Given the never-ending stream of bleak economic news of late, the stock market’s one-day surge on Tuesday was taken as a welcome sign. The major indices all saw their highest single-day gains of the year thus far, but whether the rally can be sustained for even a few days is, of course, another matter entirely.
Meanwhile, the $410 billion spending bill just passed by the Senate will be enough to fund the government’s operations for the remainder of the fiscal year. Despite clearing the Senate by a vote of 62-35, critics assailed what they claimed were nearly $8 billion in earmarks. However, the Obama administration said the bill was a holdover from the Bush era and blamed the pork on the previous administration.
In an employment market, where most companies are shedding jobs like there’s no tomorrow—which, for some firms, might be near the truth—telecom giant AT&T is bucking the trend, with plans to add 3,000 jobs this year. Yes, you read that right—add. The new positions are part of a multibillion-dollar capital spending program which will total between $17 billion and $18 billion in 2009. Two thirds of the money will go toward building up the firm’s wireless and broadband networks to accommodate a 50 percent increase in AT&T’s data traffic each year, the company said.
And now back to the aforementioned bleak economic news.
On the opposite end of the job growth spectrum from AT&T, the hedge fund industry could lose some 20,000 positions this year, according to a report by financial recruiting firm The Options Group. That figure breaks out to a 14 percent job loss for the industry, which had seen rapid growth and soaring profits over the past decade up until the collapse of the subprime mortgage securities industry, in which many hedge funds were heavily invested.
And the credit markets continue to take a beating. The latest figures released by Fitch Ratings revealed that delinquency rates for credit card payments reached record highs for the second straight month. The index, which measured the number of payments more than 60 days late through January, surged 4.04 percent, beating out the then-record 3.75 percent increase of the previous month. Despite decreased spending by consumers, job losses and plummeting investment values have forced more Americans to rely on credit cards for basic necessities.
Zooming out to a global scale, the picture is not any prettier. The head of the International Monetary Fund (IMF) said the world economy could see overall growth fall below zero this year. IMF Managing Director Dominique Strauss-Kahn blamed the strangled growth on deleveraging by financial institutions and a collapse in consumer and business confidence that has dragged down global demand and trade.
Not to be outdone in the gloomy outlook category, the World Bank said the global economy is in danger of falling to its worst performance level since the Great Depression, and predicted global industrial production could fall by as much as 15 percent this year.
It seems clear that, even if the stock market can stay on an uptick for a while, the global economy is in for a rough ride for the foreseeable future.