Job losses continue to climb

A growing number of companies are sending workers a grim holiday message: Head for the unemployment line.

Aetna Inc., Cooper Tire & Rubber Co. and Western Digital Corp. said Wednesday they would cut a combined 4,900 jobs. And Eastman Chemical Co. said it would cut an unspecified number as it tries to slash costs by $100 million in 2009.

The announcements came a day before the government is expected to report that jobless claims remain near their highest point in 26 years. Economists surveyed by Thomson Reuters project that 558,000 workers filed new claims last week.

The downturn has spread far beyond the housing and banking businesses where it began, battering workers in nearly every sector of the economy. Cooper Tire said Wednesday it would cut 1,400 jobs. Western Digital, which makes computer hard drives, said it plans to cut 2,500. Aetna, the third-largest U.S. health insurer, said it is cutting 1,000 jobs – 2.8 percent of its work force – to reduce costs and focus on growing areas.

The reports came one day after drug maker Bristol-Myers Squibb said it will eliminate 800 jobs by the end of this year.

“Things are changing so rapidly, and deteriorating so rapidly, that firms don’t have a choice,” said Nariman Behravesh, chief economist of IHS Global Insight. “It looks like the economy is in somewhat of a free fall.”

Falling sales are squeezing companies’ cash just as tighter credit makes it harder for them to borrow to fund operations, Behravesh said. The combination means this time, some companies can’t afford to wait until after the holidays to cut jobs.

Many people with jobs are so fearful about their employment security that families are reducing spending, giving retailers one of the worst holiday shopping seasons in decades.

Electronics retailer Best Buy Co. said this week that it faced “the most challenging consumer environment in its history” and would offer buyouts to all 4,000 of its headquarters employees.

“We believe that the environment for consumer spending is likely to get worse before it gets better,” said Chief Executive Brad Anderson.

“We need to prepare our organization to operate in a wide range of potential macroeconomic scenarios in the coming year,” he said.

Its rival Circuit City Stores Inc. filed for Chapter 11 bankruptcy protection last month. Retailer KB Toys filed for bankruptcy protection last Thursday.

The recession that began last December could last though the third quarter of 2009, said Aaron Smith, a senior economist with Moody’s economy.com. Unemployment will likely continue to climb into early 2010, he said, even though the economy could start growing again in the fourth quarter next year.