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In Business this Week: Recession Fears

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In Business this Week: Recession Fears
  • 6 months ago

What’s Up? (July 24-30)

Meta’s Not-So-Good-Day

It was not a good day for the former company called Facebook. The first thing that happened was a lawsuit brought by the Federal Trade Commission, and then the company reported its first-ever decline in revenue since its public listing.

The F.T.C., led by Lina Khan, Big Tech’s most vocal critic, is currently suing Meta to stop the company from purchasing Within. This online virtual reality company would help facilitate the leap of Meta’s chief executive Mark Zuckerberg, into the virtual world. In the lawsuit filed, the F.T.C. claimed that Meta of attempting to purchase an entity that it shouldn’t be competing against.

Meta said that the agency devised a defense “based on ideology and speculation.” In the following days, the company revealed that its revenue for the second quarter fell by one percent from the prior year, numbers which Zuckerberg. Zuckerberg put into the context of an “economic downturn that will have a broad impact” on advertising on the internet. Yet, he is determined to push forward his plans for the future of his company and the employees. He has instructed that anyone not on board is free to leave.

A Recession? Or not

The economy slowed for the second quarter in a row that met the requirements for the standard definition of recession. In the context of inflation, G.D.P. decreased by 0.2 percent in the 2nd quarter of the year, the Commerce Department said on Thursday. While it’s a subject of intense scrutiny, G.D.P. isn’t the only sign of a significant downturn.

Economic analysts use a wide range of statistics to gauge the state of the economy, including income, spending, and employment indicators. Most believe that it is not the case that the United States is not in an economic recession. If you look from the perspective of officials of the Federal Reserve, the latest G.D.P. figures are evidence the efforts they have made to slow down the economy are paying off. However, the outlook is decreasing due to slowing the housing market and the number of cuts gaining momentum.

This is the Fed’s supersize Rate Rise.

The Federal Reserve pressed on with its singular focus on taming the rising cost of living last week, increasing interest rates by three-quarters of a percent. The Fed’s policymakers unanimously agreed on the considerable increase, the second similar to the one in June, which was the biggest since 1994. The Biden Administration

government has claimed that it relies heavily on the Fed to reduce inflation. However, a day after the Fed meeting, President Biden declared that a deal was made with senator Joe Manchin III of West Virginia to move forward with a plan called”the Inflation Reduction Act. Cecilia Rouse, who is the chairman of the. Biden’s Council of Economic Advisers, stated that the plan will make “a meaningful contribution” to government efforts to lower the burden of inflation.

What’s Next? (July 31-Aug. 6)


Exploding Oil Profits

Like every other industry, Shell is struggling with issues like increasing cost of production, decreasing supply chain congestion, changing consumer preferences, and the power of the dollar compared to other currencies -the list goes on. Global markets have one winner that is clear that is energy. Shell recently reported $11.5 billion in profits for the second quarter of 2018, an additional milestone for Shell. The soaring prices for gas and oil are driven by the Ukraine conflict, generating enormous profits. Exxon Mobil and Chevron followed similar trends, posting record profits for the second quarter. B.P. is expected to announce similar figures on Tuesday. The company lost $25.5 billion after pulling out from Russia during the quarter, but reported an “exceptional” performance overall, more than double its earnings from a year ago. In the next week, major oil companies worldwide will all have announced that they have added tens of billions of dollars to their bottom lines because of the high energy cost, which is roiling economies.

Yet Another Closely Watched Jobs Report

Employment expansion in June came in more than anticipated, which suggests that the labor market is still booming and an expanding economy. However, that’s not an excellent result for the Fed, which is watching various economic data to see if they show an economy slowing from its brisk pace. However, the strong employment report can be a helpful communication instrument to administration officials in the Biden administration when confronted with concerns about how the country is experiencing a recession. The July jobs report is due on Friday, and economists will get an entirely new number to analyze when determining the economy’s state.

Inflation is High in Britain It’s As Is The Inflation Rate in Britain,

In its last session in June, Bank of England officials said they might be more cautious regarding rate hikes in August, following a quarter-point walk. At present, its base rate is 1.25, which is the highest since 2009. As is everywhere else in the world, the inflation rate in Britain is accelerating at the fastest pace in years as some officials from the Central Bank are concerned they’re not taking enough action to tackle the issue. As of June 3, three out of nine members of the rate-setting committee voted in favor of an increase of half a percentage point. However, they were disqualified in the vote of the majority. Policymakers may pressure other central banks to take a more aggressive approach.

What’s More?

JetBlue Airways and Spirit Airlines announced plans for a merger just a few hours after Spirit cut off talks for the consolidation in the negotiations with Frontier Airlines. The Trader Joe’s in Hadley, Mass., was the first of the over 500 locations to join.

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