Posted by hanson807 on February 3, 2009
My estimation of the coming summer appears to be rosey compared to what is actually happening currently. If you have been paying attention to the headlines, you will note that Liz Claiborne is cutting 725 jobs, Macy’s is cutting 7000 jobs, Boeing is cutting 10000 jobs, IBM is cutting 2800 jobs, Sprint is cutting 8000 jobs, Motorola is cutting 4000 jobs, AT&T, DuPont and Viacom announced 15,000 will be cut collectively, Kodak has announced 4500 cuts, AMD will cut 1100 jobs, Starbucks will layoff a 1000, Pfizer-Wyeth plan to cut 8000 jobs, New York state is planning to layoff 3100 state workers, UAL will cut 1000 salaried positions, Harley-Davidson is cutting 1100. Others can be added but this is a list of about 60,000 jobs that are going to get cut.
Along with those cuts you should anticipate other companies and small shops to begin to close. These were their customers and they are about to be unemployed. Small craft and mom and pop stores will be closing later this summer as well. Most of the big retail stores will be cutting their inventories and over seas orders will be dropping significantly. With these drops you will see plants being shuttered. The closing of plants and reduced orders will require less resources, so you will see mining and processing plants reduce output and some cases close all together. This will drop the consumption of oil and we should see a down turn in oil use so the $40 a barrel price is going to be here for a while. Not sure I would say it is going to drop, but I wouldn’t be surprised by a $30 a barrel price by mid July.
New developing energy markets are going to be hit hard. The wind farms we have will continue to run of course, but new ones will be put on hold or canceled. The tax credits associated with these projects are going to lose value and make the project unprofitable.
Unfortunately, research and development will also decline as companies try and increase the bottom line. This is exactly backwards of what I think they should do. I beleive if they increased R&D, because the cash is going away anyway, they may be able to develop a way out of this mess. You will see more people returning to college and university. My guess is you will see more people going into science fields and health care and less in business and education. The way out is through technology and new markets.
The stimulus package we should be seeing should be an increase in R&D, a new space mission and goal of making a huge moon base. The budget should cut all road and highway maintenance. The social security and medicare program benefits have never been tied to the market, the socialists believe this is the way to go. However, the amount of money that they get is tied to employment. As unemployment climbs if we don’t cut all social programs across the board we are going to just get hammered. It will increase the length of time it takes to recover.
State employees and other government employees had better start to understand where the money is coming from. The 60,000 job cuts I mentioned early pay their salary and they are gone, so they will be taking a pay cut or a job cut. I realize they won’t like it, but I’m sure the 60,000 thousand who lost their jobs didn’t like it either.