Wave of layoffs here, Europe show severity of the recession
— -- The news ratchets up the pressure on the Obama administration and Congress as lawmakers debate an $825 billion stimulus package intended to save or create millions of jobs. Far more job cuts are likely as consumer and business spending tumbles amid what many economists say is the worst recession the USA has seen since the Great Depression.
"Some of the worst job losses are ahead of us, not behind us," says Wells Fargo senior economist Scott Anderson.
He expects 3 million Americans to lose their jobs in 2009 — up from the 2.6 million who were cut last year, which was the most since 1945, the final year of World War II. The layoffs are happening in "all industries in all areas of the world," Anderson says. "This will be one of the worst job markets in the postwar period."
Chris McCabe, 48, of Mansfield, Mass., lost his job Jan. 4 as director of product quality at consumer electronics company Sonos. The father of two teenagers has seen a few job leads evaporate after prospective employers stopped hiring or his contacts at the companies were laid off. His daughter is hoping to go to nursing school after graduating from high school this year, but he isn't sure he'll be able to afford the tuition.
"I've reached out to friends … to see who they may know in Boston," says McCabe, who says he has several friends who are out of work. "I don't think I've ever experienced anything in my life like this."
The unemployment rate is forecast to peak at a 25-year high of 8.8% early next year, up from 7.2% in December, according to the median in a survey of 52 economists conducted by USA TODAY Jan. 15-22.
The workweek began Monday morning with news of massive layoffs at several European companies, including electronics giant Philips (6,000 job cuts) and insurance and banking conglomerate ING, which announced it would drop 7,000 jobs.
Then came a wave of layoff announcements by U.S. companies. Among the largest:
•Caterpillar, the world's largest maker of large construction and farm equipment, said it would cut nearly 20,000 jobs and warned of a "dismal year for the world economy" as it reported its earnings.
The cuts, amounting to about 18% of Caterpillar's workforce, reflected how the slide in construction and mining worldwide has hurt the Peoria, Ill.-based company.
•Sprint Nextel, the nation's No. 3 mobile phone service provider behind Verizon Wireless and AT&T Mobility, said it will cut 8,000 workers by the end of March as part of a plan to save $1.2 billion.
•Home Depot, the world's largest home improvement retailer, said it's cutting 7,000 jobs. Most of the cuts will come from closing Home Depot's 34 Expo stores, which sell high-end home decor items.
