“Companies today need to react quickly to revenue decline," said John Challenger of employment specialist Challenger, Gray and Christmas. "They’ve got to ratchet down their workforce. The Street expects that. They have no choice.”
Caterpillar was a case in point Tuesday. After the equipment giant missed market expectations for quarterly profit by 2 cents, the CEO said the company had laid off an unspecified number of workers in the United States, England and France as it tries to adjust to what he called "recessionary conditions" in some of its markets. (Read story here)
Meanwhile, Merrill Lynch Chief Executive John Thain said over the weekend that he expects thousands of job cuts after the company is acquired by Bank of America , according to news reports.
These were just the latest in a growing layoff trend as fallout from the credit crunch and economic downturn continues to pelt the economic landscape.
Last week PepsiCo and Danaher said they would lay off thousands of workers, while the state of Massachusetts disclosed plans to cut its payroll by 1,000 as it faces a tax shortfall.
The situation is poised to worsen as the holidays approach as many businesses scrutinize budgets for the coming year. Christmas layoffs are common in tough times.
"It's a fairly grim outlook," said Michael Goodman, director of economic and public policy research at the Donahue Institute of the University of Massachusetts, told Reuters. "I don't know of any sector of the economy that will be spared."
Ed Yardeni, chief investment strategist for Yardeni Research, is hoping that the U.S. government's $700 billion bailout package will slow the job cuts.
"If this rescue plan doesn't work, then...you could see something much worse that could feel like a recession or a depression, with all sorts of people losing jobs," he told Reuters.
A survey of more than 100 chief financial officers and other senior executives—conducted last week—found 56 percent expect to reduce payrolls over the coming year.
A majority polled by CFO Magazine also predicted falling revenues and plan to cut operating costs by at least 5 percent. (See a discussion about the survey here)