That is: this slowdown is going to be long, hard and tough and things are going to worsen.
Indeed US brokers Merrill Lynch now says it thinks estimates for 2009 profits for US companies are still too generous, that earnings are going to be lower.
Brokers already believe that December 2008 quarter earnings will be down 28%, so Merrill Lynch's warning should be seen as a pointer to the future.
Anyone thinking it's going to be a quick exit/rebound later this year, or even in 2010, had better think again.
The 100,000 job cuts that echoed around the world on Monday came from retailing, cars, heavy manufacturing, light manufacturing, technology, finance, insurance, technology and more.
On top of the cuts from the likes of BHP Billiton the week before, Intel and Microsoft, the trail of losses is mounting rapidly, day by day as employers, who have tried to keep staff on for as long as possible, are forced by plunging profits, to chop and chop deeply.
Companies reported badly damaged 4th quarter earnings in the US and Europe and used these profit slumps as the basis for the jobs cuts: Texas Instruments, Caterpillar and ING for example (it was bailed out by the Dutch government for a second time with a deal to takeover dodgy real estate assets and keep lending to the economy).
The IMF saw the US economy contracting 1.6% this year, with the euro zone shrinking 2% and Japan 2.6%. Media reports said the Fund, later this week, would reveal world growth for this year 0.5% at best. Next year an optimistic 3%.
Overnight the Japanese economy okayed a modest stimulus package of about $US75 billion and the German Cabinet signed off on a 50 billion euro package. The UK Government revealed a $US4 billion-plus assistance package for its car industry.
The aim of these packages is to try and slow the downturn and keep as many people as possible in jobs.
Companies in the US and Europe chopped more than 90,000 jobs Monday that also saw the Iceland government collapse, General Motors chop more factories as sales slump, and America's second biggest cardboard processor collapse with $US5.6 billion in debts.
Around 80 000 jobs were cut in the US, the rest in Europe.
A survey of private sector economists in the US had bad news: they see the slump as worsening. (Source)
The survey found that companies will lay off more workers and hoard more cash in the next 12 months. A large majority of the 105 economists polled believe the country's gross domestic product will continue to sink in 2009.
Respondents to the survey were getting more pessimistic about the macroeconomic outlook. "78% of respondents expect U.S. real GDP to be lower in 2009 than in 2008."
"NABE's January 2009 Industry Survey depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008," said Sara Johnson, a NABE economist.
Nearly half (47%) of surveyed economists said overall industry demand was falling, compared with 35% who said so in the October survey.
"Just 10% of respondents said profit margins were rising, compared with 52% who believe they are falling. And 38% of economists said capital expenses are falling, up from just 15% in October.
"Over half expect real GDP to fall by more than one percent this year, and only three percent project growth of over one percent.
"Falling profit margins outnumbered rising margins five-to-one among respondents? firms?the worst reading since 1982.
"Job losses accelerated in the fourth quarter, and the employment outlook for the next six months has weakened further.
"With market prospects deteriorating, firms slammed the brakes on capital spending in the fourth quarter of 2008; the percentage of firms reducing capital expenditures (38%) was the highest in the history of the survey."
The survey found that a majority of those replying said credit conditions hurt businesses, as customers had less leverage to buy discretionary products. 78% of respondents said tightening credit conditions affected customers, and 52% said the credit crunch directly hurt businesses in their industries.
Rapidly deteriorating global market conditions are hammering business profits.
"For the fourth consecutive quarter, reports of falling profit margins (52% of respondents) outnumbered reports of rising margins (10%). This was the worst result since the spring of 1982.
Job losses accelerated in the fourth quarter, producing the worst survey result in 17 years. Some 44% of firms cut payrolls, while only 14% added workers.
"Looking ahead, 39% of companies plan to reduce payrolls over the next six months, while 17% plan to increase employment. Only the services sector continues to create jobs."
If anything, that explains why so many big and small companies are now cutting jobs, more than a year after the US economy officially slipped into this recession. Business conditions have become so fraught, thanks to the credit crunch and drought, that they have no alternative.
With US first time jobless claims running at more than half a million a week for the past two months, there's no let up in the flow of bad news for US workers, and increasingly employees in Europe and Japan.
US unemployment looks certain to surge from the December level of 7.2%, even as thousands of workers stop actively searching for the few jobs that are there.
But there was some rare good news from the battered US housing sector with the National Association of Realtors reporting a 6.5% rise in the number of pre-owned houses sold in December: 4.74 million unit annual rate. Economists had expected a 4.40 million unit pace.
The US Conference Board said its index of leading economic indicators rose 0.3%: economists had expected a fall of the same size.
However, the realtors' report also had the now familiar bad news with the median national home price in the US down 15.3% in December from the same month of 2007, the largest fall on record.
The financial crisis claimed Iceland's Prime Minister Geir Haarde who announced the resignation of his government after months of protests over economic policies that brought the country close to Bankruptcy.
A coalition of Green and leftwing parties is expected to win the election later this year, which could provoke tensions between the country, the banks and the IMF. The Social Democrats will form a new Government in the meantime.
But Canada will spend $US5.7 billion on infrastructure over the next two years and officials said Canada will run budget deficits totalling $US53 billion over the next two years.
And the Norwegian government presented a $US2.87 billion fiscal stimulus package to prevent a surge in unemployment. It is dipping into its state-owned wealth fund to help bolster spending, as is Singapore.
But it was the toll of job losses that staggered observers: construction equipment giant Caterpillar axed 20,000 places worldwide to cope with plunging sales. Its big Japanese rival, Komatsu warned of a 15% drop in sales and a 42% plunge in profit in the year to March 31.
New York-based drug maker Pfizer announced it would acquire its rival Wyeth for $US68 billion ($A104 billion), and then announced it would chop the combined workforces of the two companies by 19,000, or 15%, and its own global workforce by 10%, or 8,000 jobs. It's halving dividend to help finance this big deal. Investment banks will carve up $US207 million from this mega-merger.
Texas Instruments reported a big fall in 4th quarter profits, and plans to shed up to 3,400 jobs. And still in technology, an American union reckons IBM, which last week reported better than expected 4th quarter profits, is readying itself to chop at least 2500 jobs soon. .
General Motors dropped an extra 2000 jobs at two US plants as it continues restructuring. US telecom operator Sprint Nextel said it would cut 8000 jobs, or 14% of its staff, and top US home improvement retailer Home Depot is culling 7000 employees across America.
The big Dutch financial services group, ING, has obtained more help from its government to stay alive and is sacking thousands of people, as is the huge Philips lighting and technology group.
All up, ING and Philips are shedding around 13,000 people from their businesses worldwide to try and cut costs as sales and demand slump faster than expected.
And Corus, the big Anglo-Dutch steelmaker is cutting 3,500 jobs around the world, some 2,000 of them in Britain, due to a sharp fall in demand for steel.
The company is Europe's second-largest steelmaker now owned by the Indian company, Tata which is struggling to keep Jaguar Landrover alive in Britain..
Another major US company has collapsed: the Smufit-Stone Container Corp, a cardboard packaging giant and one of the world?s largest paper recyclers, has gone bust in the US with $US5.6 billion in debt. It was unable to service amid a slumping economy and demand for its products.
The company, which is based in the US but was founded in Ireland, filed for Chapter 11 protection in the US: besides the $US5.6 billion in debt the company had $US7.5 billion in assets. 24 subsidiaries or affiliates also sought protection. It had net sales of $US7.4 billion in 2007.(Source)
Smurfit-Stone, based in Chicago is North America?s second- largest maker of corrugated packaging, and has 22,000 employees in the US, Canada, Mexico and Asia.
In Britain two retail chains selling shoes went bust overnight and their listed owner, Stylo, was suspended from trading.
Barratts Shoes and PriceLess became the latest British chains to go into administration, putting the jobs of around 5,00 people at risk. The 400 stores in the two chains will remain open for now.
They join fashion chains, Dolcis, Stead & Simpson and Faith which have all gone into administration. Woolworths has closed, at a loss of 30,000 jobs and the home improvement group, MFI has failed. The UK children's retailer, Adams has shut, while furniture retailer, Land of Leather is a failure.
And a sure sign of the damage the credit crunch is doing to business can be seen from the 72% plunge in 4th quarter operating earnings for American Express.
The credit card giant said quarterly profit from continuing operations hit $US238 million, down from $US858 million in the same quarter of 2007 (Source).
American Express received a $US3.4 billion from the US Treasury's bank bailout fund earlier this month as surging consumer defaults forced it to set aside more reserves and the market for bonds backed by credit-card debt froze.
The company has chopped 7,000 jobs, frozen management salaries and cut other costs to try and save $US1.8 billion a year. For the year earnings fell 32% to $US2.8 billion.
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