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Economic forecasters see more job cuts ahead
2009-01-26
WASHINGTON - It's shaping up to be another lousy year for workers, with more companies expecting to cut payrolls in the months ahead. That's part of the latest outlook from forecasters in a survey released Monday by the National Association for Business Economics that depicts the worst business conditions in the U.S. since the report's inception in 1982. Thirty-nine percent predicted job reductions through attrition or "significant" layoffs over the next six months, up from 32 percent in the previous survey in October. Around 45 percent in the current survey anticipated no change in hiring plans, while roughly 17 percent thought hiring would increase. The recession, which started in December 2007, and is expected to stretch into this year, has been a job killer. The economy lost 2.6 million jobs last year, the most since 1945. The unemployment rate jumped to 7.2 percent in December, the highest in 16 years, and is expected to keep climbing. "Job losses accelerated in the fourth quarter, and the employment outlook for the next six months has weakened further," said Sara Johnson, NABE's lead analyst on the survey and an economist at IHS Global Insight. Sprint Nextel Corp., the country's third-largest wireless provider, said Monday it will eliminate about 8,000 jobs in the first three months of this year. About 850 of the reductions are voluntary. Just last week, Microsoft Corp. said it will slash up to 5,000 jobs over the next 18 months. Intel Corp. said it will cut up to 6,000 manufacturing jobs and United Airlines parent UAL Corp. said it would get rid of 1,000 jobs, on top of 1,500 axed late last year. The NABE survey of 105 forecasters was taken Dec. 17 through Jan. 8. Also in the survey, 52 percent said they expected gross domestic product to fall by more than 1 percent this year. GDP measures the value of all goods and services produced within the U.S. and is the best barometer of the country's economic fitness. The last time GDP fell for a full year was in 1991, a tiny 0.2 percent dip. The economy shrank by 1.9 percent in 1982, when the country was suffering through a severe recession. Forecasters have grown more pessimistic about the outlook. In the October survey, no forecaster thought GDP would fall by more than 1 percent. In terms of business conditions, more reported customer demand dropping, capital spending reductions and shrinking profit margins. Caterpillar Inc., the world's largest maker of mining and construction equipment, reported Monday that its fourth-quarter profit plunged 32 percent. The Peoria, Ill.-based company expects sharply lower results this year as global economic problems cut into its business and said it had taken actions to remove about 20,000 workers, including Caterpillar employees, contract and agency workers. Altogether the NABE report "depicts the worst business conditions since the survey began in 1982, confirming that the U.S. recession deepened in the fourth quarter of 2008," Johnson said. Many analysts predict the economy will have contracted at a pace of 5.4 percent in the fourth quarter when the government releases that report on Friday. If they are correct, that would mark the worst performance since a 6.4 percent drop in the first quarter of 1982. The economy is still contracting now -- at a pace of around 4 percent, according to some projections.
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