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Weak Earnings In US Means More Layoffs?

It is earnings season in the US, and unfortunately, quite a few major corporations are really missing their targets and delivering disappointing numbers.

Up until this point, things haven’t really been that bad – some companies were feeling the heat, but they were pretty much in tune with the way the economy was going. But now, some really big companies are missing earnings estimates by a large margin. When earnings disappoint, what’s the first thing that usually happens?  Cuts are made. Where will most of these cuts come from? The workforce…

Bank of America has already said it would cut 10% of its workforce, or around 30,000 jobs. JP Morgan has also stated that they are looking to get rid of around 1000 employees. Even Wal-Mart isn’t immune – they have stated that they are looking to reduce capital spending in the US by around 7.5%, and you can guess where a large portion of these cuts will come from – the workforce.

Everyone thinks that right now, we are just focusing on getting the unemployment rate lower that the current rate. But, if we are not careful, that number could jump as high as 9.5% according to some analysts’ predictions.

 

Chinas Trade Numbers Take A Hit As Global Economy Worsens

It seems as though China is rally starting to feel the effects of the world economic slowdown – for the second straight month, imports and exports were slower and their overall surplus shrunk.

China has been relatively untouched by the situation in the EU and the USA for the most part. But, things are finally starting to catch up with them – the Chinese economy is mainly export driven. If people aren’t buying their products around the world (Mainly in the EU and USA) they will take a huge hit. While they do have a very large population, their domestic economy can’t support their production at the levels that they have been at for the past few years.

The higher value of the Yuan is also hurting their export numbers. When the Euro and the Dollar are on a consistent free fall against the Yuan, the Chinese goods that are produced become a lot more expensive and people can’t afford to buy them. Overall, it is just a very poor situation to be in.

It will be interesting to see how Beijing handles this situation. With their trade activity falling and rumors of financial instability domestically, China may be the next country to experience financial difficulties.

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