Feb 25, 2009
This article states that Nortel Networks is planning on laying off 3,200 more employees. This is a followup from last year where 1,800 were laid off. In addition, it is cutting into a bunch of employee incentives, bonuses, etc.
Feb 23, 2009
Yikes! This article shows the U.S. government is getting closer and closer towards nationalization of our biggest banks. Here, the article points out U.S. could own close to 40% of Citigroup’s common stock. If this comes to pass, we will be well on the road to nationalization. If you thought the market was hurting before, see what it looks like when that happens.
Feb 20, 2009
This article may signal that we have started to enter the third wave of layoffs. One area of business that had previously left unaffected by layoffs was makers or raw materials and products. However, this article indicates that we how now started to reach this segment of the economy as well. This is particularly important because this shows that retailers and other end sellers are pushing back on the manufacturers. This will result in a wave of additional layoffs and further decreased consumer spending which will feed the entire cycle again.
Feb 19, 2009
This article foreshadows that a second wave of difficulties is occuring in the auto industry. GM has gone on record as stating they need more bailout money and will need to cut 47,000 jobs. This is obviously not news the American public wants to hear, but it is a sure sign that consumer spending in the process regardless of which action is taken. If the government provides additional bailout money, this will reduce consumer spending overall as more taxpayers have to payout this additional income or GM will layoff these workers resulting in their reducing their consumer spending. It will also be interesting to see how if money is given out to GM how this will impact other businesses.
An interesting development here is that Best Buy is not immune to layoffs either. One of thought they would be doing well with the recent loss of Circuit City as a competitor; however, as this article shows, they are making about 250 layoffs in their corporate office to help become more streamlined. In addition, it shows that 500 people took a voluntary buyout about a week ago. This is a clear sign that reduced consumer spending has hurt Best Buy. It will be interesting to see if additional layoffs are made in the near future for the electronic giant.
Feb 18, 2009
United States’ largest tire maker just announced it will make 5,000 more layoffs. The article also mentions that the company is putting in salary freezes. Essentially this article is another example of what is becoming more and more common with each day: another company has a round of layoffs.
The Fed is starting to come clean about the reality of the economic problems we will have this year. They predict unemployment will rise to 8.5% to 8.8%. It was cited this was due to the housing problems and credit issues over the last year.
Feb 17, 2009
This article highlights that 20,000 state workers will be laid off in California. Although politics abound here, this will likely be a tell-tale sign for other state and municipalities throughout the United States who are forced to deal with smaller budgets. You can expect more layoffs and also a reduction in the services state and local governments offer.
Early results of the stimulus package are not positive. This should not surprise anyone, but the markets responded today with an early negative reaction as this article shows.
Feb 15, 2009
An interesting development has been created on television because of the recession. Many companies are cutting back on their brand awareness budget which is creating an opportunity for infomercials as these companies are finding this ad spots available at cheap prices. For those looking to sell things to the mass market, this may be an opportunity to look into further.
This article shows that video games are showing a strong resiliency as they continue to do well in the down economy. In some ways, it can be said video games are comparable to board games in this way because families and friends can play many of these games together. Many of the most popular games tend to be multiplayer like Mario Kart, Guitar Hero, Wii Fit and Wii Play.
Feb 14, 2009
This article shows how consignments shops are one of the few retail areas that are growing. You can bet more businesses will adopt this model from everything from clothes here to appliances.
Feb 13, 2009
Another business opportunity has emerged for those companies that cater to laid off workers. Outplacement firms have seen a rise in their business as this article shows. As more layoffs continue, this trend will likely increase. This is an example of a new found opportunity in the recession.
This is a sign that some companies are seeing a depression coming. Here, Mattell and Hasbro are assuming that things will get worse as they are putting more into promoting their board games. In the past, board games were really popular during the Great Depression because of their low cost and can be used again and again. Making a fun board game will likely be an opportunity to make some money. For all those familiar with the game Cranium, you can see that board games still have appeal in the modern era.
Feb 12, 2009
Gambling and gaming has notoriously done well in past recessions. However, this is not the case this time around. This article shows Las Vegas Sands is struggling as well. This is not surprising since other big gaming stocks are struggling including MGM Mirage and Wynn Resorts. Best to stay away from the gambling stocks this time around.
The managing partner for KPS Capital Partners predicts the current recession will last 3 to 4 years and could be longer. He believes this timetable could be extended further based on whether access to credit is opened. This is another sign that we are very likely to be in a recession for the next 3 to 5 years at least.
Feb 11, 2009
Interestingly, one of the brighter spots of the economy is not immune from layoffs either. Wal-Mart states it will be cutting 700 to 800 jobs in its Arkansas headquarters. However, it appears this move may be more of a reorganization where they are trying to streamline their operations. In addition, they stated they will be adding thousands of jobs to their retail stores.
This article shows some stocks that are doing well during this recession. Not surprising, Wal-mart is listed as well as the suggestion to look at dollar stores. In addition, it lists an auctioneers company that is doing well. Plus, an Education company, Apollo Group, which owns the University Of Phoenix is doing well. One that has not been mentioned previously is Public Storage. Apparently, when people moving into smaller homes because of the recession, they are storing their extra belongings in public storage facilities. Naturally, this creates another opportunity for those wanting to brave the stock market.
Feb 10, 2009
An analyst at RBC Capital Markets has adjusted his previous prediction of 200 to 300 banks failing to now up to 1000 banks. He anticipates this will occur over the next 3 to 5 years. He notes the decline is due to continuously high residential mortgage delinquencies and home equity loan defaults. Plus, there is an even further decline in available credit for commercial real estate. This article should be taken as gold that more bad news is coming. With more banks failing, there will be an even greater strain on the credit market that will trickle down into more layoffs and reduced consumer spending.
This article shows that casinos are going strong in this recession. This should not be surprising to anyone as historically casinos do very well in downturns. Part of this reason is because people will turn to casinos in the hopes of getting a big windfall. You can expect this trend to continue and even increase over the course of this year.
Strong language out of the new administration is for Americans to buy American products. On the surface, this sounds good. However, in this article, the Dallas Federal Reserve Bank President states this type of protectionism is will really be actually bad for America. He shows how this thinking was used during the times before the Great Depression which helped cause its creation.
Feb 09, 2009
Nissan is looking to cut 8.5% of its workforce. In addition, it looks like the other two top Japanese auto manufacturers (Toyota and Honda) will also be making some cuts with temporary or contract workers. Although it may appear they are fairing better, I suspect we will hear about them cutting their staff or wage cuts in the next two years. This articles is mainly an example of another big company taking a hit because of the ongoing recession.
This article shows a popular trend that is occurring across the board. More and more people are opting to get repairs done rather buying new. In this article, they show how more people are choosing to get repairs done on their old car rather than get a newer one. However, this article is really interesting because it shows a trend across the board. Other businesses like cobblers are up higher than they have ever been before. I naturally expect all repair businesses to boom with new business from seamstress work to electricians to even handymen.
One development that occurs during bad economic times is that more students choose to go back to school. The biggest beneficiary is normally 4 year colleges. However, this article shows more workers are choosing to go to community colleges because of the cheaper cost. Interestingly, what would seem to be a huge boom for community colleges is actually not the case because community colleges are able to control their costs largely by money given to it by the state. With state budgets drying up, they are actually hurting more because of the boom in enrollment.
Feb 08, 2009
This article shows that small government bodies like municipalities are not immune to the recession either. This is one example of many throughout the country. Here, are number of employees were laid off and some full time staff were adjusted to part time staff. These type of creative budget changes are common and will continue to take place. Although the number of employees impacted here is relatively small, this is occurring in hundreds of municipalities which adds up to quite a significant number.
This is an interesting development. This article shows that army recruiting is up in Indiana and, I suspect this may be a trend throughout the U.S. This is another example of how people will turn to more stable federal government jobs when private sector jobs go away. I believe this trend will continue to rise throughout the country.
This article highlights a few industries that are more recession resistant. They include hospitals, credit intermediation and related activities, federal government, ambulatory health care services, nursing and resident care facilities, and management of companies and enterprises. Of these, it looks like health care may be the most stable using the last recession in 2001 as an indicator.
Feb 06, 2009
This article highlights that more and more companies are starting to use business consultants to find ways to cut expenses and save money. This highlights a newly created business opportunity for those interested in helping these businesses. This will also extend beyond the private sector to state and city governments as well who will be looking for ways to make do with smaller budgets as early as next year.
This article shows an interesting dynamic at play. A number of women have chosen to start their own businesses to provide supplemental income to their family. The main impetus for this entrepreneurship was that their husband’s say their pay reduced or cut back. I suspect this trend will grow in the near future and am glad to hear it. These are some good examples of people going after business opportunities that really don’t require much start up capital.
The popular convenience store announced it is cutting 10% of its non store staff. It also mentioned the usual course of action these days: freezing raises, incentives and even 401k matching. This is a little interesting because convenience stores tend to do pretty well in recessions. However, it is too early to make a sweeping statement here because these layoffs were not made at the store level and were instead made at the support level. 7-Eleven will be an interesting company to follow to see if they can remain recession resistant.
This article highlights that the true unemployment rate is closer to 13.9%. However, it more importantly mentions that there is strong evidence to indicate that the unemployment rate will climb above the unemployment rate during the Great Depression because of us having a stronger bear market than at that time. In addition, governments will be ill equipped to help the truly needy because of runs on the allocated funds available.
This article shows that the other problem with all the layoffs is that companies are not hiring. Many companies have hiring freezes that aren’t expected to be lifted anytime soon. The article notes that the hiring rate is at the lowest it has been in years. This shows another reason why consumer spending will continue to go down.
This is an interesting development. It shows that even family grocery businesses are not immune. This grocery store had to cut 3% of its workforce. This is interesting because grocery stores are normally thought of as a recession resistant business. However, the article highlights that though they will not have a shortage of customers, the customers are starting to cut back on what they buy. In this way, they are getting less profit coming into the store. This highlights a business opportunity for discount stores and comparison services that can offer better bargains, sales, coupons, etc.
This article shows that jobless rates have climbed to 7.6% in January. Most analysts actually predict this will be over 10% sometime this year. In addition, some analysts anticipate that unemployment rates will climb higher than the roughly 25% unemployment rates during the Great Depression by predicting a 33% rate. However, this article simply reports the current facts, but does mention the significant borrowing hurdle: despite record low interest rates, businesses and individuals are having great difficulty being able to borrow money.
Feb 05, 2009
As an example to show other international companies are not immune, SAS, a Scandinavian airline, announced that it will be cutting 3,000 jobs with an additional 5,600 leaving as a part of outsourcing. The company sighted rising gas costs as on reason for the layoffs; however, a large part has to be because of the reduced traveling by many individuals.
This is an interesting article because it shows the trend of Americans starting to use their credit cards more than cash. Although this will be initially pleasing to Visa, it shows that people are starting to get stretched thin financially. When we move deeper into the recession, these bills will be left unpaid resulting in more problems. However, this does show an opportunity for those interesting in offering credit card debt relief and counseling. This trend here will not be an aberration as more people will try to go to credit before cutting back more on their spending. This naturally won’t last, but it will create a business opportunity in the near future.
The article shows Wal-Mart was one of the few retailers to beat Wall Street’s forecasts. This was due to bargain hunters trying to find better deals. This article highlights the shift in the American public to a survival mindset where discount retailers prove to be more recession resistant. Other examples to take a look at would include dollar stores like the 99 cents only store and discount clothing stores like Ross. Also, it should be noted that repair businesses like shoe cobblers are up significantly.
Feb 04, 2009
Pier 1 Imports announced it may close 125 stores. In addition, it plans to close a distribution center and layoff 10% of its staff. This is yet another example of a retailer having difficulty to keep up with declining consumer spending. Of course, this will not be the last either.
Corning Inc. just announced that they will be laying off 3,500 workers worldwide. In addition, they will be closing a plant later this year. The company also mentioned that there may be additional employees laid off at a later point. This is of some note because this company is heavily unionized.
Feb 03, 2009
Hawker Beechcraft Corp is not immune from the recession either. The plane maker will be laying off 2,300 additional workers due to declining orders among other challenges. The company specifically points out that the Government’s bailout attempt has failed to open up the credit markets. This should not be surprising since there is no pressure for banks to lend out money and it is to their benefit to keep as much cash on hand as possible.
The State Department has indicated that passport applications are way down as U.S. consumers are choosing not to travel to save money during this recession. Ironically, this creates a window of opportunity for an easier application process and it should provide better deals down the line for travel as travel companies compete for the remaining customers.
The world’s biggest mutual fund company is beginning its second round of layoffs with the plan to reduce 7% of its workforce. The reason given for the second round of layoffs was an “unprecedented worldwide economic downturn”. This is just one more example of the difficulties that are apparent in the financial sector.
Liz Claiborne plans to cut 8% of its workforce. It also is suspending merit increases and closing a distribution center. The reason for this decision is based on reduced consumer spending due to the current recession.
Feb 02, 2009
Predictions made in December about a coming round 2 of layoffs are coming true. Companies that are likely to have bad news coming include AOL, Best Buy, Caterpillar, Boeing Co, Starbucks, Motorola, and Schlumberger. As this second wave hits, we will see yet another negative impact on consumer spending which will impact even more companies. This continues ripple effect will be felt again and again over the course of this year.
As expected, white collar crime is rising during the recession as well. Most of this crime stems from mortgage fraud to other times of investment schemes. As the recession continues, crime will continue to be rampant. Here, is an example of the white collar variety although we will see increases in other more “blue collar” varieties in the coming months.
This article highlights that consumer spending has declined for 6 months straight now. In addition, it shows that personal income has declined for the last three months as well. This is clear sign that not only is their reduced consumer spending, but that this is now also being fed further by reduced income as employees are now not getting merit increases and pay raises as well as other perks.
This article highlights one of the United States’ most long standing retailer having to layoff 7,000 people to address reduced consumer spending. This move was made to centralize operations and cut back on expenses. It is also noteworthy to point out that the company is cutting raises and other executive perks. This plan will become a standard business practice for many retailers as the recession continues to worsen.
Reports are surfacing that the famous Wall Street firm is planning to cut 1,500 to 1,800 jobs. This is on top of about 7,000 layoffs made in 2008. These reports are especially interesting because it highlights that the deal with Citigroup has not been the panacea that some hoped for in these circles.
One of the major toy companies saw their 2008 4th quarter profits fall considerably. This is a clear sign of reduced consumer spending as big name products like Barbie and Hot Wheels saw sales decline which was marked contrast over the past few previous years. Mattel is looking to raise prices in 09 and reduce its advertising. This is another strategy some companies may use to address the reduced consumer spending.