This week in business: fears of recession

Wednesday was not a very good day for the company formerly known as Facebook. First came a lawsuit from the Federal Trade Commission and then, the company announced its first revenue decline since going public. One of Big Tech’s biggest critics, the FTC, led by Lena Khan, is suing Meta to stop buying Inner, a virtual reality company helped by Mark Zuckerberg’s leap into the Metaverse, Meta’s chief executive, Mark Zuckerberg. Is. In the lawsuit, the FTC accused Meta of trying to buy a company it should compete with. Meta responded that the agency had put forth a case “based on ideology and speculation”. Later, the company reported that its second-quarter revenue was down 1 percent from the previous year, a result Mr Zuckerberg placed in reference to “the economic slowdown will have a massive impact” on digital advertising. Still, he appears relentless in pursuing his vision for the next era of his business, and has told employees that anyone who isn’t on board can leave.

The economy shrank for the second quarter in a row, meeting the criteria for a common definition of recession. The Commerce Department said on Thursday that GDP in terms of inflation fell 0.2 percent in the second quarter. But when viewed closely, GDP isn’t the only indicator of a serious recession: Economists use a broad set of data to determine the state of the economy, including measures of income, spending and employment, and most Let’s assume that the United States is not in recession. And from the eyes of Federal Reserve officials, the latest GDP numbers are a sign that their efforts to slow the economy are working. But the outlook is certainly dimming, especially as a measure of the slowdown in the housing market and layoffs creep.

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The Federal Reserve pressed on last week with its single-minded effort to contain rising prices as it raised interest rates by three-quarters of a percent. Policymakers unanimously agreed on the supersize increase, the largest since 1994, after one of the same size in June. The Biden administration has said it is largely up to the Fed to bring inflation under control. But a day after the Fed meeting, President Biden announced that an agreement had been reached with Senator Joe Manchin III of West Virginia to advance a package known as the Inflation Reduction Act. Cecilia Rouse, who is the chair of Mr Biden’s economic advisory council, said the plan would make “a meaningful contribution” to the government’s efforts to reduce inflation.

As every other sector grapples with factors such as rising production costs, shortages, supply chain disturbances, changing consumer habits, the dollar’s strength against foreign currencies – the list goes on – there is one clear winner in global markets: energy. Shell posted earnings of $11.5 billion in the second quarter last week, another record for the company as the war in Ukraine has dented oil and gas prices. Exxon Mobil and Chevron followed suit with record profits this quarter, and BP will likely release similarly bullish results on Tuesday. The company wrote off $25.5 billion to exit Russia in the first quarter, but performed “extraordinarily” overall, more than doubling profits from a year earlier. By the end of this week, the world’s major oil companies will simultaneously report that they have added tens of billions of dollars to their bottom lines, as higher energy prices ravage economies.

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Job growth in June was higher than expected, indicating a still booming labor market and a growing economy. But it wasn’t necessarily a good result for the Fed, whose officials are watching a range of economic data for signs that the economy is slowing from its warm-up pace. On the other hand, a strong jobs report is a useful messaging tool for the Biden administration when faced with the question of whether the economy is in recession. The jobs report for July arrives on Friday, and economists will have a new number to analyze as they try to figure out where the economy is headed.

At their last meeting in June, Bank of England officials suggested they may be less modest about raising rates in August after a series of quarter-point hikes. At present, its benchmark rate is 1.25, the highest since 2009. But as elsewhere, inflation in the UK is galloping at its fastest pace in decades, and some central bank officials are concerned they are not moving fast enough. to address it. In June, three out of nine on the rate-setting committee voted for a half-point increase, but were turned down by a majority. Policy makers are now feeling pressure from other central banks which are acting more aggressively.

JetBlue Airways and Spirit Airlines announced plans to merge a day after Spirit broke off merger talks with Frontier Airlines. A Trader Joe’s in Hadley, Mass., became the first of the company’s more than 500 stores. Instagram backed out on some of its product changes after celebrities joined in on user-led backlash.

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