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The job cuts came heavy Monday — bad news from some of the big names of American commerce.

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Caterpillar. Pfizer. Home Depot. Sprint Nextel. General Motors. Texas Instruments.

When it was done, 33,000 more people faced unemployment, soon to be pitched into the worst job market in a quarter-century and an economy that seems to get gloomier by the week.

Monday’s events were the latest sign of how the problems that began in housing have infected the rest of the economy. Now workers from cashiers to software engineers are getting pink slips in a market that doesn’t discriminate.

More than a half-million jobs were cut in each of the past two months nationwide, and January is on a similar pace. Missouri saw the number of people applying for unemployment benefits top 100,000 for the first time ever, said Michael Waltman, spokesman for the state Department of Economic Development. And in metro St. Louis, the jobless rate is 7.7 percent and climbing.

"Businesses are cutting jobs at a rapid pace," said Sara Johnson, an economist with IHS Global Insight. "They’re reacting perhaps more quickly than in the past, anticipating that this will be a deep and lengthy recession, so there’s less incentive to ride it out by holding on to their workers."

Johnson co-authored a survey released Monday by the National Association for Business Economics, in which 44 percent of companies reported job cuts in the fourth quarter, and 39 percent expected to cut more in the next six months. "Clearly, the labor markets will get worse before they get better," she said.

While there are certainly economic reasons for these mass layoffs, at another level they spring from a kind of herd mentality, said Peter Cappelli, a professor at the University of Pennsylvania’s Wharton School of Business, who is in St. Louis today for a talk organized by St. Louis Works.

"Once you start getting a couple of big layoffs, then these guys feel like ‘everybody’s laying off and we’d better, too, or we’ll look like we’re not being efficient,’ " he said. "That’s a really bad reason to lay people off."

But there are fundamental problems driving this too, said Jack Strauss, an economics professor at St. Louis University. The credit crunch has stalled business on several fronts. Confidence is low. And if history is any guide, that bodes poorly for the months to come pay day loans.

Strauss pointed to research that recessions triggered by crises in the banking sector tend to last longer, and run deeper, than other downturns. This episode is already approaching the two longest since World War II in duration, with no end coming soon.

"It’s going to take several years for us to really turn around," Strauss said.

The news isn’t all bleak.

Health care companies and schools are still expanding. Johnson’s survey found services companies are still growing. Government agencies, including the Census Bureau and the FBI, have launched recruitment drives. And some big St. Louis employers, including Edward Jones and Monsanto, are still hiring.

But Waltman said he sees job postings at an "all-time low," and big cuts such as the ones announced Monday are becoming more and more frequent.

Caterpillar has seen its business socked by the global slowdown, reducing demand for its mining and heavy construction equipment. Representatives of Sprint Nextel and Home Depot said their job cuts will allow each company to focus on its core business. For Sprint, that means networks and customer service, a spokesman said. Home Depot will re-emphasize home renovators and construction.

"Our goal is to focus time and resources on our core orange box stores," said Home Depot spokeswoman Paula Drake.

Home Depot will spend the next two months phasing out its high-end Expo design centers, including one in west St. Louis County. Most stores employ between 100 and 150 people Drake said, and Home Depot will try to employ them elsewhere in the company.

Outside the West County store Monday, a handful of customers eyed $90 trash cans, $75 solid brass towel racks and $90 toilet seats. Ron Geiger of Chesterfield said he and his wife shopped there for granite countertops, tiles and other items.

"It’s too bad," he said. "They have a unique selection of goods here that you can’t get anywhere else."

And that includes, Geiger added, the traditional Home Depot a mile up the street.

But the recession is forcing everyone to get back to basics, Drake said, and the market for big-ticket items has shrunk.

"The economy has certainly not been our friend," she said. "The Expo business has not performed well financially and it’s not expected to improve any time soon."

Indeed, Cappelli said, it’s hard to know when things will get better. With Federal Reserve interest rates near zero and lending still sluggish, businesses slashing spending and consumers hunkering down, there aren’t a whole lot of levers left to pull to turn the economy around.

"It’s like you’ve got a patient in the hospital with a raging fever and you’ve been giving him all the antibiotics and he isn’t getting any better," he said. "Nothing we’re doing is working."

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Oil fell more than $2 towards $34 a barrel on Monday as signs of a resolution of a gas dispute between Russia and Ukraine and after a cease-fire between Israel and Hamas in Gaza eased supply concerns.

The market remained under pressure from expectations the weakening global economy would erode oil demand. The International Energy Agency and other forecasters cut their 2009 demand forecasts last week.

"Right now the economy is dominating," said Harry Tchilinguirian, analyst at BNP Paribas. "The market is very volatile and the signs are that demand is weakening."

U.S. crude oil futures for February delivery dipped to a low of $34.08, down $2.43, before recovering to trade around $34.15 by 11:30 a.m. ET.

Traders said the February U.S. crude oil futures contract, which expires on Tuesday, also fell because of very high stocks at the delivery point for the U.S. futures contract.

Only just over 2,600 lots were traded on the February U.S. crude contract. The March contract was much more active as more than 21,000 lots changed hands.

London Brent crude for March fell to a low of $44.20, down $2.37, before edging up to $44.30.

Russia and Ukraine were aiming to sign an agreement on Monday to restart gas flows to Europe through Ukraine after finally agreeing a price for 2009 supplies instant payday advance.

Also easing concern about energy supplies, Israeli forces began to pull out of the Gaza Strip following a tentative truce with Hamas after the three-week war, easing tension in a region which pumps about a third of the world’s oil.

Prices came under pressure on Friday after the IEA, an adviser to industrialized countries, joined the ranks of forecasters predicting a fall in world oil demand in 2009.

OPEC, the oil exporters’ group, has cut production three times since September to try to stem falling prices. It might consider reducing output again, Algeria’s oil minister Chakib Khelil said on Saturday.

Oil has collapsed by more than $110 a barrel since reaching a record high of $147.27 a barrel in the summer as the global economic slowdown has eroded demand and consumer spending.

Still, some in the oil market think there is little room for prices to fall much further.

"It looks as if Brent will hold in the current $40-$50 range," said Christopher Bellew, a broker at Bache Commodities. "I do not anticipate new lows." 

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When she’s not busy taking care of her three kids, stay-at-home mom Denise Mollison spends her time stitching together cherubic rag dolls, which she then sells online at her shop, The Lucky Pebble, and at Etsy, an online marketplace. Her plump creations have garnered extensive praise from fans of handmade goods, and Mollison’s Etsy page is filled with rave reviews from happy customers. But a new law passed to ensure the safety of toys and children’s clothes may unintentionally cripple small businesses like hers.

After a spate of toy recalls made headlines in 2007, Congress passed the Consumer Product Safety Improvement Act in July 2008. The law, which goes into effect on February 10, sets strict limits on lead and phthalate (a harmful chemical found in plastics) content in toys and other children’s products. Toymakers must certify their wares’ compliance via third-party testing, which can cost anywhere from less than a hundred dollars to several hundred dollars per test - and each component of a toy, such as zippers, buttons, and paint, must be tested separately. Retailers must also ensure that their entire inventory is certified. Toymakers and retailers who violate the law face fines of tens of thousands of dollars.

The law makes no distinction between large-scale manufacturers, mom-and-pop businesses, and one-man operations. While large corporations may be able to easily absorb the costs of product testing, the price is potentially overwhelming for small businesses.

The Consumer Product Safety Commission - which cannot change the law, only enforce it - is scrambling to clarify certain vague language of the law, and to establish clearer rules for testing. On Tuesday, January 6, the commission voted on certain provisions that may offer relief to some toymakers. However, a second vote - which will not take place until after the law goes into effect - is needed to finalize the rulings.

"We don’t want to fly under the radar for safety, we just want a cost-effective way to comply," Mollison says.

Mollison sells her dolls for around $30 to $50 each, earning about $8,000 in 2008. The money she makes supplements her husband’s income and helps pay the medical expenses for daughter Raven, who has special needs and requires a feeding device.

"The safety standards are perfectly reasonable, but the testing costs are not sustainable for a micro-business," says Dan Marshall, founder of the Handmade Toy Alliance. Marshall and his wife, Millie Adelsheim, own a St. Paul, Minn., store called Peapods, which specializes in natural, no-frills toys such as wooden blocks and trains, as well as other baby products and clothes.

"There’s no sense of scale, no exemptions based on the size of the business," Marshall says. "It doesn’t make sense for someone who’s knitting kids’ hats in their living room to pay hundreds of dollars to test each hat." Members of the alliance - more than 170 retailers, toymakers, and concerned citizens - have inundated the Consumer Product Safety Commission with letters, faxes and e-mails expressing their fears and offering suggestions online instant cash advance.

Etsy, the online marketplace for handmade goods, posts regular CPSIA news updates on its Web site to keep its users as informed as possible.

"Everyone has questions; there’s a lot of speculation and rumor," says Matthew Stinchcomb, Etsy’s communications director. "We’re trying to educate our users, but even the CPSC doesn’t really know what’s going to happen on February 10."

Stinchcomb says that many Esty users are liquidating their merchandise for fear that it will be considered contraband when the CPSIA goes into effect.

Two of the CPSC’s recent rulings could help some craftspeople and retailers if they are finalized when the commission votes again at a yet-to-be-determined future date. The first would exempt certain natural materials, such as wood, wool, and cotton, from testing, as it is widely accepted that such materials do not contain lead or phthalates.

"If a baby blanket is 100% cotton, or you have a set of unfinished wooden blocks, then those items wouldn’t necessarily have to be tested," says CPSC spokeswoman Julie Vallese. "There’s room under the law for certain exemptions."

Another proposal would recuse toymakers from testing their raw materials if the suppliers provided certification instead. However, it’s not currently a common practice for suppliers to offer such certifications. Before the CPSC’s second vote, the public will be invited to comment via mail, fax, or e-mail.

The commission also recently tried to clarify the law’s effect on secondhand retailers such as thrift shops and consignment boutiques, but its ruling left many resellers even more puzzled. Store owners had expressed concern that proving that the lead and phthalate content in used toys fell below the new guidelines would not be feasible without new testing. The CPSC said last week that sellers of used toys aren’t required to test their inventory for compliance - but they’re still responsible for ensuring that all goods they sell meet the new limits. Any store owner who sells a product that violates the limits could face civil and criminal penalties.

"Congress failed to address some things when they wrote the law," the CPSC’s Vallese acknowledges. "And the CPSC is a small agency with limited resources." There will still be plenty of kinks to be worked out after February 10.

In the meantime, handmade advocates like Dan Marshall are coping as best they can by staying informed and lobbying for improvements in the law’s implementation.

"Everyone’s just trying to make sure they’ve got all their ducks in a row," Marshall says. "The ironic thing is that at my store, we’ve been trying for 10 years to find as many alternatives to mass-produced products as possible. A wooden toy is a way for kids to relate to the natural world; they can see what it’s made of, and they can invest their own imaginations in it. It’s a better toy." 

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There is no debate that the U.S. economy is in terrible shape at the moment.

Nearly 2.6 million jobs were lost last year, with the majority of them coming in the final four months of the year. And some economists are forecasting as much as a 5% to 9% drop in economic activity during the fourth quarter, which could be the biggest drop in 50 years.

But some economists are starting to believe that there could be a much stronger and quicker recovery than is now widely expected.

They say that the sharp drop in production and inventories during this recession will force businesses that are now busy cutting back to quickly ramp up production once the economy starts to improve.

The crisis in financial and credit markets sparked by the Lehman Brothers bankruptcy in September caused businesses to slam the brakes on production much harder than justified by reduced demand alone, according to Joseph Carson, chief economist at AllianceBernstein.

"We were producing 2 million tons of steel a week prior to Lehman. Now we’re producing 880,000 a week," Carson said. "The economy has slowed, but it has not fallen by half in the last three months. This kind of significant inventory liquidation is exactly why recoveries take place."

Many also believe that the significant steps being taken by the Federal Reserve and Congress to spur the economy will kick in later this year. That stimulus, coupled with low energy prices, could cause a jump in economic activity.

This kind of recovery is known as a V-shaped recovery, because a chart of economic activity would look like the letter V: a steep decline followed by a quick and strong turn around.

"Generally the sharper the recession, the sharper the recovery," said Lakshman Achuthan, managing director of the Economic Cycle Research Institute.

Achuthan said he is not yet ready to call the bottom of the current economic downturn. But he said his firm’s weekly index of leading economic indicators has been ticking higher in recent weeks, suggesting that the economy may finally be close to the bottom payday loans online.

He added that when things start to show signs of improvement, the economy could well be helped by pent-up demand from consumers who sharply curtailed purchases in recent months.

"Consumers have been on strike," he said. "They’ve been holding off buying things that they don’t absolutely have to have."

Of course, hopes for a quick turnaround are still faint. There are many economists, including staffers at the Fed, who worry that there will be, at best, a modest pick-up in activity later this year and continued job losses continuing into 2010.

According to a plan released by the economic team of President-elect Obama over the weekend, the incoming administration believes the unemployment rate will continue to rise through the third quarter of this year, and top out at 8% — even if the economic stimulus plan it is proposing passes.

And some economists who believe there will be a sharp recovery aren’t sure it will take place anytime soon.

"We’re eventually going to get a strong recovery. We just can’t forecast with any degree of certainty if it will be in the second half of the year," said Ed Yardeni, president of Yardeni Research, an independent market research firm.

He added that the recovery could wind up looking more like a U, i.e. the economy hovers around the bottom for awhile, than a V.

Yardeni said everything will have to go right to bring any type of recovery in 2009, including quick passage of effective stimulus by Congress and an unfreezing of the credit markets.

He added there is some evidence of improvement in the economy, including narrowing credit spreads and lower mortgages rates. But it may be too little, too late for a turnaround this year.

"Right now there’s more going wrong than going right," Yardeni said. 

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The Bank of England cut interest rates by half a percentage point on Thursday to a record low of 1.5 percent and economists expect it to cut again in February as it battles to prevent Britain from falling into a deep slump.

British interest rates have now fallen by 3.5 percentage points since October as policymakers caught on the hop by the severity of the downturn pull out all the stops to revive an economy facing its first recession since 1992.

In a statement accompanying its decision, the BoE said output was likely to keep falling sharply in the first half of the year, although recent tax and interest rate cuts combined with the sharp fall in sterling would give the economy a boost.

Rates in Britain never fell below 2 percent even during the Great Depression of the 1930s, underlining the scale of the current crisis hurting economies all around the world. In the United States, rates now range between 0 and 0.25 percent.

Economists said the BoE would cut again next month and interest rates could even fall below 1 percent, perhaps alongside a signal they would stay very low for a very long time. Even boosting the money supply has not been ruled out.

“They are still in cutting mode but have taken their foot off the gas this month,” said Alan Clarke, UK economist at BNP Paribas.

The pound, down 15 percent against the euro since the BoE started its aggressive interest rate campaign in October, rose after the decision as many in the market had been pricing in a bigger move after the last month’s 1 point reduction personal loans.

Short sterling interest rate futures also turned negative as markets priced in less aggressive monetary easing ahead.

The BoE said further measures were also needed to increase lending to businesses and consumers. One of the key causes of the current downturn is that banks are unwilling to extend credit as they struggle to repair their own balance sheets.

Prime Minister Gordon Brown promised on Thursday more measures in the next few weeks to get banks to resume their lending.

“So we want to move from the capitalization of the banks to securing the funding that is necessary, for business projects, for home ownership and for the everyday business concerns that people have in the banking system,” he said.

DEEP DOWNTURN

The lack of credit after years of cheap money is driving more and more businesses to the wall while ordinary Britons who racked up more than a trillion pounds of debt in the good years are now having to severely curtail their spending.

Thousands of jobs have been lost in Britain’s retail sector alone over the last month with some big high street names such as Marks & Spencer () shutting stores and Woolworths disappearing altogether.

Britain’s two biggest employment agencies, Hays () and Michael Page (), warned of deteriorating market conditions on Thursday, and said they had cut hundreds of their own staff in response to the slowdown. 

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A great earthquake has rumbled through the financial markets, and no one knows for certain when the aftershocks will subside. But it’s not too early to check your foundation.

This advice holds especially true for retired investors who have been depending on their portfolios to supplement outside income sources, such as Social Security and/or pensions. If you have been drawing only interest and dividends from your investments, you might be in reasonably good shape, especially if you’ve escaped bond defaults and dividend cuts. But for a much larger, less fortunate group of retirees — those who need to draw from both income and principal to pay the bills — the foundation almost certainly is weaker now, and possibly even crumbling.

Assume, for example, that you retired last year with a nest egg of a million dollars, and that you have been drawing down $50,000 a year to live on. That’s a 5 percent withdrawal rate, slightly higher than what many financial planners consider sustainable, but still reasonable for a balanced, diversified portfolio.

With a new year under way, you still need $50,000 from your investments (perhaps more to keep up with rising costs), but in recalculating your withdrawal rate you make an alarming discovery: The bear market has reduced the value of your balanced, diversified portfolio to $700,000. Now, instead of the original 5 percent, you are consuming more than 7 percent of your life’s savings each year.

The decision you now face is what to do about it. I see at least four options:

Sell out your portfolio: Find a 7 percent investment and lock it in. There are fixed-income investments that pay 7 percent today, but they don’t come with government guarantees. And while (barring default) the income shouldn’t go down, it won’t go up, either. Fixing your retirement income in a world of rising costs can be very problematic depending on your age.

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Invest more aggressively: Taking more risk might lead to higher returns over time, allowing you to sustain a higher withdrawal rate, at least in theory no fax cash advance. But the more risk you take on, the more susceptible you are to the next market downturn. Another year like 2008 could push your withdrawal rate into double digits, turning a difficult situation into one that’s practically impossible.

Annuitize: You can exchange your nest egg with an insurance company for a promise of annual payments for life or a specified time period. This could lessen the risk of running out of income, but it also limits investment and income flexibility.

Stay the course, with adjustments: Depending on how much the current market environment has damaged your financial foundation, you might be able to recover with some less drastic moves. Instead of abandoning a well-constructed investment program, consider rebalancing your portfolio, which at this point probably involves moving assets from the fixed-income side over to the equity side. You also can reduce your withdrawal rate simply by drawing less money from your portfolio, if only temporarily. We all have discretionary expenses that can be reduced, postponed or eliminated. Spending less means preserving capital and purchasing power, the name of the game in retirement.

Desperate times don’t always call for desperate measures, especially when it comes to investing in retirement. But times like these do demand increased vigilance and some creativity. Start with what you know. Do the math. Adapt to new circumstances, and gain wisdom from this experience.

< Mike Brown is a licensed investment broker and a certified financial planner. He is the First Vice President, Investments for UBS Financial Services Inc. He also is the host of "KMOX Money Show" (1120 AM).

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