Layoffs pick up, employment hopes dim
U.S. President Barack Obama speaks on the economy following a tour of Cree, Inc., a manufacturer of energy efficient LED lighting and a meeting with President's Council on Jobs and Competitiveness, in Durham, N.C., June 13, 2011.
BOB MOON: Wall Street groaned -- loudly -- yesterday, over growing fears of another recession. That makes the government's latest jobs update -- coming up in a couple of days -- a critically important indicator. We just got a preview in the last hour from the job placement firm Challenger Gray and Christmas and it's not good. The number of planned layoffs at U.S. firms rose to a 16-month high in July. And this time, sectors which had been seeing fairly few layoffs unexpectedly lost jobs.
Live from Chicago, CEO John Challenger joins us now. Good morning, John.
BOB CHALLENGER: Good morning, Bob.
MOON: We've heard about big layoffs from Merck, Borders, Cisco and others. Is that what's driving this?
CHALLENGER: It is driving these cuts. We're not seeing the industries that have caused the recession -- housing and finance -- although banking saw major cuts as well, drive these changes. Now we're seeing new industries come into the for -- cutting jobs -- technology, pharmaceuticals, retail. And it suggests the economy may be stalling.
MOON: So, why do you think the government is planning even more cutbacks. That can't help, can it?
CHALLENGER: This deficit reduction plan isn't going to take effect til 2013 so it may not cause cuts immediately. But certainly down the road it will. Government continues to cut jobs though -- it's been the leading sector so far this year, third heaviest this month with over 11,000.
MOON: Well, this is pretty discouraging, but can we stabilize this before we fall back into another recession, do you think?
CHALLENGER: Well, that's the big question. The economy hangs in the balance -- we've been in a rocky two year recovery where we saw the economy surge forward, and we did see that this year with three consecutive months in the spring of heavy job growth, but then it seems to fall back. Maybe in just another part of that pattern, but there are increasing concerns that maybe the economy is slowing down, headed towards recession. The story will be told in coming months.
MOON: Job placement expert John Challenger. Thanks for your insights.
CHALLENGER: Thank you.