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Tag: recession

  • Airbnb stock falls sharply on cautious forecast and as record bookings miss estimates

    Airbnb stock falls sharply on cautious forecast and as record bookings miss estimates

    Nights booked on Airbnb Inc. hit a record high in the first quarter as more guests traveled overseas and returned to cities, leading to the company’s first profitable start to the year on record, executives announced Tuesday.

    But executives’ forecast was less bullish, even though they expect a strong summer travel season and second-quarter revenue growth. They cautioned that growth in nights and experiences booked will be “unfavorable” compared with the year-ago quarter, when there was a surge in travel demand as fears about…

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  • Jobs report shows strong 253,000 increase in April. U.S. labor market not cooling much

    Jobs report shows strong 253,000 increase in April. U.S. labor market not cooling much

    The numbers: The U.S. created a stronger-than-expected 253,000 new jobs in April and wages rose sharply, indicating there’s still lot of demand for labor even as the economy slows.

    The increase surpassed the 180,000 forecast of economists polled by The Wall Street Journal.

    The unemployment rate, what’s more, fell a tick to 3.4% from 3.5%,…

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  • Jobs report shows strong 253,000 increase in April. U.S. labor market not cooling much

    Jobs report shows strong 253,000 increase in April. U.S. labor market not cooling much

    The numbers: The U.S. created a stronger-than-expected 253,000 new jobs in April and wages rose sharply, indicating there’s still lot of demand for labor even as the economy slows.

    The increase surpassed the 180,000 forecast of economists polled by The Wall Street Journal.

    The unemployment rate, what’s more, fell a tick to 3.4% from 3.5%,…

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  • Federal Reserve pushes interest rates to highest point since 2007

    Federal Reserve pushes interest rates to highest point since 2007

    Federal Reserve pushes interest rates to highest point since 2007 – CBS News


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    The Federal Reserve pushed interest rates to the highest point since 2007 to combat inflation. Critics warn the hikes could lead to a recession. Nancy Cordes reports.

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  • How to Raise Funds for Your Business in an Economic Downturn | Entrepreneur

    How to Raise Funds for Your Business in an Economic Downturn | Entrepreneur

    Opinions expressed by Entrepreneur contributors are their own.

    Concerns that the U.S. is headed for a recession have been mounting for a while, especially among business owners. One survey found that eight out of 10 small business owners anticipate a recession will happen sometime this year.

    Recessions affect most businesses in two ways — first, revenue takes a hit as consumers start holding onto their cash instead of spending. Second, tightening credit conditions limit the number of financial resources available to help businesses weather economic challenges.

    Some businesses consider taking out a loan or line of credit when economic hardship is on the horizon, but is this the right move for your business?

    Related: How to Fund Your Budding Small Business During a Recession

    Should you get a loan during a recession?

    You may not like the idea of taking on additional debt and wonder if applying for a loan during a recession is a good plan, but there are situations where taking out a loan or line of credit is the smartest option.

    You should start by considering how much cash you have on hand. If you’re heading into an economic downturn with little cash, a business loan can provide a financial buffer. Access to cash will give you options for solving challenges, making staying profitable and committed to growth that much easier.

    This is especially true since no one knows how long a recession will last. You may have enough cash to get you through the next six months, but that won’t help if the downturn lasts two years or more.

    Waiting until you desperately need money can significantly reduce your options. As a downturn approaches, lenders tighten their guidelines, and you may be unable to meet their inflated eligibility requirements amid economic hardship. If you think you may need additional capital, it’s best to act sooner rather than later.

    Lending standards are starting to tighten

    Many companies struggle during recessions as demand falls and uncertainty about the future increases. They’ll start to look for ways to increase capital, like taking out a business loan or line of credit, but this becomes a challenge since most banks will tighten their lending standards during an economic downturn.

    As the economy worsens, banks face a higher risk when lending money. Most banks will only lend money to established businesses with strong credit histories and limited industry exposure to mitigate their risk of financial loss, which inflates eligibility criteria and makes it harder for entrepreneurs to qualify altogether.

    Fortunately, banks and credit unions aren’t the only lending institutions. Non-bank lenders don’t follow the same guidelines as traditional lenders, so they can extend credit to a wide range of businesses, even during a recession.

    Related: Worried About Raising Capital in a Recession? Give Your Company The Edge By Doing What Other Entrepreneurs Often Overlook.

    Consider using a non-bank lender

    A non-bank lender is a financial institution that isn’t a bank or credit union. They lend money like traditional lenders but don’t have a full banking license, and they don’t offer things like checking and savings accounts.

    There are advantages and disadvantages to going the non-bank route. While this type of lender tends to charge higher interest rates than banks or credit unions, they offer numerous quality-of-life improvements and specialized benefits, including online communications, streamlined underwriting processes, fast funding times, alternative financing solutions and more.

    What you lose in the cost of capital is gained through speed and efficiency. For example, you can complete the application in as little as 15 minutes at some institutions, and many lenders provide same-day or next-day funding.

    These loans also come with fewer stipulations about how you can spend the money, and the cost of capital can be offset with revenue-driving opportunities. For example, spending $10,000 on interest charges won’t matter as much if you increase your revenue by $50,000.

    Plus, as you continue to build a relationship with that lender and improve your business credit score, you’ll be eligible for better rates in the future.

    Start looking for business financing now

    After the Silicon Valley Bank collapse in March, some economists lowered their economic growth forecasts for the year. The lending environment was already starting to weaken following numerous prime rate hikes, but the SVB crisis caused many banks to tighten their lending standards even further.

    In particular, small banks have to be more cautious about lending money in an effort to preserve cash. Small to medium-sized banks account for roughly 50% of commercial and industrial lending, so this will impact a number of businesses.

    Federal Reserve documents predicted that the fallout from the banking crisis would likely lead to a recession later this year, and it’s unlikely that we’ll see any significant improvements for at least two years.

    If you anticipate needing funds in the coming year, you should start looking for business financing now. Although you might be apprehensive, a loan or line of credit can tide your business over until the economy improves and give you the capital you need to continue growing.

    Related: 5 Ways to Protect Your Business From a Recession

    Joseph Camberato

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  • The white-collar job market is hitting a wall. What does it mean for the economy?

    The white-collar job market is hitting a wall. What does it mean for the economy?

    A lively U.S. labor market in the past two years has been a rare bright spot in a fitful economic recovery from the pandemic, with robust job growth bringing the nation’s unemployment rate close to a 50-year low. But with a possible recession looming, many companies are now slamming the brakes on hiring in the so-called knowledge sector.

    Lyndal Cairns, a 41-year-old product marketer, left a her job at a startup in March in search of work at a more established company that would offer more growth opportunities. Since then, the Washington, D.C., resident estimates she’s submitted 1,500 applications but has had only about 20 interviews for new positions. 

    “The conversion rate is abysmal — I would not put that on my CV in a marketing context,” she joked. 

    “I am definitely finding it less effective than previous job searches,” she said of her job hunt. “Feeling that I’m shouting into the void is the most difficult part. You just don’t know — for every application, does the job exist, is the job still open, are you a good fit, is it a good wage, do they already have someone that they’re interviewing? There’s a lot you just can’t see.”

    Headshot of Lyndal Cairns
    Lyndal Cairns, a product marketer working in technology, left a startup job in March in search of greener pastures.

    Dekka Studios


    Across the U.S., it’s worth noting, employers are still hiring. Payrolls rose by 230,000 in March, while the number of unemployed workers is near historic lows. 

    Yet there’s been a marked slowdown in hiring for many white-collar jobs as businesses gird for a possible recession. Listings for technology roles are down 55% from a year ago, while banking industry vacancies are down more than 40% and insurance listings have fallen 18%, according to research from Indeed. 

    “Many businesses right now are just uncertain, either about the medium-term economic outlook, or they’re concerned that their current employment levels are not aligned with where their business is headed,” Nick Bunker, director of North American Research at the Indeed Hiring Lab, told CBS MoneyWatch. 

    That’s leading companies to pull back on hiring, particularly in fields like marketing and human resources, he added.

    In some ways, the situation is a reversal of the first year of the pandemic. Lower-wage service jobs, especially in leisure and hospitality, are still plentiful as Americans are going out and spending money. But hiring for professional and knowledge workers has slowed.

    “At the 10,000-foot level, the job market is very strong,” Bunker said. However, “Things are happening very differently in different labor neighborhoods.”

    Pulling back

    Several pockets of the corporate workforce are more affected by hiring slump, Bunker said. One is marketing, an area companies often trim when their business wobbles and they’re looking to cut costs. Opportunities in corporate recruitment and human resources more broadly are also drying up. 

    “We’re hearing from a lot of business executives that demand is much softer than it was a year ago,” said Gregory Daco, chief economist at EY. “It’s not just the tech sector — it’s broadened out into finance, professional and business services, the information sector more broadly.”

    Another sign of this cooldown is that employees are putting in fewer hours. The typical workweek length, which surged during the pandemic, has fallen to pre-pandemic levels. If those hours fall any lower, Daco said, that would show employers are “trying to cut back on their workforce.”

    And while layoffs outside the tech sector remain at a historic low, the number of workers collecting unemployment has been steadily rising, indicating that it may be taking longer for those laid off to find work. 

    “The U.S. economy is losing speed, and the landing strip is short and narrow,” Daco said in a research note.

    “I just have to keep going”

    That’s not to say a recession is inevitable. The economy is still expanding, growing at a modest 1.1% annual rate in the first three months of the year, and none of the indicators that typically precede recessions — which include various measures of employment, spending and personal income — are flashing red, noted Apollo chief economist Torsten Slok. The construction and travel industries and higher-end consumer spending are holding up well, and there’s a “manufacturing renaissance” unfurling after Congress dedicated billions to domestic industry, analysts at Vital Knowledge said in a research note. 

    “There’s no doubt the U.S. economy is cooling,” they wrote. “However, ‘cooling’ doesn’t mean ‘crashing.’” 

    Indeed, a cooldown without a crash would be the very definition of the “soft landing” the Federal Reserve has tried to achieve.

    Still, worker confidence levels are far below where they were in the heady days of 2021 and 2022 as the economy was snapping back into shape.

    One software engineer, who asked that his name be withheld to avoid possible retaliation from his employer, said he has applied to 60 jobs without a single response — a sharp contrast from his previous job-hunting experience during the pandemic, where “pretty much every place I applied, I got an interview and then I had a job within a month.”

    “It’s very worrying — I thought I was in a safe industry,” he said. 

    Indeed’s research bears out this loss of confidence, Bunker said. In a recent survey, most people said they could easily find a job if they had to, but “those who were employed and have higher levels of education, they’ve become more pessimistic.”

    Cairns, the product marketer, chooses to remain optimistic. 

    “It was a gamble to leave when I did because I know what the job market is, but you have to be happy,” she said. “This is not my first rodeo. I know how to get a job, and I know that one will come that is a good fit. I just have to keep going.”

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  • Chicago business activity index less negative in April

    Chicago business activity index less negative in April

    The Chicago Business Barometer, also known as the Chicago PMI, rose 4.8 index points to 48.6 in April.

    Economists polled by the Wall Street Journal forecast a decline to a 43.8 reading. 

    This is the eighth straight reading below the 50 threshold that indicates contraction territory.

    The index is produced by the ISM-Chicago with MNI. It is released to subscribers three minutes before its release to the public at 9:45 am Eastern. It is the last of the regional manufacturing indices before the national ISM data for April is released on Monday.

    So far, the regional data suggest a modest improvement this month in the manufacturing ISM. In March, the ISM factory index fell to 46.3% from 47.7% in the prior month. It was the fourth month in contraction territory.

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  • Inflation slows again, PCE shows, as the economy

    Inflation slows again, PCE shows, as the economy

    The numbers: The cost of goods and services rose a scant 0.1% in March and the yearly rate of inflation slowed again in response to higher interest rates and a cooler economy.

    The increase in the so-called personal consumption expenditures index matched the Wall Street forecast. The PCE index is the Federal Reserve’s preferred inflation barometer.

    The…

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  • U.S. stocks head for best day in 2 weeks on strong earnings from Meta and other big-tech names

    U.S. stocks head for best day in 2 weeks on strong earnings from Meta and other big-tech names

    U.S. stocks rose on Thursday, on track for their biggest gain in two weeks, as another batch of strong big-tech earnings reports helped boost the broader market while offsetting signs of slowing economic growth.

    How are stocks trading

    On Wednesday, the Dow Jones Industrial Average fell 229 points, or 0.68%, to 33,302 as worries about First Republic Bank FRC overshadowed upbeat big-tech earnings.

    What’s driving markets

    For…

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  • Fed ‘accident’ could slice 20% off the S&P 500, stock market strategist David Rosenberg warns. Here are 3 ways to protect your money now.

    Fed ‘accident’ could slice 20% off the S&P 500, stock market strategist David Rosenberg warns. Here are 3 ways to protect your money now.

    David Rosenberg honestly doesn’t want to be bearish on stocks or bash the Federal Reserve. The veteran market strategist will get no satisfaction if he’s right about Americans having to slog through recession and consequently endure deflation, job losses and a wallop to the stock market.

    “As I play the role of economic detective, I can see the smoking gun,” says Rosenberg, a former chief North American economist at Merrill Lynch and now president of Toronto-based Rosenberg Research.

    Who’s…

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  • Free On-Demand Webinar: How to Lead a Company Through Multiple Times of Uncertainty

    Free On-Demand Webinar: How to Lead a Company Through Multiple Times of Uncertainty

    Previously a trader and an investment banker, Glenn Fogel joined Booking (then known as Priceline.com) in Feb. 2000 as a young manager. Two weeks later, the stock market peaked and the dot-com bubble burst. Soon after, the Sept. 11 attacks happened, hampering people’s desire to travel. And the industry was shattered again when the 2020 pandemic hit. How did the world’s leading provider of online travel lead through these uncertain times?

    Find out in the next episode of our Leadership Lessons series with the CEO & President of Booking Holdings (NASDAQ: BKNG) – parent company of Booking.com, Priceline, Agoda, Rentalcars.com, KAYAK and OpenTable – chats with series host Jason Nazar about how he leads more than 20,000 employees across 300+ offices in 220 countries around the world and the greatest lessons learned in his 30+ year career. Topics include:

    Complete the registration form to watch now!

    About The Speakers

    Glenn Fogel is CEO & President of Booking Holdings (Booking.com, Priceline, Agoda, Rentalcars.com, KAYAK, OpenTable), a position he has held since January 2017, and CEO of Booking.com since June 2019. He previously served as Head of Worldwide Strategy and Planning for six years. He was also EVP, Corporate Development for over seven years, responsible for worldwide mergers, acquisitions, and strategic alliances. Prior to Glenn joining Booking Holdings in Feb. 2000, he was a trader at a global asset management firm and an investment banker specializing in the air transportation industry. He is a member of the New York State Bar (retired). Glenn is a graduate of Harvard Law School and earned a B.S. in Economics from the University of Pennsylvania’s Wharton School.

    Jason Nazar is a serial tech entrepreneur, advisor, and investor with two successful exits. He was most recently co-founder/CEO of workplace culture review platform Comparably (acquired by ZoomInfo), and previously co-founder/CEO of Docstoc (acquired by Intuit). Jason was named LA Times’ Top 5 CEOs of Midsize Companies (2020), LA Business Journal’s Most Admired CEOs (2016), and appointed inaugural Entrepreneur in Residence for the city of Los Angeles (2016-2018). He holds a B.A. from the University of California Santa Barbara and his JD and MBA from Pepperdine University. He currently teaches Entrepreneurship as an adjunct professor at UCLA.

    Jason Nazar

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  • Consumer confidence falls to 9-month low on worries about jobs and recession

    Consumer confidence falls to 9-month low on worries about jobs and recession

    The numbers: A survey of consumer confidence fell in April to a nine-month low of 101.3, reflecting nagging worries about a possible recession and a softening labor market.

    The closely followed index dropped 2.7 points from a revised 104 in the prior month, the Conference Board said Tuesday. The level of confidence in April was the lowest since July 2022.

    Consumer…

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  • Stock-market investors scan these early recession indicators for signs the U.S. economy will crack. You should, too.

    Stock-market investors scan these early recession indicators for signs the U.S. economy will crack. You should, too.

    Seemingly every day, U.S. investors are being buffeted by a flurry of sometimes conflicting economic data.

    Take this past week, for example: the U.S. leading economic index sank 1.2% in March, its biggest decline in three years. The indicator has now declined for 12 straight months.

    Then, one day later on Friday, investors received readings…

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  • U.S. economy improved in early April, S&P Global says

    U.S. economy improved in early April, S&P Global says

    The numbers: An early reading of the U.S. economy in April from S&P Global showed that business activity has escaped the doldrums after struggling over the fall and winter months.

    The S&P Global U.S. service sector purchasing managers index rose to 53.7 in April from 52.6 in the prior month. This is a 12-month high.

    The flash U.S. manufacturing…

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  • 3 Marketing Moves to Make Your Business Recession-Proof | Entrepreneur

    3 Marketing Moves to Make Your Business Recession-Proof | Entrepreneur

    Opinions expressed by Entrepreneur contributors are their own.

    If you’re a business owner, a lot has happened already this year to make you stop and consider the state of your (and your business’s) money.

    Inflation has every dollar shrinking in value, federal rate hikes have made it more costly to borrow, and while recent bank failures may not have impacted your business outright, it certainly caused a justifiable stir.

    With all of this going on, my husband and I decided to meet with a mentor and financial consultant who has managed hundreds of millions of dollars in capital over the last 25 years to review our investments.

    He pointed out that, while we both have various investments, we’ve primarily been putting our money into something that has paid off many times over standard stock market returns — and that something is our respective businesses.

    After that meeting, I concluded it was wisest to invest more into my most reliable asset — my business. Sure, we have a lot of “safe” investments as well, but truly, in the long run, nothing has compared to our businesses in terms of return on investment (ROI).

    The biggest investment I’m making is in my marketing: I’m increasing our annual marketing budget by more than 20% this year to over $7 million.

    I made this decision based on some hard-won experience I gained surviving two economic recessions. The first (2008), I cut my marketing and we barely survived. The second (2020), I refused to cut our marketing and, as a result, growth in the last three years has averaged 20% after averaging only 5% in the decade previous. I learned that marketing is crucial to not only growing a business when times are good, but essential to survival when times get tough.

    If you’re like me and know that your business is your greatest asset, I want to share three marketing principles I have followed and applied in order to strengthen my business and grow revenue despite recessions and economic turbulence.

    Related: Why a Recession Is the Worst Time to Skimp on Brand Marketing

    1. Use the current economic conditions to your advantage to increase market share

    Recessions come and go, and some businesses leave legacies behind that we can learn from. Kellogg is a perfect example of that. In the late 1920s, Kellogg and Post dominated the breakfast cereal market.

    When the Great Depression hit, Post responded in fear, reducing expenses and cutting back on advertising while Kellogg did the opposite. Kellogg moved into radio advertising and heavily promoted a new cereal called Rice Krispies.

    By 1933, the economy was the worst it had ever been, but Kellogg’s profits increased 33%. Kellogg not only survived the economic crisis but became the leading cereal brand afterward — and has remained in that spot more than 80 years later. In 2017, Kellogg had a 30% market share, with General Mills following at 29% and Post at 18%.

    I experienced a similar phenomenon with my business, PostcardMania. In 2008, the recession devastated many businesses. We were heavily affected by the real estate market plummeting since mortgage brokers made up 46% of our clientele. In 2009, an advisor at the time saw how much I spent on marketing every week and said something to the effect of, “We could save a lot of money if we cut back.”

    Against my better judgment, I listened and cut my marketing in hope that we could conserve our resources and increase profits, but that made the situation worse. What was a small revenue decline in 2008 (around $150,000) ballooned into a much bigger loss in 2009 — as much as 15% of revenue and well over $1 million.

    I made a sharp U-turn and brought my marketing back up to speed as soon as possible, and we recovered by 2010. I vowed to never cut my marketing budget again.

    Then in 2020, when the pandemic disabled the economy, I knew exactly which moves to make and maintained my marketing regardless of how rough it got — and it did get rough to the tune of sales being down over 40%.

    But guess what my competitors did? Exactly as I did in 2008 — they froze or reduced their marketing. The difference between 2008 and 2020 was obvious; we grew PostcardMania in 2020, and then business got even better in 2021 and 2022. Since 2019, our revenue has been up 60% (an average of 20% growth per year) after 10 years of averaging 5% growth.

    I know it sounds counterintuitive to invest more in marketing when the economy is poor, but history doesn’t lie, and my own experience backs this up. Keep your marketing strong, and your leads and sales will remain strong as well.

    Related: 6 Recession-Proof Business Marketing Strategies

    2. Choose the marketing channels with the highest ROI to make the most of your budget

    So, which marketing channels should you invest in? The answer is simple — the ones that work.

    If you aren’t already tracking your marketing closely, commit to starting right now. It’s critical that you track what you’re spending and where leads and new customers are coming from so that you know what’s working and what needs improvement.

    Once you know which channels yield the highest ROI, you can invest more there to grow your leads, which in turn yields more sales and revenue (and you can tinker with the lower-performing tactics until they’re in a good range or pare them back to suit your budget needs).

    One of the marketing tactics I find to have a super high return on investment is retargeted mailings. Triggered mail makes the most of every lead by specifically targeting the people who have already shown some kind of interest in your products or services by visiting your website.

    Depending on who you want to target, a postcard is automatically printed, addressed and sent within 24 hours of their website visit. Targeting can be based on the length of time a visitor spends on your site, the web pages they visit, the items they put in their shopping cart or a number of other factors.

    Because you’re only targeting warm prospects and sending a few postcards a day (rather than thousands at a time like traditional direct mail), the upfront cost of a triggered campaign is relatively low — and that means your ROI potential is much higher.

    One of our real estate investment clients, Mark Buys Houses, added retargeted direct mail to their follow-up. They spent $647 to mail just over 100 postcards to his website visitors. As a result, he converted one lead into a sale and made $70,000 in revenue. That’s an ROI of 10,710%!

    If you decide to increase your marketing investment like I did, I suggest starting with tactics focused on improving website conversion or follow-up. You’ve already spent money on the hardest part — taking someone from unaware of your business to actually interested — so take the time to find out if investing a few more dollars per lead will translate into more sales. Just don’t forget to track closely!

    Related: How to Adjust Your Marketing to Survive a Recession

    3. Take advantage of free communication tools to stay in touch with prospects and customers

    Not every marketing tactic costs money; some are 100% free. Leveraging free marketing platforms during tough times not only helps your budget, it also helps you communicate better.

    First, I suggest perfecting and increasing your email marketing. Tools like Constant Contact and Mailchimp let you send emails for free up to a certain amount. Send out promotional emails that include catchy subject lines and enticing deals to increase clicks. Consider creating an email newsletter that your audience would enjoy reading. It could include valuable information about your industry, tips and tricks, recently completed projects or features about your company to keep your customers connected to your brand.

    Second, I recommend freshening up your website with new, SEO-rich content. You can write the content yourself or find a willing team member to help — or even give the latest craze, artificial intelligence (AI), a go. Just provide a prompt, and let AI do the heavy lifting (a.k.a. writing) for you, then go over it afterward and put your own stamp on it using expertise that only you could provide. Blog posts, web pages and other types of articles will not only boost your website in the search engine results on Google, but it will also increase engagement on your website.

    Lastly, get more active on social media. Post creative, informative content that draws people in and fosters engagement, like polls or questions. Facebook and Instagram also allow you to list your products and services for free on a shop page. Even though it takes a bit more time and energy to make posts every day, communicating consistently with customers and prospects is invaluable and could lead to increased revenue and positive brand image in your area of expertise.

    At the end of this economic downturn, at least you can say that you gave it your all and worked hard to build up your business to the best it can be. Invest in the right areas, and you’ll enjoy benefits that last far beyond the most recent crisis.

    Joy Gendusa

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  • Jobless claims climb to 245,000 and signal slight cooling in hot labor market

    Jobless claims climb to 245,000 and signal slight cooling in hot labor market

    The numbers: The number of Americans who applied for unemployment benefits last week rose by 5,000 to 245,000 and pointed to a small erosion in a robust U.S. labor market.

    New jobless claims increased from a revised 240,000 in the prior week, the Labor Department said Thursday. The figures are seasonally adjusted.

    The number of people applying for unemployment benefits is one of the best barometers of whether the economy is getting better or worse.

    New jobless claims are still very low, but they have risen from less than 200,000 in January in a sign the labor market has cooled slightly as higher interest rates dampen U.S. growth.

    Key details: Thirty-five of the 53 U.S. states and territories that report jobless claims showed a decrease last week. Eighteen posted an increase.

    Most of the increase in new jobless claims were in New York, where new filings typically rise during school breaks and fall immediately afterward.

    Other states reported little change.

    The number of people collecting unemployment benefits in the U.S., meanwhile, jumped by 61,000 to 1.87 million in the week ended April 8. That’s the highest level since November 2021.

    The gradual increase in these so-called continuing claims suggests it’s taking longer for people who lose their jobs to find new ones.

    Big picture: Wall Street is watching jobless benefits closely because it’s one of the first indicators to start blinking red when the U.S. is headed toward recession.

    New jobless claims have crept higher this year after touching a 54-year low, pointing to some cooling in a hot labor market. But the labor market is still quite strong

    The Federal Reserve wants the labor market to cool even further to temper a sharp increase in wages and help the bank combat high inflation. A series of interest-rate increases by the central bank have slowed the economy and eventually should curb the appetite for workers.

    Looking ahead: “With talk of deteriorating economic conditions and in the wake of the recent bank failures, businesses may turn more cautious in their hiring practices,” said senior economic advisor Stuart Hoffman of PNC Financial Services.

    “Our view remains that layoffs will rise less dramatically than normally might occur as companies do all they can to avoid shedding workers who have been incredibly difficult to recruit and retain,” said chief economist Joshua Shapiro of MFR Inc.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -0.44%
    and S&P 500
    SPX,
    -0.60%
    were set to open lower in Thursday trades.

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  • China’s GDP Beat Expectations. Why Alibaba and JD.com Are Falling.

    China’s GDP Beat Expectations. Why Alibaba and JD.com Are Falling.



    Alibaba



    JD.com


    and other Chinese stocks fell Tuesday despite the country’s economy rebounding at a faster-than-expected pace in the first quarter.

    China’s gross domestic product (GDP) rose 4.5% in the first three months of the year, convincingly beating the FactSet economists’ consensus for 3.4% growth.

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  • 8 Ways to Keep Your Business Afloat in a Tough Economy | Entrepreneur

    8 Ways to Keep Your Business Afloat in a Tough Economy | Entrepreneur

    Opinions expressed by Entrepreneur contributors are their own.

    As the economy continues to fluctuate, it’s important for entrepreneurs to have a plan in place for any potential downturns. To remain competitive, you can take several steps, including reviewing your finances, cutting operating costs, diversifying your products and offerings and focusing on customer retention.

    Utilizing automation technology and revamping your marketing approach are both essential to adapt to the ever-changing economic climate. Don’t wait until it’s too late to start preparing — take control of your financial future and create an action plan today. Having this action plan will allow you to build what I refer to as a “war chest” for your business. The “war chest” is critical since it will allow your company to survive for a minimum of six months during a rough time.

    Related: 5 Ways to Protect Your Business From a Recession

    1. Create an action plan

    Planning for an economic slowdown is crucial for preparing your business, so it’s time to break out that budgeting spreadsheet. Be aware of potential changes to revenue, expenses and cash flow so you are not caught off guard. By preparing a budget in advance, you can make adjustments to ensure your business stays afloat. Start planning for a rainy day now — don’t wait until it’s too late.

    2. Review your finances

    Getting a handle on your finances is the first step in preparing for an unpredictable economic climate. Do a deep dive into your assets, liabilities and outstanding debts or loans. You can then determine where you stand financially and how a downturn may affect you.

    Keeping a close eye on your sales and costs and uncovering opportunities to reduce expenses is crucial to staying ahead of any potential economic shifts. Make informed decisions about your finances during difficult economic times by tracking your monthly income and expenses, such as salaries, rent and insurance. One of the best things you can do is a comprehensive review of your P&L monthly to ensure you are not being wasteful in your business.

    3. Cut operating costs

    Cutting operating costs is an obvious but effective way to prepare for a softening economy. Take a hard look at your budget and trim unnecessary expenses. It’s important to consider all costs, including travel and office supplies. You may get better terms or lower prices by renegotiating existing vendor contracts.

    Walmart, for example, switched to LED lighting in their stores. Walmart reduced its lighting energy consumption by 50% by replacing traditional light bulbs with LED bulbs. This resulted in an annual cost savings of approximately $200 million. Furthermore, LED bulbs have a longer lifespan than conventional bulbs, so Walmart also saved money on maintenance. Many people overlook this when reviewing operational expenses.

    Related: How to Help a Business Thrive During an Economic Recession

    4. Revamp your marketing approach

    Don’t let tough economic times take a toll on your brand’s success. Instead, reassess your marketing strategies to stay ahead of the competition. Are you working within a tight budget? No problem! Optimize your spending by shifting your focus to marketing tactics to enhance customer loyalty and drive sales. Use technology to your advantage with social media platforms and digital marketing solutions to increase your brand’s visibility without breaking the bank. Keep your finger on the pulse of the latest trends in marketing to tap into what’s currently catching consumers’ attention.

    Want to make a lasting impact? Ditch the typical advertising route in favor of snappy, visually-engaging short videos on YouTube and Instagram. The sky’s the limit when it comes to creatively adapting to the economic climate and taking your marketing game to the next level. They key is getting creative in your marketing messages to stand apart from everyone else. I always tell business owners I work with that use the excuse, “It’s just too noisy.” Then, make more noise.

    5. Revolutionize your business with automation and AI technology

    The future of business is here, and it’s all about automation technology. Say goodbye to human error and welcome efficiency and cost-effectiveness with open arms. Companies are relying on AI more than ever before to help them reduce costs and optimize processes. With robotic process automation, predictive analytics and natural language processing tools like ChatGPT, businesses are experiencing revolutionary benefits.

    ChatGPT is transforming customer service and support by utilizing cutting-edge language models. Automation can be the superhero businesses have in their corner. Be very mindful of how you use some of these technologies as they are new, so test the technology and split-test them before doing any full integrations into your ecosystem. Just because it’s new and shiny doesn’t mean it is everlasting!

    6. Diversify your products and offerings

    In an economic downturn, diversifying your product or service offerings is a powerful strategy for breaking into new markets. Expanding your range can entice budget-conscious buyers who might have overlooked your business previously. Using the right approach, you can both maintain and attract customers.

    Related: How to Recession-Proof Your Business

    7. Focus on customer retention

    Hold onto your customers tightly. Your relationship with your existing customers is crucial, especially during turbulent times. Keep them coming back with exciting loyalty programs or tempting discounts. You can fix any problems quickly and identify areas for improvement if you listen carefully to their feedback. Remember, keeping a happy customer is easier than finding a new one in tough times.

    8. Have a backup plan

    To weather tough times, businesses must master the art of preparation. The unexpected can strike at any time, so it’s vital to prepare backup plans to ensure your business runs smoothly. Keep emergency funds and insurance policies in tow in case of a crisis. Review finances, pivot marketing strategies and explore new product lines to keep your company on solid ground during an economic slump. Take control of potential roadblocks and steer your business toward success.

    Being prepared for a softening economy can mean the difference between taking control of your financial future and becoming another victim. A solid action plan, regular reviews or focus on improvement will give you the edge over those who wait too long to take preventative measures. Prevention goes a long way, so get out there and stay ahead of the game!

    Jason Miller

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  • Why 5% interest rates might not derail the stock market or the U.S. economy

    Why 5% interest rates might not derail the stock market or the U.S. economy

    Here’s a thought for investors: If the Federal Reserve raises interest rates to 5% or more would that wreck the economy and stock prices ?

    The U.S. stock market has been rallying to start 2023, clawing back a big chunk of the painful losses from a year ago. The bullish tone has been linked to a view that the Federal Reserve will need to cut interest rates this year to prevent a recession, reversing one of its quickest rate-increasing campaigns in history.

    Doomsday investors, including hedge-fund billionaire Paul Singer, have been warning against that outcome. Singer thinks a credit crunch and deep recession may be necessary to purge dangerous levels of froth in markets after an era of near-zero interest rates.

    Another scenario might be that little changes: Credit markets could tolerate interest rates that prevailed before 2008. The Fed’s policy rate could increase a bit from its current 4.75%-5% range, and stay there for a while.

    “A 5% interest rate is not going to break the market,” said Ben Snider, managing director, and U.S. portfolio strategist at Goldman Sachs Asset Management, in a phone interview with MarketWatch.

    Snider pointed to many highly rated companies which, like the majority of U.S. homeowners, refinanced old debt during the pandemic, cutting their borrowing costs to near record lows. “They are continuing to enjoy the low rate environment,” he said.

    “Our view is, yes, the Fed can hold rates here,” Snider said. “The economy can continue to grow.”

    Profits margins in focus

    The Fed and other global central banks have been dramatically increasing interest rates in the aftermath of the pandemic to fight inflation caused by supply chain disruptions, worker shortages and government spending policies.

    Fed Governor Christopher Waller on Friday warned that interest rates might need to increase even more than markets currently anticipate to restrain the rise in the cost of living, reflected recently in the March consumer-price index at a 5% yearly rate, down to the central bank’s 2% annual target.

    The sudden rise in interest rates led to bruising losses in stock and bond portfolios in 2022. Higher rates also played a role in last month’s collapse of Silicon Valley Bank after it sold “safe,” but rate-sensitive securities at a steep loss. That sparked concerns about risks in the U.S. banking system and fears of a potential credit crunch.

    “Rates are certainly higher than they were a year ago, and higher than the last decade,” said David Del Vecchio, co-head of PGIM Fixed Income’s U.S. investment grade corporate bond team. “But if you look over longer periods of time, they are not that high.”

    When investors buy corporate bonds they tend to focus on what could go wrong to prevent a full return of their investment, plus interest. To that end, Del Vecchio’s team sees corporate borrowing costs staying higher for longer, inflation remaining above target, but also hopeful signs that many highly rated companies would be starting off from a strong position if a recession still unfolds in the near future.

    “Profit margins have been coming down (see chart), but they are coming off peak levels,” Del Vecchio said. “So they are still very, very strong and trending lower. Probably that continues to trend lower this quarter.”

    Net profit margins for the S&P 500 are coming down, but off peak levels


    Refinitiv, I/B/E/S

    Rolling with it, including at banks

    It isn’t hard to come up with reasons why stocks could still tank in 2023, painful layoffs might emerge, or trouble with a wall of maturing commercial real estate debt could throw the economy into a tailspin.

    Snider’s team at Goldman Sachs Asset Management expects the S&P 500 index
    SPX,
    -0.21%
    to end the year around 4,000, or roughly flat to it’s closing level on Friday of 4,137. “I wouldn’t call it bullish,” he said. “But it isn’t nearly as bad as many investors expect.”

    Read: These five Wall Street veterans have 230 years of combined experience. Here’s why they are bearish on stocks.

    “Some highly levered companies that have debt maturities in the near future will struggle and may even struggle to keep the lights on,” said Austin Graff, chief investment officer at Opal Capital.

    Still, the economy isn’t likely to “enter a recession with a bang,” he said. “It will likely be a slow slide into a recession as companies tighten their belts and reduce spending, which will have a ripple effect across the economy.”

    However, Graff also sees the benefit of higher rates at big banks that have better managed interest rate risks in their securities holdings. “Banks can be very profitable in the current rate environment,” he said, pointing to large banks that typically offer 0.25%-1% on customer deposits, but now can lend out money at rates around 4%-5% and higher.

    “The spread the banks are earning in the current interest rate market is staggering,” he said, highlighting JP Morgan Chase & Co.
    JPM,
    +7.55%
    providing guidance that included an estimated $81 billion net interest income for this year, up about $7 billion from last year.

    Del Vecchio at PGIM said his team is still anticipating a relatively short and shallow recession, if one unfolds at all. “You can have a situation where it’s not a synchronized recession,” he said, adding that a downturn can “roll through” different parts of the economy instead of everywhere at once.

    The U.S. housing market saw a sharp slowdown in the past year as mortgage rates jumped, but lately has been flashing positive signs while “travel, lodging and leisure all are still doing well,” he said.

    U.S. stocks closed lower Friday, but booked a string of weekly gains. The S&P 500 index gained 0.8% over the past five days, the Dow Jones Industrial Average
    DJIA,
    -0.42%
    advanced 1.2% and the Nasdaq Composite Index
    COMP,
    -0.35%
    closed up 0.3% for the week, according to FactSet.

    Investors will hear from more Fed speakers next week ahead of the central bank’s next policy meeting in early May. U.S. economic data releases will include housing-related data on Monday, Tuesday and Thursday, while the Fed’s Beige Book is due Wednesday.

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  • Three investors on how to protect your portfolio | CNN Business

    Three investors on how to protect your portfolio | CNN Business

    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Wall Street has been hit with a barrage of complex signals about the economy’s health over the past month. From banking turmoil to weakening jobs data to slowing inflation, and now the start of earnings season, investors have remained largely resilient.

    But the Federal Reserve’s March meeting minutes revealed last week that officials believe the economy will enter a recession later this year. While that’s not new news to investors who have worried that a recession is on the horizon for the past year, it does mean that markets could take a turn for the worse.

    So, how should investors protect their portfolios? Investors say there isn’t one asset that Wall Street should pile all their bets on, but there are fundamentals that should underlie their investment strategies.

    Jimmy Chang, chief investment officer at Rockefeller Global Family Office, says he advises clients to be patient, defensive and selective when navigating the market.

    In other words, investors should make decisions based on logic, not a fear of missing out.

    “You chase these rallies and then it fizzles out — you’re left holding the bag,” he said.

    Chang also recommends that investors stay defensive by investing in high-quality blue chip stocks with solid balance sheets and keep dry powder.

    Doug Fincher, portfolio manager at Ionic Capital Management, says investors should brace their portfolios against inflation.

    The Personal Consumption Expenditures price index rose 5% for the 12 months ended in February, showing that inflation remains much higher than the Fed’s 2% target.

    Coupled with the fact that the central bank has signaled that it plans to pause interest rate hikes sometime this year, it’s possible inflation could prove stickier than Wall Street expects.

    “It is the boogeyman of traditional investments,” Fincher said.

    He manages the Ionic Inflation Protection exchange-traded fund, which seeks to specifically perform well during periods of high inflation. The portfolio’s core exposure is inflation swaps, which are transactions in which one investor agrees to swap fixed payments for floating payments tied to the inflation rate. The fund also invests in short-duration Treasury Inflation Protected Securities.

    Megan Horneman, chief investment officer at Verdence Capital Advisors, says that her firm has hedged its portfolio in cash. A well-known haven, cash is a better alternative to other perceived safe spots like gold, which tends to be volatile and run up too fast, she said.

    Investors have rushed into money market funds in recent weeks after the banking turmoil both shook their confidence in the banking system and sent ripples through the market.

    “Cash is actually earning you something at this point,” Horneman said. “You have to look long term.”

    Earnings season kicked off Friday with a bonanza of earnings from the nation’s largest banks.

    Perhaps most noteworthy out of the bunch was JPMorgan Chase, which reported record revenue and an earnings beat for its latest quarter.

    The bank has $3.67 trillion in assets, making it the largest bank in the country and a bellwether for the economy. Strong earnings reports from the New York-based bank and its peers including Wells Fargo, Citigroup and PNC Financial Services have shown a promising start to the earnings season.

    Charles Schwab, Goldman Sachs, Bank of America and Morgan Stanley report next week.

    Here are some key takeaways from JPMorgan Chase’s first-quarter earnings:

    • The company guided net interest income to be about $81 billion in 2023, up $7 billion from its previous estimate. That’s especially important because this earnings season is all about guidance, as investors try to gauge whether the economy is headed for a recession and which companies will be able to weather a potential downturn.
    • CEO Jamie Dimon said in the post-earnings conference call that while financial conditions are a bit tighter after the collapse of Silicon Valley Bank and Signature Bank, he doesn’t see a credit crunch. But chances of a recession are now higher, he said.
    • The company said that its portfolio’s exposure to the office sector is less than 10%, addressing concerns that the $20 trillion commercial real estate industry could be the next space to see turmoil.

    Read more here.

    Monday: Empire State manufacturing index and homebuilder confidence index. Earnings report from Charles Schwab (SCHW).

    Tuesday: Earnings reports from Bank of America (BAC), Goldman Sachs (GS), Johnson & Johnson (JNJ), Netflix (NFLX), United Airlines (UAL) and Western Alliance Bancorp (WAL).

    Wednesday: Earnings reports from Citizens Financial Group (CFG), Morgan Stanley (MS), Tesla (TSLA) and International Business Machines (IBM). Speech from NY Federal Reserve President John Williams.

    Thursday: Philadelphia Fed manufacturing index, jobless claims, mortgage rates, US leading economic indicators and existing home sales. Earnings reports from AutoNation (AN) and American Express (AXP).

    Friday: Manufacturing PMI and services PMI. Earnings report from Procter & Gamble (PG).

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