There are
increasing signs that the US economy is heading towards a recession as major corporations—from the auto industry, to banking, to technology, to consumer goods—have announced far weaker than expected sales and earnings and a new round of mass layoffs and plant closings.
The Federal Open Market Committee stated, “the drag on demand and profits from
rising energy prices, as well as eroding consumer confidence, reports of substantial shortfalls in sales and earnings and stress in some segments of the financial markets, suggest that economic activity may be slowing further.”
Greenspan, who was the first official figure to meet President-elect George W. Bush in Washington Monday morning
, has often spoken of his desire to engineer a “soft-landing” of the economy. But even if the Fed reverses policy and lowers interest rates as expected at the beginning of the new year, there is no guarantee that the economy will not slide into a full-scale recession or even depression.
On Tuesday, DaimlerChrysler AG's faltering Chrysler Group in the US told shareholders that it is on pace to
lose a staggering $1.4 billion in the fourth quarter and next year could be even worse. Analysts say the company, which has already temporarily idled a number of plants in the US and Canada, will have to
eliminate between 20,000 and 40,000 jobs to return to profitability
The
first ever profit warnings by Microsoft on December 14 highlighted a series of scaled-back projections by computer and computer-related companies over the last two weeks. In addition to the software maker,
Apple, Dell, Compaq, Gateway, Intel, Hewlett-Packard and Advanced Micro Devices all announced lower than expected earnings.
On Monday, Aetna, the nation's largest health insurance company, announced that it would
eliminate 5,000 jobs, about 13 percent of its workforce.
Gillette announced Monday that it would
shut down eight factories and 13 distribution centers and lay off 2,700 employees, or 8 percent of its workforce.
Last week the biggest US home appliance maker, Whirlpool, announced that it planned to
cut up to 6,300 jobs, or about 10 percent of its workforce, because of weakening demand for its products.
New York banks Chase Manhattan Corp. and J.P. Morgan & Co. said their expected merger would result in
5,000 job cuts, increasing the total from a previous estimate of 3,200.
Among other companies announcing job cuts in the past month, Unisys Corp. said it will
eliminate 2,000 jobs, Dun & Bradstreet Corp. will
slash 1,000 jobs and
Guilford Mills will cut 550. Among computer-related companies, Ask Jeeves, an Internet search engine,
cut 25 percent of its workforce, or 180 positions,
Merisel announced the layoff of 200 workers and Digital Broadband Communications announced it was
eliminating 450 of its 526 employees and seeking a buyer.
http://www.wsws.org/en/articles/2000/12/econ-d20.html