Business | Markets
Economy likely to struggle into 2oo9
The US economy is likely to be "very sluggish" well into 2009, but actions to restore liquidity to fin-ancial markets will kick in over time, a top Federal Reserve Bank policymaker said on Friday.
- Reuters
- Published: 00:03 October 19, 2008
Fond Du Lac, Wisconsin: The US economy is likely to be "very sluggish" well into 2009, but actions to restore liquidity to fin-ancial markets will kick in over time, a top Federal Reserve Bank policymaker said on Friday.
"The economy faces serious challenges," Evans said in a speech to business leaders at Marian University in Fond Du Lac, Wisconsin. "The housing market is a continuing strain, and we are experiencing disruptions in worldwide credit markets that are without precedent in the post-World War Two era."
Although it is hard to gauge how hard the turmoil would hit the broader economy, Evans said consumers and businesses are facing reduced and more costly access to credit, hurting overall spending.
Boston (Reuters) Shockwaves from the global fin-ancial crisis are now being felt in almost every corner of working America as companies press the eject button on increasing numbers of their employees.
While the axe has been falling for months in the financial, homebuilding and auto industries - where the current economic downturn started - makers of everything from soft drinks to water filtration systems have unveiled rounds of job cuts in recent weeks as they brace for what could become a long and deep recession.
Last week, companies including PepsiCo Inc and Danaher Corp said they would lay off thousands of workers, while the state of Massachusetts disclosed plans to cut its payroll by 1,000 as it faces a tax shortfall.
The situation is poised to worsen as the holidays approach as many businesses scrutinise budgets for the coming year. The sad truth is that Christmas layoffs are common in tough times.
Future tense
"It's a fairly grim outlook," said Michael Goodman, director of economic and public policy research at the Donahue Institute of the University of Massachusetts.
"I don't know of any sector of the economy that will be spared."
A four-week moving average of new US government jobless claims last week hit its highest point in seven years.
Ed Yardeni, chief investment strategist for Yardeni Research, is hoping that the US government's $700 billion bailout package will slow the job cuts.
"If this rescue plan doesn't work, then... you could see something much worse that could feel like a recession or a depression, with all sorts of people losing jobs," he said.
A survey of more than 100 chief financial officers and other senior executives found 56 per cent expect to reduce payrolls over the coming year.
A majority polled by CFO Magazine predicted falling revenues and plan to cut operating costs by at least five per cent. Workers are scared.
Some 47 per cent polled last month by Workplace Options said news of the financial crisis made them fearful about job security, and 25 per cent said they had begun scanning help-wanted ads or updating their resumes.
General Motors Corp said last week that it would close plants in Michigan, Wisconsin and Delaware and cut more than 4,000 jobs.
US auto supplier BorgWarner Inc said on Friday it plans to cut up to 1,250 jobs in the US in response to cutbacks by carmakers.
PepsiCo Inc on Tuesday said it would cut 3,300 jobs.
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