Announcements of another round of layoffs from both American and international companies, including AT&T, shook the labor market anew today as a worldwide fight to halt the recession intensified.
AT&T, the country's largest telecommunications company, announced that it would cut 4 percent of its workforce, or 12,000 jobs. That's on top of the 4,600 jobs AT&T announced in April that it would slash.
Like other companies hit particularly hard—not least of all the "Big Three" automakers, which are in Washington pleading their case this week—AT&T has been caught between both lower consumer spending and long-term industry trends. In particular, it relies on its landline services for revenue, while consumers are moving more and more toward wireless. In the last quarter alone, the company saw an 11 percent drop in the number of its basic phone lines in service.
Other major companies also announced job cuts today. Chemical maker DuPont will cut 2,500 jobs, while the Swiss banker Credit Suisse will slash 5,300, or 11 percent, of its workforce worldwide.
To the surprise of some, however, the announcements come at the same time as reports show that new claims for jobless benefits dropped last week. Analysts had estimated that seasonally adjusted initial claims would reach 537,000, but the actual number was 509,000. Still, that means ongoing claims have reached 4.09 million—the highest level since the recession 25 years ago.
Other countries are also seeing a wave of job cuts this week. One of the hardest-hit cities has been London, a major site of global banking that found itself at the epicenter of the credit crisis. The Japanese bank Nomura, which took over the European branch of Lehman Brothers, said it will cut 1,000 of its jobs in the city, while Germany's Commerzbank is letting 1,200 London workers go. HSBC, the biggest bank in Europe, announced Monday that it will eliminate 500 jobs in Britain.
In an effort to jump-start the economy, Europe's two main central banks cut interest rates today. Having been cut by 1 full percentage point, the Bank of England's main interest rate is now at 2 percent, its lowest level since the early 1950s. In Brussels, the European Central Bank has cut its key rate by three quarters of a percentage point to 2.5 percent.
In the United States, meanwhile, major efforts are being focused on freeing up the housing market. The Treasury Department is currently considering a plan by which it would buy securities financing new loans for home purchases, mainly from Fannie Mae and Freddie Mac. In turn, the mortgage lenders would need to set very low interest rates. Supporters say that would help homeowners more than by focusing only on borrowers. And many, including Treasury Secretary Henry Paulson, have said that fixing the mortgage crisis is necessary to roll back the recession.