The scariest hours in the day are the one before the stock market opens and the one after it closes. That's when companies announce their layoffs. Today was no exception. Home Depot slashed 7,000 jobs. Caterpillar is whacking 20,000. Caterpillar -- is it worth mentioning? -- had record sales last year and made a profit of $3.6 billion dollars, which counts for nothing in today's economy. Heads must roll.
These days, we'll take optimism wherever we can find it. It's been a tough search today but we found a little today in Caterpillar chairman Jim Owens' assessment of what's ahead:
"We are optimistic that economic conditions in the United States will stabilize later in the year and may show some signs of recovery."
Granted, the next sentence was the announcement that 20,000 people would lose their jobs, but when's the last time you heard someone say there may be some recovery later this year?
The CNBC anchor this morning made a big deal about that, noting that Owens is usually a pessimistic guy "who nailed the recession."
Really? This was his comment one year ago:
I think I'm considerably more optimistic than the mood here in Davos," CEO James Owens said Friday.... Owens said he expects "either a mild recession or a soft landing" on tap for the U.S. economy.... Issues surrounding subprime mortgages "have been with us for a while," and the correction in the wake of the housing bubble is already under way, Owens said.... Owens said he expects to see "a bit of decoupling" between the world economy and the United States, pointing to extremely strong growth in the Middle East, Russia, and other emerging economies, where the commodity boom has fostered strong balance sheets.
Two months later -- March 2008 -- he was described as "a financial whiz" because he claimed the U.S. was already in recession, which it was.
"The U.S. economy is probably in recession now but will likely have real growth this year of around 0.5 percent, so very very slow growth and probably a couple of quarters of negative growth," Owens said.
Update 10:02 a.m. - These additional layoffs were announced today:
The consumer confidence survey will be released on Wednesday. We're all on the edge of our seats.
Update 3:56 p.m. - The post stock-market-close layoffs:
Texas Instruments - 3,400 jobs
I see a lot of this kind of crap among the leaders in the real estate industry. Many believe that we have to make positive statements even if they are not true because people will spend more money if they are not worried.
My company is doing the same song and dance. Our CEO put out a company-wide memo stating that the recession could be one the best things to happen for the company.
How reassuring! Especially to the dozens of people that have since been laid off. I hope they realize how lucky they are!
Why don't we find the people who were accurately describing the economy a year ago, and predicting the recession, and find out what they're saying now?
"Why don't we find the people who were accurately describing the economy a year ago, and predicting the recession, and find out what they're saying now?"
Search the net for Roubini. He is not an optimist.
You know, companies used to be run for the long term profit rather than quarterly profit.
How can Owens justify cutting 20,000 jobs when the company made 3.6 billion dollars last year? It makes sense lay off some people but 20 thousand seems excessive.
But wait, if you factor in the crippling need of Wall St investors to see growth and to mitigate loss regardless of the economic environment it all makes sense.
Remember that Owens, like all his C-row brethren, are major stakeholders on Wall St. Compensation packages that stress large stock option grants lead CEO's to have more loyalty to stock holders and short term gains than to employees and long term growth.
And that, boys and girls, is how we take a recession and turn it into a depression.