“It’s just going to be a long, hard slog,” said Joshua Shapiro, the top-ranked forecaster of the U.S. economy for three consecutive months through July, according to data compiled by Bloomberg and based on two years of surveys. “The economy is weak and is going to stay weak,” added Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. “The labor market will continue to struggle.”
Bank of America, the second-biggest U.S. lender, is speeding up a 2011 plan to trim $8 billion in expenses and more than 30,000 positions. Hewlett-Packard, the world’s largest personal-computer maker, will slash 29,000 jobs instead of the 27,000 it announced in May. Staples is accelerating its shutdown of 15 American stores as consumers shift to using fewer traditional office products such as folders.
The share of U.S. chief executive officers planning to add employees or expand investment during the next six months declined in the third quarter compared with April through June, while a bigger share said they’d cut jobs and spending, according to the Business Roundtable survey conducted Aug. 30 to Sept. 14. The group’s economic-outlook index slumped to 66, the lowest since 2009, and the portion of CEOs who anticipate sales will fall more than doubled to 15 percent from the prior period.
“The headwinds we are flying into will likely dominate in the next few months,” said Harry Holzer, a public-policy professor at Georgetown University in Washington and former chief economist at the Labor Department. In addition to corporate cutbacks, “the public sectors at the state and local levels continue to shed jobs. A real turnaround from recent months -- that is, something well over 150,000 for the rest of the year -- is unlikely,” he said, referring to monthly payrolls.
This poses a hurdle for consumer spending -- which accounts for about 70 percent of GDP -- at a time when other pillars of growth are starting to slacken. Exports decreased 1 percent in July after rising in May and June. Orders for durable goods other than transportation equipment dropped in August for a third consecutive month, signaling slowing business investment. Fed data show factory activity in the Philadelphia and New York regions shrank in September.