Company Reports Show Changes in Economy
By: Tianhao Chen
The past few days, large companies have reported their earnings, and results show both positive and negative results due to the current state of the U.S economy.
On one side, companies such as Google and Apple have seen overall earnings higher than previously expected but see decreases in spending in certain categories. These companies, along with Amazon and Microsoft, have enjoyed an increase in their stock price after publishing their profits.
With these better-than-expected profits from tech companies, president of Sevens Report Research, Tom Essaye, said that “[p]eople were nervous there was some sort of bombshell lurking, and it never showed. For now, we sort of dodged a bullet.”
On the other side, some companies such as Walmart and Best Buy have reported that their earnings fell short of expectations. Other companies, such as UPS and General Motors, saw their stock prices decrease as they didn’t meet expectations.
These trends likely occurred due to changes in spending habits. Thomas Combs, a business owner in Dallas, talked about how he’s reshaped his budget, only buying necessities. In general, consumers have been reducing spending on clothing and electronics and have allocated more of their budget towards things such as housing and food. This was backed by both the Best Buy and Walmart chief executives in earlier statements.
In recent data released on July 29th by the Bureau of Economic Analysis, it was shown that although spending increased during June, it was due to prices increasing. With the economy being so close to a recession, companies planned to hire less employees, with others deciding to lay off their workers.
One of those companies is Canadian e-commerce company Shopify. Shopify reported that it planned to lay off over a tenth of their employees after a resurgence of shopping at physical stores. For Google, its Chief Financial Officer, Ruth Porat, also said in a recent quarterly meeting that to prepare for the slump in the economy, they will pull back on hiring new people.
Many Americans have already adjusted to this new economy. An Amazon warehouse worker, Shannon Villa, discussed how he deals with the changes to the economy, saying that “I can’t control the price of eggs or milk. [If] it goes up it just goes up. I still need it for family. Gas goes up, I still need it. I can’t afford to complain. I just got to adjust.”
Link to Article: https://www.washingtonpost.com/technology/2022/07/30/earnings-econ-recession/