Jobs Pull A Houdini

Posted In: Financial Services, Mortgages, Unemployment

Back on October 5 when the latest U.S. employment numbers were released, President George W. Bush praised the September data and declared the revisions added up to 49 consecutive months of employment growth, the “most on record for our country.” Pretty impressive, I thought, although I questioned what kind of jobs ware actually being created. And then I read the BusinessWeek piece on Yahoo! Finance last night, which said:

It’s official. This is the worst year ever for layoffs in the U.S. financial-services industry — and there’s still more than two months to go.

Party poopers. Anyway, Chicago-based outplacement firm Challenger, Gray & Christmas reported that as of this month, finance companies had announced 130,000 job cuts for the year to date. This number is more than double the 50,000 cuts announced in 2006 and way ahead of the previous record of 116,000 back in 2001. BusinessWeek said fallout from the subprime mortgage crisis and from risky corporate bonds and loans are the culprits undermining the finance companies.

Back on October 4, I talked about how job losses in the mortgage industry were rising sharply. According to an Associated Press article from October 3, mortgage lenders had accounted for nearly 70,000 layoffs from January to September. In the same post, I noted that Bloomberg had predicted on September 10 that close to 100,000 mortgage company jobs would be eliminated in 2007. Been there, done that. According to the BusinessWeek article, almost 80% of the job cuts took place in the last 2 months. Disturbing.

Alarmingly, the pink slips in the financial services industry aren’t stopping with the mortgage companies. According to last night’s article:

The job cuts have spread well beyond brokers in the subprime mortgage business, though. Senior mergers-and-acquisitions bankers, financiers, and traders are getting the ax, too. On Wall Street, losses stemming from a liquidity crisis (BusinessWeek.com, 9/17/07) are leading to the first major job cuts since 2003.

Experts believe that job cuts in investment banking are about 10% of the workforce so far. However, just this evening MarketWatch is reporting that Bank of America is cutting roughly 3,000 jobs and launching a strategic review of its investment banking business after recent poor performance from the unit.

More to come?

Sphere: Related Content