Coming soon to U.S., 1 million jobs lost every month: Report
London-based GFC Economics is making a frightening prediction: By spring 2009, the United States could be facing more than 1 million layoffs every successive month.
Expenses related to corporate debt, and muddy credit markets consumed by fear, are driving a fast-approaching "hard landing," claims a Sunday report in UK's Guardian.
"Corporate bond yields have rocketed since the credit crisis began as investors flee risky assets in search of safe havens such as US Treasuries. That effectively means many firms are being forced to pay eye-watering interest rates to borrow funds," the paper reported.
"November's jobs figures were so much worse than analysts had expected that the Dow Jones share index actually rallied by 259 points, more than 3 per cent, as investors bet that Washington would have to launch a major new rescue package for the economy even before President-elect Barack Obama takes over the White House in January."
Sunday morning, during an appearance on Meet the Press, President-elect Obama cautioned Americans that the crisis would only get worse before it begins to ease. He also outlined a new stimulus package some senior Democrats have said could cost as much as $1 trillion.
"Mr. Obama refused to put a cost on the plan, but senior Democrats are talking about $700 billion, with others urging up to $1 trillion," reported the Times Online. "When he met the nationís governors last week he was told that on the state level there was $136 billion worth of building projects ready to go if federal money was made available."
David Frost, director-general of the British Chamber of Commerce, paints a grim deadline.
"The worry is that next year the job losses will be just horrendous," he said. "All sectors are taking the hit. In the middle of the year it was construction and estate agencies. Now it is services, the automotive industry, retailers. Firms are waiting for Christmas and if they can't see any improvement they will cut their payrolls."