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AT&T turned in a decent fourth-quarter performance, despite being dogged by costs. Nonetheless, the weak economy will blunt the telecom firm's chances of any meaningful growth for the foreseeable future, and it still hasn't figured out how to counteract the loss in sales from those pesky landline defections.

All told, AT&T recorded a 22.6% earnings slide from the previous year's corresponding quarter, to $2.4 billion, or 41 cents per share, from $3.1 billion, or 51 cents per share. Excluding special items, earnings totaled 64 cents per share.

Between October and November 2008, AT&T (nyse: T - news - people ) beat expectations by adding 2.1 million wireless subscribers, largely because of its being the exclusive official carrier of the popular Apple (nasdaq: AAPL - news - people ) iPhone in the United States. So, yes, AT&T registered a strong quarter, but times are tough.

Though its wireless sales grew 13.2%, its landline sales 3.3%. Unlike Verizon (nyse: VZ - news - people ), AT&T still hasn't been able to quell sliding sales in the segment by selling broadband and TV services.

The San Antonio-based telecom operator expects sales to grow in the low single digit percentages. In a sign of the times, though, it also expects to cut capital spending by 10% to 15%, from the $19.7 billion it invested in 2008. That will hurt equipment vendors like Ciena (nasdaq: CIEN - news - people ) and Alcatel-Lucent (nyse: ALU - news - people ) since AT&T represents a third of spending on telecoms gear.

As in the case of Verizon, the upheaval in the financial markets is forcing AT&T to fill funding gaps. It announced Wednesday that its 2009 earnings will take a 19 cent per share hit owing to pension and retiree benefit costs. Excluding that cost, though, it expects margins to remain stable.

Mortgage rates are falling as this week's dramatic action by the Federal Reserve provides a boost to the dismal housing market, but the nation's unemployment rolls are stuck at historically high levels amid a deepening recession.

Mortgage giant Freddie Mac (nyse: FRE - news - people ) on Thursday reported that rates had fallen to the lowest level on records dating back to 1971. Average rates on 30-year fixed-rate mortgages dropped to 5.19 percent, down from the year's previous low of 5.47 percent, set last week.

Jobs data from the government, while better than expected, was still sobering. The Labor Department on Thursday said its tally of initial jobless benefit claims fell to a seasonally adjusted 554,000 from an upwardly revised figure of 575,000 the previous week. The new tally was slightly below economists' expectations of 558,000 claims.

Another slight improvement was seen in the number of people who continue to receive jobless benefits, which declined to 4.38 million from 4.43 million the previous week. Economists expected a slight increase to 4.45 million.

Still, claims remain near the highest level since 1982, though the labor force has grown by about half since then.

And the cuts continue. Water treatment and storage systems maker Pentair Inc. (nyse: PNR - news - people ) said Thursday that it will cut more than 10 percent of its work force, or about 1,600 jobs, due to a faster-than-expected drop-off in demand and consumer spending. One day earlier, hard drive maker Western Digital Corp. (nyse: WDC - news - people ), managed-care company Aetna Inc. (nyse: AET - news - people ), and Newell Rubbermaid Inc. (nyse: NWL - news - people ), maker of products including Rubbermaid storage containers and Sharpie pens, announced mass job cuts.

Meanwhile, President-elect Barack Obama is laying the groundwork for a giant economic stimulus package, worth possibly $850 billion over two years, which Democratic congressional leaders say could be passed within two weeks of Obama taking office.