April 16, 2001,
Job layoff rate climbs to record-high level in March
Climbing at a rate of 7,555 per business day, announced job layoffs climbed in March to an unprecedented level of 162,867, according to Challenger, Gray & Christmas, an international outplacement firm that tracks job cuts on a monthly basis.
March was the fourth straight month since December 2000, that monthly figures have exceeded 100,000 — the first time such totals have been reached since Challenger began collecting job-cut data in 1993.
During the first quarter of this year, 406,806 layoffs were announced, more than during the entire year of 1990, 316,047, and 187 percent higher than the first quarter of last year, 141,853.
During the past four months alone, 540,519 job cuts were announced, more than the annual figures for 1989, 1990, 1992, 1994, 1995, 1996 and 1997.
"With the job-cut figures surging, you would expect to see long lines at the unemployment offices, and at every location looking to hire," said John Challenger, ceo of the outplacement firm. "The fact that this is not occurring is probably the most dramatic demonstration of the New Economy since the language came into vogue. America is offering workers exceptional opportunities because of advances in technology, some unknown less than 10 years ago."
S & P forecasts unemployment rate to rise to 5% next year
With the U.S. economy still in a slowdown, the domestic unemployment rate will rise to more than 5 percent within a year, but the nation should still manage to avoid sliding into a recession, according to a Standard & Poor's forecast.
David Wyss, S&P chief economist, said the U.S. jobless rate, now at 4.2 percent, should rise above 5 percent by early 2002. And that, in turn, is likely to back up on consumers, crimping their ability to pay down staggering personal debt loads.
Sharply rising corporate layoffs, which have climbed to their highest level since 1993, "will impact households' ability to pay on their debts, from mortgages to auto loans to credit cards," said Wyss. American households have charged up a record amount of debt, which now stands at 107 percent of annual household income, with rising mortgage debt accounting for most of the total.
Complicating the situation, personal income is expected to slow along with employment growth, said S&P. As if that weren't enough, "In the short run, weaker consumer confidence and the destruction of stock market wealth will depress consumer spending and gross domestic product," said Wyss.
On the upside, following a bumpy ride in the first half, Federal Reserve interest rate cuts should provide a lift to the economy later during the year. S&P is forecasting that the Fed will cut its benchmark overnight bank lending rate another half point to 4.5 percent at its May 15 meeting, with a possibility of an earlier cut between Fed meetings if economic data disappoint.
Manufacturers lose, retailers gain in fourth quarter profits
Profits of U.S. manufacturers fell sharply in the fourth quarter of 2000, while profits of American retailers climbed, the Commerce Department reported.
Manufacturers' profits dropped by 25 percent to 4.8 cents per dollar of sales from 6.4 cents in the third quarter, the agency reported. Profits were down by 23.8 percent from 6.3 cents a year ago.
At the same time, retail profits were up sharply in the same period, rising to 2.5 cents per dollar from 1.4 cents in the third quarter.