Many Companies Turning Temporary Furloughs Into Permanent Layoffs
In yet another sign that the economy isn’t poised for a quick bounceback even if researchers produce an effective COVID-19 vaccine, many companies are considering permanently laying off furloughed workers and taking other steps to make cost-cutting measures permanent.
Many companies beat earnings expectations in Q2. According to CNBC, the average company outperformed analyst estimates by 22%. That’s significantly higher than the historic norm of a 3% beat. But top-line revenue only exceeded estimates by 1%. Companies boosted revenues by significantly cutting costs.
And many analysts think many of these cost-cutting measures will become permanent. That doesn’t bode well for economic growth.
For instance, companies have significantly cut travel. One executive told CNBC they are looking to reduce travel expenses permanently. “We just don’t need to necessarily make the trips that we’ve historically made.”