(Reuters) - Corporate America has opened its wallet again, with companies launching a wave of takeovers in recent weeks, but the surge in spending may be bad news for the economy as it signals more job cuts ahead.
Two trends have held back the U.S. economy's recovery from the longest recession since the Great Depression of the 1930s this year: With unemployment holding high at 9.6 percent, consumers have been unable to spend as they once did, and big companies, while flush with cash, were afraid to part with it.
Their recent wave of deal-making -- including General Electric Co's (GE.N) $3 billion buy of privately held Dresser Inc, France's Sanofi-Aventis (SASY.PA)' hostile bid for U.S. biotech company Genzyme Corp (GENZ.O) and the merger of two top U.S. airlines into a new entity called United Continental Holdings Inc (UAL.N) -- shows they are ready to spend again.
But that will do nothing to lower unemployment.
By Scott Malone
From Reuters News
BOSTON | Fri Oct 8, 2010 10:57am EDT
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