The daily business briefing: June 8, 2022
World Bank warns of global recession risk, Target cleans house, and more
World Bank: 'Recession will be hard to avoid' for most countries
Global economic growth will slow before the end of 2022, and most countries should begin preparing for a recession, the World Bank said in an economic forecast released Tuesday. "For many countries, recession will be hard to avoid," wrote World Bank president David Malpass. "Several years of above-average inflation and below-average growth are now likely," he added, "with potentially destabilizing consequences for low- and middle-income economies. It's a phenomenon — stagflation — that the world has not seen since the 1970s." At the beginning of 2022, the World Bank predicted the world economy would grow 4.1 percent. After the Russian invasion of Ukraine, that number has been revised downward to 2.9 percent.
Target aims to clear inventory as consumer spending shift eats into profits
Retail giant Target is cutting prices and canceling orders from suppliers, hoping to clear out its piled-up inventory, a move the company warned on Tuesday will likely reduce profits in the short term. Consumers have shifted their spending away from pandemic-era priorities — like bigger TVs and new home appliances — and toward experiences like travel and dining out. This change caused Target's profits to drop 52 percent in the first quarter of 2022 compared with the same quarter last year. It also left the company with way too much inventory. Shares of Target dropped 2.31 percent on Tuesday, closing at $155.98
FDA panel endorses possible 4th COVID vaccine
A federal advisory committee on Tuesday recommended that the U.S. Food and Drug Administration authorize another two-dose COVID-19 vaccine, this one manufactured by Novavax. Should the FDA move forward with authorization, the Novavax vaccine would give U.S. adults a fourth option in addition to the already available vaccines from Pfizer-BioNTech, Moderna, and Johnson & Johnson. First, however, the FDA must approve the Novavax manufacturing process, which has had its fair share of troubles over the last few years. Novavax's vaccine isn't expected to be available for several weeks.
San Francisco DA ousted in business-backed recall effort
San Francisco District Attorney Chesa Boudin conceded defeat Tuesday night after several news outlets projected he had lost a recall vote. With 53 percent of precincts reporting Wednesday morning, 60 percent of voters backed the recall. Boudin was elected in 2019, promising to eliminate cash bail and divert low-level offenders into mental health and drug treatment programs. During his first two years in office, violent and property crimes dropped, while burglaries and motor vehicle thefts rose. The recall campaign against Boudin, which was heavily funded by business groups, accused him of not doing enough to keep San Francisco safe.
Tech stocks are having their worst year since 2002
Tech companies that once drove growth on the stock market are now dragging indexes down. As of market close on Tuesday, the S&P 500's information-technology sector was down 19 percent since the beginning of the year, the worst year-to-date performance since 2002. Tech stocks have also underperformed relative to the rest of the market, with the S&P 500 as a whole down only 12.7 points since 2022 began.