Employers announced a total of nearly 40,000 job cuts Friday, almost all of them related to problems in other parts of the economy.
Circuit City Stores Inc. said it is liquidating, closing all its U.S. stores and cutting 30,000 jobs after being hobbled, in part, by declining consumer spending. Rental car company Hertz Global Holdings Inc. is eliminating 4,000 jobs worldwide as families and business travelers forgo trips. Insurer WellPoint Inc. is cutting about 1,500 jobs, with rising unemployment leading to fewer people with health insurance.
For the moment, every economic action seems to precipitate a negative reaction. Consumers made nervous by job cuts, tumbling home prices and swooning stocks aren’t spending. That’s hurt retailers and manufacturers, who have closed stores, cutting their employees’ jobs or hours, which has made workers more nervous, so they spend less. And the spiral continues.
Even falling gas prices will have hurt some workers. Petroleum company Conoco-Phillips said Friday it will cut about 1,300 jobs, or 4 percent of its work force.
“There does seem to be a painful cycle emerging,” said Dana Saporta, U.S. economist at investment bank Dresdner Kleinwort in New York. “Halting this cycle will require very aggressive fiscal and monetary policy.”
Touring a factory in Ohio on Friday, President-elect Barack Obama promoted an $825 billion stimulus plan unveiled by House Democrats a day earlier.
“It’s not too late to change course — but only if we take dramatic action as soon as possible,” Obama said. “The first job of my administration is to put people back to work and get our economy moving again.”
With unemployment at a 16-year high of 7.2 percent in December and about 11 million Americans out of work, many economists expect worse news to come. Some say the unemployment rate could be headed for 10 percent — or higher — by year’s end.