Joshua Shapiro, chief U.S. economist at economic consulting firm MFR, says layoffs at big-name firms tell only part of the story.
"A lot of these are grabbing headlines, but the small- and medium-size companies that are so dependent on bank credit are withering on the vine," says Shapiro, who expects the unemployment rate to climb to double digits.
The widespread layoffs during the last several months have forced many ousted workers to lower their sights in seeking employment.
Over the weekend, Terry Ellis, 48, of Lewisville, Texas, turned in an application to work at the local Wal-Mart. wmt
The father of four lost his job with Verizon vz last May after working for the company for 29 years, most recently as a purchasing manager. He hasn't had luck finding work and is worried about relying on his wife's salary as a pharmacy technician.
"Anything to pay the bills and put food on the table," he says.
Employers that are hiring report being inundated with applications. During the last three weeks, about 63,000 people have applied for 12,000 openings at CityCenter, a development on the Las Vegas Strip scheduled to open late this year.
In its search for people to fill jobs in gaming, hotel operations, food and beverage service, finance, engineering, entertainment and other areas, CityCenter is getting applications from people whose qualifications far exceed the jobs they're seeking, says Michael Peltyn, the company's head of human resources.
"We're not happy about the economy," he says. "But it sure hasn't hurt the applicant pool."
'It's really bleak out there'
Friday, the government is expected to report the economy contracted in the last three months of 2008 at the fastest pace since 1982.
Job losses are leading consumers to rapidly pull back spending either because they are out of work or because they fear their jobs could be in jeopardy. That is leading businesses to try to cut costs any way they can, including by cutting jobs or forcing workers to take unpaid leave.
Revenue fell 10% during the fourth quarter of 2008 compared with the same period in 2007, according to preliminary estimates from Standard & Poor's.
The numbers that matter most to investors and companies — earnings — are getting worse. Much worse.
In October, Wall Street was expecting companies in the Standard & Poor's 500 to report 46% higher earnings for the fourth quarter of 2008 compared with the same quarter in 2007, says Ashwani Kaul, director of research at Thomson Reuters.
But now that 18% of the companies have reported, earnings are down 31%.
"It's bad," Kaul says. "It's really bleak out there."
It's not just financials, although losses by banks and brokerages are the biggest drags on earnings. Seven of the 10 sectors of the economy are expected to report lower fourth-quarter earnings for 2008.
So far, the future isn't looking any more promising. Earnings are expected to be down 21% in the first quarter of 2009 and 19% in the second quarter, Kaul says.
Even companies that investors thought a year ago could hold up during a U.S. slowdown are feeling the pinch. Among them: Caterpillar.
The company's struggles show the depth and complexity of the economy's troubles. The sudden collapse in worldwide demand for industrial commodities, ranging from oil to copper, stopped the boom for exploration and production, says Alexander Blanton, analyst at Ingalls & Snyder.