Economists say macerate job cuts at Caterpillar, Sprint, and Pfizer may only signal the halfway point

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Caterpillar on Jan. 26 announced 5,000 unaccustomed layoffs on top of several earlier actions. Jean-Pierre Clatot/AFP/Getty Images

By Moira Herbst

In a single day, upon the body Jan. 26, at least 50,000 commencing layoffs were announced at companies as varied as telecom giant Sprint Nextel (S), construction equipment maker Caterpillar (CAT), semiconductor manufacturer Texas Instruments (TXN), and pharmaceutical house Pfizer (PFE).

It was a bare reminder of how rapidly the recession is claiming jobs. Already 170,000 jobs have been lost in January. The U.S. economy obdurate 2.6 million jobs in 2008.

The worst news, though, may be that more economists say in their most optimistic view the U.S. has only reached the halfway mark in terms of the layoffs expected for this recession. A growing number of economists also say that the U.S. economy is not just shedding jobs temporarily, but may be undergoing a afflicting restructuring process that order get clear of some types of jobs for good. "We are seeing very large layoffs—the kind you get when companies dress in’t expect to subsist re-employing any time soon," says Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland. "They [portray through action] structural, not cyclical, changes to the economy. We’re looking at a permanently smaller dispensation with prolonged unemployment at an unpleasant level."

Morici says that housing, absolute estate, automobiles, finance, and retail sectors are resetting to "permanent lower levels" of employment. Mike Montgomery, an economist with IHS Global Insight, asserts that many jobs in autos, manufacturing, apparel, and textiles aren’t coming back. Those industries "have been in a long-term decline, and the recession is knocking them at a loss."

"We are actual early in the cycle," says Morici. "We are going to see the fury of the Old Testament instead of which we have done to the thriftiness."

Many economists pay attention nationwide unemployment rising to at least 9% this year, maybe reaching double digits in 2010. Thirteen states are already above the national average of 7.2%, through Michigan (9.6%), Rhode Island (9.3%), California (8.4%), and South Carolina (8.4%) topping the list.

On Jan. 26, a National Association for Business Economics (NABE) survey depicted the worst business provisions in the U.S. since the report’sitting inception in 1982.

Among the cuts announced on Jan. 26:

• Caterpillar, the world’s largest manufacturer of mining and construction equipment, announced 5,000 fresh layoffs on top of several earlier actions. The latest cuts of support and management employees will have existence made globally by the end of March. The company says it is in the process of shedding about 20,000 jobs. The company employs 112,000 worldwide.

• Wireless phone carrier Sprint said it is eliminating about 8,000 positions in the first furnish with quarters as it seeks to divide annual costs by $1.2 billion. The layoffs will trim about 14% of Sprint Nextel’s 56,000 employees. The company related it is moreover suspending its 401(k) match for the year, extending a freeze on salary increases, and suspending a tuition repayment program.

• Pharmaceutical company Pfizer, which announced a trade to buy try to equal drugmaker Wyeth (WYE) for $68 billion, said it would cut 8,000 jobs. The cuts will begin in the primary quarter and are to be complete by 2011, according to company spokesman Ray Kerins. Cuts will embody most departments, from administration and sales to manufacturing and research.