A top executive of German carmaker Daimler said Friday that he does not expect a new surge in coronavirus infections to be as destructive to vehicle manufacturing as the first wave earlier in the year, when almost all major carmakers were forced to suspend production and close dealerships.
Harald Wilhelm, Daimler’s chief financial officer, said that showroom traffic remained strong and that parts were flowing, even though infection rates were reaching new highs in many European regions.
“I’m not aware that we have any problems with supply chains,” Mr. Wilhelm told reporters during a conference call. He added that the company was watching developments closely.
If big manufacturers like Daimler are able to keep operating and employing people, the economic impact of the pandemic may not be as bad as it was in March and April. Still, as countries like France, Denmark and Germany impose curfews and other restrictions on daily life, the impact is certain to be significant and unpredictable.
Daimler, the maker of Mercedes cars and trucks, said Friday that net profit in the third quarter rose 19 percent to 2.2 billion euros, or $2.6 billion, as the company was able to offset a decline in sales with cost cuts. While sales have improved from low points a few months ago, Daimler said it does not expect to be able to recoup all of the sales it lost earlier in the year.
The Federal Trade Commission is moving closer to a decision about filing an antitrust lawsuit against Facebook for its market power in social networking, according to two people with knowledge of the agency’s talks.
The five members of the F.T.C. met on Thursday to discuss its investigation into Facebook and whether the company had bought smaller rivals to maintain a monopoly, the people said. They said three documents about Facebook had been prepared by the agency and circulated among its leaders: One addresses the company’s potential antitrust violations, another analyzes its economics, and a third assesses the risks of litigation.
No decision on a case has been made, the people said. The commissioners must vote before any case is pursued.
Facebook and the F.T.C. declined to comment. The Washington Post reported earlier that the commission met about the Facebook investigation on Thursday.
Lawmakers and policymakers in Washington have ramped up antitrust actions against the largest technology companies, often in a bipartisan effort. On Tuesday, the Justice Department sued Google, accusing it of illegally maintaining its monopoly power in search and search advertising — the first such government action against a tech company in two decades. Two weeks ago, the House Judiciary Committee recommended taking action to break up the big tech platforms, including Facebook, Amazon, Apple and Google.
With a vaccine still out of reach and many companies pushing return-to-office dates back until at least summer 2021, people with the means to do so are increasingly buying what they need to hunker down for the pandemic long-haul.
“Traditionally, during an economic recession, you would expect to see discretionary categories, such as home furnishings, consumer electronics or big-ticket items like appliances, take a hit,” said Andrew Lipsman, an analyst at the data analytics firm eMarketer. “What’s interesting is that the pandemic has caused a couple of these categories to really buck that trend.”
Some start spending on luxuries again
Even as millions of Americans remain unemployed, workers who have kept their jobs and are not dining out or going on vacations may find themselves with seemingly more discretionary money to spend.
Whirlpool reported that net sales were up 3.9 percent in the third quarter compared with the same period last year, after sales were down 22 percent in the second quarter.
“If you’re still working from home and you’re getting a steady paycheck, you may feel confident enough to splurge on a renovation,” said Ted Rossman, an industry analyst for CreditCards.com. “There’s actually a shortage of things like refrigerators, as we’re seeing a big increase in demand.”
Others, sick of grocery shopping and the taste of their own cooking, are choosing take out instead. Chipotle said revenue increased 14.1 percent in the third quarter compared with last year. Revenue decreased 4.8 percent in the second quarter.
As the holiday season approaches, earnings reports already show demand rising for gifts. The toy company Mattel reported on Thursday that doll sales were up 22 percent for the third quarter.
Spending on staples stabilizes
Sales of basic necessities like groceries are leveling out, months after people panic-bought toilet paper and cleaning supplies.
Kimberly-Clark reported that consumer tissue sales were up 11 percent in North America, a smaller increase than the previous quarter.
The grocery chain Albertson’s reported sales and other revenue increased more than 11 percent to $15.8 billion during the second quarter, compared to $14.2 billion during the same period last year, with revenue from digital sales up 243 percent as consumers looked to avoid crowded stores.
Coronavirus testing businesses see boost
Abbott Laboratories Inc. and Thermo Fisher Scientific Inc, both big players in coronavirus testing, reported significant growth. Abbott’s $881 million in Covid-19 testing revenue accounted for nearly 10 percent of its total sales in the third quarter, and Thermo Fisher generated $2 billion in Covid-19 related revenue, up from $1.3 billion last quarter.
Proposition 22, a California ballot measure that would exempt gig companies from a new state labor law and save them hundreds of millions of dollars, has become the most expensive voter initiative in the state’s history.
The backers of Prop 22, which include Uber, Lyft, DoorDash and other companies, have already spent $200 million on television advertising and other attempts to win over voters when they vote on Nov. 3.
Prop 22 would exempt the companies from complying with a law that went into effect at the beginning of the year. The law is intended to force them to treat gig workers as employees, but Uber and its peers have resisted, fearing that the cost of benefits like unemployment insurance and health care could tip them into a downward financial spiral.
The ballot fight gained additional urgency Thursday when a state appellate court ruled that Uber and Lyft must treat their California drivers as employees under the new labor law. The state attorney general and the city attorneys of San Francisco, Los Angeles and San Diego had sued the companies in May to enforce the law.
Stocks on Wall Street were unsteady, capping a turbulent stretch that’s left the S&P 500 lower for the week.
Trading this week has been volatile, as investor sentiment rose and fell with each update in the state of stimulus talks in Washington. Lawmakers have now conceded that a new stimulus bill won’t be ready before the Nov. 3 election, but continue to say that progress is being made toward a compromise bill.
“There are still significant policy differences between the two sides,” Larry Kudlow, the director of the National Economic Council, said on television Friday. “We’re probably closer than we were a week or two back,” he said, while noting that there are still major disagreements, including over how much aid to give to state and local governments.
In Europe, markets rose even as business surveys showed some economic activity in the region had declined again in October amid a rising number of coronavirus cases. The Stoxx Europe 600 gained nearly 1 percent, while Britain’s FTSE 100 was up nearly 1.5 percent. Stock indexes in Japan and Hong Kong ended the day higher.
The IHS Markit Purchasing Managers’ Index for the eurozone was 49.4, below the 50 mark, which separates contraction from expansion. However, German manufacturing, an important engine of European economic growth, was still expanding strongly as manufacturers addressed a backlog of work, according to the surveys.
The pound erased early gains against the euro and the U.S. dollar after data showed that activity in both the services and manufacturing sectors dropped this month, and separate data showed consumer confidence tumbled to its lowest level since May. It’s the latest sign that the British economy is heading for a sluggish recovery over the winter, despite strong retail sales data, as a second wave of coronavirus cases and social restrictions start to bite.
Most economists agree this much is clear: The main thing holding back the economy is not formal restrictions. It is people’s continued fear of the virus itself.
A growing body of research has concluded that the steep drop in economic activity last spring was primarily a result of individual decisions by consumers and businesses rather than legal mandates, report Ben Casselman and Jim Tankersley.
Iowa was one of only a handful of states that never imposed a full stay-at-home order. Restaurants, movie theaters, hair salons and bars were allowed to reopen starting in May, earlier than in most states. Gov. Kim Reynolds has emphasized the need to make the economy a priority, and has blocked cities and towns from requiring masks or imposing many other restrictions.
Even so, Iowa has regained just over half of the 186,000 jobs it lost between February and April, and progress — as in the country as a whole — is slowing. Many businesses worry they won’t be able to make it through the winter without more help from Congress. Others have already failed. Now, coronavirus cases are rising there.
“You can’t just open the economy and expect everything to go back to pre-Covid levels,” said Michael Luca, a Harvard Business School economist who has studied the impact of restrictions during the pandemic. “If a market is not safe, people won’t participate in it.”
For the first time in nearly a decade, the median asking rent for an apartment in Manhattan has fallen below $3,000 a month, as vacancies soar and tenants reorder priorities amid the pandemic. Of the city’s five boroughs, Manhattan has the highest share of affluent, mobile renters, many of whom chose not to renew leases during the pandemic, and the once reliable stream of newcomers, who paid a premium to be close to Midtown offices, has slowed, according to Nancy Wu, an economist at StreetEasy.
Gap Inc., the owner of the Gap, Banana Republic and Old Navy chains, has long been synonymous with the American shopping mall. But now it’s rushing to get out of a slew of malls as the company repositions its decades-old brands to adapt to changes in how people shop. The company plans to close 30 percent, or about 350, of its Gap and Banana Republic stores in North America by the beginning of 2024, executives said during a presentation to investors on Thursday. That will leave 870 total stores.
Workers at Amazon are calling on groups around the country to help shut down Amazon warehouses temporarily on Halloween if the company does not give all its employees a paid day off to vote. The move is an escalation of the internal pressure being put on executives at the company, the country’s second-largest private employer. The organizing is led by Amazon Employees for Climate Justice, which has also mobilized thousands of corporate employees over the past year and a half to push the company to address its climate impact.