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The Week in Business: Spend More, Get Less

Consumers continued to spend in May, but they got less for their money. Adjusted for inflation, spending fell in May for the first time this year – by 0.4%, as spending rose less than prices. Spending was also weaker in the first four months of 2022 than previously thought. Although Americans have barely stopped shopping even as the prices of gas, groceries, travel and just about everything else rise, there are signs that high prices could start to rise. influence demand. Big-ticket items in particular have been hit, starting with the housing market, which has cooled in recent weeks as high prices combined with rising mortgage rates.

We are halfway through 2022, and there are signs in the financial markets that all is not well. The stock market had its worst first six months since 1970. The S&P 500 has fallen nearly 21% since its peak in January. Bitcoin has fallen over 50% this year. An index that tracks the 10-year Treasury fell about 10%. Bonds, which are seen as offering lower but more stable returns to investors, are also down. Jerome H. Powell, the chairman of the Federal Reserve, said last week that the bank’s efforts to fight inflation were “very likely to lead to pain.” With all the worrisome financial and economic news, economists have raised the likelihood of the US economy falling into recession.

The Supreme Court on Thursday limited the Environmental Protection Agency’s ability to limit carbon emissions from power plants. The 6-3 ruling, which limits but does not eliminate the agency’s ability to regulate the energy sector, was seen as a blow to President Biden’s climate agenda. The decision also has implications for other types of regulations, which may now become more difficult to defend. The court used the case to entrench the so-called major issues doctrine, which allows a court to strike down agency regulations if Congress was not explicit enough in granting authority and regulations have significant economic effects. In some extraordinary cases, an agency “must indicate ‘clear congressional authorization’ for the power it claims,” ​​wrote Chief Justice John G. Roberts Jr. The legal scholars say the court’s conservative majority gave the commercial interests a powerful tool to challenge regulations that reduce their profits.

The June jobs report will be released on Friday and is expected to show a slowdown in hiring. Initial jobless claims are up from May. Job growth was strong last year and earlier this year, and the United States has nearly recouped the 22 million jobs lost during the pandemic. The Fed will be looking at the jobs report to see if wages continue to rise and unemployment rates, and it will look for guidance on whether its interest rate hikes are causing the economy to slow. Minutes of the Fed’s June meeting, in which policymakers raised interest rates by three-quarters of a percentage point, the biggest increase since 1994, will be released on Wednesday.

As the fallout from falling cryptocurrency prices continues to reverberate, there is a gap between the haves and the have-nots. Wealthy cryptocurrency executives – some of whom bought when prices were low or cashed in when prices were high – are expected to lose money but emerge relatively unscathed. Cameron and Tyler Winklevoss, for example, the heads of crypto firm Gemini who are best known for their early supporting roles at Facebook, each saw their fortunes shrink to $3.3 billion last week from $4 billion. dollars each, according to Forbes. But workers at cryptocurrency companies are losing their jobs and retail investors are watching their savings evaporate. Gemini, the first major crypto firm to announce layoffs, cut around 10% of its workforce last month. Companies like Coinbase soon followed. Meanwhile, the Winklevoss twins have taken their cover band on the road. Among the songs they played: “Don’t Stop Believin”.

The 4th of July weekend is one of the busiest weekends of the year. And this summer, we expect it to be messy. Flight delays and cancellations are expected across the country. Last month, Pete Buttigieg, the Transport Secretary, urged airlines to ensure they stick to their flight schedules, Reuters reported. (That was just before his own flight from Washington to New York was canceled.) A combination of factors, including pent-up traveler demand, ongoing staffing issues at airlines and airports, and the spread of Covid means flight times may not be reliable. The same issues are affecting travel in Europe, where airline and airport workers are staging protests over understaffing and wages.

Ernst & Young has agreed to pay the Securities and Exchange Commission $100 million after regulators discovered hundreds of the company’s auditors cheated on ethics exams – and the company hasn’t done so. enough to stop him. Spirit Airlines has postponed the shareholder vote until July 8 as it continues to talk to both Frontier Airlines and rival suitor JetBlue. And major players in media, technology and business will converge in Idaho on Tuesday for the annual Sun Valley Conference hosted by Allen & Company. The event was called “Summer Camp for Billionaires”.