This Week in Business: Recession Fears

What’s Up? (July 24-30)

Meta’s Not-So-Good Day

Wednesday was not a great day for the company formerly known as Facebook. First came a lawsuit from the Federal Trade Commission and then, the company announced its first-ever revenue decline since it went public. The F.T.C., led by Lina Khan, one of Big Tech’s biggest critics, is suing Meta to block it from buying Within, a virtual reality company that would aid the leap by Meta’s chief executive, Mark Zuckerberg, into the metaverse. In the suit, the F.T.C. accused Meta of trying to buy a company that it should have to compete with. Meta responded that the agency had put together a case “based on ideology and speculation.” Later, the company reported that its second-quarter revenue was down 1 percent from the previous year, results that Mr. Zuckerberg put into the context of an “economic downturn that will have a broad impact” on digital advertising. Still, he appears relentless in advancing his vision for the next era of his business, and he has told employees that anyone who is not on board can leave.

A Recession? Or Not?

The economy shrank for the second consecutive quarter, meeting the criteria for one common definition of a recession. Accounting for inflation, gross domestic product fell 0.2 percent in the second quarter, the Commerce Department said on Thursday. But while closely watched, G.D.P. isn’t the only indicator of a serious downturn: Economists use a broad set of data to determine the condition of the economy, including measures of income, spending and employment, and most maintain that the United States is not in a recession. And seen through the eyes of officials at the Federal Reserve, the latest G.D.P. numbers are a sign that their efforts to slow the economy are working. But the outlook is certainly dimming, particularly with the housing market slowing and a measure of layoffs creeping up.

The Fed’s Supersize Rate Increase

The Federal Reserve pressed on with its single-minded pursuit of taming rising prices last week as it raised interest rates three-quarters of a percentage point. Policymakers had unanimously agreed on the supersize increase, which followed one of the same size in June, the largest since 1994. The Biden administration has said that it is largely relying on the Fed to bring inflation under control. But a day after the Fed meeting, President Biden announced that an agreement had been reached with Senator Joe Manchin III of West Virginia to advance a package known as the Inflation Reduction Act. Cecilia Rouse, who is the chair of Mr. Biden’s Council of Economic Advisers, said the plan would make “a meaningful contribution” to the government’s efforts to ease inflation.

Article source: https://www.nytimes.com/2022/07/31/business/this-week-in-business-recession-fears.html