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Friday, April 11, 2003 |
Retail purchases jumped 2.1 percent in the month, well above Wall Street analysts' expectations and the biggest monthly gain since October 2001.
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Brocade Communications Systems, Inc. (Brocade®) (Nasdaq: BRCD - News), the world's leading provider of infrastructure solutions for Storage Area Networks (SANs), announced today a workforce reduction of 115 employees, or approximately 9 percent, which was completed today. Following the workforce reduction, the company's workforce worldwide will be approximately 1200 employees. Brocade has taken this action as part of its plan to better align and optimize its business model, as described during the company's annual analyst day last week, during which the company also reiterated its financial outlook for the second quarter of fiscal 2003 (Q2 03).
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Qantas, one of the world's most profitable and resilient airlines, yesterday announced a third round of cuts in as many weeks, saying it would make 1000 staff redundant ...
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Thursday, April 10, 2003 |
Nokia Corp., facing a substantial loss in the first quarter, said Thursday it is cutting 1800 jobs as moves to cut costs.
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The board of Scandinavian Airline's holding company SAS has backed management plans to save SEK 8 billion (around USD 1 billion) in part by laying off 4000 employees. The cuts will come in addition to the billions made earlier.
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Wednesday, April 09, 2003 |
Australian flag carrier Qantas said Wednesday it will lay off 1,000 employees before the end of June in response to the twin troubles of war in Iraq and the deadly SARS virus.
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Stanley Works (SWK) lowered its first- quarter outlook and said it will close plants, lay off workers, exit certain businesses and buy back stock as part of restructuring efforts.
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Tuesday, April 08, 2003 |
AT&T Wireless Services Inc. (nyse: AWE - news - people), the nation's third-largest wireless telephone company in terms of customers, will lay off nearly half of its information technology staff and contractors ...
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The city plans to lay off 3,400 municipal workers to help close an estimated $3.4 billion budget gap in the upcoming fiscal year. The cuts mark the largest round of layoffs in New York in more than a decade.
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Wednesday, April 02, 2003 |
About 2500 American Airlines pilots will lose their jobs over the next year as part of the union's $660 million in annual concessions to save the company from bankruptcy, union officials said Tuesday.
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Tuesday, April 01, 2003 |
Some European restaurants are halting sales of Coca-Cola, Marlboro cigarettes and other U.S. brands in boycotts spurred by anti-war sentiment.
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Friday, March 14, 2003 |
Consumer confidence has fallen to its lowest level in more than 10 years, a reflection of the head winds created by the Iraqi crisis and soaring energy bills.
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Thursday, March 13, 2003 |
Dutch electronics maker Philips said Thursday it will close a semiconductor plant in San Antonio as part of a restructuring that will eliminate about 1,600 jobs in the United States and Europe.
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War worries and snow storms kept shoppers away from the stores, driving down sales at the nations' retailers by 1.6 percent in February. The worst showing in 15 months was another ominous sign for the sputtering economy.
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Tuesday, March 11, 2003 |
Japan Airlines System Corp. will eliminate 3,600 ground crew jobs, or 7 percent of its work force, over the next three years, the company said Tuesday
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Monday, March 10, 2003 |
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Exactly three years ago, all seemed bright to investors. Now there is little to cheer about.
It was on March 10, 2000, that the Nasdaq composite index hit a peak of 5,048.62. It had doubled since the previous summer, and those who had warned of a bubble in technology stocks had been so wrong for so long that few listened to them any longer.
[1,278.36 at close on March 10, 2003, loss of 3,734.62 over 3 years or 74%]
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Benchmark U.S. Treasury yields were fast approaching their lowest levels since 1958 on Monday on intense speculation that the Federal Reserve would have to cut interest rates again to support the struggling economy.
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TOKYO The benchmark Nikkei 225 Stock Index fell to fresh 20-year lows Monday, dropping below 8000 points for part of the day and setting off alarm bells in the Japanese government and central bank.
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Deutsche Telekom's seven percent tumble helped knock Germany's DAX to fresh seven-year lows on Monday afternoon as a record loss and fears over pension funding battered stock in the telecoms giant.
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Thursday, March 06, 2003 |
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Wednesday, March 05, 2003 |
Three thousand jobs are being cut at Bombardier Aerospace plants in Montreal, Toronto and Belfast.
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Monday, March 03, 2003 |
Consumers worried about a possible war with Iraq and their own financial prospects trimmed spending in January - the first such rollback in four months - and manufacturing slowed in February, sending a pair of trouble signs for an already struggling economy.
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Friday, February 28, 2003 |
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IBM has sent layoff notices to nearly 1,000 people in its global services and software groups in the United States.
The world's leading provider of computer hardware said Thursday the layoffs reflected "skills rebalancing."
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Thursday, February 27, 2003 |
Purchases of new homes dipped to their lowest level in a year in January, which raise concerns the recent strength in the housing market could be running its course.
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Wednesday, February 26, 2003 |
The Credit Suisse Group reported a 2002 loss of 3.3 billion Swiss francs ($2.4 billion) today, and one of its co-chief executives called the results "unacceptable." The company said it would eliminate 1,250 more jobs to try to get back to profitability.
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Shares of Fleming Cos. fell more than 37 percent Tuesday after the grocery distributor said it would cut 1,800 jobs and take a pretax charge of $290 million as it ends sales to bankrupt Kmart Corp., its largest customer.
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Monday, February 24, 2003 |
Kmart plans to drop the workers in mid-April, the newspaper said, quoting a person familiar with the situation. The move will leave only 1,900 workers at the site, which once employed 5,000.
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Friday, February 21, 2003 |
Agilent Technologies on Friday announced 4000 more job cuts and a larger first quarter loss as the slump in the semiconductor industry continued to weigh on the chip equipment and testing business.
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Wednesday, February 19, 2003 |
Micron Technology Inc., the world's second largest computer memory chip maker, announced on Tuesday that it is laying off 10 percent of its worldwide labor force of over 18,000.
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Tuesday, February 18, 2003 |
Financial news and information provider Reuters Group PLC posted its first annual loss since becoming a publicly traded company and announced Tuesday it would cut 3,000 jobs, or nearly 19 percent of its work force.
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Friday, February 14, 2003 |
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State-controlled French operator France Telecom is to cut 7,500 jobs, chief executive Thierry Breton said today.
Union sources maintained that the heavily indebted company, in which the French state has a 56.4 per cent stake, would cut a total of 13,000 jobs throughout the world this year, including the 7,500 job in France.
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Thursday, February 06, 2003 |
Bank of America Corp. Wednesday said it is slashing about 1,000 jobs in technology and operations during the first quarter, amid a continued economic slump.
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Wednesday, February 05, 2003 |
The struggling electronics retailer on Wednesday announced that it will cease paying commissions to its sales associates and lay off 3900 commissioned employees.
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The American economy has fallen into its worst hiring slump in almost 20 years, and many business executives say they remain unsure when it will end.
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Tuesday, February 04, 2003 |
U.S. businesses announced 132,222 job cuts in January, up 42 percent from December, an international outplacement firm said Tuesday.
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Long-distance giant WorldCom on Monday said it will eliminate 5000 jobs to reduce expenses as it seeks to re-emerge from bankruptcy protection.
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Friday, January 31, 2003 |
Coca-Cola Co. said Thursday it was cutting about 1000 jobs as it merges three of its divisions in North America, the soft drink maker's biggest and most important market.
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Wednesday, January 29, 2003 |
Atlanta-based access provider EarthLink (Quote, Company Info) on Tuesday announced it would shut down call center operations in four U.S. cities and lay off about 1,300 employees as part of a cost-cutting move.
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Tuesday, January 28, 2003 |
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Shares are starting to look a lot less expensive. But war worries and the tendency of stockmarkets to overshoot on the way down, as well as on the way up, mean they might fall quite a bit further before recovering
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Thursday, November 21, 2002 |
Boeing Co.'s commercial airplanes division expects to cut 5,000 jobs next year, commercial airplanes chief executive Alan Mulally said Wednesday.
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WorldCom Inc. will lay off at least 3,000 workers next month as part of the company's effort to trim costs and emerge from bankruptcy next year, company officials said yesterday.
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Morgan Stanley is firing about 2,200 employees worldwide in a move to cut costs amid the slump in global financial markets, sources said on Thursday.
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Wednesday, November 20, 2002 |
Xerox Corp. said Tuesday it will cut more than 2,400 jobs, or 3.4 percent of its worldwide work force, through a combination of layoffs and voluntary departures in a bid to reduce costs and boost efficiency.
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NCR Corp. said Tuesday it plans to eliminate 1,500 jobs - 5 percent of its work force - over the next six months in an effort to streamline operations.
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Housing construction lost momentum in October, plunging by 11.4 percent, the biggest drop since 1994.
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Tuesday, November 19, 2002 |
Of all the problems facing Japan's banks — falling stock prices, a weak economy, bloated payrolls, nonperforming loans — perhaps the most corrosive is the steady slide in land prices. If the latest statistics and other recent indicators are a guide, property values in Japan are going to sink even further, and undermine the banks' wobbly balance sheets even more in the months to come.
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Monday, November 18, 2002 |
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Stephen Roach
No, it is not. The conditions are not ripe yet
While I have been arguing for close to two years now that the USD is grossly over-valued, I don’t hold the view that we are witnessing the beginning of the end for the USD, at least not yet.
Bottom line
Recent developments in the currency markets suggest that the worst is behind us. If the market is right on this view, then the USD should continue to weaken. Such a development would be very consistent with our "Dollar Smile" framework. However, I hold a more pessimistic outlook on the global economy, and am looking for risk aversion to rise again. If this scenario materialises, I believe the USD will be able to reassert itself again, particularly against the Asian axes. But this rally likely will be short-lived. When US yields bottom, fear-motivated capital inflows into the US will dwindle, undermining support for the USD. That will likely be the true beginning of the end for the USD.
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United Airlines is planning to cut 9000 more jobs and reduce its flights in a bid to avoid bankruptcy.
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Thursday, November 14, 2002 |
Advanced Micro Devices Inc., battered by weak demand for computer chips and tough competition, said Thursday it will cut 2,000 jobs, or 15 per cent of its workforce.
The cuts have been expected since the company announced earlier this year it would substantially reduce costs and trim its staff in an effort to return to profitability.
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The Sprint PCS Group (PCS, news) wireless unit of Sprint Corp. (FON, news) Group said Thursday that it plans to lay off about 1600 employees, or 6% of its work force, and eliminate 500 contractors as it moves to cut costs.
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Wednesday, November 13, 2002 |
In a statement on Wednesday, the beleaguered UK telecoms company said that it had plans to cut around 25 per cent of workers employed in its Global division, which provides data and Internet services to corporations around the world.
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Tuesday, November 12, 2002 |
Eastman Kodak Co. is closing two manufacturing operations in New York and Mexico and cutting up to 800 jobs as it struggles to rebound from a two-year slump in film sales it blamed largely on a downturn in the U.S. economy.
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Friday, November 08, 2002 |
Ananova - The Swiss-Swedish firm, which employs 6800 staff in the UK, is restructuring its business in the wake of a shock profits warning last month.
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Wednesday, November 06, 2002 |
The Federal Reserve, worried about the sputtering economy, cut a key interest rate by a half point on Wednesday, marking its first rate reduction this year.
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A slowdown in new orders for the service sector last month is waving a warning flag for the US economy, the head of a business survey group said on Tuesday.
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Tuesday, November 05, 2002 |
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Semiconductor equipment maker Applied Materials Inc. said Monday it will cut 1,750 jobs, or 11 percent of its work force, as it struggles with the continuing high-tech slump.
The Santa Clara, Calif.-based company said about 800 of the jobs will be cut at its Silicon Valley operations and another 200 from its Austin, Texas, facility. The remaining reductions will take place at other locations. Employees will be notified starting Tuesday.
"This was a painful but necessary decision to make in order to enable the company to align our operations with the current level of business and position for future growth," said James C. Morgan, Applied Materials' chief executive. The job cuts were necessary even after other cost-cutting measures, he said.
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Wednesday, October 30, 2002 |
In a report that was seen as a warning signal for the economy, the Conference Board said that consumer confidence in October plunged to a nine-year low.
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Friday, October 25, 2002 |
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Consumer confidence in the economy was battered during October, falling to its lowest levels since 1993, according to a report Friday.
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Standard & Poor's on Friday cut its long-term debt rating for Ford Motor and its finance arm to two notches above "junk" status.
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Orders to U.S. factories for big-ticket durable had their biggest decline in 10 months, providing further evidence that the economy is struggling.
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Citigroup is planning job cuts in its investment banking and corporate banking businesses, according to executives who were briefed on the plans.
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Thursday, October 24, 2002 |
Eastman Kodak Co., the world's largest maker of photographic film, said its third-quarter net income jumped to $334 million, or $1.15 a share, from $96 million, or 33 cents during the same period last year.
Kodak also announced plans to cut from 1,300 to 1,700 of its worldwide staff in an attempt to save cash and said it will take a charge in the range of $130 million to $170 million to cover the costs associated with the layoffs.
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Friday, October 18, 2002 |
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Textron Inc. said Thursday it plans to cut another 2,000 jobs even as it reported third-quarter earnings that matched Wall Street forecasts.
The industrial conglomerate said the new job cuts are designed to help it meet its restructuring goals and cope with a sluggish economy.
They are in addition to 7,500 cuts announced previously as part of a $325 million initiative begun in October 2000 to reorganize some divisions and sell off others. The combined cuts represent 18.6 percent of Textron's work force of 51,000 workers.
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The U.S. trade deficit swelled to a record $38.5 billion in August, reflecting Americans' hearty appetite for foreign-made clothes, cars and TVs.
The Commerce Department reported Friday that the trade deficit was a sizable 9.7 percent higher than the $35.1 billion trade gap reported for July.
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Thursday, October 17, 2002 |
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Delta Air Lines is cutting 7,000 to 8,000 more jobs to try to stem dramatic financial losses following last year's terrorist attacks and a still sluggish economy.
Chairman and CEO Leo F. Mullin told company employees Thursday that he hoped many of the job reductions, which will include management, could come through voluntary-leave, early retirement and severance programs. If there are not enough volunteers for these programs, the company will lay off workers.
With these latest cuts, Delta has slashed 21,000 jobs, or 25% of its work force since Sept. 11, 2001.
The cuts come two days after the Atlanta-based carrier posted a third quarter loss of $326 million and said it did not see any improvement coming in the near future.
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Wednesday, October 16, 2002 |
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J.P. Morgan Chase & Co. beat a sharply reduced earnings forecast for the third quarter despite charge-offs for bad telecommunications and cable company loans and lower trading results.
J.P. Morgan Chase also announced Wednesday that it was cutting more than 2,000 workers from its investment banking operations and reducing outside consultants.
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Dynegy Inc. announced Wednesday that its chief operating officer is resigning, the company is dumping its struggling trading business and significant layoffs are coming.
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BOSTON, Oct 16 (Reuters) - Honeywell International Ltd. (nyse: HON - news - people) on Wednesday said it would take actions in the current quarter to cut 3,000 to 5,000 jobs, or as much as nearly 5 percent of its total work force as the company's key commercial aviation business suffers sharp declines in profit.
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The number two US bank, JP Morgan Chase, has announced 2000 job cuts as it unveiled a massive drop in profits.
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Tuesday, October 15, 2002 |
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despite the considerable forces of monetary and fiscal stimulus at work to support growth, the headwinds holding the US economy back are both numerous and nearly as powerful. These have reduced earnings expectations and raised risk premiums, and investors voting with their feet are turning their pessimism into something of a self-fulfilling prophecy
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many of the headwinds creating uncertainty and rising risk aversion don't seem likely to ebb quickly. Among them: The exit of capacity in technology and telecommunications industries that is so necessary to stop the slide in pricing and thus revenues is slow . . . the uncertainty resulting from corporate malfeasance and opaque accounting may disappear only after another round of 10- Ks appears. And the aftershocks from those developments appear to be widening risk spreads again, thus raising the cost of capital, as investor fears of both systemic and credit risk in the financial system mount. Finally, whatever one may have thought about the "war premium" in energy prices two months ago, the escalation in geopolitical tensions and growing uncertainty over whether we will be at war with Iraq is probably boosting energy prices now.
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Mounting deflationary risks are an important case in point. In my view, the risks of global deflation are higher today than at any point in the past 70 years. Japanese deflation is unmistakable, and America’s GDP-based inflation rate of 1% hasn’t been this low in 48 years. The risks to Europe’s 2% inflation rate are decidedly on the downside, especially given pro- cyclical fiscal and monetary policies that are now bearing down on a weakened Euroland economy. Moreover, with the exception of Korea, the rest of Asia is already in deflation; that’s true of Hong Kong, Singapore, Taiwan and, of course, China
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China’s export-led growth dynamic now has increasingly important deflationary implications for the broader global economy. Nor am I alone in reaching this conclusion. As I travel the world, I find a growing consensus in policy and investor circles endorsing China’s role as an agent of global deflation.
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this increasingly fragile global climate
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a weaker US dollar -- the world’s most important relative price -- will ultimately play a key role in sparking any such rebalancing.
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this lopsided world economy. Yet left to its own devices, the endgame would find a world dominated by the American consumer and the Chinese producer. That’s hardly a stable alternative. Global rebalancing is only way out.
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While investors have plenty to be glum about—insipid company profits, slowing economic growth, a rising risk of defaults among bonds and loans, and even the prospect of war—it has been tempting of late to conclude that the markets have lost their sense of proportion.
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According to Moody’s, the creditworthiness of American companies has now deteriorated for 18 consecutive quarters, one short of a record.
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Caterpillar Inc., facing shrinking demand for its heavy-duty trucks, announced plans Monday to furlough 3,270 workers in December at five plants.
The furloughs will take place in Illinois and Georgia and should last one to two weeks. The furloughs include managers, manufacturing employees and salaried workers, Cat spokeswoman Kelly Wojda said.
The news comes as Caterpillar officials earlier this month announced plans to suspend operations at a dump truck facility in Waco, Texas.
Caterpillar's work force is about 70,380. Other facilities might face one- or two-week shutdowns to "bring their production in line with demand," she said.
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Friday, October 11, 2002 |
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 The risk of falling prices is greater than at any time since the 1930s
FOR decades inflation was the bogeyman in rich countries. But
now some economists reckon that deflation, or falling prices, may be a more serious threat—in America and Europe as well as Japan. That would be decidedly awkward, given the surge in borrowing by firms and households in recent years. Particularly worrying is the rise in borrowing by American households to finance purchases of houses, cars or luxury goods. Deflation would swell the real burden of these debts, forcing consumers to cut their spending.
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If deflation causes real debts to swell, debtors may have to cut spending and sell assets to meet their payments. This can unleash a vicious spiral of falling incomes, asset prices and rising real debt.
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When Japan was the only country with deflation, one sure cure might have been a big devaluation of the yen to push up inflation. But for the world as a whole, this is not an option. Global deflation could be even harder to budge.
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U.S. retail sales fell more than one percent in September as threats of war and concerns over a slow economy pushed consumer confidence to a nine-year low.
A U.S. Commerce Department report released Friday says consumer spending fell at nearly twice the forecasted rate to its lowest point in 10 months.
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The private University of Michigan index of consumer sentiment for early October says confidence in the economy has declined sharply to a nine-year low. The twice-monthly survey of 500 households reflects perceptions of American families' financial situation and whether it's a good time to make major purchases. The economy lost 43,000 jobs last month, although the unemployment rate dropped to 5.6 percent.
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The country's largest retailers reported September sales so dismal that they were only slightly better than sales a year before, when many shoppers stayed away from stores after the Sept. 11 terrorist attacks.
The results reported yesterday further worried an industry looking warily toward a holiday shopping season, with consumers already troubled by a falling stock market, weak job prospects and the possibility of a war with Iraq.
"Christmas is looking bleak," said Ben Johnson, the editor of Shopping Center World, a trade newsletter published by Primedia. "Back-to- school was disappointing to say the least, and now the September figures show the darlings like Target and Kohl's are down. They were like the rocks."
Sales at stores open at least a year were up just 1.2 percent from last September, according to the Goldman, Sachs retail composite measure. Discounters were up 3.1 percent, while department stores were down 3 percent.
One analyst after another sounded like Scrooge, pointing to evidence that retailers have already begun to expect the worst through the end of the year.
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Lucent Technologies (LU.N), the struggling telecommunications equipment maker, said on Friday it would report a wider- than-expected quarterly loss, cut 10,000 more jobs and take $4 billion in charges for severance payments and a decline in its pension assets.
The company -- which has been crippled by the drought in spending by telecoms companies amid a massive industry slump -- also said it expected business in 2003 to continue to decline, with revenues expected to be down 20 percent from 2002.
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Thursday, October 10, 2002 |
AT&T Corp. and Comcast Corp. said on Wednesday 1,700 jobs would be cut at AT&T's cable unit in Denver after the two companies close their $28.6 billion merger combining the nation's No. 1 and No. 3 cable companies.
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Shoppers, spooked by stock market plunges, the prospect of war in Iraq and a weak job market, retrenched even further in September, resulting in lower sales and indicating a difficult holiday season is ahead.
As the nation's retailers reported their sales Thursday, department stores and apparel stores were hit the hardest. But even high-flying Wal-Mart Stores Inc., Target Corp. and Kohl's Corp. also posted disappointing results.
"Consumers are unwilling to spend, and if they do they are only buying necessities," said Walter Loeb, president of retail consulting firm Loeb Associates.
The weak performance led several merchants, including Target, Talbots Inc. and Federated Department Stores Inc., to reduce their earning outlook for the remainder of the year.
"This has made it more certain that holiday will be lousy," said Michael P. Niemira, vice president of Bank of Tokyo-Mitsubishi Ltd.
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. . . investors seem to be awakening to a host of weaknesses in Ford's financial position.
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Ford, mostly through its Ford Motor Credit unit, carries a staggering debt load. It faces lingering questions from investors about how it presents its cash position and concerns about its ability to finance long-term pension and health care obligations to workers.
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The more that investors focus on company balance sheets, the more anxious they seem to become about heavy corporate debt or a company's dependence on capital markets. Investors seem to have concluded that a company's future can depend less on its operations than on its ability to finance those operations.
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When bond investors sour on a company's prospects, higher borrowing rates are a result. Though rising costs for financing are never a plus, Ford will especially suffer from higher costs because of its zero percent financing deals to car buyers.
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Wednesday, October 09, 2002 |
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Japan's newly appointed chief financial regulator, Heizo Takenaka, threw a scare into the teetering banking industry today by saying in interviews published over the weekend that no bank or borrower was too big to be allowed to fail, and that cleaning up the mountain of nonperforming loans would inevitably increase unemployment and bankruptcies.
His comments shattered a long-standing taboo in Japan, where lawmakers have intervened repeatedly to protect banks, especially the biggest ones, and their customers from the harshest effects of market forces, lest their troubles touch off a broader crisis.
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The remarks by Mr. Takenaka also put into sharper focus the pledge by Prime Minister Junichiro Koizumi to solve the banking malaise, which has helped cripple the economy for more than a decade. Mr. Koizumi repeated today that he was determined to force the banks to move more quickly to write off large chunks of their 52.4 trillion yen ($425 billion) in nonperforming loans.
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Abbott Laboratories Inc. (ABT.N) said on Wednesday it will slash 2,000 jobs in a restructuring plan to cut costs, and also said its quarterly profit rose by 14 percent.
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General Electric Co.'s jet engine division said Tuesday it will eliminate 1,000 jobs worldwide this year and as many as 1,800 additional jobs in 2003 because of a slump in the airline industry.
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Plagued by strikes and slumping car sales, ailing automaker Fiat said Wednesday it would lay off 7,600 workers and offer another 500 employees a chance to transfer or retire.
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Tuesday, October 08, 2002 |
“IT'S only when the tide goes out that you can see who's swimming naked.” This famous remark by Warren Buffett, America's best-known investor, is a perfect description of what is happening in the American economy at present. The bubble in the late 1990s masked excessive borrowing by firms and households, widespread accounting fraud and the incompetence of company bosses, but now the effects of irrational exuberance and infectious greed are being shockingly exposed. Share prices have suffered their steepest slide since the 1930s. The tide has well and truly receded.
Yet most economists are still predicting robust economic growth of 3-3.5% over the next 12 months. Many of these are the same economists who in the late 1990s dismissed the idea that America was experiencing a bubble, and who insisted only last year that the economy was not heading for a recession. They were wrong then and are likely to be wrong again. America's economic downturn is not yet over. A protracted period of slow growth—perhaps even a further slump in output—is likely to expose more financial embarrassment of the Enron and WorldCom sort.
This is no normal business cycle, but the bursting of the biggest bubble in America's history. Never before have shares become so overvalued (see chart 1). Never before have so many people owned shares. And never before has every part of the economy invested (indeed, overinvested) in a new technology with such gusto. All this makes it likely that the hangover from the binge will last longer and be more widespread than is generally expected.
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Credit Suisse First Boston told its employees late Monday that it planned to eliminate an additional 1,500 jobs in an effort to trim $500 million from its budget.
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Monday, October 07, 2002 |
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J. P. Morgan Chase is planning to cut as many as 4,000 employees, including many managing directors, from its investment banking operation over the next several weeks, executives with the firm said yesterday.
The executives said that William B. Harrison, J. P. Morgan's chief executive, had instructed his top lieutenants several weeks ago to draft lists of possible candidates to be dismissed and has now directed them to be ready to lay off 10 percent to 25 percent of certain groups within the firm. J. P. Morgan has some 20,000 employees worldwide.
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J.P. Morgan Chase, which warned last month it would be cutting jobs to save money, is reducing its investment banking staff by as much as 20 percent, according to a person familiar with the situation.
Merrill Lynch, the biggest full-service brokerage in the United States, was also preparing further job cuts, sources told Reuters. Merrill, which currently employs more than 50,000 staff, has already cut around 15,000 workers in the past year.
The reduction of about 4,000 of J.P. Morgan's roughly 20,000 investment bankers will come this quarter, the source said.
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Friday, October 04, 2002 |
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EMC Corp. said yesterday that it would eliminate 1,350 jobs, a workforce reduction of 7 percent.
EMC currently has 17,000 employees worldwide. In early 2001, the company employed about 24,500.
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Wednesday, October 02, 2002 |
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Northwest Airlines Corp. NWAC.O said on Wednesday it was notifying flight attendants of new voluntary leave programs designed to help cut up to 1,600 jobs as the carrier tries to match staffing with weak demand for air travel.
The Egan, Minnesota-based carrier last month laid off 670 temporary workers after the U.S. Labor Day weekend and said it was looking to cut another 350 full-time positions. Northwest, the No. 4 U.S. airline, has about 43,000 employees.
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Tuesday, October 01, 2002 |
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Fidelity Investments, the nation's largest mutual fund company, said Monday it would lay off 1,695 workers, or about 5 percent of its work force, in a move that was widely expected due to Wall Street's slump.
The value of privately held Fidelity's managed assets has fallen from about $1 trillion to $776 billion, since their peak in August of 2000. After the job cuts, the company will have about 29,300 workers, down from a peak of 33,000.
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The pace of job cuts announced by U.S. businesses slowed significantly in September to 70,057, the lowest in 22 months, down 41 percent from August, according to an international outplacement firm that tracks job losses on a daily basis.
Challenger, Gray & Christmas' monthly job survey found 1,004,617 workers have lost their jobs so far in 2002, the second time job losses have exceeded 1 million since the Chicago-based recruitment firm began tracking job cut announcements in 1989.
The report found U.S. corporations handed out 70,057 pink slips last month, bringing the number of third- quarter job losses to 269,090 -- 8 percent lower than the 292,393 cuts announced during the summer quarter and 72 percent lower than September 2001, when employers announced 248,332 job cuts in the slowdown following the terrorist attacks.
Job cuts like the overall economy have been on a roller-coaster ride, averaging 111,624 a month from January through September.
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The US manufacturing sector stalled last month, according to a widely-watched monthly survey of purchasing executives.
The Institute for Supply Management said its index of manufacturing activity fell to a nine-month low of 49.5 in September from 50.5 the previous week. Any reading below 50 suggests contraction. September's reading suggested the sector has essentially stopped growing.
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The US economy has been battered by a series of shocks during the past year - including the terrorist attacks, the eruption of a crisis of confidence in corporate America, fears of terrorism and now fears of war with Iraq and higher oil prices - all of which has complicated the interpretation of the ISM and other economic figures. The uncertain outlook has fuelled an ongoing debate about whether the economy's weakness is temporary, the first chapter of a protracted spell of sluggish and erratic growth or the beginning of another full-blown recession.
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Price to earnings ratios are still way above normal. The Standard & Poor's 500 ended the third quarter priced at 30 times its last 12 months' earnings - twice its long-term average.
And while dividend yields are moving up (see my column of Sept. 17), they are still far below the yield ($TNX: news, chart, profile) on the 10-year Treasury, theoretically the most competitive investment to stocks.
This places fair value for the Dow anywhere from 6,500 to 5,000. Before you get too shocked, remember that the Dow was 6,346 when Federal Reserve Chairman Alan Greenspan first mused about irrational exuberance in early December 1996.
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Monday, September 30, 2002 |
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As Japan fumbles for ways to stabilize its wobbly banks, another potentially destabilizing crisis is brewing in the nation's life insurance industry, the world's largest, which has also been hurt by the weak stock market, record-low interest rates and the sour economy.
Like the banks, the insurers hold huge amounts of stocks and bonds, and the collapse of one or more of them — something analysts say is a distinct possibility — could further rattle jittery investors. The potential for such a meltdown has risen as stock prices have fallen to near 19-year lows and left most insurers with losses in their portfolios.
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Consumers, upset by a falling stock market and rising job layoff notices, trimmed their spending a bit in August even as their incomes were picking up, the government said Monday.
The Commerce Department reported that personal consumption spending, which accounts for two-thirds of total economic activity, rose by only 0.3 percent in August following a red-hot 1 percent surge in July.
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Friday, September 27, 2002 |
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By STEPHEN S. ROACH [Chief Economist, Morgan Stanley]
A year after terrorism dealt a seemingly lethal blow to America, talk of resilience and economic recovery is in the air. The nation's inflation-adjusted gross domestic product has risen for four consecutive quarters following a mild downturn in the first nine months of 2001. While the estimated 3.2 percent growth rate over the past year is subdued when compared with the more vigorous rebounds of the past, the hope is that it's a down payment on bigger and better things to come.
But while Sept. 11 was a defining event for America, it was not a defining event for the economy or the financial markets. That role belongs to the stock market bubble of the late 1990's that finally popped in March 2000. There was far more to the excesses of the 1990's, however, than an asset bubble. The bubble expanded high enough, and for long enough, to have infected the behavior of consumers and businesses alike.
The equity bubble helped to create other bubbles — most notably in the housing market and in consumer spending. Their continued existence poses a serious threat to lasting expansion — and yet, puncturing them raises the grave risk of deflation. This suggests the economy will prove as challenging to America's political leadership as any other issue in the year ahead.
There is good reason to believe that both the property and consumer bubbles will burst in the not-so-distant future. If they do, there is a realistic possibility that the United States, like Japan in the 1990's, will suffer a series of recessionary relapses over the next several years. Yet denial remains deep, just as it was when the Nasdaq composite index was lurching toward 5,000. Few want to believe that this economic expansion may be built on such a shaky foundation.
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Thursday, September 26, 2002 |
 The International Monetary Fund has revised its forecasts for the world economy downwards. It says that, despite plunging stockmarkets and war jitters, growth should continue. But there are now more reasons to worry
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Wednesday, September 25, 2002 |
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Eroding some of the social and economic gains of the late 1990s, the nation's poverty rate rose last year while the typical household's income went down, the government reported yesterday. Government and private researchers said the changes largely reflected the effects of the economic recession.
In its annual report on income and poverty, the Census Bureau said that 1.3 million more Americans slipped below the government's official poverty line last year, the first increase since 1993. As a result, 11.7 percent of the population is considered to be in poverty, up from 11.3 percent in 2000.
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A plunge in share prices poses a serious threat to world economic growth, the International Monetary Fund warned today.
In a gloomy forecast, the IMF yet again cut its expectations for global growth in its latest "World Economic Outlook" from its previous economic projections in April.
"There is a significant risk of a more subdued recovery, especially if the impact of recent equity market declines in both the United States and Europe proves greater than presently expected," the IMF said.
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The Argentine economy minister announced that his country would no longer pay back loans from the International Monetary Fund and other multitlateral lenders.
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Consumer confidence declined 1.3 percent in September, to a 10-month low because of falling stocks, weak employment numbers and a growing concern about a potential war with Iraq.
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Consumers, rattled by the possibility of a war with Iraq and worried about the economy's direction, bought fewer existing homes in August, sending sales down by 1.7 percent.
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Saturday, September 07, 2002 |
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A new report by Goldman Sachs is sharply pessimistic about the robustness of auto sales and the underlying health of the Big Three.
The report contends that two main factors that have propped up sales in the short term — huge incentives and extra consumer cash coming from a boom in home mortgage refinancing — cannot be sustained.
The report, titled "After the Automotive Boom," suggests that if auto sales remain strong, the financing operations of the Big Three will have difficulty generating enough equity to continue to support deals like zero percent financing.
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Thursday, September 05, 2002 |
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Financial giant Zurich Financial Services on Thursday reported a loss of $2.03 billion for the first half of this year and said it planned to cut 4,500 jobs, or 5.9 percent of its work force, in a restructuring.
The company said the job cuts would include 2,000 in the United States and Britain and 700 in Germany with most of the rest in Switzerland. The company currently employs 76,500 people.
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Wednesday, September 04, 2002 |
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Northwest Airlines will cut about 1,000 jobs as the carrier shifts to a reduced flight schedule for the slower, fall season.
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Friday, August 16, 2002 |
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The Computer Sciences Corporation, the computer-services company, said today that it would ask its 66,000 workers to volunteer to take at least six months' leave with 20 percent pay.
A spokesman for Computer Sciences, Frank Pollare, said the program would allow workers to receive some income and the company to "reduce costs for that time." Mr. Pollare said he could not forecast possible savings or say how many workers would take the extended leave.
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Tuesday, August 13, 2002 |
American Airlines, the world's largest air carrier, which is still losing huge amounts of money nearly a year after the Sept. 11 hijackings, said Tuesday it will cut another 7,000 jobs by March 2003 and shrink its operation by retiring aircraft and cutting back more flights.
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Saturday, August 10, 2002 |
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Friday, August 02, 2002 |
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FRANKFURT, Germany (August 2, 2002 9:44 a.m. EDT) - Electronics and industrial goods maker Siemens said Friday it is contemplating more staff reductions at its fixed line and mobile phone divisions, while a union official said 5,000 jobs would be cut.
The telecommunications industry, to which Siemens is a major supplier of equipment, is in a worldwide slump as companies have cut spending on new equipment and services. Siemens has already embarked on a cost- cutting program at the two divisions and announced it will make 6,500 job cuts at the fixed-line division, on top of 10,000 announced last year.
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Fresh signs that the pace of economic growth is faltering emerged this morning, when the Labor Department reported that only 6,000 new jobs were created during July and that American workers spent less time on the job than in the previous month.
Analysts were disquieted by the jobs report, which came a day after a survey of the nation's purchasing managers showed that conditions in the manufacturing sector softened considerably during July.
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Thursday, August 01, 2002 |
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The Commerce Department estimated yesterday that economic growth slowed sharply in the recent quarter from April through June and reported that last year's recession was both longer and deeper than originally thought.
With consumers becoming more cautious, state governments cutting spending and the trade deficit widening, the economy expanded at an annual rate of just 1.1 percent in the second quarter, down from 5 percent the first three months of the year.
"The economy is on a much weaker foundation than thought," said Mark Zandi, the chief economist at Economy.com, a research firm in West Chester, Pa. Growth, he added, has come "to a virtual standstill."
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Wednesday, July 31, 2002 |
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 New data suggest that America’s recession last year was worse, and its recovery this year is weaker than previously thought. Is there now a risk of another downturn?
THIS was definitely not what the doctor ordered.
With world stockmarkets—and political America— still reeling from a long list of corporate scandals which have destroyed some of the country’s biggest companies, there seemed at least one comfort: America’s economic recovery seemed strong. Now that reassurance, too, has been brushed aside. Figures issued by the government on July 31st showed that the economy grew much more slowly than expected in the second quarter of this year—by only 1.1% at an annual rate.
Almost as alarming are the revisions made by government statisticians to earlier figures. It now turns out that last year’s recession was significantly worse than previously estimated, and growth in the first three months of 2002 a bit less impressive than earlier statistics had indicated. The backward changes will mean a downward revision to America's spectacular productivity figures and cast further doubt on the “miracle” of the new economy.
The new figures are a blow to hopes that America’s economic recovery is well established. Suddenly, the recovery looks weak and the economy looks vulnerable to further shocks. The determination of American consumers to keep spending has bolstered the economy for so long. If consumers should now lose heart, as some recent surveys suggest they might, all bets will be off. Another downturn—a so-called “double- dip” recession—would then be highly likely. With Europe and Japan still in the doldrums, the forecasts of steady global growth this year could soon look overly optimistic.
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Credit card issuer Providian Financial Corp. said it is closing three offices in California and Utah and firing another 1,300 workers as part of recovery from crippling loan losses.
The San Francisco-based company disclosed the layoffs Tuesday in its second-quarter earnings report.
Providian reported net income of $153.9 million, or 53 cents per share - a 34 percent drop from a profit of $232.4 million, or 79 cents per share, at the same time last year.
The company closed a Sacramento office Tuesday, laying off 300 employees. Providian said 1,000 more jobs will be cut from its fast-shrinking payroll with the closure of offices in Fairfield and Salt Lake City before the end of the year.
The purge follows through on a promise Providian management made to Wall Street in May. At that time, the company said it would jettison 2,600 more workers, or about 26 percent of its work force, during the final eight months of the year.
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The U.S. economy lost momentum in the second quarter of this year, growing at an annual rate of just 1.1 percent. New figures Wednesday also showed that last year's recession was worse than thought, with the economy shrinking in three quarters of 2001.
The gross domestic product in the April-June quarter was in sharp contrast to a revised 5 percent growth rate turned in during the first three months of the year, the Commerce Department reported.
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Tuesday, July 30, 2002 |
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Consumer confidence fell sharply in July, to its lowest level in five months, undermined by falling stock prices and worries about jobs, a private research group said Tuesday.
The New York-based Conference Board said its Consumer Confidence Index fell to 97.1 from a revised 106.3 in June. Analysts had been expecting a reading of 101.5.
The industry group's index, based on a monthly survey of some 5,000 U.S. households, is closely watched because consumer confidence drives consumer spending, which accounts for about two-thirds of the nation's economic activity.
"The erosion in consumer confidence represents a significant deterioration in consumer attitudes" said Lynn Franco, director of The Conference Board's Consumer Research Center. "The continued decline in the value of stock market portfolios, coupled with ongoing reports of corporate scandals, have taken a toll on consumer confidence."
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Monday, July 29, 2002 |
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The publisher of the Web site whose name is a vulgarism for "failed company" plans to spin off part of that site into a new unit. Drawing from a deep well of material sent by fans of corporate comeuppance, Philip J. Kaplan said he would roll out a new site, InternalMemos.com, this morning.
On it, readers can sample some of the more than 800 examples of internal business correspondence sent to Mr. Kaplan over the last three years by aggrieved employees of various companies.
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Saturday, July 27, 2002 |
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Kim Haack, 45, a federal government worker playing golf at Davenport's Duck Creek municipal course, has been stung enough by the stock market's plunge to hunker down.
Each year, Ms. Haack and her husband take two- or three-week vacations far away, and two brief vacations of four days to Chicago or St. Louis. "The mini-vacations are out," she said.
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Avaya Inc., a major provider of business communications networks, plans to cut 2,500 jobs and take a $150 million restructuring charge in the current quarter.
When it released its third-quarter earnings report Monday, the Basking Ridge-based company said it would lay off an unknown number of employees and expected to take a charge of $150 million to $250 million.
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Wednesday, July 24, 2002 |
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GE Power Systems said Tuesday it will eliminate 2,500 jobs in the next nine months, with further reductions coming in 2003, due to a reduction in demand for power generation equipment.
The Atlanta-based company said the initial reductions will come at turbine production facilities in Greenville, S.C., and Schenectady, N.Y., where each plant will eliminate 1,000 jobs.
The remaining 500 jobs will be cut at other undisclosed GE Power Systems locations and through some early retirements.
"We have always made it clear that, after several years of exceptional growth, our turbine business would at some point return to more normal order levels, and it is," said John Rice, company president and CEO.
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Tuesday, July 23, 2002 |
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With battered U.S. telecom companies spending little on hardware upgrades, equipment maker Lucent Technologies Inc. posted a quarterly loss of $7.9 billion on Tuesday and said it would cut 7,000 more jobs.
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Most of Lucent's loss was attributed to a massive $5.8 billion non-cash charge, which amounted to $1.70 per share. The company said the charge would defer a tax benefit which could be used in future years to reduce its taxable income.
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Monday, July 22, 2002 |
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Stock investors got in trouble in the late 1990s by ignoring price earnings ratios.
Economist Ed Leamer is afraid that home buyers, especially in the Bay Area, may be making the same mistake.
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Saturday, July 20, 2002 |
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Published on July 03, 2002
Of course, if New York real estate prices keep rising, or even hold their own, it would be nuts to trigger a large tax bill and go to all the trouble of moving, unless they wanted to retire to Maine or something, which they don’t.
But can these prices hold? My own guess – and I am generally wrong, which is something to take into account in assessing my advice – is that they can’t. At some point the shock of the stock market collapse and the Wall Street lay-offs and the looming $6 billion New York City deficit have got to begin to reverse the cycle. Not to mention the possibility of higher interest rates if things like a falling dollar were to rekindle a bit of inflation. (A falling dollar makes the things we import more expensive.)
Because that’s just it: real estate prices are cyclical. I agree that “bubble” is too strong a term for what’s going on in American real estate (and I’m speaking here mainly of residential real estate, where I at least have a tiny bit of anecdotal experience). I don’t see home prices dropping 95% the way hundreds of NASDAQ tech stock prices have. But “peak of the cycle” might not be too strong. Might my friends’ apartment ever fetch “just” $3 million – or even the mere $1.5 million they’ve put into it? I can conceive of circumstances where this would be the case . . . and that would be a huge drop in price in percentage terms, if not a full 95%.
What, rationally, could account for a 34% compounded annual increase in value of prime New York apartments (or this one, anyway)? I would argue: nothing. Which is why some might call it a bubble.
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Sunday June 30, 2002
The US faces a grave economic crisis. The confidence in the balance sheets and reported profitability of American companies has been shattered by an orgy of unprecedented corporate fraud, plunder and malfeasance that has demanded the connivance of its most reputable accounting firms, business leaders and banks. . . .
. . . The integrity of the entire system for channelling savings into investment is now in question as is that of corporate America, just as America's debts to foreigners and its own consumers indebtedness have reached unsustainable levels. The country has been living beyond its means and inventing value when none existed. No one can predict with certainty how this will unravel, although the faltering of American consumer confidence and the sell-off of the dollar are already pointers. The dollar is threatening to inherit the sobriquet of 'toilet currency' once borne by the euro.
The US can and eventually will recover, but only when it comes to terms with the harshest of realities. That it does not possess a uniquely enterprising economic and financial model. That the scandals now hitting the headlines are not a case of one or two bad apples, but reveal systemic weaknesses in its financial system and methods of corporate governance which need root- and- branch reform. That American business ethics are abysmally low and require the toughest of policing . And that the US, like other economies that have pursued unsustainable and foolhardy policies, must go through a period of painful and difficult adjustment. . . .
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The truth is that American business has bought the American executive and legislature alike.
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The states of the Confederacy remain the heartland of the distinct brand of American conservatism that combines Christian, market and America-first fundamentalism to a unique degree, reinforced in the South by a legacy of barely submerged racism.
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For most of the last decade, the result has seemed impressive, spawning what may only be transient US leadership of the hi- tech revolution. But now we can see the underlying weaknesses. Company directors awarded themselves fabulous share-option schemes and cut corners to manipulate their profits to meet investors' avaricious expectations, so supporting the share price and their own fortunes. The ruses were simple, ranging from booking next year's income as this year's to the sheer fraud, as in the telecoms sector, of falsifying sales altogether. The result was to propel an already fevered stock market to yet more stratospheric and unjustified levels: Wall Street is still valuing American companies more generously that at any time since 1929.
. . . While dividend distributions have doubled as a proportion of profits, investment in the core of American business was troublingly low; the US has less invested capital per employee than France or Germany.
Productivity is higher in both (the old East Germany excepted) and growing at least as rapidly. The consequence is America's intractable trade deficit. Great wealth and opportunity have been the privilege of the few. As the scandals unfold, ordinary Americans are left naturally concerned about the integrity of their pensions and the viability of their insurance companies. The structures that support ordinary peoples' lives - free health care, quality education, guarantees of reasonable living standards in old age, sickness or unemployment, housing for the disadvantaged - that Europeans take for granted are conspicuous by their absence. Mainstream America has been told that its threadbare and neglected social contract is the price it must pay for opportunity, liberty and wealth creation. The political reaction could be fierce . . .
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Thursday, July 18, 2002 |
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Declaring that no end to the technology slump is in sight, business software maker Siebel Systems Inc. said Wednesday it will slash more than 1,100 jobs and reported quarterly earnings that fell well short of analysts' expectations.
The cuts, which amount to 16 percent of Siebel's 7,160-person work force, are necessary because corporate technology spending only worsened in the second quarter and figures to stay weak the rest of the year, said Thomas Siebel, chairman and chief executive. The company lowered its outlook for the current quarter and beyond.
"It's difficult to express how weak it is, in Europe, in Asia, in the United States," Siebel said in a conference call with analysts. "There's just not a lot of business being done in the information-technology market."
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Wednesday, July 17, 2002 |
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In the latest blow to Dallas' battered technology sector, i2 Technologies Inc. said Tuesday it would lay off 1,400 employees - about 30 percent of its work force - because of a deep slump in software sales.
Chairman and chief executive Sanjiv Sidhu said the layoffs are part of a plan to cut costs at least 30 percent by year end and bring them in line with recently falling revenue.
I2 had already cut about one-quarter of its staff in the past 18 months - it had about 6,300 workers at the start of last year but is down to about 4,800.
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Intel Corp., which had avoided mass layoffs during technology downturn, said Tuesday it is cutting 4,000 workers as the chip-making giant posted lower-than-expected second-quarter earnings.
The world's largest semiconductor company did not immediately specify why it was making the job cuts, representing about 4.8 percent of its work force, though demand for chips in personal computers remains weak.
Intel also has been focusing on its core semiconductor products such as the chips that serve as the brains of PCs, shedding unprofitable divisions that hosted Web sites and sold music players.
Intel had 83,000 employees worldwide at the end of the first quarter, down from 86,000 at the end of 2000. Last year, the company said it was cutting 5,000 jobs mostly through attrition.
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Monday, July 15, 2002 |
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The latest of several recent stories in the media about the impact of the economic downturn on Silicon Valley.
The venture capital field has "had its hat handed to it" after the boom years, says Bill Burnham, a partner at Mobius Capital in Mountain View, Calif. Even so, he notes, the atmosphere is strangely calm, in part because of the still-exuberant real-estate market, which remains heated and is behaving like it was the year 2000 despite the Nasdaq's slide. "It's like reading in the paper that there was a 7.0 [Richter scale] earthquake and walking outside and seeing everything normal," Mr. Burnham says. But he acknowledges that unbridled faith in high housing prices is specious at best. "When the housing market cracks in Silicon Valley, then the spirit will finally be broken," he says. "That's the one belief that's left."
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Saturday, July 13, 2002 |
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In an effort to improve efficiency and competitiveness, Canadian telecommunications company Telus (Telus.com) said on Thursday that it would consolidate customer contact centers and various operation and administrative functions, as well as closing most of its retail stores in Alberta and British Columbia.
The actions, says Telus, are a part of the company’s previously announced Operational Efficiency Program, and will result in the elimination of approximately 6,000 positions in 2002 and 2003.
Including the reduction of approximately 1,000 management positions in the past year, the program will equate to a reduction of Telus’s communications workforce by about 25 percent.
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A reorganization triggered by disappointing sales at Sprint Corp.'s E/Solutions division and other parts of the company will cost 1,100 employees their jobs.
The Overland Park telecommunications company said Friday it would scale back the E/Solutions division and discontinue its business digital subscriber line, or DSL, high-speed Internet service in some markets.
The company, which is the Kansas City area's largest corporate employer, said the move was being made to "better position its long-distance organization."
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Consumer confidence has fallen the most since terrorists attacked New York and Washington, a report released today showed, as flagging trust in American companies hammered stocks and threatened the economic recovery.
The University of Michigan said its preliminary index of consumer sentiment for July sank to 86.5, an eight-month low, from 92.4 in June. The index dropped almost 10 points in September.
Stocks continued their recent decline yesterday. "There is a heightened risk that the troubles in the stock market will bleed over into the real economy," said Stephen Stanley, an economist at Greenwich Capital Markets in Greenwich, Conn.
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Thursday, July 11, 2002 |
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Share prices slumped Thursday in Europe and Asia amid concern about the health of the U.S. economy and corporate earnings.
Economists and analysts said investors, shaken by a raft of corporate accounting scandals, were braced for more bad news from the United States.
"The markets are going through a period of major uncertainty and fear," said David Page, an economist at Investech Bank in London. "Confidence is ebbing on a daily basis, and though we will probably see some bounces on the way down we would not be surprised if the market fell off even from these levels."
Paris's blue-chip CAC 40 traded down 1.7 percent at 3,593.32 in the early afternoon, while Britain's FTSE 100 was down 1.8 percent at 4,338.70, having recovered from deeper losses in the morning. In Germany, the DAX index was down 0.6 percent at 4,165.49.
Earlier in the day, stock markets wilted in Asia. The key markets indicators fell 2.5 percent in Tokyo, 1.8 percent in Hong Kong and 3.8 percent in South Korea.
Falling U.S. markets affect their counterparts in Europe and Asia because of worries that a decline on Wall Street will hurt consumer confidence and make Americans more cautious about spending - bad news for companies exporting to the United States.
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Wednesday, July 10, 2002 |
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In a blow to efforts to end a seven-month- old freeze on bank withdrawals that has paralyzed the economy and generated unrest, Argentina's government has had to abandon its latest plan to persuade savers to exchange their savings for government bonds.
With the one-month deadline to make the swap just expired, only 1 percent of the estimated $16.6 billion on deposit has been converted into bonds. Instead, savers have preferred to trade whatever pesos they can obtain for dollars, contributing to a dangerous and accelerating decline in Argentina's foreign reserves.
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Monday, July 08, 2002 |
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Allegheny Energy Inc. said Monday that it will cut 600 jobs, or 10 percent of its work force, and cancel construction of two power plants to help cut costs after an unexpectedly weak first half.
The company - with customers in parts of Maryland, Ohio, Pennsylvania, Virginia and West Virginia - also lowered its 2002 earnings estimate by more than 25 percent, citing lower wholesale energy prices, mild winter and spring weather, and substantially decreased energy trading since the collapse of Enron Corp. Allegheny invested heavily last year in energy trading operations.
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Accenture Ltd., a large consulting firm, will cut about 1,000 jobs in the United States, England and Australia to reduce costs in uncertain economic times, the company said Monday.
The cuts, mostly management jobs, will take place over the next several months, said company spokeswoman Roxanne Taylor.
Taylor would not provide specific reasons for the cuts, except to say that there have "been challenging economic conditions in some parts of the world."
Bermuda-based Accenture expects other hiring will offset the cuts, meaning the company's work force of about 75,000 will remain at that level by September, when the firm's 2002 fiscal year ends.
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Wednesday, July 03, 2002 |
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Cable equipment maker Scientific-Atlanta Inc. announced Wednesday that it has cut a production shift at its Juarez, Mexico, plant, eliminating about 1,300 jobs.
The decision cuts about 30 percent of the company's work force in Juarez.
A statement from Scientific-Atlanta said reduced demand for its products forced the cuts. The company also said it was evaluating the need for further job cuts.
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Tuesday, July 02, 2002 |
Electronic Data Systems Corp. said Tuesday it has laid off 2,000 workers, or 1.4 percent of its work force, saying the cuts were needed to balance its employment levels with ongoing contracts.
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Monday, July 01, 2002 |
The world was a rosier place this time last year, when no one could have ever imagined the events of Sept. 11 or the scandals at WorldCom, ImClone Systems, Tyco International and Xerox. Yet despite last week's stock market jitters and a general nervousness about the economy, the important annual auctions of Impressionist, modern and contemporary art here proved that the rich feel more confident putting their money in Picassos, Monets or Légers than they do in financial markets.
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Thursday, June 27, 2002 |
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French computer services and consulting firm Cap Gemini Ernst & Young said Thursday it will cut 5,500 jobs, or 10 percent of its work force, over the next six months as it adjusts to the slump in the telecommunications and financial services businesses.
The job reductions, designed to streamline its administrative operations, come on top of 5,400 job cuts last year. The company currently employs 55,000 people worldwide.
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"Motorola on Thursday said it plans to eliminate another 7,000 jobs, or 7 percent of its worldwide work force, to lower costs and return to operating profitability in the second half of the year."
"As part of a lengthy restructuring, the Schaumburg-based company has been reducing its work force from the 150,000 employees it had in August 2000 to the roughly 100,000 people it now employs."
"In a statement, the cell-phone and semiconductor giant said the cuts will affect all business segments and corporate headquarters operations. It is part of an effort to lower expenses in a number of areas, including, manufacturing, research and development, and sales."
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Wednesday, June 26, 2002 |
The world’s financial markets are in turmoil after the revelation of a massive accounting fraud at WorldCom. Is the collapse in share prices and the dollar a short-term reaction: or might policymakers now find themselves struggling to keep the economic recovery on track?
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"The euro flirted Wednesday with parity to the U.S. dollar, which was dragged down by falling stocks on Wall Street and another scandal over corporate accounting."
"The euro reached 99.43 U.S. cents early Wednesday, before slipping back to 98.5 cents, its latest climb in a rally that began in early April and has sent the currency up 14 percent."
"Many economists predict the euro will reach parity - one euro to the dollar - in the next weeks or months. That would be a public-relations boost for the 3-year old currency, which has so far played a distinct second fiddle to the dollar as the preferred vehicle for investors and central banks around the world."
"At the same time, experts say it's mostly the dollar's weakness - not a sudden improvement in the euro-zone economies - that is driving the rally. In the 12 countries that use the euro, second quarter growth was only 0.2 percent."
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 "Dan Gillmor blasts the corporate crooks whose transgressions fill today's newscasts, greedy bastards who milked billions from their companies, betraying their shareholders. Dan thinks they're aberrant, and that their worst sin is making investors believe that there's no way for the little guy to win. I wonder how aberrant they are -- these aren't fly-by-night operators; the perps in these billion-dollar, economy-destroying felonies are seasoned CEOs and CFOs, people who come from the ranks of Big Five consulting firms and out of world-renowned B-schools. These crooks are the kinds of talking hairpieces that VCs like to parachute into startups to get them ready for IPO; they're the kinds of back-slapping cap-toothed glad-handers who know how to talk to the investment bankers. Some days, I believe that the only way to get to the top of a venture-funded or public company is to check your morals at the door. "
"Rational people are starting to assume something that isn't necessarily true. They're becoming
convinced that the system is hopelessly, irrevocably rigged against everyday investors by a corrupt cadre of insiders in boardrooms and on Wall Street, willfully assisted by regulators and elected officials who are either corrupt themselves or simply blind." [via BoingBoing]
Dan Gillmor asks, after learning of the WorldCom debacle, "How much more trust can we lose?" He continues, in a sentiment shared by more than a few: "I fear we're nearing a classic tipping point. The primary reason we didn't have a worse recession in the wake of the market downturn was that consumers kept spending. Now their confidence is dropping." [via Corante Premiumblend]
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"European stock market traders and investors voiced shock and disgust on Wednesday at a $4 billion accounting scandal at U.S. telecoms group WorldCom Inc, but they doubted the same could happen in their home markets."
"'If you can't trust the accountants or the companies then the whole thing falls down like a pack of cards,' said Henk Potts, an investment analyst with Britain's Barclays Private Clients, which manages money for wealthy clients."
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"WorldCom, the nation's second-largest long-distance carrier, said last night that it had overstated its cash flow by more than $3.8 billion during the last five quarters in what appears to be one of the largest cases of false corporate bookkeeping yet."
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"A multi-billion dollar accounting fraud has taken place at WorldCom, the number two US long- distance phone company. "
"In an immediate attempt to salvage some of its business, the firm has announced 17,000 redundancies and sacked its chief financial officer, Scott Sullivan."
"The fraud is far bigger in money terms than Enron's misdeeds, and will further undermine the trust of investors in corporate America."
"The US dollar lost strength and share prices around the world plummeted on news of the fresh scandal, with telecoms firms particularly hard hit. "
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Tuesday, June 25, 2002 |
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"Consumer confidence declined in June to a four-month low, hurt by corporate scandals and concerns about jobs, a private research firm said Tuesday."
"The New York-based Conference Board said its Consumer Confidence Index fell to 106.4 this month from a revised 110.3 in May. Analysts were expecting a reading of 106.0."
"'Weak labor market conditions, generally soft business conditions and waning public confidence in questionable business practices have helped erode consumer confidence,' said Lynn Franco, director of the Conference Board's research center."
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"But real problems, if not dealt with, have a way of festering. In the last few weeks, a whole series of problems seem to have come to a head. Yesterday's speech notwithstanding, Middle East policy is obviously adrift. The dollar and the stock market are plunging, threatening an already shaky economic recovery. Amtrak has been pushed to the edge of shutdown, because it couldn't get the administration's attention. And the federal government itself is about to run out of money, because House Republicans are unwilling to face reality and increase the federal debt limit. (This avoidance thing seems to be contagious.)"
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Monday, June 24, 2002 |
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Financial markets are supposed to be a huge forward-looking discounting machine. Yet nothing could be further from the truth these days. Our strategists remain focused on whether this is the time to catch that proverbial knife in midair and play a tradable rally in an oversold equity market. Our economists are hard at work in scrutinizing weekly chain store reports and jobless claims in an effort to discern the underlying fundamentals of aggregate demand. Meanwhile, tectonic shifts are occurring in the macro climate. A turn in the dollar, another crisis in Latin America, whiffs of deflation, and increasingly impotent central banks all speak of an engineless global economy that casts financial market risk in a very different light. The forest has never looked more different from the trees.
I’ll leave the short-term calls to the traders. But my macro lens continues to see the movie of the 1990s running in reverse. America was the world’s bubble and now it has popped. Equities led on the upside and were the first to go on the downside. And the real economy has followed with predictable lags. The first shoe to fall was the capacity overhang of earnings-battered businesses. Next to come should be the spending excesses of saving-short and overextended consumers. A US economy that drew increasing support from the extremes of financial asset appreciation is now returning to the much tougher basics of income- driven fundamentals. At the same time, a long overdue US current- account adjustment is under way -- a multi-year process that should ultimately force a US-centric world to come up with a new recipe for global growth. Try as they might, policy makers can’t alter the endgame. The new realities of this post-bubble era are likely to remain with us for some time to come.
The unwinding of the dollar bubble has equally profound implications. The interplay between currency markets and other asset prices is turning many of the rules of engagement in financial markets inside out. In recent times of turmoil -- for example, the Asian financial crisis, the demise of Long-Term Capital Management, and the popping of the Nasdaq bubble -- dollar strength cushioned the blow in the broader equity and bond markets. It was symptomatic of a Teflon-like US economy that was able to ward off the impact of even the toughest of body blows. Shielded by the ultimate in virtuous circles, a US-centric global economy had little to fear.
A weak dollar denies investors the cover they had grown accustomed to. It also unmasks new fault lines in the global economy. That puts today’s rapidly spreading Latin American currency crisis in a very different light. This, of course, was the contagion that was never supposed to happen again. The tragedy of Argentina was widely thought to be a country- specific problem that had little or no bearing on the rest of the region. But now Brazil, the largest economy in the region, has seen a wholesale markdown of its currency and bonds that is every bit as bad as that which occurred in the depths of the crisis three and a half years ago. Nor are other Latin economies being spared this contagion. From Uruguay to Mexico, virtually all of the region’s currencies are now lurching to the downside.
Consequently, this year’s 7.9% decline in the trade-weighted value of the dollar (as measured against the broadest basket of America’s trading partners) takes on new meaning. In a post-bubble world, "buy America" is suddenly seen as a risky alternative. In retrospect, this shouldn’t be all that surprising. Just as it was when Nasdaq was rocketing toward 5000, the world has overdone the dollar play. As Joe Quinlan has noted, foreign investors appear to have reached historical saturation points with respect to their holdings of dollar-denominated assets (see his 21 June dispatch, "Saturation of Foreign Holdings of US Assets"). For example, at the end of 1Q02, foreign holdings of US Treasuries totaled $1.25 trillion, close to the previous record of $1.3 trillion hit in 1998; that’s equivalent to 35.7% of outstanding marketable Treasury securities. At the same time, foreign ownership of US equities rose to a near record high of $1.75 trillion in March 2002 -- equivalent to nearly 13% of the value of outstanding corporate stocks. Such saturation, against the backdrop of America’s massive current account deficit, puts an engineless world on notice: Unlike the case in earlier crises, there is no refuge in the once proud safe-haven status of the dollar.
A rapidly spreading Latin currency crisis, in conjunction with a weaker dollar and what I believe is an increasingly fragile recovery in the global economy, changes everything for the world’s major central banks. Financial markets had been virtually unanimous at the start of this year in looking for the monetary authorities to take back the extraordinary rate cuts that had been put in place in the immediate aftermath of the terrorist attacks on 11 September. This "recalibration" is standard operating procedure for central banks once the impacts of any shock wear off. Once a post-shock economy is able to stand on its own, a return to pre-shock interest rates is usually in order. It’s just a question of when.
But it may be different this time. That’s because the world is a more deflationary place than it was pre-September 11. US inflation has fallen to a 48-year low of a 0.45% annual rate in the past two quarters (as measured by the broad GDP chain-weighted price index). At the same time, Asian deflationary pressures have intensified. As Andy Xie notes, the newly-industrialized Asian economies (Korea, Taiwan, Singapore, and Hong Kong) have lowered their real export prices by 41% over the past decade. Yet, that’s nothing when compared with the rapidly emerging "China factor" -- the intensification of deflationary pressures from the largest and fastest-growing economy in the region. That’s underscored by the reemergence of outright deflation in China late last year -- a decline that has persisted to this very day, with the Chinese CPI running 1.1% below its year-earlier level through May 2002.
At the same time, there is good reason to question the final demand follow-through to the US inventory dynamic. In my opinion, earnings- battered Corporate America remains very much focused on cost cutting, likely to take further actions that would continue to restrain capital spending and hiring. The macro feedback effects of such restraint should intensify pressure on the US economy’s income-generating capacity -- spreading macro vulnerability to the heretofore resilient American consumer. This, of course, underscores the possibility of the double dip or the anemic recovery, either of which would prolong America’s deflationary perils.
Against this backdrop, why would central banks tighten at all over the foreseeable future? Recently, our US team pushed out its view of an August Fed tightening. For what it’s worth, as a card-carrying double dipper, I wouldn’t be surprised if the next move of the Federal Reserve was to ease. Indeed, I would currently ascribe as much as a 40% probability to just such a policy adjustment -- roughly consistent with the same probability that I would now pace on the dreaded double dip between now and the end of this year. In my view, the combination of a rapidly spreading Latin currency crisis, heightened geopolitical tensions, and another sharp downdraft in US equity markets reinforces the possibility of such a Fed surprise. For many of the same reasons, but with the added complication of a strengthening euro, I also find it hard to believe that the European Central Bank will tighten in this climate. That conclusion stands in contrast with our official view that still calls for an ECB tightening on 4 July.
All this represents a rude awakening for the once proud Federal Reserve. Yet it didn’t have to end this way. Alan Greenspan was well ahead of the curve in December 1996 when he pondered the perils of "irrational exuberance." But by failing to follow through on this warning and then by adding fuel to the mania through his steadfast support of the "new economy," the great moral-hazard play was on with a vengeance. Few could resist -- long-term investors and speculators alike. Sadly, the rest is now history. But it’s a history that could well have more painful lessons to offer -- those of central banks that end up "pushing on a string" in the aftermath of an asset bubble. Just as the Bank of Japan has had to struggle with this painful reality over the past decade, the Fed may find it exceedingly difficult to gain policy traction in the years ahead. And so the era of the omnipotent central banker may have drawn to a close.
In the meantime, the state of play in world financial markets is shaping up as the mirror image of the 1990s. The fall of the once mighty dollar and a whiff of deflation have the potential to turn the world inside out. Engaging in hand-to-hand combat over the weekly gyrations in the markets and the economy does this debate a real disservice, in my view. There are far bigger issues to face up to. You can’t tell the new forest by looking at the old trees.
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Saturday, June 15, 2002 |
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Doubts about the valuation of American shares have led to jitters on stockmarkets the world over. America’s economic growth and productivity both seem to be strong. However, investors are worried about the size of the current- account deficit, and its implications for the value of the dollar
"Foreigners, worried about the size of America’s current-account deficit—4% of GDP and growing —have started to sell dollar assets. Partly as a result, the American currency hit a 17-month low against the euro, at $0.95, on June 12th, marking a decline of nearly 14% since last July. And, just when investors need reassurance, the continuing drip-drip of corporate and Wall Street scandals sends exactly the wrong signal. With investors feeling so bearish, stockmarket indices around the world have lost most of the gains made after a concerted round of interest-rate cuts followed the terrorist attacks on New York and Washington last September. This week the Nasdaq-100 index closed at its lowest level since January 1998. The Dow Jones Industrial Average fell by 3.4% last week alone and this week touched a seven-month low of just below 9,500. Markets in Europe and Asia were also effected. This week ended on a grim note, with markets everywhere in turmoil."
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"The University of Michigan said its consumer sentiment index fell to 90.8 in June from 96.9 in May. That is the largest decline since a 9.7-point decrease in September. Production at factories, utilities and mines rose 0.2 percent last month after a 0.3 percent gain in April, the Federal Reserve said."
"Flagging confidence and production came after a larger-than-expected drop in retail sales last month and add to a picture of slowing growth."
"Concerns about the threat of more terrorist attacks and a lack of faith in corporate accountability that has sent stock prices tumbling may prompt consumers to rein in spending and slow the economy's rebound, economists said. That may help explain declines in sales at retailers."
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Thursday, June 13, 2002 |
" Postal services group Consignia PLC on Thursday said it plans to slash 17,000 more jobs, or about 8 percent of its work force, over the next three years in the wake of a $1.4 billion loss for the latest fiscal year."
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Wednesday, June 12, 2002 |
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"What appears to be holding the market back are more intangible concerns, including fears of another terrorist attack, distrust of corporate executives and worries about the accountants who have been reviewing their books."
"Now add to that list of fears a potential plunge in the value of the dollar."
"Since its high for the year at the end of January, the dollar has fallen 9.4 percent against the euro. The dollar is down 7 percent against the Japanese yen since its 2002 high in early February. So far, the decline has been orderly."
"But Stephen S. Roach, chief economist at Morgan Stanley, says the chance of a dollar plunge has grown recently — to a 15 percent probability from 5 percent. While the odds are low, the impact should be considered."
"The dollar, by Morgan Stanley's calculation, is overvalued by 14 percent. It is also threatened by the United States' large current account deficit, including international trade. Covering this deficit requires a rising inflow of foreign capital. This means a slowdown in foreign capital inflow would weaken the dollar."
"The return of federal budget deficits in the United States and hints of protectionism, especially tariffs on foreign steel imports, 'hardly instill confidence in the dollar as the mainstay of global commerce,' Mr. Roach wrote in his recent report."
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Tuesday, June 11, 2002 |
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What will it take to get Americans comfortable about buying stocks again? How about jail time for Wall Street crooks, for starters
"While the stock market remains in a depressingly narrow trading range so far this year, it's becoming increasingly clear that the problem isn't the economy, which is recovering. But even the prospect of an earnings bounce later in the year isn't enough to get today's disillusioned investors back in the game. Many of them don't trust analysts to forecast earnings or companies to deliver honest profits as accounting and analyst-research scandals continue to mount amid accusations of corporate malfeasance."
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COVER STORY
Corporate America has lost its way. Here's a road map for restoring confidence
"Goldman Sachs CEO Hank Paulson is not a touchy-feely guy. Even by Wall Street standards, he's fairly buttoned down. But the daily drumbeat of news about horrifying corporate behavior would get to anyone-- and it's clearly getting to Paulson. 'In my lifetime, American business has never been under such scrutiny, and to be blunt, much of it deserved,' he said in a recent speech. To FORTUNE he added, 'You pick up the paper, and you want to cry.'"
"Phony earnings, inflated revenues, conflicted Wall Street analysts, directors asleep at the switch--this isn't just a few bad apples we're talking about here. This, my friends, is a systemic breakdown. Nearly every known check on corporate behavior-- moral, regulatory, you name it--fell by the wayside, replaced by the stupendous greed that marked the end of the bubble. And that has created a crisis of investor confidence the likes of which hasn't been seen since--well, since the Great Depression."
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Monday, June 10, 2002 |
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"The unrelenting gluttony has become almost numbing. CEO greed, combined with all of the other legal and illegal corruptions of public markets, is one of the many reasons for a growing popular disenchantment with investing. When people figure the market is rigged, the entire economy suffers in the long run."
"There's another effect. America's continuing, disproportionate accumulation of wealth at the very top, while others lag far behind, is a corrosive influence in a society that claims equal opportunity."
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"After reading Wolff's article I really started to think about all the stuff that's going on these days. The one phrase I keep repeating is: It's all gonna come crashing down. I'm normally a glass-is-half-full kinda guy, but everywhere I look the walls are swaying. Perhaps that's because so many of them are really just set decorations and not the real thing."
"I think the real estate market is gonna come crashing down. I think the music industry is gonna come crashing down. I think the professional sports television contracts boondoggle is gonna come crashing down. I think the airline industry and telecom are gonna come crashing down. I think higher-education is gonna come crashing down. I think network news is gonna come crashing down. Today's way of doing business is not sustainable. The Cult of Free has something to do with it, but the companies themselves have been willing accomplices."
"Now just to prove that I'm a cynical optimist I believe that banking, healthcare, adaptive technology, privacy/ security, and biotech are on their way to the top. I have my reasons, but I'll leave that for another blog."
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Investors seem to have lost faith in Wall Street. What can be done about it?
"Investors have not only lost patience with corporate America's greed and its inability to do what it says it is doing; they have also lost confidence in Wall Street's ability to act as an honest broker between them, the providers of capital, and the corporate users of it. 'There is an air of cynicism surrounding every institution that underpins our capital markets,' says Stanley O'Neal, co-head of Merrill Lynch, an investment bank that recently paid $100m to settle a lawsuit over the integrity of its analysts when the Internet hype was at its peak. 'This cynicism has gone beyond reasonable questioning, and could easily turn destructive.'"
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Saturday, June 08, 2002 |
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Friday, June 07, 2002 |
"An economist is a man who states the obvious in terms of the incomprehensible." --Alfred A. Knopf
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Thursday, June 06, 2002 |
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"WorldCom Inc. plans another round of job cuts - possibly as many as 16,000, or about 20 percent of its global work force, a company official familiar with the situation said Wednesday."
"The layoffs would be the second round this year for WorldCom, which is facing $30 billion in debt. In April, the Clinton-based company said it was eliminating 3,700 U.S. jobs to better align costs with projected revenue. Those cuts were limited to WorldCom Group, which includes the high- growth data, Internet and international businesses."
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Wednesday, June 05, 2002 |
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"On April 16, Newsday, the Long Island newspaper, published a startling report that old oil fields in the Gulf of Mexico were somehow being refilled. That is, new oil was being discovered in fields where it previously had not existed. "
"Scientists, led by Mahlon Kennicutt of Texas A&M University, speculate that the new oil is surging upward from deposits well below those currently in production. "Very light oil and gas were being injected from below, even as the producing was going on," he said. "
"Although it is not yet known whether this is a worldwide phenomenon or commercially important, the new discovery suggests that there may be far more oil and gas within the Earth's core than previously thought. "
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"Foreign investment in the United States, after hitting record highs for three straight years, plunged by 60 percent in 2001, reflecting the U.S. recession and a sharp slowdown in mergers and acquisitions."
"The Commerce Department said that spending by foreigners to buy existing U.S. companies or set up new operations fell to $132.9 billion in 2001, down from an all-time high of $335.6 billion in 2000."
"The department attributed the big decline to the recession in the United States and economic weakness in many other major countries last year, as well as the sharp slowdown in mergers and acquisitions, especially in telecommunications and other high-tech industries which have seen their stock values plummet since the spring of 2000."
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Tuesday, June 04, 2002 |
"By many measures, the United States economy is rebounding smartly from its desultory performance in late 2001. But even as economic output surges and corporate profits appear once more to be rising, one closely watched indicator of economic oomph remains depressed: the broad stock market indexes. All of the big-company indexes, the ones that reflect what investors are most likely to own through mutual funds, are still down for the year."
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"Layoff announcements at U.S. firms fell to the lowest level in a year during May as companies boosted production and the economic recovery gathered speed, Challenger, Gray & Christmas said on Tuesday."
"Job cuts announced in May totaled 84,978, a 25 percent decline from April's 112,649, the outplacement firm said in a monthly report."
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"Weak sales in May at General Motors helped drag car sales to their lowest monthly pace in nearly four years."
"Auto sales industrywide fell 6 percent in May from the month a year earlier, according to Ward's AutoInfoBank, a data tracking service in Southfield, Mich."
"The one-month slump came even as Detroit continued to spend money to provide big rebates and to subsidize interest rates, and it suggested that incentive spending, which surged after Sept. 11, could go even higher in the coming months."
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"HP expects to cut 10,000 jobs by November 1 and another 5,000 jobs next year, a total of about 10 percent, Chief Executive Carly Fiorina said on Tuesday in the company's first meeting with analysts since purchasing Compaq last month."
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Investors are intriguingly wary of America's recovery
"The obvious explanation is that the economic outlook remains uncertain. Certainly first-quarter GDP growth—5.6% at an annual rate, according to revised figures released on May 24th by the Commerce Department—was unexpectedly strong. But much of that surge was driven by temporary factors, particularly a reduction in the pace at which firms slashed their inventories. Between January and March, this inventory adjustment added a hefty 3.5 percentage points to annualised GDP growth. Although the inventory cycle still has some way to go, and may add 1.5 percentage points to second-quarter GDP growth, inventory adjustment is incapable of being a sustained source of growth."
"The broader outlook for corporate investment is still murky. The good news is that firms' profits appear to be on the mend, boosted by radical cost-cutting coupled with strong productivity growth. Higher profits should bode well for future investments. The bad news is that profits are paltry compared with their pre-recession peaks, and that by most measures America's firms still have plenty of spare capacity. In the short term, few expect investment spending to offer much of a boost to the overall economy."
"That leaves the onus where it has long been—on the American consumer. Contrary to the fears of many pessimists, consumer spending has yet to peter out. Consumption rose by a monthly 0.5% in April, less than many predicted, but perfectly consistent with a moderate recovery. There is little sign that Americans have, as yet, lost their appetite for ever more big-ticket purchases. Motor vehicles (which almost single-handedly sustained consumption at the end of last year) sold even faster than their first-quarter average in April. And according to one dealer survey, they are running 7% higher in the first two weeks of May than in the same period last year."
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Wednesday, May 29, 2002 |
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"Telephone-equipment maker Nortel Networks Corp. said Wednesday it will cut another 3,500 jobs, more than expected, and may sell its optical-components business as it revamps its operations to save money."
"Nortel now expects its work force to bottom out at 42,000. Last month, Nortel put the figure at 44,000. The Brampton, Ontario company has cut about 50,000 jobs since the beginning of last year, and employed 47,000 people at the end of the first quarter."
"Nortel said it plans to streamline the optical long-haul business because it doesn't expect a 'meaningful' recovery in that market before late 2003 or early 2004. The plan includes the possible sale or resizing of Nortel's optical-components business."
12:06:48 PM Google It!
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"Scott Adams, creator of Dilbert as well as mouthpiece and defender of the everyman: 'Well, I (have) this new book coming out, Dilbert and the Way of the Weasel, and I would lump the dot-coms in with Enron and Merrill Lynch and Arthur Andersen and all these companies that are just major weasels. I think it used to be true that you could more or less trust them because the threat of getting caught would keep them honest. But that doesn't even seem to make a difference anymore. It just seems (like) widespread lying everywhere.'"
11:58:24 AM Google It!
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"Once the unchallenged spearhead of the global wireless business, the Vodafone Group announced today that it had a net loss of almost $24 billion in the year ended in March, largely a result of write- downs in the value of the same deals and takeovers that once fueled its growth."
"The loss, corporate Europe's biggest, succeeded in overshadowing the $12 billion loss in 2001 reported last month by Vivendi Universal, the French media giant, as European companies scramble to reassess the value of assets acquired at the height of the boom in technology, Internet and telecommunications stocks."
8:26:51 AM Google It!
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Tuesday, May 28, 2002 |
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By PAUL KRUGMAN
"Summertime, and the living is iffy. Double-dippers — economists who believe that the economy will turn down again — are still a small minority. But we're no longer hearing the triumphalist predictions of roaring recovery that were so prevalent back in March."
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Wednesday, May 22, 2002 |
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"The industrial services division of German electronics and engineering group Siemens AG said Wednesday it plans to eliminate 2,000 jobs, or 6.7 percent of its work force, and sell businesses employing thousands more to cut costs and curb losses. Most of the job cuts would be within Germany."
"The division said marginal activities including businesses making circuit boards and operating repair shops would be ''acquired and maintained by partners,'' a move affecting 5,000 employees 1,300 of them outside Germany."
"The division employs 30,000 people worldwide to supply and maintain industrial equipment and help manufacturers improve plants with new technology, but has lost business to smaller rivals providing routine servicing for industrial plants."
11:35:26 AM Google It!
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"I.B.M. researchers have created carbon nanotube transistors that substantially outperform models of even advanced silicon devices without departing from the most common design of silicon chips."
"The I.B.M. transistors also have a higher capacity for carrying electrical current — a measure related to transistor speed — than previously designs using nanotubes."
8:34:26 AM Google It!
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Tuesday, May 21, 2002 |
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"A decline in a key gauge of U.S. economic activity amplifies doubts about whether the recovery can maintain the strong pace it showed in the first quarter, analysts say."
"The New York-based Conference Board said yesterday that its index of leading economic indicators fell by 0.4 per cent in April, the first time it has declined since September, suggesting a recovery that remains quite sluggish."
"The drop brings the index to 111.7, following a 0.1-per-cent rise in March. Analysts had forecast a 0.1-per-cent decrease for April."
"Economists said the decline in the leading indicators does not signal a reversal of the recovery, and downplayed the danger of that scenario. But the report does hint at continued underlying weaknesses that could temper the pace of growth, they said."
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Saturday, May 18, 2002 |
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"The Boeing Co. issued layoff notices Friday to 1,500 employees, including 1,100 in the Puget Sound region, in the latest round of job cuts announced by the aircraft manufacturer after the Sept. 11 terrorist attacks."
"The layoffs take effect July 19."
"Chicago-based Boeing had announced in mid-September that it would slash its labor force by 25,000 to 30,000 employees by the end of this year because of the impact of the September attacks on commercial air travel."
"The pink slips bring the total number of layoff notices since September to roughly 27,000, said Boeing spokesman Tom Ryan, with about 24,000 of those people now off the payroll."
10:31:09 AM Google It!
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Friday, May 17, 2002 |
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"It's been a bad week to work for a phone company, with BellSouth (NYSE:BLS) announcing Friday staff cuts of nearly 5,000 in the coming months."
"Executives don't expect to surprise employees with a pink slips, instead opting for a voluntary separation plan to both managers and non-managers. The Communications Workers of America union will oversee the non-management reductions. "
1:07:20 PM Google It!
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"The construction of new homes fell in April to the lowest level in six months and the number of workers seeking unemployment benefits rose unexpectedly last week, two reports released today showed, pointing to a moderating economic expansion."
"Builders started work at an annual rate of 1.56 million homes last month, down 5.4 percent from March, for the slowest pace since October, the Commerce Department said. Initial unemployment claims increased to 418,000 last week, and the number of people drawing benefits earlier this month, 3.9 million, was the highest in almost two decades, the Labor Department said."
"'It will take some time for vigorous growth to extend to all industries and regions of the nation,' said Michael Moskow, president of the Federal Reserve Bank of Chicago, in a speech today."
"The employment report reinforces the concern of central bankers that businesses are skeptical about increasing investment and hiring."
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"On Tuesday Standard & Poor's, the private bond rating agency, announced that it would do something unprecedented: It will try to impose accounting standards substantially stricter than those required by the federal government. Instead of taking corporate reports at face value, S.&P. will correct the numbers to eliminate what it considers the inappropriate treatment of "one-time" expenses, pension fund earnings and, above all, stock options — a major part of executive compensation that, according to federal standards, somehow isn't a business expense. S.&P.'s estimate of 'core earnings' for the 500 largest companies slashes reported profits by an astonishing 25 percent."
"Why does S.&P. — along with Warren Buffett, Alan Greenspan and just about every serious financial economist — think that current accounting standards require a drastic overhaul? And if such an overhaul is needed, why doesn't the government do it? Why does S.&P. think that it must do the job itself?"
"Options are only part of an accounting system in deep trouble. As David Blitzer, S.&P.'s chief investment strategist, recently wrote, 'Financial markets are as much a social contract as is democratic government.' Yet there is a growing sense that this contract is being broken, undermining the trust that is so essential to the operation of financial markets. Clearly, major reforms are needed.
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Thursday, May 16, 2002 |
"The latest in what has become a steady stream of bad budgetary news arrived last Friday, when newspapers reported that this year's deficit is estimated to be about $100 billion--twice as large as previous forecasts had suggested."
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"Bankruptcy filings by American consumers jumped 15.2 percent in the 12 months ended March 31, fueled by the strong spending that helped make the recession shallow, the government said Thursday."
"Personal bankruptcies hit a record 1,464,961 during the period, up from 1,271,865 in the 12 months ending March 31, 2001, the Administrative Office of the U.S. Courts reported."
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"Faced with a large, unexpected drop in income-tax revenue, states across the country are trying desperately to plug wide budget gaps in ways voters can abide in an election year."
"Some are raising cigarette taxes and various fees. Some are cutting spending on the edges or using bookkeeping devices to make the deficits go away. A few have taken drastic measures to avoid raising sales or income taxes or cutting popular programs like education."
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Wednesday, May 15, 2002 |
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"Honeywell International plans to lay off as many as 900 workers as it closes four of its advanced circuits facilities in near Minneapolis, saying an industrywide slump is forcing it to reduce capacity."
"Honeywell on Tuesday closed its advanced circuits plant in Buffalo and laid off the factory's 200 workers. The plant manufactured electronic circuit boards used in such things as cell phones."
"Another 550 people will likely lose their jobs when Honeywell closes another advanced circuits plant in Roseville, and another 150 administrative jobs will disappear as it closes facilities in Hopkins and Minnetonka. Honeywell expects to close those three facilities by the end of June."
"After the cuts, New Jersey-based Honeywell will employ some 5,400 people in Minnesota in other divisions, but none in advanced circuits."
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"About a week after its blockbuster merger with Compaq Computer, Hewlett-Packard will begin laying off employees this week as part of its plan to cut 15,000 positions."
"Most of the job cuts will take place over the next six to nine months, but the entire process could take as long as two years, the Palo Alto company said."
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"Four New Jersey men were charged yesterday with defrauding banks of more than $600 million through an international scheme to secure loans for illusory metal-trading deals, federal authorities said."
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Tuesday, May 14, 2002 |
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"SBC Communications Inc. said Tuesday that it will slash another 5,000 jobs, or about 2.6 percent of its work force, in the second quarter because the slow economy continues to curb its revenue."
"The cuts come atop the 10,000 positions already eliminated since last fall."
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"After a tightfisted March, U.S. consumers splurged in April and pushed retail sales up by 1.2 percent, the biggest increase in six months."
"The latest sales snapshot released by the Commerce Department Tuesday suggests that consumers -- the lifeblood of the economy -- are helping to support the budding economic recovery by keeping their pocketbooks and wallets open."
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Saturday, May 11, 2002 |
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What if a company lost $54 billion and nobody noticed?
" We're now being told that $50 billion of market value was simply an illusion, an accounting quirk."
"What a quirk! There are only a handful of companies in the world even worth $50 billion. Something must be wrong with a system that played fast and loose with numbers to such an extraordinary degree."
"When you think about it, though, the fact that these accounting mechanisms were pervasive makes the situation even shadier. If "everyone" really appreciated that the most admired companies in America routinely reported numbers they knew were illusory, why did those companies bother to go through the exercise?"
"That's how a successful company like VeriSign can purchase Network Solutions for $21 billion and two years later, after more acquisitions, be worth just $2 billion as a combined entity. We're all suddenly noticing that the emperor is stark naked."
"The problem the AOL write-off highlights is a collective one, and it comes down to trust. Trust is the foundation of our entire financial system. For thirty years, since we went off the gold standard, the almighty dollar has been backed by nothing more than the promises of the U.S. government. Absent faith in the stability of the United States, it would be worthless."
"Similarly, the stock market, and the economy as a whole, can only function if participants believe the game is fair, and that enforcement mechanisms and remedies will take care of the situations, such as Enron, where it isn't."
"As the U.S. government routinely tells the rest of the world, the key to trust is transparency. If the workings of the system are plain for all to see, inefficiencies and cheating will eventually be spotted and stamped out."
"Trust becomes endangered when companies, some investors and regulators decide collectively to pretend that two plus two equals five. Trust became debased when so many of us concluded that the numbers we were seeing were irrational and unsustainable, but we should act as though they were real and justifiable."
"Goodwill write-downs, flameouts of well-funded start-ups and even the collapse of Enron are cathartic. These events are painful, but they provide the necessary public confirmation that the environment has really changed. It's the end of an era. And, let's hope, the end of an error."
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Friday, May 10, 2002 |
"Unseasonably cool weather and Easter in March dampened retail sales in April, but several merchants raised their profit outlook Thursday noting that lean inventories reduced the need for heavy discounting."
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"Reflecting the continued weakness in technology spending and shifts in its mix of businesses, I.B.M. plans to trim its payroll by roughly 9,000 workers by the middle of this year, an industry executive close to the company said yesterday."
"The jobs to be lost make up fewer than 3 percent of International Business Machines' worldwide work force of 320,000, but most of the cutbacks will come among the company's 160,000 employees in the United States, according to the executive."
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Thursday, May 09, 2002 |
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"Louisiana-Pacific, which makes lumber, pulp and building products, said it will sell several businesses and shed nearly half of its work force as part of a restructuring effort."
"The Portland-based company said it would trim 4,400 jobs - cutting its work force from 9,700 to 5,300. The moves would leave the company with 30 North America mills instead of 60."
"It is also selling 935,000 acres of timberland in three states - Idaho, Louisiana and Texas - and its plywood, industrial panels and lumber businesses."
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Wednesday, May 08, 2002 |
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"The U.S. Postal Service will cut more than 8,000 additional full- time jobs this year as the agency struggles to contain its losses in the face of declining business."
"Postmaster General John Potter said Tuesday that a total of 20,000 career positions are being eliminated this year, all through attrition. About 11,800 positions have been cut so far."
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"Citing effects of a "hangover" in the technology sector, Compuware Corp. announced Tuesday that its restructuring completed last month included 800 job cuts, or about 7 percent of its global work force."
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Tuesday, May 07, 2002 |
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"Worker productivity, a key ingredient to the economy's long-term vitality, shot up at an annual rate of 8.6 percent in the first quarter, the best performance in nearly 19 years."
"The jump in productivity -- the amount of output per hour of work -- followed a strong 5.5 percent rate of increase in the final three months of 2001, the Labor Department reported Tuesday."
"Productivity performance in the January-March quarter was better than many analysts expected. They were forecasting a 7 percent growth rate."
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America's economy continues to confound the forecasters. The latest productivity figures show it growing at the fastest pace since 1983. But unemployment in April was also higher than expected, and has cast doubt on the strength of economic recovery. Both figures come just ahead of the Federal Reserve’s decision on interest rates
"Only a week earlier, economic euphoria had been the order of the day when it was announced that America’s GDP had expanded at the startling rate of 5.8% at an annual rate in the first quarter of the year. That, too, was a bigger number than most economists had predicted and led the incautious to conclude that the recovery was comfortably under way. Now that optimism must be tempered with the recognition that solid and sustained expansion cannot yet be taken for granted."
"Nevertheless, the unemployment data is a sharp reminder that the recovery is still in its infancy, is still fragile and is likely to be a good deal slower than the recent GDP figures suggested to some people. The productivity figures do not remove the need for caution. Alan Greenspan, the powerful chairman of the Federal Reserve—America’s central bank—has repeatedly warned that after such an apparently mild recession last year, recovery is likely to be equally modest. And there is concern about America’s ability to exploit any recovery. Profits for many firms remain low. Partly as a consequence, business investment— seen by Mr Greenspan as the key to sustained growth—is disappointingly weak."
"If it persists, that weakness could eventually undermine the economy's ability to deliver further sustainable productivity improvements. Household and corporate debt remain high. And the recent, so far modest, slide in the value of the dollar promises to exacerbate America’s massive current-account deficit, as well as threatening a sudden massive adjustment."
"The Fed’s duties are clear—to maximise growth and employment as far as possible, but to do so while maintaining price stability. Notwithstanding some disappointing data in recent days, an increasing number of economists are now starting to think that inflation could become the Fed’s biggest concern this year. The Bush administration, in this case personified by Paul O’Neill, the treasury secretary, continues to insist that it believes a strong dollar is good for the economy and that it is unconcerned about the current-account deficit. It is in any case not clear what effective action the government could take if it thought otherwise."
"But should market concerns intensify, and lead to a dramatic collapse in the dollar, Mr Greenspan might become very anxious about inflation—since the conventional wisdom has it that a sharp fall in a currency can lead to a rapid acceleration in inflation. The Fed might then find itself steering a tricky course between heading off inflationary pressures and sustaining what might become a very weak recovery."
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Monday, May 06, 2002 |
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"Winn-Dixie Stores Inc. said Monday the company will close all 76 of its stores in Texas and Oklahoma, laying off 5,300 workers. Winn-Dixie operates 71 stores in Texas and five in Oklahoma. It also has a distribution center and dairy plant in Fort Worth, and will close those as well, the company said. "
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Sunday, May 05, 2002 |
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"The Sept. 11 terrorist attack was the closest thing to jeopardizing the long boom."
"The key issue in the next 10 years is whether we can avoid a weapon of mass destruction going off on U.S. soil. If a suitcase nuke or a rogue nuke goes off in the downtown of a major U.S. city, that could be a shock to the psyche of the American people in a way that would make 9/11 just a small beginning."
2005.01.01
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"In the wake of another unprofitable quarter, Genuity Inc. said it would cut up to 1,200 jobs, or 30 percent of its work force, and reduce its capital spending."
"There was no word when or where the cuts among the Internet services provider's 4,000 employees would occur."
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"Put aside the recession, and the marvelous surge in the first quarter. That certainly did wonders for appearances. But in fact the American economy is like a brightly painted pier without enough piles to support it. Step too hard in the wrong place and the pier sags into the water. The hard part is putting enough piles in place before reality overwhelms appearance."
"Just two piles sustained appearances in the first quarter, making the economy seem sturdy. They were stepped-up government spending, for defense at the federal level and public works at the state and local levels, and stepped-up business spending to maintain stockpiles of merchandise after they were depleted during the recession. Take away these supports and the economic growth rate, instead of being a robust 5.8 percent at an annual rate, as announced, would have been a meager 1.3 percent."
" . . . inventory replenishment contributed a very hefty 3.1 percentage points to the first quarter's 5.8 percent growth rate. That sort of replenishment is not likely to be topped this quarter, with its sudden signals of weak growth. Why replenish only to be stuck with unsold goods?"
"Government spending shows similar stress, after contributing 1.4 percentage points to first-quarter growth, half of it at the federal level and half at the state and local levels. Federal spending went up because of rising outlays for defense. That could happen again. But many states and cities have begun to slash spending in response to less-than-expected tax revenue."
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Saturday, May 04, 2002 |
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" . . . Wall Street remains in a funk, as wary investors find reasons to worry. They fret about the contrary trends in business and consumer spending that have made a clear reading on the economy so elusive, the trade deficit, debt of all kinds, lackluster profits and possible oil shocks."
"Yesterday's jobless numbers are further cause for concern. The Federal Reserve Board and most economists predicted that unemployment would continue to rise during a tepid recovery, but news that the rate has inched up to 6 percent — the highest level in eight years — could shake investor confidence and consumer optimism."
"Few people expect the economy to sustain the vigorous pace it set in the first quarter. The bulk of that frothy growth can be attributed to a replenishing of business inventories, a one-time affair unless across-the-board economic activity picks up. Alas, capital spending by businesses was down for the fourth straight quarter. Consumers, who account for two-thirds of economic activity, heroically continued to spend freely throughout the slowdown, but there are questions as to how long this can continue. Zero-interest financing can talk you into buying only so many cars."
"Improving global prospects should provide a boost. Warnings about a sudden falloff in consumer spending overlook the significant increase in real wages in recent years and the power of low inflation to boost confidence. America's current-account deficit continues to grow, but there appear to be no credible threats to the nation's status as a magnet for foreign capital."
"The surprisingly steady growth in productivity is the one constant linking the exuberant late 1990's to the more anxious present. It suggests that despite the bursting of the Nasdaq financial bubble, there was something real to all that hype about the "new economy," and that perhaps all that investment in new information technologies is still paying off."
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"'We are in the midst of a recovery, but uncertainty about its strength has increased,' Nanette Abuhoff, a bond market strategist at J. P. Morgan Chase, said yesterday after the government reported that the April unemployment rate had climbed to 6 percent."
"'We have a ton of stimulus now,' said James Glassman, a senior economist at J. P. Morgan Chase, who noted that the first President Bush had been reluctant to push for stimulus measures like the extended unemployment benefits now in place. Mr. Glassman said he thought Congress and the current president would provide more stimulus, if needed. And Wall Street, Mr. Glassman notes, now thinks the Federal Reserve is less likely to raise interest rates soon."
"'The market looks out six months or so,' said Chuck Hill, director of research at Thomson Financial/First Call, which tallies analysts' estimates, 'and what the market is seeing is a lot of uncertainty.'"
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"Federal Reserve Chairman Alan Greenspan said Friday the lucrative stock options that showered millions of dollars on top corporate executives over the past decade need to be treated as a business expense - even though such an accounting change could significantly reduce a corporation's reported profits."
"Greenspan said under the current practice, which does not require companies to reflect the true cost of options in their annual reports, investors will continue to receive inaccurate information on the financial status of a company."
"'The failure to expense stock option grants has introduced a significant distortion in reported earnings and one that has grown with the increasing prevalence of this form of compensation,' Greenspan said . . . "
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"That intimate club of companies with the highest credit rating is becoming even more exclusive. But having pristine credit isn't that coveted these days, at least not when it comes at the expense of the bottom line."
"History also points to a weakening in the triple-A set with membership falling since the 1980s, when the nation entered the largest period of economic expansion. In 1980, there were 65 companies that had Moody's Aaa rating. By 1992, there were 21."
"Credit ratings across the board have been sliding as well. Since 1998, downgrades have outnumbered upgrades 5 to 1, according to S&P."
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Friday, May 03, 2002 |
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By PAUL KRUGMAN
"The latest budget news is worse than even the most dour pessimists had thought possible. But the unfolding fiscal disaster hasn't yet penetrated the public's consciousness — and the administration is trying to exploit that window of ignorance."
"In fiscal 2000 the federal budget was in surplus by $236 billion. This year's deficit will be more than $100 billion, possibly more than $150 billion."
"How did a huge surplus turn into a huge deficit? The recession, the tax cut and terrorism — in that order — all played a role. Also, it now seems clear that the big surplus in 2000, almost twice as large as the surplus in the previous year, was an aberration — that tax receipts were inflated by the technology bubble."
" . . . terror-related spending is only a minor factor in this year's budget (the war in Afghanistan cost only $10 billion), the administration plans a huge defense buildup, which will swallow much of the gains from economic recovery."
"What it's really about is exploiting a window of opportunity. Mr. Bush is still riding a wave of wartime popularity; the public still doesn't know how bad the budgetary situation is."
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"The nation's unemployment rate rose to 6 percent in April, its highest level in nearly eight years, the Labor Department reported today. Still, employers expanded their payrolls for the first time in nine months. Economists said the report is consistent with an economy that is in the early stages of recovery. The rise in the unemployment rate to 6 percent from 5.7 percent in March puts it at its highest level since August 1994, when the unemployment rate was also 6 percent."
" . . . in its report today, the government reversed what it had initially reported for March. Instead of a gain of 58,000 in payroll employment in that month, the revised figures now show businesses actually shed 21,000 jobs."
"' . . . this economy and the stock market are still on fragile ground. At current levels, short-term interest rates are not where they should be for the long haul. But this is no time to be moving them higher.'"
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Thursday, May 02, 2002 |
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Filings rise 25% in first quarter
"Bankruptcies by publicly traded US companies rose almost 25 percent in the first quarter and are on pace to top last year's record numbers as crippling debt and a widening telecommunications slump push more businesses into the red."
"The surge in bankruptcy filings, reported by BankruptcyData.com and Palm Beach Gardens, Fla.-based Weiss Ratings, comes despite a modest recovery in the US economy, underscoring the risks of massive debt piled on during the 1990s lending boom, bankruptcy specialists said."
"'It doesn't matter where the economy is today, it's where it was, and there's still a lot of debt that has to be dealt with, both on the corporate side and household sector,' said Samuel Gerdano, executive director of the American Bankruptcy Institute."
"Bankruptcy specialists have predicted that 2002 will set new records for business failures because of massive debt, lingering effects from last year's recession, and a business slump in such major sectors as retail, technology, telecom, and manufacturing."
"Weiss Ratings, which has been issuing risk ratings on about 7,000 publicly traded companies since last November, has 'very weak' ratings assigned to 1,359 companies, indicating a risk of bankruptcy . . . "
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Wednesday, May 01, 2002 |
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By PAUL KRUGMAN
"When demand drops, inventories build up, then production drops sharply as businesses work off the overhang. Finally, there's an "inventory bounce" when the overhang is gone. But the bounce doesn't necessarily presage a true recovery — to get that, you need increased sales to final buyers."
"And more than half of that 5.8 percent growth was just inventory bounce. Final sales actually grew only 2.6 percent, slower than in the previous quarter. And even that growth rate may not be sustainable: home construction soared, partly because of unusually warm weather, but there are already signs that the housing market is cooling off. Meanwhile, business investment, weighed down by excess capacity and weak profits, actually declined. In short, there is nothing in the data to suggest that a great boom is imminent."
"Of course, it's still possible that the prophets of boom will be vindicated. But it's also still possible, and I'd say about equally likely, that the recovery will stall. Right now the best bet for the next few quarters is probably a "jobless recovery," in which G.D.P. grows but unemployment stays high. After all, the economy needs to grow at about 3.5 percent just to prevent the unemployment rate from rising — and the odds are at least even that growth will fall short of that mark."
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Tuesday, April 30, 2002 |
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"Personal income and spending grew in March at the slowest rates in three months, the Commerce Department reported today, suggesting that the economy began to cool somewhat entering the second quarter."
"The 0.4 percent gain in income came after a 0.6 percent increase in February, the report said. Spending also rose 0.4 percent after a 0.6 percent gain, as purchases of durable goods, like appliances, as well as those of services and nondurable goods slowed. The rises matched forecasters' expectations."
"Consumer spending grew at a 3.5 percent rate in the first quarter, as the economy expanded at a 5.8 percent pace. First-quarter spending was slower than the 6.1 percent rate in the final three months of 2001."
"Disposable income, or the money left over after taxes, increased 0.5 percent in March after rising 0.7 percent a month earlier. Wages and salaries rose 0.2 percent in March, half the increase in February."
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Sunday, April 28, 2002 |
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"After spending 2001 confronting the first recession in a decade and the economic aftershocks of Sept. 11, Alan Greenspan and his colleagues at the Federal Reserve took some time a few months ago to ponder the possibility of another crisis."
"The Fed itself has pushed official rates in the United States to their lowest level in four decades, with no assurance that the nascent recovery will continue — and with any number of threats hanging over the outlook, including a spike in oil prices and the risk of further terrorist attacks."
"Should the economy become so weak that it experiences deflation — a general decline in prices — even holding interest rates steady amounts to tighter monetary policy."
"But what if prices are falling? In that case, inflation is, arithmetically speaking, negative. So if the nominal rate was 1 percent and the deflation rate was 1 percent, the real interest rate would be 2 percent."
"In such a case, the economy could become prone to a deflationary spiral, in which a lack of demand, falling prices and paralysis in nominal interest rates lead to more restrictive financial conditions, weaker demand and further downward pressure on prices."
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Saturday, April 27, 2002 |
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"The economy grew this winter at its fastest pace in more than two years, the government said yesterday, delivering a clear sign that the recession has ended and that a new expansion has started briskly. But analysts said that growth was unlikely to continue at the 5.8 percent pace of the first three months of the year, pointing to signs that the economy has already weakened slightly in April."
"But there was no doubt the economic downturn is over. Consumers, flush with large tax refunds and helped by low interest rates, continued to spend freely in the first quarter of the year."
"And the federal government gave the economy a big push by increasing military spending at the fastest rate since the Vietnam War."
"The 5.8 percent annual growth rate in the nation's economic output for the first quarter was up sharply from the 1.7 percent pace for the final quarter of 2001. The Commerce Department report confirmed that few of last year's widespread economic fears had come true and that the recent recession, which officially began last March but has not yet been formally declared over, was one of the mildest since World War II."
"But few economists doubt the recent downturn deserves to be called a recession, largely because the country lost 1.4 million jobs over the last year as industrial production plunged."
"With the weather unusually warm and mortgage rates low, spending on housing construction — which is not included in consumer spending — jumped 15.7 percent, the biggest rise in six years."
"Military spending also surged — growing at a 19.6 percent rate, the most since 1967 — as the war in Afghanistan continued, and the Pentagon geared up for potential missions. State and local government spending increased at a 5.6 percent pace, but it is expected to fall in coming months as governments struggle to close budget deficits."
9:48:25 AM Google It!
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Friday, April 26, 2002 |
"The economy, knocked down by last year's recession and terror attacks, rocketed back in the first quarter at an annual growth rate of 5.8 percent."
12:13:25 PM Google It!
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"U.S. consumer sentiment fell in April as a sluggish stock market and conflict in the Mideast dented Americans' assessment of current conditions and the outlook for the future even as the economy recovered."
"The University of Michigan's final consumer sentiment index for April fell more than expected to 93.0 from 95.7 in March. Forecasts were for a reading of 94.5 after a preliminary mid-month reading of 94.4."
12:03:51 PM Google It!
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© Copyright 2003 Michael Jamison. E-Mail: 
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