Saturday, July 23, 2011

Economic News Shifts to Increases in Layoffs

Mr. Obama, Republicans, Are You Just Not Even Listening Any More

A detailed report in the Wall Street Journal documents that substantial growth in job layoffs that is currently occurring in the U. S. economy. 

The report substantiates the observations by The Dismal Political Economist that stuff like this is what keeps real economists up at night.

A number of firms have not only stopped hiring, but also started to terminate employees that they no longer need.  Although this is largely anecdotal evidence of economic difficulties, it is not an encouraging sign. 

Cisco Systems Inc., Lockheed Martin Corp. and troubled bookstore chain Borders Group Inc. are among those that have recently announced hefty cuts, while recent government numbers underscore how companies have shifted toward cutting jobs.

And then there is this concerning the Confidence Fairy.  The Confidence Fairy is someone who is supposed to come along after the Federal government pursues deficit reduction policies which contract the economy.  The Confidence Fairy bestows jobs because with the deficit being reduced, business now has confidence in the economy and starts hiring people. 

The cuts also reflect the shifting outlook of employers, many of whom had expected the economy to gain speed as the year progressed. Instead, growth has faltered. If the pace continues to disappoint, more companies will feel pressure to pull back.

This doesn’t look like the Confidence Fairy is out there yet.  The Reality Fairy, well that one is out there bright and early.

Consumer spending is a central worry. Cracker Barrel Old Country Store Inc. said last week it let go of 60 workers, most at its headquarters. The move will save $10 million, Lebanon, Tenn.-based Cracker Barrel said, citing higher commodity costs and the effect of a "challenging economy" on consumer spending habits as reasons for the cuts.

"That they're looking to reduce staff means they don't see a pickup in demand going forward," says Steven Ricchiuto, chief economist at Mizuho Securities

So stay tuned.

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