Goldman Sachs (GS) - Get Goldman Sachs Group, Inc. (GS) Report has joined a growing list of large banks and other blue-chip companies resuming full-time job cuts as the coronavirus pandemic continues to pummel economic growth.
Goldman is embarking on a plan to eliminate about 1% of its workforce, or roughly 400 positions. The Wall Street bank joins other lenders in the U.S. and Europe including Citigroup (C) - Get Citigroup Inc. Report, Wells Fargo (WFC ) - Get Wells Fargo & Company Reportthat have announced job cuts this year.
Goldman’s move follows a flurry of job-cut announcements this week from the likes of Allstate (ALL) - Get Allstate Corporation Report, Walt Disney (DIS) - Get Walt Disney Company Report and Dow Inc. (DOW) - Get Dow, Inc. Report that indicate the pandemic’s impact is now entering an extended phase where companies are cutting full-time management positions.
Dow said Wednesday it is cutting its workforce costs by 6%. American Airlines (AAL) - Get Report said it will begin furloughing 19,000 employees and United Airlines (UAL) - Get Report will lay off 13,000 workers after lawmakers failed to agree on a coronavirus relief package.
To date, most layoffs largely have been centered around hourly-wage and part-time positions predominately in retail, hospitality and other small-business and service-focused sectors, with financial services companies like Goldman pledging to hold off on cuts amid payroll protection and other government support.
The latest layoffs stretch beyond hourly workers, however, suggesting the recovery in the broader jobs market may be stalling.
While U.S. private sector employers added nearly three quarters of a million new jobs in September, the economy is still out some 11.4 million positions since March. Meantime the Labor Department reported Thursday that 837,000 Americans filed for first-time jobless benefits last week, down from a revised 879,000 claims the week earlier.
September's nonfarm payrolls report - the last before the November presidential election - is expected to reveal on Friday that employers added a half-million fewer workers last month than they did in August.
Banks, in particular, are expected to begin picking up the pace in cutting headcount, particularly as restrictions on shareholder payouts and other activity remain in place.
The Federal Reserve on Wednesday extended restrictions on the largest U.S. banks on dividend payouts and share repurchases through to the end of the year.
Under the restrictions, large banks with more than $100 billion in total assets remain prohibited from making share repurchases, while dividend payments will be capped and tied to a formula based on recent income.
As part of its policy announcement last month, the Fed forecast unemployment will likely sit around 7.6% by the end of the year, better than its previous projection of 9.3% but still far off from what it considers "maximum employment" within the U.S. economy.