Government data is expected to show that economic growth slowed sharply over the summer, as supply-chain bottlenecks and the resurgent pandemic restrained activity at stores, factories and restaurants.
The Commerce Department on Thursday will release its preliminary estimate of economic output in the third quarter. Forecasters surveyed by the financial research firm FactSet expect the report to show that gross domestic product, adjusted for inflation, rose less than 1 percent from the previous quarter, or 3.5 percent on an annualized basis, down from 1.6 percent in the second quarter. Some forecasters warn that the report could show an outright stall, or even a contraction.
The slowdown was partly a result of the spread of the Delta variant of the coronavirus, which led many Americans to pull back on travel, restaurant meals and other in-person activities. More recent data suggests that people have returned to those activities as virus cases have fallen, and most economists expect significantly faster growth in the final three months of the year.
But another major restriction on growth may be slower to recede. The pandemic has snarled supply chains around the world, even as demand for many products has surged. The resulting backups have made it hard for U.S. stores and factories to get the products and parts they need. Economists initially expected the disruptions to be short-lived, but many now expect the issues to linger into next year.
Many businesses are also struggling to find enough workers to make, sell and deliver products — another supply shortage that is holding back growth longer than economists expected.
“The economy doesn’t have a demand problem,” said Ben Herzon, executive director of IHS Markit, a forecasting firm. “It has a supply problem.”
The combination of strong demand and limited supply has resulted in higher prices: Inflation soared last spring and has remained elevated.
Still, the economy is in much better shape than forecasters expected for most of last year. Gross domestic product returned to its prepandemic level in the second quarter, although it has not caught up to where it would be if the pandemic had never occurred. Government aid, along with reduced spending during the pandemic, has left Americans flush with cash, which should support spending for the rest of the year.
“Supply chain disruptions together with Delta conspired to hold back growth,” said Constance L. Hunter, chief economist for KPMG, the accounting firm. “It’s a speed bump not a slowdown.”
As Royal Dutch Shell announced its quarterly earnings on Thursday, including a jump in profit that failed to meet investor expectations, company executives were dealing with an activist fund’s proposal that the oil giant be broken up.
Third Point, a New York-based activist fund management firm, has taken a stake in Shell and called for it to be broken up into “multiple stand-alone companies” that could address competing shareholder interests.
These companies could include a unit encompassing Shell’s legacy oil- and gas-extraction businesses and another with its renewable-energy and liquefied-natural-gas activities, said Third Point’s chief executive, Daniel S. Loeb, in a letter to investors.
Mr. Loeb called Shell “one of the cheapest large-cap stocks in the world.” He also said that by most metrics Shell was trading at a 35 percent discount to its rivals Exxon Mobil and Chevron, despite what he called “higher quality and more sustainable” business lines.
He blamed the company’s “attempting to appease multiple interests but satisfying none” for the lack of investor interest in Shell.
Shell said that it had “preliminary conversations with Third Point and we will engage with them, as we do with all our shareholders.”
Third Point’s move recalled the successful battle waged this spring by another activist hedge fund, Engine No. 1, to install three directors on the board of Exxon Mobil with the goal of pushing it to reduce its carbon footprint.
News of the Third Point’s interest came as Shell, Europe’s largest oil company, reported $4.1 billion in adjusted earnings for the third quarter of this year, a substantial increase over the $955 million reported in the period a year earlier, thanks mainly to higher oil and gas prices. The earnings came in below analysts’ expectations.
Shell shares were down 3 percent.
Executives of some of the world’s biggest oil and gas companies — Exxon Mobil, Chevron, BP and Shell — are set to appear before a congressional committee Thursday to address accusations that the industry spent millions of dollars to wage a decades-long disinformation campaign to cast doubt on the science of climate change and to derail action to reduce emissions from burning fossil fuels.
The hearings mark the first time oil executives will be pressed to answer questions, under oath, about whether their companies misled the public about the reality of climate change by obscuring the scientific consensus: that the burning of fossil fuels is raising Earth’s temperature and sea levels with devastating consequences worldwide, including intensifying storms, worsening drought and deadlier wildfires.
House Democrats compare the inquiry with the historic tobacco hearings of the 1990s, which brought into sharp relief how tobacco companies had lied about the health dangers of smoking, paving the way for tough nicotine regulations. Climate scientists are now as certain that the burning of fossil fuels causes global warming as public health experts are sure that smoking tobacco causes cancer.
The evidence showing that fossil fuel companies distorted and downplayed the realities of climate change is well documented by academic researchers. But oil companies have denied lying to the public about climate change, and have said the industry is now taking bold steps to rein in emissions.
Food prices are surging, and food banks and pantries are struggling to keep up. To cope, they’re substituting or pulling the most expensive products, like beef, from their offerings, The New York Times’s Nelson D. Schwartz and Coral Murphy Marcos report.
For food banks, the rising costs have stretched budgets even as the number of people seeking help has increased. Here are some details from the article:
A case of peanut butter that was $13 to $14 before the pandemic now costs $16 to $19, according to Alexandra McMahon, director of food strategy for the Gleaners Food Bank of Indianapolis. Green beans that used to retail for $9 a case now sell for $14.
Prices of meat, poultry, fish and eggs in U.S. cities are up 15 percent since the start of 2020, according to the Bureau of Labor Statistics.
At the Oregon Food Bank, which distributes food to partners across Oregon and southwest Washington, 1.7 million people sought assistance in 2020, compared with 860,000 in 2019, said Susannah Morgan, the group’s chief executive.
Although the number of people coming for help in Oregon will probably be closer to 1.3 million this year, “the need is still ridiculously high,” Ms. Morgan said. “Your dollar goes less far in a grocery store.”
Responding to mounting pressure from activists, parents and regulators who believe tech companies haven’t done enough to protect children online, businesses and governments around the globe are placing major parts of the internet behind stricter digital age checks.
People in Japan must provide a document proving their age to use the dating app Tinder. The popular game Roblox requires players to upload a form of government identification — and a selfie to prove the ID belongs to them — if they want access to a voice chat feature. Laws in Germany and France require pornography websites to check visitors’ ages.
This month, lawmakers in Washington, which has lagged other world capitals in regulating tech companies, called for new rules to protect young people after a former Facebook employee said the company knew its products harmed some teenagers. They repeated those calls on Tuesday in a hearing with executives from YouTube, TikTok and the parent company of Snapchat.
The New York Times’s David McCabe reports that the changes, which have picked up speed over the last two years, could upend one of the internet’s central traits: the ability to remain anonymous. Since the days of dial-up modems and AOL chat rooms, people could traverse huge swaths of the web without divulging any personal details. Many people created an online persona entirely separate from their offline one.
But the experience of consuming content and communicating online is increasingly less like an anonymous public square and more like going to the bank, with measures to prove that you are who you say you are.
Critics of the age checks say that in the name of keeping people safe, they could endanger user privacy, dampen free expression and hurt communities that benefit from anonymity online. Authoritarian governments have used protecting children as an argument for limiting online speech: China barred websites this summer from ranking celebrities by popularity as part of a larger crackdown on what it says are the pernicious effects of celebrity culture on young people.
SAN JOSE, Calif. — The ninth week of testimony in the fraud trial against Elizabeth Holmes raised questions of what risks and responsibilities investors have when they put money into high-growth start-ups like Theranos, Ms. Holmes’s failed blood testing company.
In past weeks of the trial, the jury heard from former Theranos employees who were alarmed by its practices, as well as executives and board members who said they were taken in by Ms. Holmes’s pitch for blood testing machines that could conduct hundreds of blood tests accurately and quickly from a drop of blood.
That built up to testimony from investors, who prosecutors said are the victims in the 12 counts of wire fraud at the heart of the trial. Before Theranos collapsed in 2018, it raised $945 million from investors, valuing it as high as $9 billion and making Ms. Holmes a billionaire.
Ms. Holmes has pleaded not guilty. If convicted, she faces 20 years in prison.
Here are the key takeaways from this week’s proceedings, which took place only on Tuesday after a water main break near the courthouse on Wednesday forced the cancellation of the day’s events.
Lisa Peterson, an investment manager at RDV Corporation, an investment firm representing Michigan’s wealthy DeVos family, explained how the group came to invest — and eventually lose — $100 million in Theranos.
RDV’s chief executive, Jerry Tubergen, met Ms. Holmes at a 2014 conference and became enthusiastic about Theranos, according to an email shown in court. Ms. Peterson, who was put in charge of researching and facilitating the investment, testified that Theranos had handpicked a few wealthy families to invest and that Ms. Holmes made the firm feel lucky to be included.
“She was inviting us to participate in this opportunity,” Ms. Peterson said. Theranos purposely sought out private investors who would not push the company to go public, a presentation shown in court said.
With Ms. Peterson’s testimony, prosecutors built on how Theranos had appeared to use fake endorsements from pharmaceutical companies to deceive its partners and investors. Theranos had shown Walgreens and Safeway executives a validation report that displayed the logos of pharmaceutical companies and said they supported its technology.
Last week, a Pfizer executive testified that the company had dug into Theranos’s technology and “come to the opposite conclusion.” Ms. Peterson said she had seen the validation report and believed it had been prepared by Pfizer, which helped entice her firm to invest.
In a heated cross-examination, Ms. Holmes’s lawyers tried painting Ms. Peterson as a negligent steward of capital who did not do proper research before pouring cash into a young start-up.
Lance Wade, a lawyer for Ms. Holmes, highlighted contradictions between Ms. Peterson’s statements and an earlier legal deposition she had given. When Ms. Peterson insisted that her current testimony was accurate, he shot back, “Your memory has improved over time? Is that your testimony?”
Mr. Wade also prodded Ms. Peterson for not hiring scientific, legal and technology experts to dig into Theranos’s claims, nor did she demand to see copies of Theranos’s contracts with Walgreens and Safeway. “You understand that’s a typical thing to do in investing?” he asked.
Ms. Peterson said the firm relied on what Ms. Holmes and other Theranos executives told them.
Mr. Wade tried to diminish Ms. Peterson’s decision-making power within the firm by pointing out that she was not on RDV’s investment committee and was not present for all the meetings involving Theranos.
By arguing that investors like Ms. Peterson didn’t do enough research, Ms. Holmes’s lawyers walked a delicate line. That’s because their argument included an implied acknowledgment that Theranos’s technology did not do all that it promised, even as they also had to maintain that Ms. Holmes did not lie about the technology.
Elizabeth Holmes, the disgraced founder of the blood testing start-up Theranos, stands trial for two counts of conspiracy to commit wire fraud and 10 counts of wire fraud.
Here are some of the key figures in the case →
The ‘conspiracy period’
Jurors watched two videos of Ms. Holmes — most likely their first time seeing her face without a mask — as she defended Theranos in interviews after The Wall Street Journal reported in 2015 that the start-up’s blood testing machines did not do as much as claimed.
In an appearance on Jim Cramer’s “Mad Money” show on CNBC, Ms. Holmes said Theranos’s machines could do more than 100 tests, dismissing the critical report. In an interview with CBS in 2016, Ms. Holmes was more contrite, saying, “I’m the C.E.O. and founder of this company. Anything that happens in this company is my responsibility.”
Ms. Holmes’s lawyers argued to exclude the videos as evidence, at one point referring to the period of time after The Journal article as the “conspiracy period.”
Ms. Peterson testified that during that time, she and others at RDV met with Ms. Holmes. At the meeting, Ms. Holmes downplayed the revelations, Ms. Peterson said, saying The Journal’s reporting was “done by a very overzealous reporter who wanted to win a Pulitzer.”
Mr. Wade asked the court to strike that comment from the record.
Source: NYT > Top Stories