Conoco Phillips ( Part of Warren Buffett holdings)(NYSE: COP) the second-largest U.S. refiner, announced that it plans to cut 4 percent of its workforce, or about 1,350 jobs.
Unfortunately, many other companies in the U.S. and around the world cut jobs yesterday. And the cuts are across a wide range of industries which suggests that a deflationary spiral is hurting all industries. That means that lowering demand causes sales to drop and producers respond by cutting prices and reducing capacity. The lost jobs that follow the capacity reduction mean that consumers, which account for 70% of GDP growth, will buy less. And the cycle will begin anew.
Unfortunately, many other companies in the U.S. and around the world cut jobs yesterday. And the cuts are across a wide range of industries which suggests that a deflationary spiral is hurting all industries. That means that lowering demand causes sales to drop and producers respond by cutting prices and reducing capacity. The lost jobs that follow the capacity reduction mean that consumers, which account for 70% of GDP growth, will buy less. And the cycle will begin anew.
Let's hope that the stimulus package will be able to "save or create" the hoped-for three million jobs. If it does, then we might be able to get back to where we were at the end of 2007. If not, the 2.1 million forecast for 2009's lost jobs may prove to be too low.
As per Sep 08 shareholding of Conoco Phillips, Warren Buffett's Berkshire Hathaway is holding 83,955,800 shares.
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