Microsoft cut 5000 jobs, unemployment claims hit a 16-year high and housing construction fell to half-century lows in another bad day for the US and global economies.

Google earned more, Nokia less and cut its dividend and 2009 mobile phone sales forecast. Chipmaker AMD had another loss and the markets went backwards — shares fell, commodities ditto.

The gloom descended further as China slumped, Japanese exports plunged and South Korea went backwards.

Sony revealed a $US2.9 billion loss estimate for the year to March, almost $US5 billion worse than the $US2 billion profit estimate only two months ago.

The loss in the December quarter seems to have been a mind blowing $US3.6 billion.

But as dramatic as this corporate news was the latest from the continuing cause of all the woe: the tanking US housing sector, still staggered us.

New housing starts fell 15% in December on November, to be down a mind blowing 75% in the past two years, prices continued to fall as foreclosures rose, job losses escalated and the recession deepened.

The news from Microsoft and the housing sector underlined what President Barack Obama has to do with his plans for a stimulus package and rescuing banking.

Microsoft sacked 1400 people immediately with the rest going over the next 18 months as the tech giant reported stumbling sales of its key software products, including Windows and Word.

Two days ago, IBM had surprised the market and investors with good news: better than expected 4th quarter figures and outlook, while offset news from Intel, the giant chipmaker revealed of plans to close six plants around the world and sack up to 6000 people in the next few months.

Google’s profit topped estimates, but earlier this week it sacked 100 in-house recruiters — it might be earning more but it’s not eager to hire.

The US Labor Department reported the number of new unemployment claims leapt last week to 589,000, equalling the highest level since November 1982.

Economists say these jobless claim figures so far this month are pointing to another miserable employment report in two weeks: the US lost 2.6 million jobs in 2008 and unemployment hit a 16 year high of 7.2% in the month.

The number of housing starts plunged 15.5% in December from November to an annual rate of 550,000 units while permits to build new homes, an indicator of future activity in the housing sector, fell 10.7% from the prior month to an annual rate of 549,000 (which was seen as ‘good’ news by economists desperate for a silver lining to call their own.

The US Commerce Department figures were the lowest on record: Housing starts data were first published in January 1959, and permits data in January 1960.

Economists say these figures are 30% lower than in any recession in the past half century in the US. That’s how bad the situation is.

In London the country’s shrinking manufacturing sector is now at its worst level since 1991 and unemployment this week was reported as nudging 2 million and rising.

The Confederation of British Industry said that demand for UK manufactured goods had plummeted over the last three months and is weaker than at any time since July 1991.

Italy confirmed it was being hurt by the meltdown, despite claims by some in the government that the country was secure.

Car giant Fiat, which this week revealed plans to buy 35% of struggling Chrysler in the US, said 4th quarter earnings dropped sharply and that means a lower yearly profit and no dividend.

And despite the huge spending on the wars in Iraq and Afghanistan, the weapons industry isn’t as safe as some would suspect.

Lockheed Martin, the country’s biggest defence contractor and the number third, Northrop Grumman both reported that earnings would slump. Lockheed cut its forecast twice in the past few months and Grumman warned it would report a loss for 2008 due to a write-down of up to $US3.4 billion in asset impairments on goodwill on acquisitions.

Next week we find out about our consumer price inflation, and get the Fed’s meeting and the first estimate of 4th quarter GDP for the US economy. That will be the best reading of the three estimates and it will not make for pretty reading.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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