Companies are struggling with the economy
By: Iris Shen
Recently, executives from the biggest tech and retail companies have all attempted to address questions and concerns about the state of the economy, which has lingered on the brink of decline.
Four times a year, the many big companies report how much money they’re making — or losing - in addition to future goals. These reports provide helpful information of how consumers are spending, which is a key part in predicting an organization’s economic performance.
But, as the government economic indicators reported this past week, companies’ earnings are showing that the U.S. economy is in an unusual place. People are still spending their money, but because of inflation, more is going to gas and necessities and less to electronics, clothing, and decorations. Unemployment remains low, but some companies are slowing hiring and a few are beginning to lay people off outright.
Last Tuesday, Google CFO Ruth Porat said “some advertisers” pulled back on buying ads, but its two biggest customer groups — travel and retail — still experienced growth. Amazon (whose CEO also owns the Washington Post) reported results that defied expectations and the company said consumer demand was still strong, but even so, warned that they would be stringent with hiring.
The Federal Reserve raised rates again this past week, making it harder for people to borrow more money and keep spending. The intent was to slow down inflation and stabilize the economy. But it’s a delicate balance as some companies are already reporting warning signs.
“As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened,” said Corie Barry, Best Buy’s CEO, in a statement Wednesday. The statement echoed comments two days earlier from Walmart CEO Doug McMillon that food and fuel prices are inhibiting people’s ability to buy clothing and other goods.
Some Americans say it’s a new normal. Shannon Villa is a 32-year-old Amazon warehouse worker who lives in Birmingham, Alabama. He said he’s been careful with expenses. He has three kids and a mortgage, but still managed to take a few trips this summer.
“I can’t control the price of eggs or milk. [If] it goes up it just goes up. I still need it for family,” he said in a message. “Gas goes up, I still need it. I can’t afford to complain. I just got to adjust.”
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