What’s Up? (Jan. 22-28)
Job Cuts, and Not Just in Tech
What began as a wave of ominous job cuts by technology companies is rippling through other industries, most recently media and retail. In the last week alone, layoffs, or reports of coming layoffs, have swept The Washington Post, Vox and Saks.com. Adding to the tens of thousands of unemployed tech workers, Spotify said on Monday that it was cutting 6 percent of its work force, or about 600 employees, and IBM announced on Wednesday that it would shed 3,900. Tech’s challenges may be somewhat particular to the sector — employers have largely pointed to overhiring during the pandemic as a reason for the recent cuts — but its upheaval can be an indicator of where the economy is heading. Yet even as layoffs appear to creep across the job market, unemployment claims overall remain low, and millions of jobs are open across the country.
A Growing Economy
Despite what might seem to be obvious harbingers of an economic downturn — mass layoffs, for example — there are other signs of relative health. Take gross domestic product, an indicator that was not as reliable at the beginning of the pandemic but has since normalized. The latest report on G.D.P., when adjusted for inflation, shows the U.S. economy grew at an annual rate of 2.9 percent in the fourth quarter of 2022, suggesting that it has been largely resilient in the face of inflation, high interest rates and the war in Ukraine. Though just a few months ago, G.D.P. numbers met one commonplace standard for determining a recession, the most recent data would seem to assuage fears. But only to a certain extent — many economists still expect a recession to begin later this year.
Elon Musk Takes the Stand
More than four years after he posted a tweet telling his followers that he had secured the funding to take Tesla private, Elon Musk, now the chief executive of both Tesla and Twitter, appeared in court to defend that statement against a lawsuit. He provided seven hours of testimony over three days, arguing that funding for a deal with Saudi Arabia’s sovereign wealth fund was plentiful but dodging a question about whether a specific dollar amount had been discussed. In the 2018 tweet, Mr. Musk suggested that he had secured $420 a share (a favorite number of the billionaire’s). Lawyers for the plaintiffs, a group of Tesla investors, are trying to build a case to prove that Mr. Musk’s actions led to the wild swings in Tesla’s stock, causing them to lose money. Some experts believe they are likely to succeed: Last year, the senior U.S. District Court judge hearing the case ruled that he agreed with the plaintiffs that Mr. Musk was “deliberately reckless” — investors’ words — when he posted the tweet.
What’s Next? (Jan. 29-Feb. 4)
A Smaller Rate Increase?
The Federal Reserve took its first step toward slowing its interest rate increases last month, when it broke a streak of aggressive three-quarter-point increases with a half-point one. At its meeting on Tuesday, the central bank may opt to slow its pace further. In recent weeks, Fed officials including Susan M. Collins, the president of the Federal Reserve Bank of Boston, and Christopher Waller, a Fed governor, have discussed the possibility of a quarter-point move. “There appears to be little turbulence ahead, so I currently favor a 25-basis-point increase,” Mr. Waller said. But he echoed his colleagues in emphasizing that their campaign to fight inflation was not over yet, and Jerome H. Powell, the Fed chair, has made clear officials’ intention to raise the policy interest rate to 5.1 percent by the end of the year.
