Brutal job losses continue in 2009
As recession deepens, companies like Pfizer and Alcoa shed jobs.
NEW YORK (CNNMoney.com) -- The job market is off to a terrible start this year, with companies announcing more than 80,000 job losses so far, in one of the most painful symptoms of the ongoing recession.
Circuit City Inc. is the biggest culprit of 2009. The bankrupt retailer said on Friday that it is shutting down because of dried-up consumer spending and liquidating its 567 U.S. stores, dooming some 30,000 jobs.
Also on Friday, the Hertz (HTZ, Fortune 500) rental car company said it would cut 4,000 jobs in the first quarter, because of decreased demand for its cars. Japanese auto maker Honda Motor (HMC) said it would cut 3,100 jobs and healthcare company WellPoint (WLP, Fortune 500) said it would slash 1,500.
Other massive job cuts from this week include electronics producer Motorola (MOT, Fortune 500), with 4,000 cuts, finance firm Barclays, with 2,100, and packaging company Meadwestvaco (MWV, Fortune 500), with 2,000.
These announcements come on the heels of the devastating news that the U.S. economy lost 2.6 million jobs in 2008, making it the worst year since 1945. This brought the annual unemployment rate up to 7.2%.
In recent days, the most hard-hit industries include retailers and manufacturers.
The 2009 job market got off to a rough start on Jan. 5, when health benefits company Cigna said it was cutting 1,100 jobs. The following day, aluminum giant Alcoa (AA, Fortune 500) announced 13,500 cuts, while computer mouse maker Logitech (LOGI) said it was shedding 500 jobs.
The onslaught continued. Some of the larger cuts included Japanese electronics maker TDK Corp., (TDK) with 8,000 casualties announced on Jan. 8, and airplane manufacturer Boeing (BA, Fortune 500), with 4,500 cuts announced on Jan. 9.
The job market isn't likely to get much better in 2009, according to projections. The Conference Board forecast two million more job cuts this year.
Lakshman Achuthan, managing director of the Economic Cycle Research Institute, said that leading indicators are hinting at further job cuts in 2009. The most telling, he said, is the Labor Department statistic that the average work week has shrunk to 33.3 hours, which is down 0.2 hours over the last two months.
"That tells you that job growth is going to get worse going forward," said Achuthan. He said the shrinking work week shows that employers "don't need [workers] as much."
Even after the economy bottoms out, it could take a while before employers start hiring again, said Achuthan, noting that job market didn't begin to grow until a full year after the end of the 2001 recession.
"We're going to have to have a recovery well under way before we can reverse the trend of job losses," he said.
Moody's chief economist John Lonski said the shrinking job market is a casualty of collapsing retail sales. Therefore, the job market won't recover until after retail sales start to pick up, he said.
"Businesses will probably continue to lay off people in large numbers until demand stabilizes at a lower level," said Lonski. "Once we have the situation arise where inventories are in line with expectations, there is less of an incentive to cut back on staff."