Weakening demand is forcing new and accelerated cost reductions at companies from Bank of America and Hewlett-Packard to Staples and Eastman Kodak, dimming the outlook for an already struggling U.S. labor market.
Even as consumer confidence and housing show signs of recovering, sales for businesses in the Standard & Poor’s 500 Index fell 0.9 percent from a year earlier in July through September, the second consecutive quarterly drop and biggest decline since 2009, according to analyst forecasts compiled by Bloomberg. A 1.2 percent gain projected for October-December still is smaller than the 5.4 percent rise in this year’s first three months.
A global slowdown triggered by Europe’s debt crisis is exacerbated by the potential impact of the impending U.S. fiscal cliff of changes in taxes and government spending. All this is pushing finance chiefs back to the drawing board, with some limiting hiring and investment and others slashing more jobs than originally announced. Such belt-tightening will dominate employment prospects for the rest of the year.
Bank of America, the second-biggest U.S. lender, is speeding up a 2011 plan to trim $8 billion in expenses and more than 30,000 positions. Hewlett-Packard, the world’s largest personal-computer maker, will slash 29,000 jobs instead of the 27,000 it announced in May. Staples is accelerating its shutdown of 15 American stores as consumers shift to using fewer traditional office products such as folders.