An improving economy and a persistent virus are beginning to weigh on Amazon’s retail business, even as its cloud computing business grew and an investment lifted profits.
The company, whose profits, employee count and share price swelled two years ago as Covid forced people to stay home, said on Thursday that its operating income in the fourth quarter tumbled to $3.5 billion, about half the $6.9 billion it earned in the fourth quarter of 2020.
To compensate for its increased costs, Amazon said it was raising the annual price of its Prime shipping club to $139, from $119. The company said the 17 percent hike was the first Prime increase since 2018.
“As expected over the holidays, we saw higher costs driven by labor supply shortages and inflationary pressures, and these issues persisted into the first quarter due to omicron,” Andy Jassy, Amazon’s chief executive, said in a statement.
Net income, however, rose sharply owing to what Amazon called a “pretax valuation gain” in Rivian Automotive, an Amazon investment that went public in the fourth quarter. Amazon owns about 20 percent of the electric vehicle maker.
That pushed up net income to $14.3 billion compared with $7.2 billion a year ago. Without Rivian, net income would have slid to $2.5 billion, the company said. Revenue rose to a record $137.4 billion, just slightly under what analysts were expecting.
Amazon controls about 40 percent of the e-commerce market but that business — the one it began with and is still best known for — is increasingly the weakest part of the company. Online retail sales were essentially flat in the fourth quarter from 2020.
“Growth is slowing, there is no doubt,” Tom Johnson, global chief digital officer at Mindshare Worldwide, said in a note. “Comparisons against hyper growth quarters from early in the pandemic, supply chain issues that have a knock-on impact on ad spend, and continuing additional costs all add up the conclusion that the accelerated period of growth is over.”
AWS, Amazon’s cloud division, racked up its usual impressive performance, with operating income rising 49 percent. Ad revenue was $9 billion, up 37 percent. Twitter, which makes the vast majority of its revenue from advertising, has by comparison annual sales of less than $5 billion.
During regular trading Thursday, as investors fretted over what was to come, Amazon shares fell 8 percent. But after the earnings release appeared, investors focused on the good news, quickly pushing up Amazon shares in after-hours trading about 17 percent before beginning to fall back.
Andrew Lipsman, principal analyst at the research firm Insider Intelligence, attributed Wall Street’s optimism to two things.
“There was the price increase for Prime membership and the continued acceleration in AWS growth and its growing impact on the bottom line,” he said. “Perhaps there’s also some forgiveness of the e-commerce deceleration given the extraordinarily challenging year-ago comparisons to Q4 2020.”
Amazon added 140,000 workers during the quarter, giving it a total of 1.6 million employees. That was up 24 percent in a year. Walmart, the largest nongovernment U.S. employer, has 2.2 million workers.
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The U.S. Air Force is looking into keeping its airfields safer with help from the facial recognition start-up Clearview AI.
The Air Force Research Laboratory awarded Clearview $49,847 to research augmented reality glasses that could scan faces to help with security on bases.
Bryan Ripple, a spokesman for the lab, described the work as a three-month study to figure out the “scientific and technical merit and feasibility” of using such glasses for face recognition.
“No glasses or units are being delivered under this contract,” Mr. Ripple said on Thursday.
In other words, the lab is paying for the glasses to be developed, but it isn’t buying them yet. Mr. Ripple provided “a one-page overview from the company” titled, “Clearview AI: Augmented Reality Glasses to Secure Bases and Flightlines.” The flier said the product “saves lives,” “saves time” and “improves health” by increasing social distancing and keeping officers’ hands free to grab their weapons.
New York-based Clearview AI has been the target of international investigations and lawsuits because it scraped billions of photos from the public internet to build a facial recognition tool used by law enforcement. Hundreds of federal agencies and local police departments have employed Clearview’s technology.
The company describes its software as ideal for investigations that take place after a crime and not for surveillance, but it has experimented with real-time facial recognition.
In January 2020, a technologist at The New York Times found code in the company’s app that showed it could be paired with augmented reality glasses. At the time, Hoan Ton-That, the chief executive of Clearview AI, acknowledged designing a prototype but said the company had no plans to release it.
“We continually research and develop new technologies, processes and platforms to meet current and future security challenges, and look forward to any opportunities that would bring us together with the Air Force in that realm,” Mr. Ton-That said in a statement after the contract became public. “Once realized, we believe this technology will be an excellent fit for numerous security situations.”
Last month, Mr. Ton-That said in a public letter that his company would not use its technology “in a real-time way,” but outfitting glasses with the technology to recognize faces seems to fill that bill.
In a phone call, Mr. Ton-That said that Clearview’s database of 10 billion photos “won’t be used for any real-time surveillance” and that any augmented reality glasses would rely instead on “limited data sets — for example, outstanding warrants, missing children or persons of interest.”
The Air Force contract was signed in November but became public only on Thursday. It was first highlighted on Twitter by Jack Poulson, the executive director of Tech Inquiry, a nonprofit that monitors government procurement of surveillance technology.
In December 2019, the Air Force awarded Clearview AI $50,000 for research and development. BuzzFeed News previously reported that the Air Force was one of many divisions within federal agencies that had performed trials with the company’s facial recognition software.
Correction: Feb. 4, 2022
An earlier version of this article misspelled the given name of the spokesman for the Air Force Research Laboratory. It is Bryan Ripple, not Brian.
Ford Motor said on Thursday that it made a hefty profit in 2021 because of a big gain on its holding in a fledgling electric-vehicle maker and higher production in the second half of last year.
The automaker also said the shortage of computer chips that slowed vehicle production last year was easing.
In a conference call, Ford’s chief financial officer, John Lawler, said the company expected to continue to face tight chip supplies and supply-chain disruptions because of the Omicron variant of the coronavirus in the first quarter of this year.
“We see things improving significantly after that,” he said. Chip makers have been working to add production capacity for automotive chips “that will start to come online in the second half,” he added.
Ford earned $17.9 billion in 2021, a rebound from a loss in 2020. It was helped by a $9.1 billion gain in the value of its stake in Rivian, a maker of electric trucks. Rivian completed an initial public offering in the fall and its stock surged after it began trading, though it has fallen sharply since mid-November.
Ford reported revenue of $136 billion, up from $127 billion in 2020. It was the second year in a row that Ford ended the year with more revenue than General Motors.
Ford said it expected profit before certain expenses to increase 15 percent to 25 percent this year.
Ford is counting on a new electric pickup truck to lift sales in 2021. The truck, the F-150 Lightning, will go into production in the next few months, and Ford has said it has taken in more than 200,000 reservations from customers. The company is also close to selling an electric delivery van that has drawn strong interest from fleet and corporate customers.
“The first wave of our electric vehicles is extremely popular and they’re bringing in new customers to Ford,” Mr. Lawler said.
Established automakers are racing to field new electric models to compete with Tesla, which sold nearly one million vehicles globally last year, nearly twice as many as the year before.
The F-150 Lightning could pose serious competition to Tesla because it is based on a conventional truck with a large customer base — it is the top-selling vehicle in the United States — and Tesla does not yet make a pickup truck.
Ford hopes to produce 60,000 or more Lighting pickups this year and 150,000 a year by 2024.
With New York’s coronavirus cases declining, some Wall Street firms are recycling their favorite human resources message: back to the office, for real this time.
BNY Mellon, a global bank with nearly 50,000 employees, including 5,400 in New York, told all its staff in a memo Thursday that their return-to-office date would be March 7. But the firm has broken from many of its industry peers in adopting a more flexible approach to reopening its workplace.
American Express also announced on Thursday that it would require workers to return to office next month under a hybrid model the company introduced last year.
At BNY Mellon, managers will be permitted to determine which days employees are required to be in the office. Employees will also have the option to work anywhere in the world for two weeks each year.
“It gives our teams the freedom and responsibility to determine the mix of remote and in-office experiences that will enable them to perform at their best,” Thomas P. Gibbons, the firm’s chief executive, wrote in the memo.
BNY Mellon told employees last summer that they had to be fully vaccinated against the coronavirus to enter its offices. It did not share how it would handle employees who refused to be vaccinated.
American Express told its employees that they would be encouraged to return to the office starting March 1, followed by a broader return on March 15. Last year, the company announced a flexible working model called Amex Flex, where team leaders can decide whether their employees work mostly on-site, hybrid or remotely.
Starting next month, all eligible American Express employees have to be fully vaccinated and have gotten their booster shots to enter the company’s U.S. offices. Employees who refuse to get vaccinated or to disclose their vaccination status have to apply for permission to work virtually.
Financial firms have been among the most eager white-collar employers to see workers report back to their desks. Goldman Sachs and JPMorgan Chase both asked workers to return to the office on Tuesday, while Citigroup told employees in the New York metropolitan area that they will need to come back starting Monday for at least two days a week. Jefferies, a New York investment bank, and the Swiss lender UBS have both embraced hybrid working.
But many employers, including those in finance, conceded a new degree of uncertainty in their return-to-office plans amid the spread of the highly infectious Omicron variant of the coronavirus. A January survey from the Partnership for New York City, a business advocacy group, found that 22 percent of 187 major Manhattan employers could not estimate when their offices would reach even half capacity.
And for some employers, like BNY Mellon, that uncertainty has given way to new forms of flexibility.
“We are helping support the future of the work force with a flexible hybrid approach,” Jolen Anderson, the head of BNY Mellon’s human resources, said of the company’s new hybrid model. “That will set us apart from peers.”
Workers at one of the largest General Motors plants in Mexico voted to adopt an independent union on Thursday in what was seen as an important test case for whether new North American trade rules can improve working conditions and stamp out corruption in the Mexican labor system.
The union, called the Independent National Autoworkers Union, won 78 percent of the votes cast at the plant in Silao, where more than 6,000 workers assemble Chevy Silverados and G.M.C. Sierra pickup trucks. The vote pushed out the Confederation of Mexican Workers, which had held the contract for the last 25 years.
Workers at the Silao plant start out earning less than $9 a day, and have described punishing working conditions. Employees have said they are often denied breaks and are rarely offered raises.
Mexico pledged to make sweeping changes to its labor laws and court system as part of the new United States Mexico Canada Agreement, which replaced the North American Free Trade Agreement. The new agreement aimed to make it easier for independent unions to challenge incumbents, and required companies operating in Mexico to revisit hundreds of thousands of existing contracts in independent elections.
Democrats hailed those reforms as among the pact’s most important changes, saying they would help level the playing field among workers in the United States, Canada and Mexico.
Labor leaders have hoped the vote at the G.M. plant would presage changes at other factories around Mexico, where existing labor unions have been accused of colluding with company management to keep wages low.
Liz Shuler, the president of the AFL-CIO, said in a statement that the election “set a hard-won precedent and came only after workers voted to throw out a previous contract that had poor benefits and was negotiated without the workers’ input.”
“Workers overcame gross intimidation and election meddling, and their triumph is an example of what happens when workers stand together. This vote represents a rejection of the past and a new era for Mexican workers’ right to associate freely,” she said.
The U.S. secretary of labor, Marty Walsh, issued a statement expressing support for the vote.
“As workers, we are stronger when we can speak with one voice — and we are stronger when our fellow workers around the world can do the same,” he said. “The work of defending freedom of association never stops, but this historic election shows us that we can make progress toward the right of all workers to associate freely when we work together.”
The trial over Sarah Palin’s defamation suit against The New York Times, a high-profile test of how far juries will go in assigning liability to media organizations for making errors, resumed on Thursday, a week and a half after its start in federal court in Lower Manhattan was delayed because Ms. Palin tested positive for the coronavirus.
Ms. Palin sat silently at the front of the courtroom, frequently looking in the direction of the jury as lawyers for her and The Times presented drastically different portrayals of the events that led up to the episode in dispute: an editorial the paper published in 2017 that initially erroneously attributed her political rhetoric to a mass shooting outside Tucson, Ariz., in 2011 that left six dead and gravely wounded former Representative Gabrielle Giffords.
Ms. Palin’s lawyer, Shane Vogt, asked the jurors to set aside whatever opinions they may have about the former Alaska governor and 2008 Republican nominee for vice president. He said Ms. Palin was not “asking for your votes” but instead asking that they see the error as the kind of “reckless disregard” for truth that would warrant a monetary judgment against The Times.
At the heart of Ms. Palin’s case is her argument that the paper should be held liable — an extremely high legal standard for a public figure like her to meet — because its opinion editor at the time, James Bennet, acted with a vendetta toward her. “He had his narrative, and he stuck to it,” Mr. Vogt said.
The lawyer representing The Times, David Axelrod, responded by telling the jury that Mr. Bennet and the other Times journalists involved did not behave in a way that was consistent with people acting maliciously — a question the jury will have to weigh in reaching a decision. The paper published a correction within 12 hours of its posting online, after numerous readers pointed it out, and drew attention to it with a post on Twitter that Mr. Bennet wrote himself, Mr. Axelrod said.
Further, Mr. Axelrod said, it was preposterous to believe, as Ms. Palin has claimed, that she could have suffered harm from an editorial that did not mention her name in its headline, referenced her briefly and was corrected. “Two sentences,” he said, “available to readers online for a total of 12 hours: That’s what we’re here for.”
Ms. Palin was in the news for other reasons in the days leading up to the trial. She is not vaccinated, and despite New York City’s requirement that all people dining indoors be vaccinated, was spotted the weekend before the trial’s original start date dining at an Upper East Side restaurant.
It is unusual that a libel lawsuit against a news organization by a public official advances to the trial stage. And legal experts have said that the case is a legal test for those who argue that First Amendment protections for the press are too broad and media outlets should pay a steeper price when they get something wrong.
The trial is set to continue on Friday.
Year-to-date change in stock price of major tech companies
Stocks on Wall Street tumbled on Thursday, with Meta, the parent company of Facebook, leading the way with a drop of 26.4 percent, its worst one-day loss ever and one that erased more than $230 billion off its market value.
The losses weighed on the tech-heavy Nasdaq composite, which fell 3.7 percent. The broader SP 500 declined about 2.4 percent. It was that index’s biggest one-day decline since February of last year.
Meta said on Wednesday that changes made last year by Apple that made it harder for apps to track iPhone users’ digital habits would cost it about $10 billion in ad revenue this year. The privacy features Apple added are a blow to advertisers, who would track consumers’ online behavior and use data to target them with pitches for products they might be interested in.
The company’s chief executive, Mark Zuckerberg, said that it was having trouble competing with TikTok, the short-video app, and that Facebook lost users globally for the first time. The company spent $10 billion building augmented and virtual reality hardware as it changes its focus to the metaverse, a theoretical vision for the internet.
Meta’s drop in market capitalization, to about $650 billion, was the worst one-day drop in value of any U.S. company, according to Birinyi Associates, a research firm, eclipsing losses by Apple and Microsoft of about $180 billion in 2020. (Various data providers calculated Thursday’s drop differently, with the data provider Bloomberg putting it at more than $250 billion.)
Other social media companies also slid on Thursday. Twitter dropped 5.5 percent. Snap and Pinterest reported earnings Thursday after the market close, and before that, Snap fell 23.6 percent while Pinterest was down over 10.5 percent. Those companies have been on the decline all year, with Meta down 29.3 percent for the year, Snap down 47.9 percent and Twitter down 20.2 percent.
“If a company like Facebook comes out saying it has a significant earning die-down, it’s going to impact the stock perhaps more than other companies that are more reliant on economic growth,” said Saira Malik, chief investment officer at Nuveen, a global investment manager. “Technology companies are very reliant on their own structural growth drivers, so if those start to go away or fade, it’s going to be an issue on the stock.”
The sentiment over Meta’s discouraging earnings went beyond social media companies. Shares of Apple, Microsoft and Google were all lower on Thursday.
Amazon fell 7.8 percent ahead of its earnings report. The e-commerce giant said Thursday that its operating income in the fourth quarter tumbled to $3.5 billion, about half the $6.9 billion it earned in the fourth quarter of 2020.
The five biggest tech companies, including Facebook, account for about 20 percent of the SP 500’s value, meaning their declines have a stronger impact on the index.
Technology stocks — which have proved sensitive to changing views on interest rates — have already been contending with a sell-off since the start of the year. Traders are feeling discouraged to invest in riskier assets, like stocks, because higher interest rates impede the potential for larger returns in the future. The SP 500 is down about 6.1 percent this year.
Also lower on Thursday was Spotify, which tumbled 16.8 percent after the company said it expected subscriber growth to slow in 2022, and said it would “no longer plan to issue annual guidance.” The audio streaming platform said it did not expect the number of premium users to be affected by the controversy over accusations that its most popular personality, Joe Rogan, had used his podcast to spread misinformation about Covid-19 and vaccines.
The sell-off on Thursday ended a four-day rebound for stocks, which had been bouncing back from a plunge in January. That drop had more to do with concerns about the economy, and what higher interest rates mean for businesses, consumers and stock investors — as the Federal Reserve gears up to start increasing borrowing costs to cool down inflation.
On the economic front, the Labor Department reported another dip in initial jobless claims on Thursday, falling 23,000 to 238,000 last week. The data signals the Omicron wave is receding.
But the major economic news for the week will be the jobs report on Friday, which will offer a more detailed look at hiring in January — when the latest coronavirus wave was at its most disruptive. Highlighting the uncertainty around this month’s report, forecasts range from a gain of 250,000 jobs during the month to a loss of 400,000.
Economists see the January jobs report as an anomaly because a slew of measurement issues, data quirks and the Omicron wave mean it doesn’t offer a clear picture of the state of the labor market. Still, with the Fed now focused on inflation data and wage growth as it tries to assess how to best move forward with its plans to raise interest rates, the data will be closely scrutinized.
“The surge in Covid cases is expected to result in a decline in payroll employment in January,” Nancy Vanden Houten, an economist at Oxford Economics, wrote in a note. “But we expect the interruption in the labor market recovery to be short-lived.”
The forecasting and research group expects the government to report a loss of 45,000 jobs for January.
Sarah Bloom Raskin’s past statements on climate regulation are stoking heated Republican opposition to her nomination to be the Federal Reserve’s vice chair for supervision and could leave President Biden’s pick with a narrow path to confirmation.
Ms. Raskin, a former Fed and Treasury official who previously argued that financial regulators should police climate risks more diligently, faced resistance during her hearing before the Senate Committee on Banking, Housing and Urban Affairs on Thursday.
She has been nominated alongside Lisa D. Cook and Philip N. Jefferson, economists up for seats on the Fed’s Board of Governors. The three need to first pass out of the committee and then must attract support from a majority of senators to win confirmation. It is unclear if Ms. Raskin, in particular, will clear those hurdles.
“The margin here is slim to none for her,” said Ian Katz, a managing director at Capital Alpha Partners.
That is especially true if Senator Ben Ray Luján, a New Mexico Democrat who is recovering from a stroke, is not present for coming votes on the Fed nominations. A senior aide to Mr. Luján said Wednesday that he was expected to make a full recovery and would return in four to six weeks, barring complications.
If the banking committee deadlocks along party lines over Ms. Raskin’s nomination, a majority of America’s 100 senators could vote to move her past the committee. But unless Ms. Raskin can win Republican support, that may need to wait until Mr. Luján returns, since Democrats need all 50 senators who caucus with them and the vice president’s tiebreaker vote if all Republicans are opposed. And even then, Ms. Raskin may need to secure support from centrist Democrats like Senator Joe Manchin III of West Virginia to win confirmation.
“I’m not expecting her to get any votes from Republicans in the committee,” Mr. Katz said, estimating that she has less than a 60 percent chance of being confirmed. “It’s really, really close.”
Republicans have interpreted Ms. Raskin’s statements on climate-related regulation to mean that she would use her perch at the Fed to dissuade banks from lending to oil and gas companies. The energy industry has galvanized opposition to her nomination with a lobbying push to thwart confirmation. Ms. Raskin has faced much less resistance from the banks that she would oversee.
Senator Patrick J. Toomey of Pennsylvania, the top Republican on the committee, called Thursday’s hearing a “referendum on the Fed’s independence” during his opening remarks, and sharply criticized Ms. Raskin over her climate regulation views, which he previously called “disqualifying.”
Several Republican lawmakers referred to an opinion piece critical of government support for fossil fuel companies that Ms. Raskin wrote for The New York Times in 2020, as well as a post for Project Syndicate last year in which she argued that “all U.S. regulators can — and should — be looking at their existing powers and considering how they might be brought to bear on efforts to mitigate climate risk.”
Ms. Raskin struck a gentler tone Thursday, rebutting the idea that she would favor using bank supervision to choke off lending to oil and gas companies.
“It is inappropriate for the Fed to make credit decisions and allocations based on choosing winners and losers — banks choose their borrowers, the Fed does not,” Ms. Raskin said, repeatedly, in response to questions from senators. She also emphasized that Fed policymaking was a collaborative process.
But those assurances may not placate her critics. Republicans including Senator John Kennedy pushed her on her opinions, and Mr. Toomey expressed disbelief.
“This is one of the most remarkable cases of confirmation conversion I have ever seen,” Mr. Toomey said.
Ms. Raskin’s climate views were not the only thing Republicans focused on.
Senator Cynthia Lummis, Republican from Wyoming, called into question whether Ms. Raskin had used her Fed connections to help to get a Fed master account for a financial technology firm, Reserve Trust, for which she served as a board member.
Ms. Lummis said it was “her understanding” that Ms. Raskin had called the Federal Reserve Bank of Kansas City about the matter, which Ms. Raskin neither confirmed nor denied during the hearing. The Kansas City Fed had no comment.
“Senator Lummis engaged innuendo with no facts presented to back up her false claims,” Chris Meagher, a White House spokesman, said following the hearing. The White House did not dispute that the Fed granted the Reserve Trust’s account while Ms. Raskin sat on its board.
Ms. Raskin served on the board of Reserve Trust from 2017 to 2019. The company was granted a Fed charter in 2018. Master accounts give companies access to the U.S. payment system infrastructure, allowing it to move money without partnering with a bank, among other advantages.
The company, which could not be immediately reached for comment, advertises on its website that it “is the first fintech trust company with a Federal Reserve master account,” and describes the advantages that confers.
Mr. Lummis suggested that Ms. Raskin may have financially benefited from her involvement with Reserve Trust. Ms. Raskin cashed out stocks in the firm for more than $1 million in 2020, her husband’s newly updated financial disclosures showed. That transaction is reflected as capital gains income on her own financial disclosures. Ms. Raskin is married to Representative Jamie Raskin, a Maryland Democrat.
It is unclear how, or whether, Ms. Raskin’s private sector dealings will influence her chances. Mr. Katz at Capital Alpha said it was probably not going to determine the outcome, but noted that “it’s not nothing” and it “could gain some legs.”
Senator Elizabeth Warren, Democrat of Massachusetts and a critic of the revolving door between regulators and private sector, seemed to hint at the issue during the hearing.
“I believe that we must examine a nominee’s total balance of qualifications,” she said. “But I’ve asked nominees from both the Republican and Democratic administrations to abide by higher ethical standards.”
Some centrist Democrats have sounded content with Ms. Raskin. But one critical lawmaker, Senator Manchin, said on Wednesday that he hadn’t yet studied the nominees.
He added that he was “going to get into that” because he’s “very concerned” about issues including inflation.
A Harvard-trained lawyer, Ms. Raskin is a former deputy secretary at the Treasury Department and a former Fed governor, and she also spent several years as Maryland’s commissioner of financial regulation.
Mr. Toomey made it clear that he also had some reservations about Dr. Cook, but other Republicans seemed inclined to support her — including Senator Kennedy. That means that her nomination is likely to succeed unless she loses Democratic votes. Mr. Jefferson seems poised to clear the Senate easily, with the support of Mr. Toomey and others.
The Fed has seven governors — including its chair, vice chair and vice chair for supervision — who vote on monetary policy alongside five of its 12 regional bank presidents. Governors hold a constant vote on regulation.
Dr. Cook, who would be the first Black woman ever to sit on the Fed’s board, is a Michigan State University economist well known for her work in trying to improve diversity in economics. She earned a doctorate in economics from the University of California, Berkeley, and was an economist on the White House Council of Economic Advisers under President Barack Obama.
Dr. Jefferson, who is also Black, is an administrator and economist at Davidson College who has worked as a research economist at the Fed. He has written about the economics of poverty, and his research has delved into whether monetary policy that stokes investment with low interest rates helps or hurts less-educated workers.
Dr. Cook, Dr. Jefferson and Ms. Raskin are up for confirmation alongside Jerome H. Powell — for his renomination as Fed chair — and Lael Brainard, a Fed governor who is the Biden administration’s pick for vice chair.
Senator Sherrod Brown of Ohio, the committee chairman, said on Wednesday that all five candidates would face a key committee vote on Feb. 15, and that Senator Chuck Schumer of New York, the majority leader, “knows to move quickly” for a full floor vote.
The January jobs report is arriving at a critical time for the U.S. economy. Inflation is rising. The pandemic is still taking a toll. And the Federal Reserve is trying to decide how best to steer the economy through a swirl of competing threats.
Unfortunately, the data, which the Labor Department will release on Friday, is unlikely to provide a clear guide.
A slew of measurement issues and data quirks will make it hard to assess exactly how the latest coronavirus wave has affected workers and businesses, or to gauge the underlying health of the labor market.
“It’s going to be a mess,” said Skanda Amarnath, executive director of Employ America, a research group.
Data for the report was collected in mid-January, near the peak of the wave of cases associated with the Omicron variant. There is no question that the surge in cases was disruptive: A Census Bureau survey estimated that more than 14 million people in late December and early January were not working either because they had Covid-19 or were caring for someone who did, more than at any other point in the pandemic.
But exactly how those disruptions will affect the jobs numbers is less certain. Forecasters surveyed by Bloomberg expect the report to show that employers added 150,000 jobs in January, only modestly fewer than the 199,000 added in December. But there is an unusually wide range of estimates, from a gain of 250,000 jobs to a loss of 400,000.
The Biden administration and its allies are bracing for a grim report, warning on Twitter and in conversations with reporters that a weak January jobs number would not necessarily be a sign of a sustained slowdown.
Economists generally agree. Coronavirus cases have already begun to fall in most of the country, and there is little evidence so far that the latest wave caused lasting economic damage. Layoffs have not spiked, as they did earlier in the pandemic, and employers continue to post job openings.
“You could have the possibility of a payroll number that looks really truly horrendous, but you’re pulling on a rubber band,” said Nick Bunker, director of economic research for the job site Indeed. “Things could bounce back really quickly.”
Still, the January data will be unusually confusing because Omicron’s impact will affect different particulars in different ways.
Two Measures of Employment
The number that usually gets the most attention, the count of jobs gained or lost, is based on a government survey that asks thousands of employers how many employees they have on their payrolls in a given pay period. People who miss work — because they are out sick, are quarantining because of coronavirus exposure or are caring for children because their day care arrangements have been upended — might not be counted, even though they haven’t lost their jobs.
Forecasting the impact of such absences on the jobs numbers is tricky. The payroll figure is meant to include anyone who worked even a single hour in a pay period, so people who miss only a few days of work will still be counted. Employees taking paid time off count, too. Still, the sheer scale of the Omicron wave means that absences are almost certain to take a toll.
The jobs report also includes data from a separate survey of households. That survey considers people “employed” if they report having a job, even if they are out sick or absent for other reasons. The different definitions mean that the report could send conflicting signals, with one measure showing an increase in jobs and the other a decrease.
Economists typically pay more attention to the survey of businesses, which is larger and seen as more reliable. But some say they will be paying closer attention than usual this month to the data from the survey of households, because it will do a better job of distinguishing between temporary absences and more lasting effects from Omicron, such as layoffs or postponed expansions.
But economists have also cautioned not to minimize the impact that even temporary absences from work could have on families and the economy, especially now that the government is no longer offering expanded unemployment benefits and other aid.
“There isn’t that much Covid relief funding sloshing about anymore, so absences from work may actually reflect a meaningful decline in income,” said Julia Pollak, chief economist at the employment site ZipRecruiter.
Even in normal times, January jobs data can be tough to interpret. Retailers, shippers and other companies every year lay off hundreds of thousands of temporary workers hired during the holiday season. Government statisticians adjust the data to account for those seasonal patterns, but that process is imperfect. January is also the month each year when the Labor Department incorporates long-run revisions and other updates to its estimates.
“January is a messy month as it is,” Mr. Amarnath said.
This year, it could be extra messy because the pandemic has disrupted normal seasonal patterns. The labor shortage led some companies to hire permanent workers instead of short-term seasonal help during the holidays; others may have retained temporary workers longer than planned to cover for employees who were out sick. If that results in fewer layoffs than usual, the government’s seasonal adjustment formula will interpret that continued employment as an increase.
Other numbers could also be deceptive. The unemployment rate, for example, could fall even if hiring slowed. That is because the government considers people unemployed only if they are actively searching for work, and the spike in Covid cases may have led some to suspend their job searches.
Data on average hourly earnings could also be skewed because it is based on the payroll data — people who aren’t on payrolls aren’t counted in the average at all. Low-wage workers were probably the most likely to be missing from payrolls last month, since higher-wage workers are more likely to have access to paid sick leave. That could lead to an artificial — and temporary — jump in average earnings when policymakers at the Fed are watching wage data for hints about inflation.
Inflation in Britain has been rising relentlessly, and the Bank of England made an assertive move on Thursday to tamp it down: its first back-to-back interest rate increases at policy-setting meetings in more than 17 years.
As well as raising rates, the central bank said it would start to shrink its enormous holdings of government and corporate bonds, partially amassed during the pandemic in an effort to bolster the economy.
Inflation has been running at its fastest pace in three decades: The annual rate rose to 5.4 percent in December, about a percentage point higher than the bank predicted just three months ago. By April, the central bank expects it to climb to about 7.25 percent, which would be the highest rate of inflation since 1991.
In response, the bank’s policymakers voted to raise interest rates by a quarter of a percentage point, to 0.5 percent.
But four of the nine policymakers wanted to do something bolder: a 0.5 percentage point increase. The bank has never agreed on a rate increase that large before.
The Bank of England has taken earlier and more decisive action than other major central banks against inflation. In December, it raised interest rates for the first time in three and half years, looking past the economic uncertainty created by the Omicron variant of the coronavirus and focusing on the battle against inflation.
The Federal Reserve said last week that it expected to start raising rates soon, potentially as soon as next month. On Thursday, Christine Lagarde, the president of the European Central Bank, said inflation in the eurozone was likely to remain higher than expected but that the bank, for now, would keep its rates steady.
The Bank of England expects the effects of Omicron to have weighed on Britain’s economy in December and January, whereas inflation presents a much more persistent problem. Inflation far exceeds the central bank’s 2 percent target and is expected to remain well above it throughout the year.
“We have not raised interest rates today because the economy is roaring away,” Andrew Bailey, the governor of the Bank of England, told reporters on Thursday. The increase was “necessary because it is unlikely that inflation will return to target without it,’’ he said.
Mr. Bailey noted that Britain was heavily affected by so-called imported inflation, generated by global factors such as energy shortages and supply chain issues. The impact of the sharp rise in international energy prices and goods is not something British monetary policy can prevent, he said. The central bank’s role is to return inflation to its target and try to avoid too much volatility in the economy in the process.
“We face the risk that some of the higher imported inflation could become ingrained within the domestic economy, leading to a longer period of high inflation,” he added.
Half of the increase in inflation between now and April will be because of higher energy prices, the Bank of England said.
Earlier on Thursday, Ofgem, Britain’s energy regulator, announced that a price cap on energy bills would rise by 54 percent in April for 22 million households. The government has said it will try to mitigate the pain by giving millions of households £350, or $476, off bills this year in the form of grants and loans.
One of the major concerns for policymakers is that businesses and consumers will begin to assume that rapid cost increases will continue, causing workers to demand higher wages and businesses to continue to raise their prices, fueling a cycle that keeps inflation higher for longer.
In January, Catherine Mann, a member of the bank’s rate-setting committee, said it was the job of monetary policy to “lean against” expectations that could lead to this scenario.
But there are already signs it is happening. The central bank’s economists expect wage settlements to rise by nearly 5 percent over the next year, based on surveys of businesses.
Still, prices are rising even faster. For months, the higher inflation rates have prompted concerns about a cost-of-living crisis in Britain, as the budgets of households, particularly low-income ones, are squeezed by the highest food price inflation in a decade, expensive energy bills and other rising costs.
For 2022, the bank’s measure of households’ net income after taxes and inflation is expected to fall by 2 percent from last year, and fall again in 2023. In November, the central bank had projected a 1.25 percent decline for this year.
Since 1990, that measure of income has only fallen twice before on an annual basis, in 2008 and 2011.
Eventually, the squeeze is expected to hamper the overall economy. Growth in gross domestic product is “expected to slow to subdued rates” over the next few years, according to minutes of the rate-setting meeting which concluded on Wednesday, with energy and goods inflation cited as the main reasons. The central bank also expects the unemployment rate to rise to 5 percent, after falling to 3.8 percent in the first quarter.
That economic slowdown — along with higher interest rates — is expected to push inflation back below the central bank’s target by 2024.
On Thursday, policymakers also voted to begin reducing the bank’s bond holdings, made up of £875 billion in government bonds and £20 billion in corporate bonds. The bank will stop reinvesting the proceeds from bonds as the debt matures.
Interest rates are likely to rise again in “the coming months,” policymakers said. But Mr. Bailey warned against making assumptions about how high and how fast these increases will be.
“We face a trade-off between strong inflation and weakening growth,” he said. Given this uncertainty, he added, policymakers “will, it scarcely needs to be said, remain very vigilant.”
The European Central Bank on Thursday kept to its cautious approach in the face of record inflation in the eurozone, but Christine Lagarde, the bank’s president, acknowledged that “the situation has indeed changed” and refused to rule out a rate increase in 2022.
A change in policy was not expected when the European Central Bank’s Governing Council met this week for the first time this year, but pressure has been mounting from all sides as prices in Europe continue to rise. Hours before the meeting in Frankfurt, the Bank of England raised its interest rate for the second consecutive meeting, to 0.5 percent.
Traders have been at odds with the central bank’s message that the eurozone economy is not ready for higher interest rates. On Wednesday, before the policy announcement, markets had priced in two 10-basis-point increases in the deposit rate this year. The rate is currently negative 0.5 percent.
Inflation data for the eurozone released on Wednesday surprised economists, showing that the rate of price rises in January in the 19 countries using the common European currency had reached 5.1 percent compared with a year ago. That was only a slight increase from the 5 percent rate in December, but set yet another record for the eurozone. Analysts had projected that the January rate would fall to 4.4 percent — still well above the bank’s set target of 2 percent.
Ms. Lagarde blamed persistently high energy prices and an increase in the cost of food.
“Compared with our expectations in December, risks for the inflation outlook are tilted to the upside,” she said. “Particularly in the near term.”
She noted, though, that the pandemic appeared to be easing, and supply chain issues were expected to follow suit, pointing to a pick up in economic growth later in the year.
But should the economy heat up too quickly, or if there is a worsening of what she called the “geopolitical clouds” hanging over Europe — without specifically referring to the tensions between Russia and the West over Ukraine — inflation could remain high.
The bank’s Governing Council said on Thursday that it expected the key interest rates would “remain at their present or lower levels” until policymakers saw inflation “reaching 2 percent well ahead of the end of its projection horizon and durably for the rest of the projection horizon,” adding that it would tolerate higher inflation in the interim.
The bank also said it remained on track to end its pandemic bond-buying program in March, but maintain support for the economy by continuing another, older bond-buying program.
In December, Ms. Lagarde said that it was “very unlikely” policymakers would raise interest rates in 2022, arguing that inflation would ease over the course of the year and settle below the bank’s 2 percent target, warranting the extension of monetary stimulus.
On Thursday, she refused to repeat that line, saying the council would revisit the situation when it next convenes on March 10.
“The situation has indeed changed,” she said, speaking about inflation in light of the latest data. “So, situation having changed, we need to continue to monitor very carefully, we need to assess the situation on the basis of the data and then we will have to make a judgment.”
Other members of the bank’s Governing Council have pointed to reasons that inflation might remain high longer than expected.
Earlier this year, Isabel Schnabel, a member of the Executive Board, said the transition to a low carbon economy could require higher fossil fuel prices and rising energy bills and could pose “measurable upside risks” to the bank’s inflation projections.
Luis de Guindos, the bank’s vice president, said in a speech last month that inflation would not be “as transitory as forecast only some months ago.”
The central bank has insisted that it will not change its interest rates before it stops asset purchases, which inject capital and liquidity into the market. It will update its inflation forecasts again in March.
“Unlike the United States, the eurozone is showing neither signs of excess demand nor of excessive wage gains (yet),” Holger Schmieding, an economist with Berenberg economics team, wrote in a note to clients. But he predicted that “unless the central bank returns to a normal policy stance significantly faster than it was planning in December,” inflation was likely to remain above the bank’s target in the longer term.
“Ms. Lagarde today took a big step toward this assessment, emphasizing that inflation could turn out to be higher even beyond the near-term, and that the outlook is uncertain,” he wrote.
Earlier on Thursday, the Bank of England raised its benchmark interest rate by a quarter of a percent, the second time it has raised rates in the last two meetings, and sad it would also begin to shrink its holdings of government and corporate bonds. In the United States, the Federal Reserve has signaled that it plans to increase interest rates in March.
Eshe Nelson contributed reporting.
The price many British households pay for their heat and electricity is set to rise by 54 percent in April, the government’s energy regulator, Ofgem, said Thursday. The big jump, caused mainly by a surge of global natural gas prices, is expected to exacerbate concerns over inflation and the cost of living in Britain.
The regulator said that for customers paying by direct debit from their bank account, annual charges would increase by 693 pounds ($940), to £1,971. The big rise will affect about 22 million customers who currently buy energy under a price cap set by the regulator.
Ofgem said natural gas prices, which hit record levels in December and remain elevated, had driven the increase. The regulator evaluates the market twice a year and allows energy providers to pass on costs such as increases in the price of gas, a major source of electric power generation, to consumers.
“We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet,” said Jonathan Brearley, Ofgem’s chief executive, in a statement.
Rising energy prices have become a major political issue in many countries, especially in Europe, with governments scrambling to find ways to ease the pain and avoid blowback from voters. The rising prices are also a threat to the effort to reduce carbon emissions, with some lawmakers calling for scrapping so-called green tariffs, extra charges added to bills in Britain and elsewhere to help pay for wind and solar power and other clean energy.
The high prices for natural gas have also led to a shake-up among utilities. According to Ofgem, 29 companies with 4.3 million customers have either gone bankrupt or otherwise left the market over the last year. Many of these companies were relatively small, and the wipeout of the sector has led to criticism that Ofgem has been lax in its financial requirements for energy providers. Consumers will be charged for some of the costs incurred by companies in taking on the customers of failed rivals.
According to Ofgem, generation costs like the purchase of gas will make up more than half of new energy bills, while green tariffs will come to about 8 percent.
On Thursday, immediately after the regulator’s announcement, the British government said it would allocate £9.1 billion to help consumers with their bills. Among the measures are a £200 discount customers will receive on their bills beginning in October. The sums would be recovered over the next five years when, the government apparently expects, costs are lower.
To critics, these measures fell short. Martin Young, an analyst at Investec, an investment bank, said that natural gas futures indicate that bills might need to surge again to around £2,300 in October, negating the government aid.
Greenpeace UK, the environmental group, said the government supports were “devastatingly scant for the poorest households, and aren’t sufficiently targeted to those who need them the most.”
Greenpeace called for new taxes on the profits oil companies are making from booming prices to finance additional relief for consumers.
At a time when the future of theatergoing remains very much in question, Netflix revealed a film lineup for 2022 that is again chock-full of A-list stars and directors, giving viewers plenty of reasons to watch movies at home.
Ryan Gosling, Ryan Reynolds, Jennifer Lopez and Charlize Theron will be in movies released weekly on the streaming service. The filmmakers behind “Avengers: Endgame” will unveil “The Gray Man,” their first big-budget film since leaving the Marvel universe, while Tyler Perry will release two films on Netflix, including one featuring his beloved character Madea.
The list, announced on Thursday, is a display of what Netflix gets from the $17 billion it spends annually on original content. And it’s a crucial time for the company, which has reduced its growth forecast but is still betting that it can increase its subscriber base of 222 million over the next year.
Netflix announced 61 English-language live-action films. They include “Spiderhead,” starring Chris Hemsworth and Miles Teller, and the Kenya Barris-directed comedy “You People,” starring Jonah Hill and Eddie Murphy. There will also be five animated features, including Guillermo del Toro’s long-awaited take on “Pinocchio,” and “Wendell Wild,” a cartoon about two demon brothers written by Jordan Peele and Henry Selick (“Coraline”) and voiced by Mr. Peele and his sketch-comedy partner, Keegan-Michael Key. The company will release three anime films (a first for the company) and 17 live-action movies in languages other than English.
Netflix unveiled the list just days before Tuesday’s announcement of the Academy Award nominations, which are expected to be dominated by movies that debuted on streaming services. Netflix films like “The Power of the Dog,” “Tick, Tick … Boom!” and “Don’t Look Up” all figure to be major contenders.
Among the other films coming from Netflix are “Blonde,” with Ana de Armas as Marilyn Monroe, which the director Andrew Dominik (“Killing Them Softly”) has been trying to make since 2010, and an adaptation of Don DeLillo’s novel “White Noise,” directed by Noah Baumbach.
Other prominent releases include “The Adam Project,” starring Mr. Reynolds and directed by Shawn Levy (“Night at the Museum”), and two family films: “Slumberland,” from Francis Lawrence, the director of a few films in the “Hunger Games” franchise, and “The School for Good and Evil,” starring Ms. Theron and Kerry Washington.
Coinbase is trying to establish itself as a mainstream gateway to the world of cryptocurrency, a place to routinely deposit paychecks, expense reimbursements and tax refunds.
On Thursday, the company started a direct deposit program with the software company TurboTax to send state and federal tax refunds to Coinbase accounts, with the option to automatically convert dollars into cryptocurrency, the DealBook newsletter reports.
“We’ve seen a rise in alternative investments, in a new class of investors beyond just high-income earners,” said Randy Hellman of TurboTax’s investor segment.
Coinbase sees itself as an “on-ramp” to the crypto economy. It wants to make things easy for people by offering direct deposits of all kinds, said the company’s head of product, Prakash Hariramani.
Coinbase just finished the rollout of a paycheck program in the United States, with Mayor Eric Adams of New York naming the company in a statement on converting his first mayoral income from dollars to crypto. Coinbase also lets people direct corporate expense reimbursements to their crypto accounts.
But holding a digital currency like, say, Dogecoin isn’t the same as having a dollar. Given crypto’s high volatility, even enthusiastic early adopters of these sorts of services are proceeding with caution.
“The education piece is really critical,” said Sally Shin, who leads strategy at the music distributor United Masters, which is working through the initial phases of a partnership with Coinbase to design a crypto payment program for employees and artists.
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The pandemic was initially good for PayPal, the payments processor that was spun out of eBay in 2015, as homebound consumers shopped online in droves. But the company’s disappointing earnings report this week showed how sharply its fortunes have turned.
Shares in PayPal plunged 25 percent on Wednesday, the single worst slide in its post-eBay life, taking them back near prepandemic levels. Its stock had been under pressure for months, with investors increasingly unhappy with moves like PayPal’s aborted $45 billion bid to buy the social network Pinterest.
Investors were spooked by the earnings report for two big reasons:
First, the company cut its forecast for 2022, with executives citing a resurgence in in-store shopping, supply chain disruptions and inflation reducing the buying power of lower-income customers. EBay’s effort to build its own payments arm also hurt.
Second, PayPal’s executives also abandoned an ambitious user-growth plan after admitting that an expensive marketing campaign attracted consumers who spent little. (About 4.5 million accounts were created just to collect sign-up incentives.) The company said it would now focus on enticing existing users to spend more.
It’s another example of pandemic stars falling back to earth, as life slowly returns to pre-2020 routines. (See also: Zoom and Peloton.) Other payments services have suffered — Block’s shares fell 10 percent on Wednesday — but PayPal’s management specifically has its work cut out to restore investor confidence.
Booming prices for oil and natural gas propelled Shell’s profit in the fourth quarter of 2021, lifting its adjusted earnings to $6.39 billion, up from $393 million a year earlier, the company reported Thursday.
Shell, Europe’s largest energy company, also said that it would accelerate returns to shareholders, buying back $8.5 billion in shares in the first half of 2022 — a big increase on the total of $3.5 billion set aside for buybacks in 2021.
Shell also said it would increase the dividend it pays to shareholders by 4 percent, to 25 cents per share for the first quarter.
In the short term, at least, Shell is carrying out a strategy of using the proceeds from oil and gas to reward shareholders as well as invest in new businesses like hydrogen.
At the same time, Shell offered further signs that oil would play a diminishing role in the company’s future. Oil production has declined by 8 percent since 2019, the company said, and was expected to fall by up to 2 percent a year during this decade.
Shell said that trading in liquefied natural gas was a key contributor to the higher earnings along with higher oil and gas prices. The company has a large fleet of liquefied natural gas tankers that it can direct to the regions where it will receive the highest prices.
The fuel price boom, while beneficial to Shell and its shareholders, is of course concerning to consumers and governments, especially in Europe, where utility bills have risen sharply and gasoline prices have hit record highs. In Britain, there have been calls from politicians and environmental groups for windfall taxes to be imposed on the profits of gas producers.
On a call with reporters after the earnings announcement, Ben van Beurden, Shell’s chief executive, said that demand for oil and gas, in particular, had boomed in Asia, where China is switching to reduce coal consumption, while companies have restrained investment during the pandemic and focused investment on what he called the energy systems of the future.
“We are struggling as an industry to keep up with supply,” he said.
He said that Shell was diverting cargoes of liquefied natural gas to Europe, and that the company’s retail utility business in Britain was taking some of the customers of other suppliers that had not been able to deal with “the outrageous volatility” and had collapsed.
This business, called Shell Energy, is also losing money, Mr. van Beurden said, but was able to stay in business because of the parent company’s financial strength.
Spotify officials said Wednesday that they did not expect subscriber numbers to be affected by the uproar over accusations that its most popular podcaster, Joe Rogan, had spread misinformation about Covid-19 and vaccines.
In an conference call on Wednesday afternoon to discuss the streaming service’s financial results, Daniel Ek, Spotify’s chief executive and co-founder, said that the company’s expectations of premium users in the current quarter did not anticipate “churn” caused by the controversy over “The Joe Rogan Experience.”
“In general, what I would say is, it’s too early to know what the impact may be,” Mr. Ek said in the call. “And usually when we’ve had controversies in the past, those are measured in months and not days. But I feel good about where we are in relation to that and obviously top line trends looks very healthy still.”
Paid subscribers were up 16 percent for a total of 180 million in the last three months of last year, and monthly active users were up 18 percent for a total of 406 million. It also said revenue from advertisements had reached a record 15 percent of total revenue. The company lost about 39 million euros ($44 million) in the quarter. READ MORE →
A laser-equipped vacuum from Dyson is one of the latest examples of cleaning tech, products that are designed to make our household hygiene as painless and efficient as possible. It’s an increasingly important category of technology now that the pandemic has forced so many of us to spend lots of time at home, creating messes that never seem to go away.
Brian X. Chen, The New York Times’s personal-tech columnist, tested that vacuum as well as the latest automated cleaners — a robot vacuum and a robot mop — from iRobot, the maker of the Roomba. The robots were fussy to set up and staggeringly dumb at times, but once they learned where to clean, they were very helpful, he found.
Becky Rapinchuk, the founder of Clean Mama, a website that offers advice and products for keeping homes tidy, said she had also tested many cleaning tech products and found they were ideal for certain types of people. Robot cleaners, for example, are a great fit for busy commuters but not for professionals who work from home and would be disrupted by the noise.
“There are so many people who will put it on before they leave for work and come home to a house that is beautifully vacuumed,” she said about cleaning robots. “For someone who works from home, it doesn’t have the same effect.”
“Once I saw it, I couldn’t unsee it,” Mr. Chen writes of the filth highlighted by the Dyson vacuum. “I had newfound neuroses about cleanliness.” READ THE FULL ARTICLE →
Today in the On Tech newsletter, Shira Ovide writes that five superpower tech companies — yes, even Facebook after recent news — are so enmeshed in our world that they’ve held a grip for years.
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