US GDP Declines as Data Crackdown Harms Tech Giants
This week, new data shows that the US economy shrank for the second straight quarter. Tech giants report declining earnings after Apple and the US government are cracking down on their unethical practices. JetBlue is planning on buying budget airlines Spirit for $3.8 Billion. The majority of the US is dealing with excessive heat and droughts. China continues to work on its space station, but debris from one of its rockets uncontrollably crashed in the Indian Ocean. Here are this week’s stories.
GDP Falls in The Second Quarter
The US economy has shrunk for the second straight quarter, hitting a widely accepted rule for identifying recessions. Gross domestic product (GDP), a key measure of economic output, fell by 0.9% annually in the second quarter after declining by 1.6% earlier this year. Inflation remains extremely high at 9.1% year-over-year, according to the Bureau of Labor Statistics, and the Federal Reserve continues to raise interest rates to combat high inflation, but it will likely tip the US economy into a recession. In the 11 times the Federal Reserve increased interest rates, the Fed has successfully dodged recession only three times. Because of the high inflation rate, Americans are also saving less. Americans saved only 5.4% of disposable personal income in May, down from 12.4% last year. Although the inflation rate keeps increasing and GDP is shrinking, the labor market has remained relatively robust. 98% of jobs lost during the pandemic had been recovered, and the unemployment rate is at historic lows at 3.6%. The labor market is so strong that there were over 11 million job openings in May, but only 6 million Americans were unemployed. Still, a recession is inevitable with high inflation, high-interest rates, and a shrinking GDP.
Tech Giants Report Decline in Earnings
Major tech giants like Apple, Snap, Meta, and Twitter have all revealed their earnings this week, and it seems like their growth is halting. Even the world’s most valuable tech company, Apple, reported its profits declining by nearly 11% to $83 billion compared to last year, but it still exceeded Wall Street’s expectations. Meta reported its first decline as revenue dropped 1% yearly to $28.8 billion, and profits fell 36% to $6.7 billion. Snapchat, Twitter, Alphabet, and Meta all reported underwhelming results for Q2 partially because of Apple’s app-tracking transparency feature. This feature allows users to block apps from tracking and collecting data with one click in an unavoidable popup and has cost Meta over $10 billion in ad revenue last year alone. Social Media companies have unethically profited off their users for a decade now, and crackdowns are finally happening. Even the US government is working on a data privacy bill that will restrict companies' ability to collect and use data. The Facebook and Cambridge Analytica data scandal is also getting investigated, and several top Meta executives are set to give depositions. Cambridge Analytica, a consulting firm, collected the data of millions of Facebook users without their permission and attempted to influence them during the 2016 presidential election and Brexit.
JetBlue to Buy Spirit for $3.8 Billion
JetBlue is planning on buying Spirit, a budget airline, for $3.8 billion. Spirit Airlines is known to provide only the bare minimum by having hardly any leg room and charging extra for carry-on luggage, while JetBlue is more traditional. Over the past couple of years, Spirit has expanded rapidly by offering cheap tickets, and JetBlue hopes to become the nation’s fifth-largest carrier by merging. JetBlue would also gain Spirit’s Airbus fleet and its pilot staffing which are both in high demand. Thousands of flights are delayed or canceled daily because of bad weather, more travelers, and staffing shortages. Many airline workers retired during the pandemic, and airlines have not replaced them. Many pilots have also retired early or gone on strike because of a lack of pay, long hours, and fatigue. Major airlines have overbooked flights and are canceling thousands of flights for the summer. Although this may improve JetBlue’s services, many are worried that Spirt’s low prices will soon disappear. JetBlue’s CEO Robin Hayes is defending the acquisition and claims they will aim to create competition to “bring down fares from the Big Four airlines.” The deal still needs to pass regulatory hurdles, which could take months.
Drought Across the US
Most of the US is dealing with extreme heat and drought, causing water shortages and difficulties for farmers. According to the America Farm Bureau Federation, nearly 80% of the western half of the US has been suffering from extreme drought conditions for a year. Much of the Northeast is in a drought, and southern New England suffers from water shortages. Temperatures have also remained high and are expected to be above average for August. Record heat is being recorded in the Pacific Northwest as temperatures reach triple digits, and in Texas, daily highs are not dropping below 100 degrees Fahrenheit. Wildfires have also exploded in size in California and Montana, burning thousands of acres of land. Extreme heat and droughts are becoming more common because of climate change, and we must adapt. In Phoenix, one of the hottest cities in the US, the government is turning its black asphalt streets gray to reflect the sun and keep the pavement significantly cooler. Some regions in Australia have banned dark roofs for the same reason, resulting in substantial cooling. Experts also recommend having more trees and plants because they release water vapor through their leaves which has a cooling effect.
China’s Rocket Debris Uncontrollably Crashed in The Indian Ocean
China continues to work on its space station, but debris from one of its rockets uncontrollably crashed in the Indian Ocean. Experts said the probability of the rocket landing in a populated area was extremely low. NASA has made calls for the Chinese space agency to design rockets to disintegrate into smaller pieces upon re-entry, but they are not taking responsibility. Debris from a Chinese rocket also crashed in 2020 and destroyed multiple properties in the Ivory Coast, but they continue to launch the same rockets and work on the Tiangongn space station. China launched the first module of the Tiangongn space station last year and plans to add more modules, like a science lab and a space telescope, later this year and next year. With the Tiangongn space station, China hopes to become a space power and replace the International Space Station, which will likely be decommissioned in 2031. This decade, China hopes to collect samples from asteroids, the Moon, and Mars and land astronauts on the Moon. Many other countries also plan lunar missions, including the US, United Arab Emirates, India, Japan, South Korea, and Russia. The US believes that Private corporations, like SpaceX and Blue Origin, will likely lead future space station projects in collaboration with NASA.
Above were my top stories for the week of July 31, 2022. Thank you, and see you next week!