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Illustration: Sarah Grillo/Axios

Big Tech was buoyed by the exact thing that prevented the dreadful GDP report from being even worse in the second quarter: the pandemic stimulus measures.

Why it matters: The stimulus is in the spotlight as its key expanded unemployment benefits provision is set to lapse despite coronavirus cases surging across the country, reimposed lockdown measures and more businesses shuttering.

What's happening: Personal income soared by a staggering 7.3% in the second quarter from the prior three months — a phenomenon that doesn't typically happen in the middle of a recession.

  • It was made possible by measures like the extra $600 in weekly unemployment benefits and the one-time stimulus checks, which made up for the collapse in wages.
  • Strip out government support programs and personal income fell 6.1%.

The big picture: Big Tech executives, whose companies have become a symbol for the deep divide between the soaring stock market and the downward spiraling economy, touted these stimulus measures as a reason why their businesses thrived in the second quarter.

  • What they're saying: The increase in demand for Apple products came down to a range of factors — including economic stimulus in the U.S, Apple CEO Tim Cook said during an analyst call on Thursday.

Worth noting: As the pandemic raged, these companies have come to represent a whopping 22% of the S&P 500.

  • Their combined market value jumped by $250 billion in late trading after their earnings were released, giving these companies a bigger hold on the stock market.
  • It's also a win for traders who have bet these so-far Teflon-protected companies would come out even bigger in the midst of the economic collapse caused by the pandemic.

Yes, but: Big Tech companies, along with others, are expressing concerns about what happens to the economy — and their business — after the stimulus runs dry.

  • "We don’t know what the subsequent economic stimulus will look like. And to the extent that stimulus decreases in the future and recession lingers, that could impact consumer purchasing power for advertisers in areas like e-commerce," Facebook CFO Dave Wehner said on the company's analyst call.

Driving the news: The enhanced employment benefits millions of Americans are relying on will lapse.

  • The Senate adjourned until next week, without a deal to extend the benefits (or even replace them with an alternative amount).
  • There's also little progress on negotiations so far on a broader, supplemental stimulus package.

The bottom line: Hopes for a swift economic rebound are being downgraded, with analysts paring back estimates for Q3 growth as additional stimulus hangs in limbo.

Go deeper

Unemployment plunges as the pandemic continues

Data: BLS; Chart: Axios Visuals

Here's the good news for workers: The unemployment rate fell by a full percentage point to 6.9% last month — in the face of rising coronavirus cases, continued pressure on businesses, and no economic relief in sight from the government.

The bad news: That rapid snapback in employment after initial economic lockdowns eased is over. Job growth has slowed every month since June.

Dion Rabouin, author of Markets
Nov 6, 2020 - Economy & Business

Big businesses' corporate paradise may be coming to an end

Illustration: Aïda Amer/Axios

If Trump's presidency is about to end, an unprecedented golden era for big businesses could end with it.

Why it matters: Thanks to support from the president, Congress, the Supreme Court and the Federal Reserve reaching levels not seen in recent history — if ever — large companies have done a lot of winning.

Fed chair says economy will see "stronger recovery" with stimulus package

Powell at a congressional hearing in September. Photo: Stefani Reynolds/Bloomberg via Getty Images

Federal Reserve chair Jerome Powell said on Thursday the pandemic-hit economy will recover at a slower pace absent additional stimulus from Congress.

Why it matters: With Congress still gridlocked over another stimulus package — and pending results of the presidential election that put the timing of another package more in limbo — the Fed is facing questions about what more it can do to prevent the economy from backsliding as coronavirus cases surge.