US economy sending mixed signals: Here’s what it all means
WASHINGTON (AP) — The U.S. economy is caught in an awkward, painful place. A confusing one, too. Growth appears to be sputtering, home sales are tumbling and economists warn of a potential recession ahead. But consumers keep spending, businesses keep posting profits and the economy keeps adding hundreds of thousands of jobs each month. In the midst of it all, prices have accelerated to four-decade...
US economy sending mixed signals: Here’s what it all means
WASHINGTON (AP) — The U.S. economy is caught in an awkward, painful place. A confusing one, too. Growth appears to be sputtering, home sales are tumbling and economists warn of a potential recession ahead. But consumers keep spending, businesses keep posting profits and the economy keeps adding hundreds of thousands of jobs each month. In the midst of it all, prices have accelerated to four-decade highs, and the Federal Reserve is desperately trying to douse the inflationary flames with higher interest rates. That’s making borrowing more expensive for households and businesses. The Fed hopes to pull off the triple axel of central banking: Slow the economy just enough to curb inflation without causing a recession.
EXPLAINER: How do we know when a recession has begun?
WASHINGTON (AP) — By one common definition, the U.S. economy is on the cusp of a recession. Yet that definition isn’t the one that counts. On Thursday, when the government estimates the gross domestic product for the April-June period, some economists think it may show the economy shrank for a second straight quarter. That would meet a longstanding assumption for when a recession has begun. But economists say that wouldn’t mean that a recession had begun. During those same six months when the economy might have contracted, businesses and other employers added a prodigious 2.7 million jobs — more than were gained in most entire years before the pandemic.
Biden fights talk of recession as key economic report looms
President Joe Biden wants to convince a skeptical public that the U.S. is not, in fact, heading into a recession. He’s sending that message in the leadup to the release of a key report on the economy’s overall health. The Commerce Department on Thursday will release new gross domestic product figures. Top forecasts are predicting that the figure will be negative for the second straight quarter — an informal signal that the country is stuck in a downturn. The Biden administration is pre-emptively telling voters not to judge the economy by GDP or inflation alone. Republicans see political chum in the water. They suggest the GDP report will show an economy in collapse.
Bill to boost semiconductor industry passes key Senate test
WASHINGTON (AP) — The Senate has advanced a $280 billion bill designed to boost the U.S. semiconductor industry and accelerate high-tech research. Backers of the measure say it will be critical to the economy in coming decades. The legislation is now on a glidepath to final passage in the Senate, and the House is expected to take up the package this week. Industry leaders say government subsidies are necessary to compete with other nations that are spending billions of dollars to lure semiconductor manufacturers. Senate Majority Leader Chuck Schumer tells The Associated Press that without the federal funding, the U.S. economy will fade and the prospects of good-paying jobs in America will shrink.
Google’s parent reports slowest quarterly growth in 2 years
SAN FRANCISCO (AP) — Google’s revenue growth during the past quarter decelerated to its slowest pace in two years as advertisers reined in their spending amid fears of an economic recession. The regression reported Tuesday by Google’s corporate parent, Alphabet, is the latest sign that the tailwinds propelling big technology companies during the pandemic have shifted into a challenging new direction. In Alphabet’s case, revenue during the April-June period totaled $69.7 billion, a 13% increase from the same time last year. That was the lowest rate of growth since Alphabet suffered a revenue decline in the April-June period of 2020.
Microsoft blames economic woes for missing profit targets
REDMOND, Wash. (AP) — Microsoft on Tuesday reported fiscal fourth-quarter profit of $16.7 billion, or $2.23 per share, falling short of analyst expectations for $2.29 per share — a rare disappointment from the tech giant that has consistently beat Wall Street expectations in recent years. It posted revenue of $51.9 billion in the April-June period, up 12% from last year. Analysts had been looking for revenue of $52.94 billion, according to FactSet. The company blamed a number of “evolving macroeconomic conditions and other unforeseen items” for affecting its financial performance, including pandemic-related production shutdowns in China, a deteriorating personal computer market, lowered spending on advertisements and the war in Ukraine that led Microsoft to scale down its operations in Russia.
Hobbled by chip, other shortages, GM profit slides 40% in Q2
DETROIT (AP) — General Motors’ second-quarter net income fell 40% from a year ago as computer chip and parts shortages hobbled factory output and caused the company’s U.S. sales to fall more than 15%. The Detroit automaker said it made $1.67 billion from April through June, in part because it couldn’t deliver 95,000 vehicles during the quarter because they were built without one part or another. Last year it made $2.79 billion. The company said it made an adjusted $1.14 per share, falling short of Wall Street estimates of $1.27. Revenue was $35.76 billion for the quarter, beating estimates of $33.9 billion, according to FactSet. Like other automakers, GM has been forced to slow its factories since late in 2020 largely due to a global shortage of semicondutors.
Asian stocks follow Wall Street ahead of likely US rate hike
BEIJING (AP) — Asian stock markets have followed Wall Street lower as traders prepared for a possible sharp interest rate hike from the Federal Reserve to cool inflation. Shanghai, Hong Kong and Seoul declined. Tokyo advanced. Oil prices were little changed, staying below $100 per barrel. Wall Street tumbled after Walmart warned inflation that has spiked to a four-decade high of 9.1% is hurting American consumer spending. The Fed is expected to announce a rate hike of up to three-quarters of a percentage point, triple its usual margin. Investors worry aggressive action by the Fed and central banks in Europe and Asia to cool inflation might derail global economic growth.
Consumers confidence slides for third straight month in July
WASHINGTON (AP) — U.S. consumer confidence slid again in July as concerns about higher prices for food and gas continue to weigh on Americans. The Conference Board said Tuesday that its consumer confidence index fell to 95.7 in July from 98.4 in June, largely due to consumers’ anxiety over four-decade high inflation. The business research group’s present situation index — which measures consumers’ assessment of current business and labor market conditions — fell from 147.2 to 141.3. U.S. inflation surged to a new four-decade high in June, squeezing household budgets and pressuring the Federal Reserve to raise interest rates aggressively — trends that raise the risk of a recession.
Drugmaker Teva latest to settle opioid lawsuits nationally
Drugmaker Teva has announced an agreement to settle lawsuits over the allegations that it helped fuel the U.S. opioid epidemic. The deal calls for the Israel-based company to pay more than $4.3 billion to state and local governments and Native American tribes over 13 years. The total includes settlements the company has already reached with individual states and providing at no charge a drug that reverses overdoses. The company was found liable last year in a trial involving claims in New York state; that will still head to a damages phase unless a separate deal is reached on those claims.