Doug, I agree that these companies are, in some part, attempting to impress Wall Street through this action. However, these layoff announcements, when viewed in light of recent economic news (see clip below), do not bolster confidence. If the PPI increase of 1.6% is any indication of our future, then I think these companies will either be forced to follow through with these layoffs in an effort to cut costs, or they will have to pass these increases on to their customers....does this mean we are headed for an inflationary future?
ECONOMIC NEWS:
The U.S. trade deficit unexpectedly jumped 10.6 percent in December to a record $44.2 billion, as the ravenous U.S. demand for imports continued to grow and exports slumped, the government said on Thursday. The monthly trade gap far exceeded the average estimate of $38.8 billion by analysts before the report and pushed the tally for the year to a record $435.2 billion, as U.S. exports declined for the second year. Imports increased 1.7 percent to $125.4 billion in December while exports declined 2.6 percent to $81.2 billion. "That tells me not only is the global economy not strengthening, but it's getting weaker," said Mark Vitner, senior economist at Wachovia Securities in Raleigh, North Carolina.
Overall producer prices climbed 1.6 percent, the largest rise since January 1990, and surpassing forecasts for a 0.5 percent increase. The number followed a 0.1 percent drop the previous month. Excluding volatile food and energy goods, prices still rose 0.9 percent, the fastest rise since December 1998 and also way above forecasts of 0.1 percent.
The Labor Department reported that initial claims for unemployment aid rose 21,000 to a seasonally adjusted 402,000 for the week ended Feb. 15, worse than the 382,000 expected by analysts. Some economists view claims above the 400,000 level as a sign of a deteriorating jobs market.
Expecting to reach the national debt ceiling of $6.4 trillion on Thursday, the government took steps Wednesday to allow federal borrowing to continue while Congress considers raising the debt limit. Treasury Secretary John Snow wrote congressional leaders urging quick action to raise the ceiling, though he did not recommend a new limit. Treasury officials saying they wanted to leave that decision up to lawmakers. The national debt subject to limit stood at $6.392 trillion as of Tuesday, only $8 billion below the $6.4 trillion limit.
U.S. oil inventories hover near record lows with the EIA reporting a rise of 3.1 million bbl to 272 million barrels while the API reports a drop of 3.3 million bbl to 268,289 million barrels. Distillate inventories were down 24% from a year earlier. Natural gas in storage fell 203 bcf on very strong demand.