As President Obama heads up to Capitol Hill to try to convince Republicans to support the massive $825 billion economic recovery package, the nation’s economy is shedding jobs at a rapid pace. On Monday several major U.S. companies announced job cuts totaling over 60,000. The news comes just weeks before the Bureau of Labor Statistics releases the official Employment Situation Summary for January that will detail the unemployment rate and job losses by sector. Over the last two months the economy has lost over 1 million jobs and January’s numbers are expected to bear more bad news given the dismal holiday shopping season in December.
Yesterday Home Depot announced it will layoff 7,000 employees and close its high-end Expo Design Centers stores. It was a clear signal of the impact of the slowing down of the home construction industry and that homeowners are not spending money on home improvements that under the current economic climate are considered excessive. The cuts will affect about 2 percent of the home improvement retailer’s workforce and cause Home Depot to take a $532 million loss in the fourth quarter.
Home Depot was far from alone in announcing cuts on Monday. General Motors indicated it will layoff 2,000 employees as the Detroit automaker fights for survival. One of two auto U.S. manufacturers to receive assistance from the federal government through TARP, the other being Chrysler as Ford Motor Company did not seek aid, GM, as has Chrysler, signaled that the funds it received should allow them to make it through the first quarter. However, yesterday’s announcement may suggest that the automaker will have to cut deeper in order to remain solvent.
Sprint, the nation’s third largest wireless phone carrier, has also announced it will cut 8,000 jobs and work to trim its annual costs by $1.2 billion. A little more than one year ago the company laid off 4,000 workers and closed 125 retail stores. Sprint will also suspend its 401(k) match for the year, extend a freeze on salary increases and suspend a tuition reimbursement program. Caterpillar, the world’s largest manufacturer of mining and construction machinery, announced it will lay off 5,000 workers as the company’s profit dropped 32 percent in the fourth quarter.
In addition, 8,000 jobs are expected to disappear after the merger of pharmaceutical giants Pfizer and Wyeth and Texas Instruments announced it would cut 3,400 jobs or 12 percent of its workforce.
Since the recession began in December 2007 the U.S. economy has shed 2.59 million jobs, with over one million of those losses coming in the last two months. Last month unemployment rose to 7.2 percent and the rate of Black unemployment threatening to double the national rate. There is growing concern that the economy may be losing jobs at the rate of 600,000 per month; losses so staggering that they would overwhelm the projected 3 million jobs President Obama has called for in his economic recovery package. By the time the jobs spurred by the recovery package are created, as many jobs may be lost.