Lay-Offs Spread to "Healthy" Sectors
We try to keep you up to date with major economic indicators and the collective wisdom of economists, even if the news isn't very good. Today the 24/7 Wall Street blog, which offers solid analysis of the markets, points out the unsettling reality that layoffs are spreading from the sectors everyone expected to take a hit from this summer's credits problems, to other "robust" sectors.
Countrywide (CFC) has said that about 12,000 jobs will be lost at the mortgage company. The Mortgage Bankers Association says that 30,000 jobs in their industry will disappear next year due to the lowest mortgage originations since 2000. Wall St. firms are letting go employees in fixed income units. Boston Scientific (BSX) hurt by falling sales of its stents will probably fire 3,400 people later this month. And, these companies and industries are in trouble.
But, yesterday Intel (INTC) said that it earnings were up 43% in Q3. And, it will fire another 2,000 people. AOL recently let go about 2,000 souls. Internet advertising is supposed to be growing. Hewlett-Packard (HPQ) says that it will further cut costs.Its stock is near a 52-week high. 3M (MMM) and Amgen (AMGN) recently pushed out some of their people.As 24/7 points out, this round of lay-offs may simply be businesses preparing for a slowing economy, or it simply may reflect an increase in productivity--fewer people accomplishing more. But whatever the reason, layoffs are worrying as they could be the start of a troubling cycle. People lose their jobs or fear losing their jobs. They spend less, which hurts earnings. More people lose their jobs. This, according to 24/7, "is how recessions begin."
(Image of sign by Daquella manera, CC 2.0)