NEW YORK — Skittishness about the economy spread on Monday with weak reports on consumer spending, more evidence of tighter bank credit dimming prospects for consumers and business owners alike — and thousands of additional layoffs.
Macy's Inc., the department store chain, said it plans to cut 7,000 jobs, almost 4 percent of its work force; reduce its contributions to its employees' retirement funds; and slash its dividend to preserve cash amid the severe pullback in consumer spending.
The Cincinnati-based department store chain, which has stores in Nashville, made the announcements on Monday as it delivered bleak earnings and sales forecasts for the year.
Meanwhile, consumer spending in the U.S. fell in December for a record sixth consecutive month, a slump likely to persist as companies slash payrolls.
The 1 percent drop in purchase prices was larger than forecast and followed a 0.8 percent decrease in November, the Commerce Department data showed.
"The big question is whether the negative economic momentum is easing or deepening," said Matthias Fankhauser, a Zurich-based fund manager with Clariden Leu AG, which oversees about $100 billion. "We had some hope" about the U.S. bank bailout, but "somehow it is going to be more difficult, more tricky."
"People are waiting for indications that things are getting better," said John Massey, senior vice president and portfolio manager at AIG SunAmerica Asset Management. "People have to have more than a hunch that things are going to get better."
"There isn't any real sign that consumer spending has picked up, nor have businesses reporting fourth-quarter earnings been very encouraging," said Frederic Dickson, chief market strat egist at D.A. Davidson & Co.
Credit limits still tightMany banks have made it harder for borrowers to obtain all kinds of loans over the past three months despite a $700 billion federal bailout program and a flurry of other bold moves to stem the worst financial crisis to hit the country since the 1930s.
The Federal Reserve, in its quarterly survey of bank lending practices released Monday, found large numbers of banks reporting tighter credit standards across a broad range of loan products, from credit cards and home mortgages to business loans.
Nearly 60 percent of banks responding to the survey said they had tightened lending standards on credit card and other consumer loans, about the same share as in the previous survey released in early November.
The Fed survey was based on the responses of 51 domestic banks and 23 U.S. offices of foreign banks.
In its survey, the Fed said roughly 45 percent of banks raised the minimum-required credit scores on credit card accounts and other consumer loans. Also for consumers, about 40 percent of banks reduced the size of existing home equity lines of credit, and roughly 35 percent trimmed credit card account limits.
Macy's to close storesMacy's said its cuts, which include some unfilled jobs and 1,900 positions being eliminated in a restructuring now under way nationwide, will come at corporate offices, stores and other locations. The company employs about 180,000 people.
Macy's announced last month that it would close 11 stores, affecting 960 employees.
That includes closing Macy's store at Bellevue Center in Nashville after one of the weakest holiday shopping seasons in four decades.
The company expects the additional actions announced on Monday to lower its annual selling, general and administrative expenses about $400 million starting in 2010.
The retail chain predicts its same-stores sales — sales at stores that have been operating at least a year — will fall between 6 percent and 8 percent in the year that ends in January 2010. Same-store sales are considered a key indicator of retail health.
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