US economy sending mixed signals: Here’s what it all means
WASHINGTON (AP) — The US 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.
Biden fights talk of recession as key economic report looms
WASHINGTON (AP) — President Joe Biden wants to convince a skeptical public that the US 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 US semiconductor industry and to accelerate high tech research that backers say will be critical to the economy in future decades. The Senate needed 60 votes to advance the bill and the vote was 64-32. The legislation is now on a glidepath to final passage in the Senate later this week. The House is also expected to take up the package this week. The White House has led support for the bill, along with industry leaders who say government subsidies are necessary to compete with other nations that are spending billions of dollars to lure semiconductor manufacturers.
Google’s parent reports slowest quarterly growth in 2 years
SAN FRANCISCO (AP) — Google’s revenue growth during the last 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 beaten 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 US sales to fall more than 15%. The Detroit automaker said it made $1.67 billion from April through June, in part because it could not 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 semiconductors.
Grim news from Walmart sends US markets lower
NEW YORK (AP) — Stocks are closing lower on Wall Street Tuesday after Walmart warned that inflation is hurting American consumers’ spending power. The S&P 500 index lost 1.2%, the Dow Jones Industrial Average fell 0.8% and the Nasdaq Composite dropped 1.9%. Walmart shares plunged after the retail giant cut its profit outlook for the second quarter and the full year, saying rising prices on food and gas are forcing shoppers to cut back on more profitable discretionary items, particularly clothing. Technology and communication stocks were also among the biggest weights on the market.
Consumer confidence slides for third straight month in July
WASHINGTON (AP) — US 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. US 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.
The S&P 500 fell 45.79 points, or 1.2%, to 3,921.05. The Dow Jones Industrial Average dropped 228.50 points, or 0.7%, to 31,761.54. The Nasdaq lost 220.09 points, or 1.9%, to 11,562.57. The Russell 2000 index of smaller companies was down 12.53 points, or 0.7%, to 1,805.25.