Get Ready for More Layoffs
That light at the end of our dark economic tunnel is a train. And it could roll over you this year.
Every day headlines scream the latest bad news about yet another company announcing massive layoffs. Household names such as Boeing, Pfizer, Home Depot, United Airlines, and hundreds of financial institutions are sending out pink slips by the millions. (No, that is not a misprint).
According to Yahoo News, the Labor Department reports that 21,137 mass layoffs took place last year, up from 15,493 in 2007. That's the highest annual total since 2001, the last time the economy was in recession, and the second-highest since the department began tracking mass layoffs in 1995.
More than 2.1 million workers were fired as a result of last year's mass layoffs, the department said. The Associated Press reports companies announced 125,000 layoffs in January alone. And this time around the recession is not sparing any industry. Even once recession-proof law-firms are pulling in their shingles and closing their doors.
Adam York, an economic analyst at Wachovia Corp. predicts greater job losses in this recession that any downturn since the late 1950s. And York says total employment will drop by 3.5 percent by the end of this year, a sharper decline than the 3.1 percent fall that took place during the steep 1981-1982 recession. York estimates employers will cut an additional 2 million jobs this year.
The Obama Administration is pushing its $819 billion stimulus plan, and the Fed is keeping the key interest rate it controls at nearly zero and said it would remain at that level for "some time." But zero interest rates do not help someone buy a house who cannot get credit or is unemployed.
Just as an oil tanker cannot turn on a dime, neither will the U-S or world economy. And that world economy will not help the U-S recover quickly. Yahoo News reports the International Monetary Fund said Wednesday the global economy will grow by only 0.5 percent this year, the slowest since World War II and a sharp reduction from its projection of 2.2 percent growth in November.
The world economy is hamstrung by potential credit losses of $2.2 trillion stemming from U.S. mortgages and other loans, the IMF said. It used to be said that when the U-S economy sneezes, the world economy gets a cold. This time around the world economy is getting pneumonia.
There is a well-worn phrase first uttered by former President Harry Truman that comes to mind here. "It's a recession when your neighbor loses his job; it's a depression when you lose your own." It seems to me there will be a lot more neighborhoods in depression this coming year.
(Brian Banmiller is a national Business Correspondent for CBS News Radio, free lance writer and public speaker. The former television business news anchor in San Francisco can be reached at brian@banmilleronbusiness.com .)
