DOES GOLDMAN SACHS LOSS PORTEND MORE BANKING SECTOR JOB CUTS?

Yesterday’s news that Goldman Sachs reported a loss of $393 million in the third-quarter raises the possibility of more job cuts in the financial sector. The slowdown in the economy and worsening debt crisis in Europe is taking a toll on U.S. banks, many of which are still struggling to recover from the 2008-2009 financial collapse. Last month, Bank of America announced plans to reduce its headcount by 30,000 over the next few years. Over the last three months, Goldman Sachs’ payroll dropped by 1,300. Through September, the financial sector has announced just over 54,000 job cuts, up from about 19,000 at the same point a year ago. “Outside of government, the sector with the biggest potential for future mass layoffs is the financial sector. Not only is the economy struggling, but the European financial crisis is looming. A collapse across the Atlantic will quickly ripple through the U.S. economy and the first sector it will hit is the financial sector,” said John Challenger, chief executive officer of Challenger, Gray & Christmas. In 2008, in the wake of the housing collapse, the financial sector announced a record 260,110 job cuts. “If the economy doesn’t improve and Europe implodes, we could see similar fallout in 2012,” Challenger warned.

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