Reverse Spin: Recession looms with record job cuts

How’s this for a working title of a book on the current economic slowdown: “Pretty in Pink”?

Job cuts announced by U.S. companies soared in March to almost triple the level of a year ago. It’s the fourth consecutive month that the total has exceeded 100,000, international outplacement firm Challenger Gray said Thursday.

In a report surely signaling that employers are scared as all get out, the Chicago-based firm said U.S. companies announced 162,867 layoffs in March, up from 55,783 in March 2000. This past March was the highest job-cut month since the survey began in 1993.

On Friday, the government confirmed the bad news when it said U.S. jobs were slashed in March at the sharpest rate in close to a decade. The Labor Department said that a total of 86,000 jobs were lost – the first time jobs were cut from payrolls since August – and that national unemployment had crept to 4.3%, from 4.2%.

Forecasts called for 58,000 more jobs to be created in March, rather than for losses. The reduction was the steepest for any month since 1991 when 94,000 jobs were dropped. That was not long after the last recession had ended while doubts lingered whether that downturn was over.

Secretary of Labor Elaine Chao said the March unemployment data implied a rising risk of recession.

“I think this economy is like the Pillsbury dough boy – it continues to soften,” Ms. Chao said.

No insulation

* Talk about falling from grace. Specialty chemicals maker W.R. Grace & Co. on Monday said it filed for Chapter 11 bankruptcy protection because of rising asbestos-related personal-injury claims.

A surge in allegedly “unmeritorious” asbestos claims prompted Grace’s filing, the Columbia, Md.-based company said Monday.

Grace, which employs 6,000 people worldwide and generates about $1.6 billion in annual sales, said it had been hit with more than 325,000 asbestos personal-injury claims and paid out $1.9 billion to resolve and manage such litigation.

The claims against Grace stem from a practice, ended in 1973, of adding asbestos to some of its fire-protection products.

Utility blacks out

* Add another name to the bankruptcy brigade. Pacific Gas and Electric, California’s largest utility, voluntarily filed for Chapter 11 federal bankruptcy protection Friday.

Pacific Gas, a subsidiary of PG&E Corp., said it had run up an $8.9 billion deficit buying electricity as of Feb. 28. Along with other California utilities, it has been pinched by skyrocketing wholesale power costs and the state’s 1996 deregulation law.

As of March 29, the utility – which has 13 million customers – had $2.6 billion in cash and outstanding bills of $4.4 billion.

New financial behemoth

* Look out for this 800-pound gorilla … er, make that, pretzel. Dresdner Bank last Monday approved a $20.65 billion takeover from insurer Allianz that would create the world’s fourth-largest financial services group.

By buying Germany’s No. 3 bank, Munich-based Allianz creates a company with 24 million customers and 13,000 outlets through which it can sell banking and insurance products.

Allianz has been a hungry company. In October, it acquired San Diego’s Nicholas-Applegate, which is well known for its growth-stock investment style. Earlier this year, it bought Newport Beach, Calif., bond titan Pimco Advisors Holdings LP. Now another U.S. fund firm, Dresdner RCM Global Investors of San Francisco, will be joining the fold.