Despite Layoffs, Economy Holding Strong
Jan. 25 -- There are still plenty of reasons for Americans to be nervous about the economy, beginning with heavy layoffs.
There were 5,300 layoffs at J.C. Penney today, and 2,000 at AOL Time Warner and 10,000 at Lucent Technologies earlier this week.
Meanwhile, the dot-com carnage grows. More than 200 companies are in such dire straits they may lose the right to have their stocks traded on the Nasdaq.
Then there is the California energy crisis, which according to Federal Reserve Chairman Alan Greenspan's comments today, is big enough to threaten the entire nation.
Silver Linings
But for all the bad economic news swirling around, there are also hopeful signs, surprising glimmers of better news suggesting consumers still have faith in this economy.
Carnival Cruise lines says it booked more cruises on Monday than on any day in history.
"We've just had a record-breaking month of January so far," says Bob Dickinson, president of Carnival Cruises. "Our reservations are up 30 percent this year. We've smashed all records in the history of the company."
Consumers are also buying cars and houses; mortgage applications are back near record highs.
And while layoffs are mounting, businesses are still hiring, especially those that have been starved for quality workers.
"What is means is it's very easy today for people who lose a job to land on their feet," says Diane Swonk, chief economist at Bank One. "In fact in the tech sector, we're finding some people finding new jobs in as little as 24 hours."
Higher Consumer Confidence
Various surveys show consumers are feeling a bit more confident about the economy, helped by a big gain in the Nasdaq this month and a big cut in interest rates by the Fed.
"We've got a Federal Reserve that's now stepped up to the plate and said, 'Listen, we don't think we're going toward recession but we're going to take on an insurance policy and do as much as necessary to ensure we do see a sunny day after the clouds lift,'" says Swonk.
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