Employers still trimming jobs even as holidays near
A growing number of companies are sending workers a grim holiday message: Head for the unemployment line.
Aetna Inc., Cooper Tire & Rubber Co., and Western Digital Corp. said yesterday they would cut a combined 4,900 jobs. And Eastman Chemical Co. said it would cut an unspecified number as it tries to slash costs by $100 million.
The announcements came a day before the government is expected to report that jobless claims remain near their highest point in 26 years. The downturn has spread far beyond the housing and banking businesses where it began.
"Things are changing so rapidly, and deteriorating so rapidly, that firms don't have a choice," said Nariman Behravesh, chief economist of IHS Global Insight.
Falling sales are squeezing companies' cash just as tighter credit makes it harder for them to borrow to fund operations, Behravesh said. The combination means some companies can't afford to wait until after the holidays to cut jobs.
Many people with jobs are so fearful about their employment security that families are reducing spending, giving retailers one of the worst holiday shopping seasons in decades.
Best Buy Co. said this week that it faced "the most challenging consumer environment in its history" and would offer buyouts to all 4,000 of its headquarters employee.
Its rival Circuit City Stores Inc. filed for Chapter 11 bankruptcy protection last month. Retailer KB Toys filed for bankruptcy protection last week.
The recession that began last December could last though the third quarter of 2009, said Aaron Smith, a senior economist with Moody's economy.com. Unemployment will likely continue to climb into early 2010, he said.