Mike: Welcome back from your holiday. I hope you all had a pleasant weekend with your family. The news is busy this Monday. The holiday cheer has turned back into holiday fear as news of the manufacturing index dropping to a 26-year low and the official announcement that the US has been is a recession since December 2007 reared its ugly head. Job loss numbers are expected to get worse quickly, so let’s get to the news of the day:
Update: Today ended up being an historical day as the DOW crumbled under recession pressures.
Wall Street breaks 5-day win streak as stocks plunge; Dow down 680 in 4th-worst decline
http://biz.yahoo.com/ap/081201/wall_street.html
4th largest DOW drop ever (courtesy of http://finance.yahoo.com/q?s=^DJI)
Manufacturing index drops to 26-year low as new orders, production fall
http://biz.yahoo.com/ap/081201/economy_manufacturing.html
National Bureau of Economic Research panel says US recession began in December 2007
http://biz.yahoo.com/ap/081201/recession.html
Unilever to cut 250 research jobs worldwide
http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSL158378420081201
Mike: Texas has weathered the storm so far, but it can’t rest on its laurels since the energy economy they so depend on has been damaged by oil prices that are 1/3 what they were only six months ago. Even that TX ego won’t make up for those kind of losses. But if you are seeking a safer haven for the time being, there are worse places to go than TX.
Unemployment went up from 5.1 percent in September to 5.6 percent in October.
http://www.star-telegram.com/245/story/1066159.html
The Washington area, long considered one of the most economically resilient in the country, is beginning to feel the pinch of the sharp national downturn, with unemployment hitting levels not seen since the last downturn.
http://www.washingtonpost.com/wp-dyn/content/article/2008/11/30/AR2008113001762.html
Mike: There is still that glimmer of hope in many locals that see this national problem as one that won’t affect their area. While some areas won’t be as bad as others, all areas will get worse.
Marathon County’s unemployment rate in October was 4.1 percent, up from 3.7 percent at the same time last year, according to figures released this week by the Wisconsin Department of Workforce Development. Nearby counties have risen by similar amounts, and the state’s rate went from 4.2 percent in 2007 to 4.4 percent in October.
Mike: I usually enjoy reading foreign news reports since they offer a more realistic assessment of current and future conditions. US news likes to gloss over bad economic conditions in favor of rose-colored glasses scenarios. Although a positive attitude is important when trying to navigate financial storms, people need to be made aware of the what the true state of affairs are before they can accurately determine the best way to proceed.
The US unemployment rate surged to 6.5 per cent in October from 6.1 per cent the previous month, the Labour Department said. Declines in non-farm payrolls, which hit 240,000 in October, could surpass 350,000 in the coming report. Such a drop would be the largest since May 1980, when non-farm payrolls declined by 431,000. Many forecasters expect joblessness to top 8 per cent by the end of next year.
For 2009, “the best-case scenario is 8.2 per cent or 8.3 per cent unemployment, but there’s an increasing risk that we could go up to 9 per cent,” said IHS Global Insight chief economist Nariman Behravesh.
http://www.theaustralian.news.com.au/business/story/0,28124,24732177-643,00.html
Mike: Some good news for the working retired crowd:
HARTFORD, Conn. – Connecticut‘s Department of Labor is opening phone lines to help more people inquiring about unemployment benefits, and temporarily rehiring recent retirees to handle the extra workload.
With jobless claims at a 14-year high and expected to rise, this is a good time to figure out what you’re entitled to if you’re laid off — or if you sense a pink slip may be in your future.
http://www.nbcchicago.com/news/business/Your_Career__Entitlements_of_the_unemployed.html
The shuttered state facilities and laid-off workers are the latest and most visible effects of state financial problems that have been building for several years and have been exacerbated by the global economic crisis.
“Take a look around — this is doomsday,” said Anders Lindall, spokesman for the American Federation of State, County and Municipal employees, which represents workers laid off from the state’s historic preservation, natural resources and human services agencies.
http://www.tmcnet.com/usubmit/2008/11/30/3821873.htm
Mike: Discussed below is the The federal Pension Benefit Guaranty Corporation that guarantees pensions of companies that go belly-up. The problem with having faith in that entity is that it is running a deficit:
The Pension Benefit Guaranty Corp. reported a deficit of $10.7 billion for its single-employer pension plan insurance program in the fiscal year ended September 30, a $2.4 billion improvement from last year’s $13.1 billion deficit, according to its annual report submitted to Congress on November 18.
The single-employer program had assets of $61.6 billion and liabilities of $72.3 billion as of September 30.http://www.workforce.com/section/00/article/25/99/53.php
Fortunately for retirees such as Thom, pensions would be safe in the case of a GM bankruptcy, Gerhart said. The federal Pension Benefit Guaranty Corporation backs pensions up to a certain amount for companies that can no longer fund their pension plans.
If GM terminates its pension plan in 2008, the PBGC will guarantee up to $4,300 a month—almost $52,000 a year—for workers age 65 and older, with a lower maximum for younger workers. A 55-year-old retiree, for example, would receive a maximum of $1,900 a month, or $23,000 a year.
“The retirement benefits for those in the plan, those are fairly well protected,” Gerhart said. “Health care, that’s different.”
If GM declares bankruptcy, a bankruptcy court would decide which obligations it’s required to uphold. So GM might no longer fulfill health care provisions or unemployment benefits negotiated in union contracts, and it could stop contributing to pensions of current employees.
United Airlines, for example, saved $7 billion a year after declaring bankruptcy in 2002 by eliminating 25,000 jobs, replacing traditional pensions with 401(k) plans, reducing cost structure and cutting pay.
http://gazettextra.com/news/2008/nov/30/gm-bankruptcy-could-hurt-local-retirees-employee/
Mike: More to come. And here it is:
Seattle and WA in general was hoping to miss out on the massive job loss scenario, but as can be seen here, the area will see job losses expand. The tech sector is holding up right now, but it’s just a matter of time before they have to ax jobs.
WaMu cutting 3,400 Seattle-area jobs, 9,200 total
JPMorgan Chase & Co. is eliminating the jobs of 3,400 Washington Mutual employees in the Seattle area, part of 9,200 job reductions nationwide, a spokesman said Monday.
Outside of Seattle, where WaMu is based, the biggest number of job cuts is 1,600 at credit card call centers in San Francisco and Pleasanton, Calif., and layoffs are generally no more than a few hundred in other areas, JPMorgan spokesman Thomas A. Kelly said.
None of the more than 20,000 workers in branch banks are being cut, he said.
http://seattletimes.nwsource.com/html/localnews/2008456464_apwawashingtonmutual1stldwritethru.html
Palm sees slump in sales, eyes U.S. job cuts
The maker of the Treo line of mobile devices said it now expects fiscal second-quarter revenue to drop from the year-ago period. It’s also seeking to cut costs over the rest of the fiscal year. It aims to reduce operating expenses by 20% by the fiscal fourth quarter through U.S. job cuts and the consolidation of European operations.
[Silver] says that the number of IT jobs advertised on his site had been holding steady at between 85,000 and 90,000 jobs until the September-October time frame, when the number of ads for IT jobs dipped significantly. “We’ve seen a drop of roughly 20 percent versus where we were last year,” he says. “We’re now around 70,000 jobs on the site.”
Mike: The US automakers are begging for a cash infusion to save thousands of jobs. They aren’t the only group that is demanding money, as the European and Asian car makers are holding their hands out and letting their countrymen know that unless they get bailed out the consequences will be dire. This is a world wide financial crises that is only beginning:
Japanese car sales in worst fall since 1970s
Confirming new fears that Japan has crashed into its sharpest downturn since the Second World War, November sales of cars, trucks and buses plunged 27.3 per cent from the previous year.
In the breakdown of the report, there was, as expected, sharp decline in sales to the US and Europe, but the major Japanese car manufacturers were visibly shaken by the acute drop in sales in emerging markets. (When these stand-tall guys are visibly shaken, you know the news is bad – Mike)
http://business.timesonline.co.uk/tol/business/industry_sectors/engineering/article5266832.ece
TOKYO (AFP) — Countries face massive job losses unless they move quickly to provide financial assistance to their carmakers, Renault-Nissan head Carlos Ghosn warned Monday.
http://www.google.com/hostednews/afp/article/ALeqM5h6cJM1zE9zhg6o4CTN_iHNC73fLQ
More than one million jobs have been lost this year through October, according to the Labor Department. And the upcoming November employment report is expected to show a loss of another 350,000 jobs, according to analysts surveyed by MarketWatch. A decrease of 350,000 would be the largest drop since May 1980, when more than 400,000 jobs were shed.
Mike: The following was taken from the Bureau of Labor Statistics (http://data.bls.gov/PDQ/servlet/SurveyOutputServlet) and it shows ominously that people are waiting longer to secure a job once they lose one. As can be seen from the graph, those who have been out of work from 5-14 weeks are waitng longer for re-employment than at any time in the last 10 tears. This is also the case for those out of work 15 weeks or longer or 27 weeks or longer:
Bureau of Labor Statistics
Bureau of Labor Statistics
Mike: And on that note. If you have any links to job loss announcements, please post them so we can all be made more aware. Have a good evening.
Sun Nov 30, 12:00 AM ET - Mike Luckovich
