The Week in Business: Twitter Enters a New Era

What’s Up? (Oct. 23-29)

Musk at the Helm

Elon Musk ushered Twitter into a new era on Thursday, completing a $44 billion deal to acquire the service. This outcome was hardly inevitable: Mr. Musk’s bid in April to buy Twitter was followed by months of reversals and lawsuits that brought the two parties to the brink of a trial. But Mr. Musk met an Oct. 28 deadline set by a judge to carry out his purchase, and he immediately began cleaning house, firing at least four top executives. The swift cuts suggest that Mr. Musk is going to move quickly to carry out his vision — and by taking Twitter private, the mercurial billionaire is not beholden to shareholders or required to make regular public disclosures as he does so. What he is planning to do remains somewhat hazy, but Mr. Musk has described himself as a “free speech absolutist” and said he would reverse the ban on former President Donald J. Trump from the platform. Mr. Trump said Thursday evening that he had been told his account would be restored on Monday.

Tech Companies Feel Economic Pain

Earnings reports last week brought grim tidings from Silicon Valley. Once relatively insulated from the consequences of inflation and cooling demand, even the biggest tech companies are now experiencing the same travails as much of the rest of the economy. Meta’s quarterly profit fell 50 percent from a year earlier. Microsoft reported its slowest revenue growth in five years. And Alphabet, Google’s parent company, reported a profit for the latest quarter that was down 27 percent from a year earlier. These companies still raked in billions in profits. But they have also collectively shed trillions in market value so far this year. And their problems go beyond rising prices and changing consumer habits. Many of them are struggling with the consequences of Apple’s privacy changes, which have limited the way tech companies can target advertising, and few have hit on fresh, profitable ideas for their businesses in recent years.

Making Sense of the Economic Data

G.D.P., P.C.E, E.C.I. — if this sounds like alphabet soup to you, read on. Fresh economic data released last week created a complex, and at times seemingly contradictory, portrait of the global economy. The U.S. economy returned to growth in the third quarter, lending some credibility to arguments that it is not yet in a recession — though that data belied other troubling signs in Thursday’s gross domestic product report. Similarly, economists warned not to put too much stock in Germany’s report on Friday that its economy expanded in the third quarter. Reports on the same day by both France and Spain showed that their economies had slowed, and economists believe that Europe is heading for a serious slowdown. New U.S. inflation numbers also landed on Friday, adding even more uncertainty to the outlook for the economy. Prices (in the Personal Consumption Expenditures index) are still climbing at a concerning pace, and wages (in the Employment Cost Index) ticked up, too. There may be some mixed signals from these reports, but the broad takeaway is that economies around the world are weakening.

What’s Next? (Oct. 30-Nov. 5)

Another Big Rate Increase

The Federal Reserve is poised to announce another three-quarter-point increase to its benchmark rate at its meeting this week, the fourth consecutive increase of that size. Not long ago, policymakers at the Fed expected to debate slowing the pace of the increases at their November meeting. But economic data since their last gathering has suggested that the labor market is still strong and that inflation remains stubbornly persistent, prompting them to delay any discussion of easing. Among officials’ foremost concerns now is that inflation could become a permanent fixture of the U.S. economy if they allow it to linger too long. The more Americans come to expect high prices — a troubling possibility suggested by some food companies’ quarterly earnings reports, for example — the more their behaviors will reinforce inflation.

Article source: https://www.nytimes.com/2022/10/30/business/twitter-fed-jobs-report.html