US Jobs Forecast: Gloom with a Chance of Doom

US firms announced plans for 205,975 job cuts in July, according to Challenger, Gray & Christmas. That brings the total planned layoffs to 983,337 since January (see related article: http://www.msnbc.com/news/610106.asp). With planned job cuts soaring 65% in one month and 222% higher than in July 2000, the rate of unemployment in the US is certainly not decelerating.

And those numbers don't even include the layoff plans of foreign companies. As the global slowdown wears on, foreign companies are beginning to pare down. Foreign-based companies account for 6% of the US workforce, and many, such as Alcatel, BASF, and Nokia, have layoffs in the pipeline that will affect the US.

US workers have reason to be scared. The strict employment laws and union contracts in Europe and Japan are forcing multinational (US and foreign-based) companies to ax employees in the US before letting their foreign counterparts go. It seems that the same rules of open and free employment in the US that made it easier to create jobs are now also making it easier to cut jobs.

Although these more flexible employment rules aren't necessarily bad, they will contribute to the fear and reality of unemployment that is sure to spread over the next few months. US consumers will be forced to rein in spending -- the primary factor that, so far, has kept the US economy afloat.

It won't be long before the economy sinks further toward recession.