This Week in Business: Recession Fears

how are you? (July 24-30)

Not so good days of meta

Wednesday wasn’t a great day for the company formerly known as Facebook. The Federal Trade Commission first filed a proceeding, after which the company announced its first decline in revenue since its release. The FTC, led by one of Big Tech’s biggest critics, Lina Khan, is trying to thwart the acquisition of Within, a virtual reality company that helps Meta CEO Mark Zuckerberg make the leap to the Metaverse. I’m suing Meta. In the proceedings, FTC accused Meta of trying to buy a company that had to compete. Meta replied that the agency had put together a proceeding “based on ideology and speculation.” The company then reported second-quarter revenues down 1% year-over-year. As a result, Zuckerberg puts digital advertising in the context of a “widespread recession.” Still, he seemed relentless in advancing his vision for the next era of business and told employees that anyone who wasn’t on board could leave.

recession? or not?

The economy has shrunk for the second consecutive quarter, meeting the criteria of one general definition of recession. Gross domestic product fell 0.2% in the second quarter, taking into account inflation, according to the Commerce Department. But while watching carefully, GDP is not the only indicator of a serious recession. Economists use a wide range of datasets to determine economic conditions, including measures of income, spending and employment, and most people argue that the United States is not in a recession. And, as seen through the eyes of Federal Reserve officials, the latest GDP numbers are a sign that their efforts to slow the economy are working. However, the outlook is certainly dim, especially as the housing market slows and layoffs are skyrocketing.

Fed super-large interest rate hike

The Federal Reserve raised interest rates by three-quarters of a percentage point last week, pushing for a single-minded pursuit to curb price increases. Policy makers unanimously agreed to increase supersize following one of the largest June of the same size since 1994. The Biden administration said it relied heavily on the Fed to control inflation. However, the day after the Fed’s meeting, President Biden announced that he had reached an agreement with West Virginia Senator Joe Manchin III to promote a package known as the Inflation Reduction Act. Biden’s economic advisory board chairman, Cecilia Rouse, said the plan would make a “significant contribution” to the government’s efforts to mitigate inflation.

What’s next? (July 31st-August 6th)

Fast-growing oil profits

The strength of the dollar against foreign currencies-the list continues-one in the global market, as all other sectors are suffering from factors such as rising production costs, shortages, supply chain roars, and changing consumer habits. There are two clear winners: energy. Shell reported revenue of $ 11.5 billion in the second quarter last week. This is another record for the company, as the soaring oil and gas prices caused by the war in Ukraine have brought huge profits. ExxonMobil and Chevron followed suit with record profits in the quarter. BP will probably announce similar good results on Tuesday. The company amortized $ 25.5 billion in its withdrawal from Russia in the first quarter, but overall celebrated its “extraordinary” performance and more than doubled its profits from the previous year. By the end of this week, the world’s major oil companies will report along with they adding tens of billions of dollars for their profits as high energy prices devastate the economy.

Another carefully watched job report

Employment growth in June was higher than expected, indicating that the labor market is still booming and the economy is growing. But that wasn’t always a good result for the Fed. Fed officials are looking for a variety of economic data on signs that the economy is slowing from its blazing pace. Powerful employment reports, on the other hand, are a useful messaging tool for the Biden administration when faced with questions about whether the economy is in recession. The July job report will be released on Friday, and economists will get new numbers to analyze when trying to figure out where the economy is.

Inflation is also high in the UK

At the final meeting in June, Bank of England officials suggested that the August rate hike after a series of quarterpoint hikes may not be so modest. At the moment, the benchmark rate is 1.25, the highest since 2009. But, like elsewhere, UK inflation is skyrocketing at the fastest pace in decades, with some central bank officials worried that it may not be moving fast enough. doing. Deal with it. In June, three out of nine members of the pricing committee voted in half, but were closed by a majority. Policy makers may now be feeling pressure from other central banks that are acting more aggressively.

what else?

JetBlue Airlines and Spirit Airlines have announced plans to merge the day after Spirit terminates the merger negotiations with Frontier Airlines. Trader Joe’s, located in Hadley, Massachusetts, was the first of the company’s more than 500 stores to form a union. Instagram has put off some of the product changes after celebrities have joined the user-led backlash.