The Week in Business: Blistering Job Growth
What’s Up? (July 31-Aug. 6)
A Jobs Day Surprise
Analysts had forecast an increase of 250,000 jobs in July. And so it was a shock when the Department of Labor’s report showed that more than twice that number — 528,000 — were added last month. The blistering pace of growth brought total employment back to prepandemic levels, a befuddling benchmark considering other recent signs of a slowing economy, including a falling gross domestic product and a more sedate housing market. Indeed, this latest jobs report provides more questions than answers about the state of the U.S. economy: What is the cause of employers’ confidence in hiring if many fear a recession? Why is the job market so resilient if the economy seems to be more depressed? These are apparent contradictions that Federal Reserve officials will weigh as they think about what path to take.
More Crypto Shock Waves
Citing the cryptocurrency market crash along with inflation and the worsening economic outlook, the trading app Robinhood announced layoffs of 23 percent of its staff on Tuesday, the second round of job cuts in just a few months. It is still dealing with the fallout from last year’s “meme stock” frenzy, when investors conspired to drive up the stocks of struggling companies like GameStop and AMC, ultimately resulting in lawsuits, a Securities and Exchange Commission report and congressional hearings for Robinhood, which became a key player in the trading. But also disastrous for the company has been its exposure to the crypto market, which analysts said led many companies, like the cryptocurrency exchange Coinbase, to over-hire in the market’s boom time and then cull staff as it plunged. Vlad Tenev, the chief executive of Robinhood, said the company misjudged the economy and trading activity. “As C.E.O., I approved and took responsibility for our ambitious staffing trajectory — this is on me,” he wrote in a blog post.
Elon Musk Countersues
In his first extensive response to Twitter’s suit against him, Elon Musk accused the social media company of fraud, reiterating arguments that it concealed the true number of spam and bot accounts on its platform. in a legal filing made public on Thursday, Mr. Musk’s lawyers asserted that the proportion of those accounts was closer to 10 percent, while Twitter has maintained it was less than 5 percent. His lawyers also accused Twitter of hiding the number of its users who see ads. Twitter continues to say its figures are accurate. The two parties are still slated to resolve their disputes in Delaware’s Court of Chancery in October, when a judge will decide whether Mr. Musk’s claims that Twitter withheld information about spam accounts on the site are legitimate or if he must still complete the $44 billion deal.
What’s Next? (Aug. 7-13)
Disney’s Ambitious Subscriber Goal
The Walt Disney Company’s bold subscriber ambitions may get a check in its quarterly earnings report on Wednesday. The company has beat analyst expectations for its streaming platform Disney+ so far this year, announcing in February that it had added 11.8 million subscribers and then in May that 7.9 million more had joined for a total of 138 million. But it has an aggressive goal to reach 230 million to 260 million Disney+ subscribers globally by 2024, and analysts have said that guidance is likely to be lowered on Wednesday. They predict that instead Disney will want to focus on making the streaming site profitable. These aren’t the only challenges Disney faces: Its stock price has sunk this year, the company fired its most senior television content executive, and though its theme parks in the United States have rebounded, they have struggled in China because of pandemic restrictions.
The Latest on Inflation
The Consumer Price Index this week may put forth a somewhat confusing message. Analysts expect both year over year and month over month inflation to slow down but “core” inflation — the measure that excludes volatile gas and food costs — to speed up on an annual basis. Gas prices, which have fallen sharply from recent highs, would be the likely cause of a slowdown in headline inflation. Still, policymakers are concerned about how much and how quickly overall price gains will cool down. Officials at the Federal Reserve are planning another large rate increase in September but are watching for signs of moderation across the economy as they determine the pace of increases. At the White House, President Biden is pushing the Inflation Reduction Act as the administration’s tool for bringing down prices, though how effective the legislation will be at that task is uncertain.
A Potential Salve for Travel Chaos
In April, The New York Times’s transportation reporter asked: “Air travel is back. Can the industry keep up?” The answer recently has seemed to be: No. To address the increase in delays and cancellations this year — especially acute during high-travel holiday weekends this summer — the Transportation Department has proposed a rule that would provide more recourse for passengers who experience significant disruptions in their travel plans, including major changes to a flight’s schedule, route or seating. Airlines that received pandemic aid from the government would also be required to issue full refunds to passengers who change their minds about travel for Covid-related reasons. If it goes into effect, however, it won’t be in time for your August trip to Italy — the agency has opened a 90-day public comment period and will make a decision after that.
What Else?
Stephen King testified in the Justice Department’s antitrust case to block Penguin Random House from buying Simon & Schuster. Walmart is laying off 200 corporate workers. OPEC Plus approved a small increase in oil production.
