More Doom Ahead

Everyone knows the current global economic situation is terrible. Can it get worse?

As unemployment reached 6.5% with no sign of slowing up, the U.S. automotive sector comes into clearer focus. Unemployment has reached its highest level in 14 years. Almost 250,000 jobs alone were lost in October. On Thursday, the next unemployment claims report is released. The expectation is 508k down from 516k previously. Personal bankruptcy flew past 100,000 in October due in part to lending sources drying up.

Michigan unemployment has reached 8.9% while the auto industry in on the brink. Ford (F) employs nearly 250,000 workers, the majority of them in Michigan. Nevada unemployment is at 7.1% as Harrah's Entertainment (HET) has cut 1900 jobs and the once high-flying Las Vegas Sands (LVS) run by Sheldon Adelson is cutting 10,000 jobs from its Macau projects and stopping parts of its billion dollar project. Their stocks are trading at $1.80 and $6.11 respectively.

Germany is officially in a recession after economic activity contracted much faster than was expected in the third quarter. The good news for the Germans, unlike Americans, is they have on average low levels of personal debt and a stabilization of consumer price goods.

The UK, considered the center of Europe's financial hub, has its own issues. Estimates have real estate decreasing up to 15% this year and 10% next year. Unemployment is at its highest levels in nearly ten years. Retail sales will be announced on Thursday. The previous result was -0.4 with the current estimates at -0.9.

No data indicates a change in direction. The U.S. retails are revving it up, but all indicators point to red. Best Buy (BBY) CEO Brad Anderson may have said it best after it lowered its profit for the year, "rapid, seismic changes in consumer behavior have created the most difficult climate we've ever seen." In other words, we're in trouble.

Disclosure: no positions in any company mentioned.

Comments

[rsinvestor:]

Thanks for the recap of old news.

2008 Nov 17 08:03 AM

[investor88:]

Agree with the article that there is more doom ahead.

2008 Nov 17 08:09 AM

[Joyful Alte...:]

Sheldon Adelson financed those "Islamofascist" propaganda DVDs delivered with the Sunday New York Times and practically every other newspaper in the country, and few people deserve more than he does to owe $8.8 billion.

2008 Nov 17 08:25 AM

[peterthepai...:]

yup!

2008 Nov 17 12:50 PM