Layoffs May Worsen if Economic Growth Doesn’t Pick Up

(From cnbc.com) Thousands of layoffs were announced in just the past week, and that trend could continue if economic growth does not start to pick up speed. Merck on Friday became the latest company to announce a new round of job cuts, saying it would trim 13,000 employees from its work force of 91,000 by 2015. It joins HSBC, which is reported to be trimming 10,000 jobs from its global staff, and Borders, letting go another 10,700 workers, as it shuts down all of its retail stores.

“These heavy cuts are a sign the economy is stalling. The GDP numbers back it up. This is a concrete result of what you get when you see GDP stalling under 2 percent, like we’ve seen for two consecutive quarters,” said John Challenger, CEO of Challenger Gray and Christmas, which monitors layoffs.

“It’s across the board industries. It’s not like the auto sector or something doing poorly. We are seeing pharmaceuticals; defense; retailers – in terms of Borders; and financial firms – in terms of Goldman..It’s so very broad-based and it certainly poses a risk to the economy turning around, as people lose their jobs, and a lot of consumers who support these companies lose their jobs,” he said.

Friday’s report of first and second quarter GDP drove home the sluggish state of the U.S. economy and provides a backdrop for a 9.2 percent unemployment rate and the string of poor jobs reports in the past several months. The second quarter grew at a 1.3 percent pace, well below the 1.8 percent expected by economists, but the shocker was a revision knocking first quarter growth down to 0.4 percent, from a previous 1.9 percent.

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