I thought unemployment was dropping. The biggest companies in the U.S. have announced 22% more mass firings this year than last year. The announcements of layoffs are coming fast and furious as accounting tricks can no longer hide the fact that revenues and earnings are falling. We already know that small companies are not hiring, so a critical thinking person might ask how the unemployment rate keeps dropping. I have a feeling the number of people NOT IN THE LABOR FORCE will be surging upwards in the next few BLS misinformation reports. We now have a perfect storm for employment in the U.S.
- Mega-corporations are laying off thousands.
- State and local governments must layoff people as they try to balance their budgets without help from the Feds
- Obamacare will keep small businesses from hiring and completely stop entreprenuers from starting businesses
- Major retailers and restaurant chains will convert full time workers to part time workers to avoid the impact of Obamacare
- The recession and continued layoffs will result in lower consumer spending, which will result in more retailers going under, closing stores, and laying off workers
- The 2% payroll tax cut will expire on January 1, resulting in an immediate decline of disposable income of $1,000 for a median income family and $2,000 for a family making $100,000.
- The uncertainty of the fiscal cliff will keep all businesses from making any hiring or capital spending decisions.
So, based on these facts, the brainless twits on CNBC say it’s the best time to buy stocks. The shysters at the National Assoc of Realtors say it’s the best time to buy a house. What do you think?
Firings Reach Highest Since 2010 as Ford to Dow Face Sales Slump
By Chris Burritt
Ford Motor Co. (F) and Dow Chemical Co. (DOW) joined a growing number of companies firing thousands of workers as sluggish U.S. growth and Europe’s deepening recession lead to a persisting slump in sales.
North American companies have announced plans to eliminate 62,600 positions at home and abroad since Sept. 1, the biggest two-month drop since the start of 2010, according to data compiled by Bloomberg. Firings total 158,100 so far this year, more than the 129,000 job cuts in the same period in 2011.
Ford is closing its first European car-assembly factories in 10 years, adding to more than 5,500 cuts announced by Dow Chemical, DuPont Co. and Advanced Micro Devices Inc. (AMD) in the past week. The reductions coincide with a majority of U.S. companies missing analysts’ third-quarter revenue estimates and a focus on jobs in the final weeks of the U.S. presidential campaign.
“Companies are saying, ‘Let’s not build up inventories, let’s be lean and mean until we know until we have a better idea of what 2013 is going to look like,’” said Janna Sampson, who helps manage more than $3 billion for Oakbrook Investments in Lisle, Illinois. “There is a fear now as companies see that the economic recovery is not picking up.”
So far, out of 204 S&P 500 companies that have released third-quarter earnings, 120 have reported sales that trailed analysts’ estimates, according to data compiled by Bloomberg.
More Cuts
Those results, similar to the S&P 500′s second-quarter performance, signal employers may increase firings over the next two quarters, according to John Challenger, chief executive officer of Challenger, Gray & Christmas Inc., a human resources consulting firm based in Chicago.
Sales misses are “a sure prescription for layoffs starting to heat up as companies take immediate action to show their shareholders how responsive they are,” Challenger said yesterday by telephone.
The U.S. unemployment rate fell below 8 percent in September for the first time since January 2009, and a surge in firings may counteract job gains elsewhere in the economy.
The technology hardware and equipment industry has announced the most job reductions among North American companies this year with 41,200, led by Hewlett-Packard Co. (HPQ)’s announcement in September that it plans 29,000 cuts, more than it originally disclosed. Banks are next with plans to eliminate more than 19,000 positions, according to Bloomberg data.
AMD, the second-largest maker of processors for personal computers, said last week it will cut 15 percent of its staff, or about 1,665 jobs, after forecasting fourth-quarter sales that fell short of analysts’ estimates.
‘Necessary Steps’
Restructuring measures designed to trim annual costs by about $190 million are “difficult but necessary steps to ensure our plan has the right scale and scope to address the market and competitive challenges we now face,” Rory Read, chief executive officer of the Sunnyvale, California-based company, said on an Oct. 18 conference call.
The closing of about 20 plants in the U.S. and abroad will eliminate about 2,400 jobs, Midland, Michigan-based Dow Chemical said this week. DuPont, based in Wilmington, Delaware, plans to trim 1,500 jobs after third-quarter profit trailed analysts’ estimates and it reduced its full-year forecast.
Earlier this month, Cummins Inc. (CMI), a Columbus, Indiana-based engine maker, said it expects to erase as many as 1,500 jobs by the end of 2012 and lowered its forecasts for sales and profit.
“A lot of companies have been positioned for continued growth and we’re seeing some stagnation or a modest decline,” Andy Kaplowitz, a New York-based industrial analyst for Barclays Plc, said in a telephone interview on Oct. 24.
Ford Factories
U.S. companies are also restructuring European operations to stem the slowdown. Kimberly-Clark Corp. (KMB) said this week it plans to cut manufacturing and administrative operations as it exits the diaper business in western and central Europe, except for Italy, to concentrate on faster-growing regions. The Dallas- based company didn’t say how many workers may lose their jobs.
Ford, the second-largest U.S. automaker, is closing a factory in Genk, Belgium, by the end of 2014. A second plant in Southampton, England, will shut as early as next year, said two people familiar with the situation, asking not to be identified revealing internal plans. In contrast, the Dearborn, Michigan- based automaker has added more than 6,500 hourly jobs in the U.S. this year through early September, Todd Nissen, a spokesman, said in an e-mail.
European Recession
Companies based in western Europe have also accelerated large-scale job reductions this year as the recession in the European Union worsens. Services and manufacturing shrank more than economists forecast in October and business confidence in Germany, Europe’s biggest economy, dropped to the lowest in more than 2 1/2 years.
“We’re seeing uncertainty about whether Europe will make it or not,” Diane Swonk, chief economist for Mesirow Financial Holdings Inc. in Chicago, said in an interview.
Among western European companies, there have been 47 job- cut announcements so far this year involving at least 1,000 workers, compared with 32 in the same period of 2011, according to the data compiled by Bloomberg. The peak month was July, with 39,800 firings. That brings the year-to-date total for the region’s companies to 165,700, up from 162,420 in the same period a year earlier, the data show.
Alcatel-Lucent SA (ALU), the Paris-based phone-equipment maker whose stock is trading near a 23-year low, said last week it plans to trim 5,500 positions worldwide, including about 1,400 in France. The reductions will primarily affect sales, marketing and administrative employees, said Simon Poulter, a spokesman.
Philips, Siemens
Lighting company Royal Philips Electronics NV, based in Amsterdam, is eliminating 2,200 additional jobs to wring out an extra 300 million euros ($389 million) as economic conditions deteriorate. Munich-based Siemens AG (SIE), the maker of high-speed trains, turbines and medical gear, has identified about 8,000 potential cuts globally, and the number that may reach 10,000 by year-end, a person familiar with the plan said this month.
Back in the U.S., companies are hesitant to expand until they know the result of the presidential election and how lawmakers will handle the so-called fiscal cliff, or the $607 billion in tax increases and spending cuts set to take effect in January if Congress doesn’t intervene. Inaction probably would cause a recession in the first half of 2013, according to the Congressional Budget Office.
The world’s largest economy probably grew at a 1.8 percent annual rate in the third quarter after expanding at a 1.3 percent pace in the previous three months, according to the median forecast of economists surveyed by Bloomberg before an Oct. 26 Commerce Department report. It would be the first back- to-back readings lower than 2 percent since the U.S. was emerging from the recession in 2009.
“We are operating in a world where demand is still very weak,” Jeff Fettig, CEO of Benton Harbor, Michigan-based Whirlpool Corp. (WHR), said in an Oct. 23 interview. The world’s largest appliance maker boosted its 2012 adjusted earnings forecast this week, helped by the elimination of 5,000 jobs in the past year.
To contact the reporter on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net
TeresaE says:
I guess the PTB just thought that if they could lie and convince the sheeple that things were better, then magically things would get better.
I love the BS like Ford “adding” 6500 US jobs. Ford did no such thing, they laid off/fired a shit load of employees, then “hired” them back as contract/temps. They tout added headcount, even though they lost many workers via the “changeover.”
There has been NO FUCKING RECOVERY.
Next year – if we make it that far – is looking to be a doozy.
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26th October 2012 at 1:05 pm
AWD says:
Some of the biggest names in the business world have announced job cuts in recent weeks. The following are 15 signs that layoffs and job losses are skyrocketing…
1. Dow Chemical has announced that it will be closing about 20 plants and will be letting about 2,400 workers go.
2. Colgate-Palmolive has announced that they will be eliminating about 2,300 jobs.
3. DuPont has announced plans to eliminate about 1,500 jobs.
4. Ford has announced that it will be eliminating 6,200 jobs and will be reducing production capacity in Europe by 18 percent.
5. Hewlett-Packard announced last month that they plan to eliminate 29,000 jobs.
6. Chip maker AMD has announced that they will be getting rid of about 15 percent of their workers.
7. Sony has announced plans to reduce their workforce by about 2,000 workers.
8. Electronics manufacturer Sharp reportedly plans to eliminate 11,000 jobs.
9. Engine maker Cummins Inc. has announced that they plan to get rid of about 1,500 jobs by the end of 2012.
10. Earlier this month Applied Materials announced a plan that will eliminate up to 1,300 jobs.
11. Zynga (known for making video games for Facebook such as FarmVille) has announced that they are reducing their workforce by about 5 percent.
12. Lattice Semiconductor has announced plans to eliminate about 13 percent of their jobs.
13. Alcatel-Lucent recently announced a plan to eliminate more than 5000 jobs all over the globe.
14. Siemens AG has announced that the number of positions being eliminated may reach 10,000 by the end of the year.
15. Banking giant UBS plans to eliminate up to 5,000 jobs.
http://theeconomiccollapseblog.com/archives/will-the-bottom-fall-out-15-signs-that-layoffs-and-job-losses-are-skyrocketing
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26th October 2012 at 1:17 pm
Stucky says:
Mortgage applications have fallen off a cliff.
According to the Mortgage Bankers Association (MBA) loan applications decreased by 12% on a seasonally adjusted basis ….. “registering the biggest percentage decline in a year as demand for both purchase loans and refinancings tumbled.”
Fuckme. There goes the Great Housing Rebound of 2012.
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26th October 2012 at 1:32 pm
Stucky says:
On the song “Magic,” Springsteen sings in the spectral and spooky voice of trickster with the uncanny ability to hypnotize, deceive, and bewilder his awe-inspired subjects. He’s an illusionist who distracts people from the carnage he creates with style and sleight of hand. The song reaches its most frightening level when he promises to make his audience enjoy their own destruction: ——
“I got a shiny saw blade / All I need’s a volunteer / I’ll cut you in half / While you’re smiling ear to ear.” ………… A perfect description of Rombama.
.
.
I got a coin in your palm
I can make it disappear
I got a card up my sleeve
Name it and I’ll pull it out your ear
I got a rabbit in the hat
If you wanna come and see
This is what will be
This is what will be
I got shackles on my wrists
Soon I’ll slip and I’ll be gone
Chain me in a box in the river
And rising in the sun
Trust none of what you hear
And less of what you see
This is what will be (This is what will be)
This is what will be
I got a shiny saw blade (a shiny saw blade)
All I need’s a volunteer
I’ll cut you in half
While you’re smilin’ ear to ear
And the freedom that you sought
Driftin’ like a ghost amongst the trees
This is what will be
This is what will be (This is what will be)
Now there’s a fire down below
But it’s coming up here
So leave everything you know
Carry only what you fear
On the road the sun is sinkin’ low
Bodies hanging in the trees
This is what will be (This is what will be)
This is what will be
.
.
“Magic” by Bruce Springsteen
http://www.youtube.com/watch?v=WCVJny3Va4I
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26th October 2012 at 1:42 pm
sangell says:
I just redeemed my Chase Rewards credit card points. Got $638.00 from them ( it took a few years to ‘earn’ them). Although I am retired I suspect I will get a 1099 form from Chase for this money so will the Bureau of Labor Statistics consider me an ‘employed independent contractor’ working for Chase as ‘professional shopper’ in the 4th quarter?
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26th October 2012 at 1:45 pm
Administrator says:
« Look Out Below, Time to Reduce Equity Exposure . . .
By Barry Ritholtz – October 26th, 2012, 7:00AM
All this week, I have been discussing why I thought we may be coming to an end of the cyclical bull market that began in March 2009: Listen to Ritholtz Sees “Major Cyclical Correction” from Tuesday morning, and watch this and this from Thursday.
I have cut back on some major holdings, and raised our cash levels to 25% in the asset allocation model I manage. I removed half of our energy positions, eliminated our emerging markets exposure. The biggest move was cutting S&P500 exposure by 50%. A handful of clients who had outsized Apple exposure saw those positions reduced by a third. We maintain a heavy bias in long portfolios in health care and in consumer staples. I have no desire to reduce treasuries or munis, which will become a safe harbor if and when things get choppy. (I have NOT added inverse ETFs, but that is something I may consider in the future).
Note that these portfolio moves have nothing to do with the upcoming elections or the fiscal cliff. I agree with what Michael Belkin said at the Big Picture conference: “People should forget the Fiscal Cliff, this market is all about the Earnings cliff.”
In terms of future recession probabilities, I now place us at 60% over the next 18 months. In other words, we are more likely to see a normal cyclical recession before Spring 2014 than not.
I don’t imagine we go straight down from here; There will be sell offs and rallies, pre and post elections. There will be some data points that suggest things aren’t so bad, and then some that are awful. It is not a black and white situation. I do believe the low volatility we have seen may very well become a thing of the past, and the VIX is becoming a definitive Buy.
One last point: This is NOT a batten down the hatches, go-to-100%-cash, looking for a 50-60% crash type of expectation. (We, um, already had that one). Instead, this is looking like a regular earnings and revenue shortfall driven recession, with equity markets at risk for a 20-30% correction.
~~~
Investing is an art form that requires probabalistic decision-making using imperfect information about an inherently unknowable future. We work with less than a century of price action, when ideally we should have 1,000 years of market data to analyze. We never know the ideal time to enter and exit positions, but we can at least strive for an objective process using known metrics (earnings growth, valuation, price trends, etc.).
Hence, why we make gradual and infrequent moves, highly cognizant of the possibility we will be wrong.
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26th October 2012 at 2:00 pm
Bob says:
Ritholtz says: “This is NOT a batten down the hatches, go-to-100%-cash, looking for a 50-60% crash type of expectation. (We, um, already had that one). Instead, this is looking like a regular earnings and revenue shortfall driven recession, with equity markets at risk for a 20-30% correction.”
Barry is probably right, sorta kinda.
Likely worst-case (probable) scenario: The initial drop will run down about 30%, followed by a bounce that recovers around half or two thirds of the drop. Then will come the big wave down from levels about 20% lower than now, in a range of 60% – 80% down. After a feeble bounce of about 40% of the drop, a final plunge to market levels approximating a total 90% drop from current levels. Expect wild gyrations before and after the final low.
The 2009 low was NOT the big move — that is why we were able to have as much of a ‘recovery’ as we have had.
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26th October 2012 at 2:39 pm
Eddie says:
So..Bob, your last name must be Prechter. LOL.
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26th October 2012 at 2:44 pm
youcanthavemyglock says:
http://www.youtube.com/watch?v=m3hqiksl6lU
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26th October 2012 at 3:17 pm
Administrator says:
UBS To Terminate 10,000, Or One Sixth Of Its Employees
Submitted by Tyler Durden on 10/26/2012 15:07 -0400
There is down-sizing; there is trimming-the-fat; and then there is UBS. The once-giant Swiss Bank just announced it will cut up to 10,000 jobs. This comes on top of the 3,500 from last year – which makes a rather dramatic weight-loss strategy for the 63,500 employee firm. As the FT reports, they will not happen all at once (so just after the election then?) but will lead to the closure of a sizable part of UBS’ fixed-income trading operations (and other capital intensive areas of the investment bank). Perhaps in the understatement of the day: “There were several options on the table but UBS has decided on the most radical one,” a person familiar commented as the plan is hoped to reduce complexity and costs – so no more Bloomberg Terminals? One thing surely gone is a source of fixed income axes: “The new strategy, hammered out in several executive board meetings in New York this week and set to be announced next Tuesday, will lead to the closure of a sizeable part of UBS’s fixed-income trading operations and other capital-intensive areas of the investment bank.” The winner: Goldman of course, which in a world of collapsing trading revenues has taken to Lehmaning its competition once again, only this time not using brute force but the far more classical war of attrition in a collapsing economy.
Via FT:
UBS is set to unveil a radical downsizing of its struggling investment bank next week in a move that will prompt the loss of up to 10,000 jobs across the Swiss banking group.
Switzerland’s largest bank by assets will significantly shrink the trading side and complexity of its investment bank and as a consequence also cut thousands of jobs in its back office over the next few years, three people close to the situation said.
The job cuts will amount to almost a sixth of the bank’s workforce of 63,500 at the end of June. They will not happen all at once and the precise number is still unclear as the exact impact on back-office functions has not yet been determined.
It comes on top of another – still ongoing – programme announced last year to cut 3,500 jobs.
The move highlights how banks around the world are trying to adapt to a radically changed regulatory and market environment that has left them with lower returns and much higher capital needs for certain business areas and national subsidiaries.
The new strategy, hammered out in several executive board meetings in New York this week and set to be announced next Tuesday, will lead to the closure of a sizeable part of UBS’s fixed-income trading operations and other capital-intensive areas of the investment bank.
“There were several options on the table but UBS has decided on the most radical one,” one person familiar with the plan said.
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26th October 2012 at 4:30 pm
The Watchdog says:
Declining net energy is a cruel mistress.
Hot debate. What do you think?
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26th October 2012 at 5:18 pm
It's me, bitches! says:
We just haven’t smoked enough Hopium. Then magical unicorns will appear, farting cash out of the wazoo and the US economy will be A-OK gain.
Puff, puff give. Don’t break the cipher.
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26th October 2012 at 5:23 pm
It's me, bitches! says:
Stupid website…had to go to a different one for the same pic.
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26th October 2012 at 5:24 pm
It's me, bitches! says:
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26th October 2012 at 5:26 pm
It's me, bitches! says:
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26th October 2012 at 5:27 pm
DaveL says:
“Ford has announced that it will be eliminating 6,200 jobs and will be reducing production capacity in Europe by 18 percent.”
Apparently no one has seen the latest directive from Obama to Hilda Solis at the Department of Labor.
“As of the beginning of October, all jobs created in Europe, Asia, Africa, Australia, and South America are to be included in our statistics at a rate of 5% of the total, added to the number our employed people, since we trade with all of these areas of the world. All layoffs in these countries are to be ignored, as they are not our problem.”
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26th October 2012 at 5:29 pm
ThePessimisticChemist says:
@DaveL – Please tell me you are joking.
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26th October 2012 at 6:05 pm
Stucky says:
DaveL is bullshitting.
However, here’s a pic of Hilda Solis (dark glasses) and her heros. She authorized these new posters in elevators throughout the Department of Labor’s Washington, D.C. headquarters building.
Representative government!! God, I love this country.
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26th October 2012 at 7:28 pm
Ron says:
TBP never fails to cheer me up.Wheres that bottle? Im having this problem where i want to slap people upside the head.This site should be a show on cable.
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26th October 2012 at 2:19 am
Llpoh says:
The real issue is not just that the big companies are dropping employees. The bigger issue is that for every one they drop, the rest of the economy loses between 5 and 7 more.
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26th October 2012 at 7:11 pm
There’s a Storm Coming (and the weather forecast is bad too) says:
[...] think large companies have cost cut as much as possible (though they are still trying with more layoffs). Low rates have motivated housing related businesses like construction and home improvement (think [...]
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26th October 2012 at 6:56 am