The daily business briefing: January 27, 2023
Economy grew faster than expected in last three months of 2022, Hasbro cuts 1,000 jobs as slowing economy dents growth and profit, and more
Economy grew more than expected despite recession fears
The U.S. economy grew at a faster-than-expected 2.9 percent annualized pace in the fourth quarter of 2022, down from 3.2 percent the previous quarter, according to Commerce Department data released Thursday. For the full year, gross domestic product grew 2.1 percent. The data showed weakening demand among consumers and other red flags indicating ongoing risk of a recession later this year, according to Bloomberg. But the data also suggested the Federal Reserve's aggressive interest rates were slowing the economy as intended in the central bank's fight against high inflation. "The numbers are good," said Robert Frick, chief economist at Navy Federal Credit Union. "We shouldn't expect them to be fantastic, because the economy is slowing down ... but they were still very positive."
Hasbro cuts 1,000 jobs as slowing economy hurts growth, profit
Hasbro on Thursday warned of weak holiday results and said it would cut about 1,000 jobs, or 15 percent of its global workforce, this year as it tries to cut costs and increase growth and profits. The toy and entertainment company said the cuts, a sign layoffs are spreading beyond tech firms as the economy slows down, would start in the next few weeks. The company said preliminary fourth quarter results showed that its revenue fell 17 percent to $1.7 billion in the holiday quarter, compared to a year earlier. Adjust earnings ranged from $1.29 to $1.31 per share. Both figures fell short of analysts' expectations. Hasbro shares fell more than 6 percent in extended trading.
Bed Bath & Beyond defaults on JPMorgan credit line
Bed Bath & Beyond said in a Securities and Exchange Commission filing Thursday that it had received a notice of default from JPMorgan, and didn't have enough cash on hand to pay the lender. At the end of November, Bed Bath & Beyond had about $1.1 billion in outstanding debts to three credit facilities, according to the filing. It only had about $225.7 million in cash at the time. The home-goods retailer's inability to make the payments pushed it a step closer to having to file for bankruptcy protection. The company said it would have to "consider all strategic alternatives, including restructuring its debt under the U.S. bankruptcy code." Bed Bath & Beyond shares closed down 22 percent.
Chipotle seeks 15,000 workers ahead of 'burrito season'
Layoffs are spreading as the economy slows, but Chipotle Mexican Grill has launched a push to hire 15,000 workers to staff up its restaurants for "burrito season," The Wall Street Journal reported Thursday. March, April, and May are the fast-food chain's busiest months, as the restaurants get a rush of customers taking advantage of better weather. Chipotle said the jobs, which will pay $16 an hour, are part-time but not temporary. The company opened 200 restaurants last year, and is planning to launch up to 285 more in 2023. David Henkes, an analyst at food and restaurant industry consulting firm Technomic, said restaurants are having to cut opening hours and hike pay to contend with staff shortages in a tight labor market.
Biden spars with Republicans over the economy, debt limit
President Biden on Thursday accused House Republicans of trying to cut retirement benefits, and holding the nation's finances hostage by demanding deep spending cuts in exchange for raising the debt limit to avert an economic catastrophe. "I will not let anyone use the full faith and credit of the United States as a bargaining chip," Biden told union members in Springfield, Virginia. "In the United States of America, we pay our debts." Republicans rejected Biden's allegations. "Their go-to position ... is to fearmonger senior citizens about essential benefits being stripped from them. No one in this side of the aisle is talking about that," said Rep. Scott Perry (R-Pa.), a member of the hard-right House Freedom Caucus, which has called for cutting spending sharply.