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U.S. Companies Axe 532,000 Jobs in May; Bernanke: U.S. Must Plan Now to Control Debt; Microsoft Threatens Outsourcing if Tax Bill Passes; U.S. Business Bankruptcies Surge By 40%; Microsoft-Yahoo Still Unglued; Bob Evans Beats Forecasts;
U.S companies cut roughly 532,000 workers from payrolls in May, more than economists forecast, according to a report from Automatic Data Processing Inc. April's data was also revised to reflect companies a loss 545,000 jobs, up from the previous reading of 491,000. The unemployment rolls are expected to increase as General Motors Corp. (NYSE: GM) and Chrysler LLCtrim payrolls as they deal with bankruptcy. The labor market continues to struggle even as the overall economy shows signs of improvement. "Still, losing over half a million jobs a month is hard to get excited about," Derek Holt, an economist at Scotia Capital Inc. in Toronto, said in a note to clients, Bloomberg reported. "Steep job losses still signal a deeply troubled economy."
U.S. Federal Reserve Chairman Ben S. Bernanke yesterday (Wednesday) warned that controlling government debt is critical to the nation's long-term health and sounded more confident that the U.S. recession would end this year,as he delivered a cautiously optimistic view of the U.S. economy to the House of Representatives' Budget Committee. Bernanke also said the threat of deflation has eased, but surging debt is causing interest rates to rise, "Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance," he said, according to Reuters. Bernanke didn't say whether the government would buy more Treasury bonds and mortgage-backed securities to keep interest rates low.
Microsoft Corp. (Nasdaq: MSFT) will outsource "lots of" jobs to overseas offices if President Barack Obama's plan to sock U.S. companies with higher taxes on foreign operations passes Congress, Chief Executive Officer Steven Ballmer said yesterday (Wednesday). The proposed law would eliminate or restrict roughly $190 billion in tax breaks for offshore companies in the next decade. The world's largest software company joins such business groups as the National Foreign Trade Council and the U.S. Chamber of Commerce in speaking out against the overhaul. "It makes U.S. jobs more expensive," Ballmer said in an interview with Bloomberg. "We're better off taking lots of people and moving them out of the U.S. as opposed to keeping them inside the U.S."
U.S. businesses filed 40% more bankruptcies in May than a year ago as companies including RH Donnelley Corp (OTC: RHDC), auto parts maker Visteon Corp. (OTC: VSTN) and apparel retailer Anchor Blue Retail Group Inc. were pushed into the red by a struggling U.S. economy. According to Automated Access to Court Electronic Records (AACER), a database of U.S. bankruptcy statistics used by attorneys and lenders, 7,514 commercial entities filed for bankruptcy last month, compared to just 5,354 a year ago. The May figure was twice as high as the number of filings two years ago.
Talks of a possible partnership between Microsoft Corp. (Nasdaq: MSFT) and Yahoo Inc. (Nasdaq: YHOO) may cool off after Yahoo Chief Executive Officer Carol Bartz told a moderatorduring an investor conference that "Yahoo actually has a bright, bright future, probably cleaner and simpler without thinking there's any Microsoft connection."