Business Highlights: US economy accelerates; Southwest reports soaring labor costs
Business Highlights: US economy accelerates; Southwest reports soaring labor costs
US economy unexpectedly accelerated to a 2.4% growth rate in April-June quarter despite Fed hikes
WASHINGTON (AP) — The U.S. economy surprisingly accelerated to a 2.4% annual growth rate from April through June, showing continued resilience in the face of steadily higher interest rates resulting from the Federal Reserve’s 16-month-long fight to bring down inflation. The gross domestic product — the economy’s total output of goods and services — picked up from the 2% growth rate in the January-March quarter. Last quarter’s expansion was well above the 1.5% annual rate that economists had forecast. Driving the gain was a burst of business investment, which surged at a 5.7% annual pace, the fastest rate since late 2021. Companies plowed more money into factories and equipment. Increased spending by state and local governments also helped fuel growth.
Casino mogul Steve Wynn fined $10M to end Nevada fight over claims of workplace sexual misconduct
LAS VEGAS (AP) — Casino mogul Steve Wynn is ending a long legal fight with Nevada gambling regulators over claims of workplace sexual misconduct by paying a $10 million fine. The Nevada Gaming Commission accepted a settlement Thursday that calls for Wynn to cut ties to the industry he helped shape in Las Vegas. Wynn admits no wrongdoing. He’s now 81 and lives in Florida. He didn’t attend the hearing in person. His attorney says they’re grateful to close the matter and that Wynn looks forward to moving on to other phases of his life.
DALLAS (AP) — Southwest Airlines is reporting a $683 million profit for the second quarter, and revenue is a quarterly record as planes are packed during the peak summer travel season. The financial results reported Thursday were in line with Wall Street expectations. But the airline is warning that a key revenue ratio will fall in the third quarter, and it also faces higher labor costs as it negotiates new contracts with unions. In afternoon trading, Southwest shares were having one of their worst days in more than three years.
White House rolls out measures aimed at lowering cost of housing, increasing supply
The White House has announced a series of measures that it said would reduce the cost and increase the supply of housing while bolstering protection for renters. The measures announced Thursday would provide communities with funding to reduce zoning barriers, expand financing for affordable and energy-efficient housing as well as promoting the conversion of commercial buildings to residential housing. It also announced policies that would help renters, including giving tenants in public housing and publicly-financed developments more time to avoid evictions as well as efforts to support tenant organizing and increase financing for tenant education.
A ‘rolling recession’ or a ‘richcession’ might spare the US economy from a full-scale downturn
WASHINGTON (AP) — Despite more than a year of widespread warnings that a recession was near, America’s economy is, if anything, accelerating. The government estimated Thursday that the economy expanded at a solid 2.4% annual rate in the April-June quarter, an unexpected pickup from the 2% pace in the first quarter. The latest snapshot of the economy coincides with rising sentiment that it may achieve an elusive “soft landing.” Analysts point to two trends that might help stave off an economic contraction. Some say the economy is experiencing a “rolling recession,” a circumstance in which only some industries shrink while the overall economy manages to stay above water. Others think the nation might have experienced what they call a “richcession.”
Federal Reserve keeps raising rates. That means it’s harder to get a car loan.
NEW YORK (AP) — The Federal Reserve’s decision Wednesday to raise interest rates for the 11th time could once again send ripple effects across the economy. Perhaps no one has felt the pain more than car buyers. It’s not just that sticker prices are way up. Or that lenders have tightened credit standards. On top of all that, steadily higher auto loan rates have elbowed many would-be buyers out of the market. A study by the New York Federal Reserve has found that 14% of applicants for auto loans were rejected over the past year — the highest such proportion since the New York Fed began tracking the figure in 2013 — up from 9% in February.
European Central Bank hikes interest rates to combat inflation and leaves door open to more
FRANKFURT, Germany (AP) — The European Central Bank has raised interest rates for the ninth straight time in its yearlong campaign to stamp out painfully high inflation. ECB President Christine Lagarde had all but promised the quarter-percentage point increase and then kept the door open to further hikes despite increasing fears of recession. She said Thursday that “we might hike or we might hold” at the bank’s next meeting in September. But she insisted that the ECB is “very strongly rooted in our determination to break the back of inflation.” U.S. Federal Reserve Chair Jerome Powell on Wednesday was similarly noncommittal about whether more rate increases might be coming.
EU investigates Microsoft over concerns bundling Teams with Office eliminates competition
BRUSSELS (AP) — The European Union has opened an antitrust investigation into Microsoft over concerns that bundling its Teams messaging and videoconferencing app with its Office productivity software gives it an unfair edge over competitors. The European Commission said Thursday that it would carry out its in-depth investigation “as a matter of priority.” The investigation stems from a complaint filed in 2020 by Slack Technologies, which makes popular workplace messaging software. Slack alleged that Microsoft was abusing its market dominance to eliminate competition in violation of EU laws by illegally combining Teams with its Office suite. Microsoft says it “will continue to cooperate with the commission and remain committed to finding solutions that will address its concerns.”
Big banks will need to hold more capital to guard against risk under new Fed proposal
NEW YORK (AP) — The nation’s biggest and most complex banks will need to hold additional capital on their balance sheets under an initial proposal by the Federal Reserve designed to help banks better withstand risks to their businesses that go beyond a recession or financial crisis. The proposal released Thursday, boiled down from highly complex and technical nuances, roughly means that Wall Street collectively will have to set aside tens of billions of dollars as a buffer against risk. The banking industry had a hostile reaction to the Fed’s proposal. Banks have long contended that they hold more than enough capital to withstand even a global financial crisis.
Republican-led committee calls off vote to hold Meta’s Mark Zuckerberg in contempt
WASHINGTON (AP) — A House committee has called off a vote on a recommendation that Meta CEO Mark Zuckerberg be held in contempt of Congress for failing to fully supply documents related to an investigation into supposed censorship of conservatives by tech companies. Rep. Jim Jordan, the Republican chair of the Judiciary Committee, tweeted shortly before the committee was to meet Thursday that based on “Facebook’s newfound commitment to fully cooperate” with the investigation, it had decided to hold contempt in abeyance, “For now.” The committee says Meta has produced only documents between Meta and external entities, and a small subset of relevant internal documents. It’s seeking more internal documents.
News Source