Business briefs
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U.S. economic growth for last quarter is revised up slightly
WASHINGTON | The U.S. economy grew at a solid 3.4% annual pace from October through December, the government said Thursday in an upgrade from its previous estimate. The government had previously estimated that the economy expanded at a 3.2% rate last quarter.
The Commerce Department’s revised measure of the nation’s gross domestic product — the total output of goods and services — confirmed that the economy decelerated from its sizzling 4.9% rate of expansion in the July-September quarter.
But last quarter’s growth was still a solid performance, coming in the face of higher interest rates and powered by growing consumer spending, exports and business investment in buildings and software. It marked the sixth straight quarter in which the economy has grown at an annual rate above 2%.
For all of 2023, the U.S. economy — the world’s biggest — grew 2.5%, up from 1.9% in 2022. In the current January-March quarter, the economy is believed to be growing at a slower but still decent 2.1% annual rate, according to a forecasting model issued by the Federal Reserve Bank of Atlanta.
Thursday’s GDP report also suggested that inflation pressures were continuing to ease. The Federal Reserve’s favored measure of prices — called the personal consumption expenditures price index — rose at a 1.8% annual rate in the fourth quarter. That was down from 2.6% in the third quarter, and it was the smallest rise since 2020, when COVID-19 triggered a recession and sent prices falling.
Stripping out volatile food and energy prices, so-called core inflation amounted to 2% from October through December, unchanged from the third quarter.
The economy’s resilience over the past two years has repeatedly defied predictions that the ever-higher borrowing rates the Fed engineered to fight inflation would lead to waves of layoffs and probably a recession. Beginning in March 2022, the Fed jacked up its benchmark rate 11 times, to a 23-year high, making borrowing much more expensive for businesses and households.
Yet the economy has kept growing, and employers have kept hiring — at a robust average of 251,000 added jobs a month last year and 265,000 a month from December through February.
At the same time, inflation has steadily cooled: After peaking at 9.1% in June 2022, it has dropped to 3.2%, though it remains above the Fed’s 2% target. The combination of sturdy growth and easing inflation has raised hopes that the Fed can manage to achieve a “soft landing” by fully conquering inflation without triggering a recession.
Thursday’s report was the Commerce Department’s third and final estimate of fourth-quarter GDP growth. It will release its first estimate of January-March growth on April 25.
Four Canadian school boards sue Snapchat, TikTok and Meta
TORONTO | Four of the largest school boards in the Canadian province of Ontario said Thursday they launched lawsuits against TikTok, Meta and SnapChat alleging the social media platforms are disrupting student learning.
The lawsuits claim platforms like Facebook and Instagram are “designed for compulsive use, have rewired the way children think, behave, and learn” and teachers have been left to manage the fallout.
Meta Platforms Inc. owns Facebook and Instagram, while Snap Inc. owns SnapChat and ByteDance Ltd. owns TikTok.
Rachel Chernos, a trustee for the Toronto District School Board, said teachers and parents are noticing social withdrawal, anxiety, attention problems, cyber bullying and mental health issues.
“These companies have knowingly created programs that are addictive that are aimed and marketed at young people and it is causing significant harm and we just can’t stand by any longer and not speak up about it,” Chernos said.
Dozens of U.S. states, including California and New York, are also suing Meta Platforms Inc. for harming young people and contributing to a youth mental health crisis by knowingly and deliberately designing features on Instagram and Facebook that addict children to its platforms.
The school boards in Canada suing are the Toronto District School Board, the Peel District School Board, the Toronto Catholic District School Board and the Ottawa-Carleton District School Board.
They are seeking damages in excess of $4 billion Canadian (US$2.9 billion) for disruption to student learning and the education system.
A spokeswoman for Snap Inc., Tonya Johnson, said Snapchat helps its users stay connected with their friends.
“Snapchat opens directly to a camera — rather than a feed of content — and has no traditional public likes or comments,” she said. “While we will always have more work to do, we feel good about the role Snapchat plays in helping close friends feel connected, happy and prepared as they face the many challenges of adolescence.”
Representatives of Meta and ByteDance didn’t immediately respond to messages seeking comment.
Duncan Embury, a lawyer for the firm representing the boards, said there is a real addiction issue with the designed algorithms.
Embury said proper warnings are needed, age parameters need to change and there needs to be an increase in the level of resources school boards get to adapt to the new reality. He said the companies have knowingly and negligently designed their products to maximize the amount of time young people spend on their platforms at the expense of their wellbeing and education.
“There is an inability for students to focus,” he said.
The use of social media among teens is nearly universal in the U.S. and many other parts of the world. Almost all teens ages 13 to 17 in the U.S. report using a social media platform, with about a third saying they use social media “almost constantly,” according to the Pew Research Center.
In May, U.S. Surgeon General Dr. Vivek Murthy called on tech companies, parents and caregivers to take “immediate action to protect kids now” from the harms of social media.
This week, Republican Florida Gov. Ron DeSantis signed a bil l that will ban social media accounts for children under 14 and require parental permission for 14- and 15-year-olds. It takes effect Jan. 1 and is expected to face legal challenges.
No money will be paid to the attorneys handling the Canadian lawsuits unless they win.
Texas judge moves late fee case to DC, accusing banks of venue shopping
NEW YORK | A Texas federal judge on Thursday accused the major banking industry groups and U.S. Chamber of Commerce of venue shopping in their lawsuit against the Consumer Financial Protection Bureau, a major win for the federal regulator.
The bureau had argued the only reason banks filed their lawsuit in Texas was to increase their chance of a favorable ruling. Judge Mark Pittman ruled that the lawsuit should be transferred to Washington, where the banking lobby has armies of lawyers able to handle this case.
“Venue is not a continental breakfast; you cannot pick and choose on a Plaintiff’s whim where and how a lawsuit is filed,” Pittman wrote.
The lawsuit deals with the CFPB’s new regulations over credit card late fees, where the average late fee of a customer would be capped at $8, down from the average late fee of $32. The major banking groups had filed their lawsuit in the U.S. District Court in the Northern District of Texas. Industry and interest groups have often filed lawsuits against the Biden administration there, due to its historically conservative judges.
The banks have been pushing hard to stop the late fee rule, due to the potential billions the banks would lose in revenue. The bureau estimated when it issued the proposal that banks brought in roughly $14 billion in credit card late fees a year.
In his ruling, Pittman found little reason why the major industry groups — the American Bankers Association, Consumer Bankers Association, and U.S. Chamber of Commerce, among others — had filed their lawsuit there. The only banking industry connection to the district was the Fort Worth Chamber of Commerce, which only recently acquired a major bank as a member.
The CFPB had argued that Texas was an irrelevant place to file a banking industry regulation lawsuit, saying that Washington, with its location closer to regulators and expertise in industry regulation law, was more appropriate.
Pittman agreed with the Biden administration.
“In fact, as far as this Court can discern, not one of the banks or credit card companies directly affected by the future (CFPB regulations) is located in the Fort Worth Division,” he said.
The American Bankers Association and the Consumer Bankers Association did not immediately return a request for comment.
Applications for U.S. unemployment benefits dip
NEW YORK | The number of Americans signing up for unemployment benefits fell slightly last week, another sign that the labor market remains strong and most workers enjoy extraordinary job security.
Jobless claims dipped by 2,000 to 210,000, the Labor Department reported Thursday. The four-week average of claims, which smooths out week-to-week ups and downs, fell by 750 to 211,000.
Overall, 1.8 million Americans were collecting unemployment benefits the week that ended March 16, up 24,000 from the week before.
Applications for unemployment benefits are viewed as a proxy for layoffs and a sign of where the job market is headed. Despite job cuts at Stellantis Electronic Arts, Unilever and elsewhere, overall layoffs remain below pre-pandemic levels. The unemployment rate, 3.9% in February, has come in under 4% for 25 straight months, longest such streak since the 1960s.
Economists expect some tightening in the jobs market this year given the surprising growth of the U.S. economy last year and in 2024.
The U.S. economy grew at a solid 3.4% annual pace from October through December, the government said Thursday in an upgrade from its previous estimate. The government had previously estimated that the economy expanded at a 3.2% rate last quarter.
The Commerce Department’s revised measure of the nation’s gross domestic product — the total output of goods and services — confirmed that the economy decelerated from its sizzling 4.9% rate of expansion in the July-September quarter.
“We may see initial claims drift a bit higher as the economy slows this year, but we don’t expect a major spike because, while we expect the pace of job growth to slow, we do not anticipate large-scale layoffs,” wrote Nancy Vanden Houten, the lead U.S. Economist at Oxford Economics.
—From AP reports
