After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

National

Axios Media Trends

Shares for Snap were down more than 25% in after-hours trading Monday after the company warned investors of slowed growth in the months ahead. 

Why it matters: The news comes as the entire tech sector, but particularly social media companies, struggle to maintain the unprecedented growth levels they saw during the pandemic.

Details: In a regulatory filing submitted Monday, Snap said the company expects to miss its own revenue and profit targets for the current quarter. 

In the filing, the company said the "macroeconomic environment has deteriorated further and faster than anticipated" since it last reported that guidance on April 21, 2022. 

Snap CEO Evan Spiegel is currently speaking at a JP Morgan global conference about the company's growth.

As a result of the slowed growth, the company plans to slow hiring for the remainder of the year, according to a note sent to employees by Spiegel and obtained by Axios. The note was first reported by CNBC. 

"We will continue to hire new team members, including recruiting for open roles," the memo said. "We will slow our pace of hiring for unopened roles for the remainder of the year, as well as push some planned hiring into next year."

Yes, but: Spiegel notes that the company expects to hire more than 500 new team members between now and the end of the year, "representing nearly 10% company-wide headcount growth over the next seven months," he wrote. 

Snap will also continue to backfill existing positions that become available as a result of attrition "if those roles remain a high priority for our teams," Spiegel added. 

Other tech firms have also slowed or frozen hiring. 

Flashback: Snap predicted last quarter that its second quarter revenues would grow between 20% and 25%, which was below Wall Street estimates. 

Those projections, combined with a Q1 revenue and earnings miss, drove Snap's stock down slightly, despite the fact that the tech giant reported strong user growth. (Snapchat now has 100 million more daily active users than Twitter.)  

Snap's stock is down more than 50% year-to-date and is down roughly 70% from its all-time trading high of roughly $75 last fall. 

The big picture: Shares for tech companies are down across the board as the market begins to course correct from inflated pandemic valuations. 

Tech giants have continued to blame macro-economic factors, including advertising slowdowns in markets impacted by Russia's invasion of Ukraine, for slowed advertising growth. 

Snap and other tech firms have also been impacted to varying degrees by changes to Apple's privacy settings.

Snap stock plunges after CEO warns of slowed revenue growth

Shares for Snap were down more than 25% in after-hours trading Monday.

Snap Inc.

From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

Technology

Axios Closer

Driving the news: The average age of vehicles on the road hit an all-time high for the fifth straight year, reaching 12.2 years in 2022, according to an annual report released today by S&P Global Mobility.

Why it matters: Americans are adapting as they deal with the confluence of price spikes, rising borrowing rates and vehicle shortages.

"People are keeping their vehicles longer and repairing them," Autotrader analyst Michelle Krebs tells Axios. "We’re seeing a lot more service business."

By the numbers: The average age of vehicles has been rising for decades, having jumped from 9.6 years in 2002 and 11.1 in 2012.

The figure stems from the annual "scrappage rate" — the share of vehicles that were sent to the junkyard in a given year. That figure is at a two-decade all-time low of 4.2% in 2022, according to S&P Global Mobility.

The big picture: With new vehicles in short supply due to the global shortage of semiconductor chips, prices have skyrocketed for new and used cars, increasing the incentive for people to hang onto their rides.

The average price of new vehicles was up 13.2% in April, compared with a year earlier, while the average price of used cars and trucks was up 22.7%, according to the federal government's monthly Consumer Price Index report.

Worth noting: Rising interest rates are making it harder for some people to trade up.

The average new-car buyer agreed to an estimated $648 monthly payment on a 70.2-month loan in April, up $68 from April 2021, according to Edmunds.

💭 Nathan's thought bubble: I've got a 16-year-old car that has needed several costly repairs in recent years, but fixing it is still cheaper than buying a new car.

Disclosure: Autotrader is owned by Cox Enterprises, an investor in Axios.

Cars are getting older and older as prices rise and shortages persist

The average age of vehicles on the road reached an all-time high of 12.2 years, according to S&P Global Mobility.

Illustration of a car with birthday candles on it.   

Automakers

Airbnb will remove all Chinese homes and experiences from its platform by mid-summer, a source familiar with the situation tells Axios.

Why it matters: Airbnb’s exit from China, first reported by CNBC, is another example of a U.S. company finding the costs and risks of operating in the Chinese market as outweighing the benefits.

Microsoft, which makes less than 2% of its revenue from its business in China, shut down a local version of its LinkedIn app late last year amid censorship pressure.

State of play: Since officially launching China-based listings in 2016, Airbnb has failed to gain popularity.

Stays at Airbnb accommodations in China have accounted for about 1% of revenue for the past few years, according to the source.

Continuing lockdowns in the country due to COVID have also made it difficult to forecast demand for travel into and around the country for the foreseeable future.

Over the past year, Airbnb has also faced scrutiny for promoting tourism in Xinjiang, where the U.S. has declared genocide to be taking place.

What's next: Airbnb intends to maintain an office in Beijing with employees focused on Chinese tourists traveling globally and other global projects, according to the source.

An Airbnb spokesperson declined to comment.

The big picture: There is pent-up demand among Chinese tourists to travel outside the country as the pandemic wanes globally, McKinsey noted earlier this year. 

The opportunity to capture that specific demand has now become the bigger priority for Airbnb than trips inside the country, according to the source familiar with the matter.

Airbnb to take down its listings in China

It's another example of a U.S. company finding the costs and risks of operating in the Chinese market as outweighing the benefits.

China

World

Axios World

DAVOS, Switzerland — Hopes of a robust global economic recovery in 2022 have been replaced by expectations for high inflation, lower real wages and further supply shocks, according to the quarterly Chief Economists Outlook from the World Economic Forum (WEF).

The big picture: The primary reasons for the gloomy forecast are Russia's invasion of Ukraine and the resulting sanctions and shortages, as well as new COVID-19 outbreaks and lockdowns, particularly in China. 

Details: The quarterly report is based on a survey of 24 chief economists at some of the world's biggest corporations, banks and multilateral lenders.

It was released Monday at WEF's annual meeting in Davos, where inflation and supply chain disruptions have been near the top of the agenda.

Flashback: For the previous edition, in Nov. 2021, most of the economists expected inflation to be a short-term phenomenon that central banks could contain. That confidence is fading.

Breaking it down: More than 90% of the economists surveyed expect "high" or "very high" inflation in Europe and the U.S. in 2022. Largely as a result, two-thirds of respondents expect real wages to decline in advanced economies in 2022, while 90% expect them to fall in low-income economies.

In the Middle East and Africa, meanwhile, the rising food and fuel prices are expected to generate severe food insecurity. 

"At the current trajectory, the world is on track for the worst food crisis in recent history compounded by the additional pressure of high energy prices," the report notes.

Expectations among the general public are also fairly grim, according to an IPSOS poll commissioned by WEF. 

Respondents in France, Germany, Italy, Japan, Poland and the U.K. were all roughly twice as likely to say they expect their standard of living to decline this year rather than rise. 

In Turkey, where inflation has spiked precipitously, 62% expect their standard of living to fall.

In the U.S., Australia and Canada, respondents were a bit more optimistic, with more expecting living standards to rise than fall, but large pluralities expecting them to stay about the same.

Three-quarters of Americans expect their groceries and fuel to get more expensive over the next six months. Those percentages are even higher across Europe. Japan was the only country polled where respondents generally are not expecting costs to rise.

The bottom line: “We are at the cusp of a vicious cycle that could impact societies for years. The pandemic and war in Ukraine have fragmented the global economy and created far-reaching consequences that risk wiping out the gains of the last 30 years," writes Saadia Zahidi, managing director for WEF.

One additional consequence could be a scramble for supplies of fossil fuels, rather than more investment in green energy, the report notes.

Go deeper: Economists in U.S. are lowering growth forecasts — and that's good news

Survey of economists: More supply shocks and inflation coming in 2022

The two big reasons are the war in Ukraine and lockdowns in China.

Inflation

Arby’s is known for being about "the meats" and for the first time in its nearly 60-year history, the fast-food chain is adding a burger to its menu.

Driving the news: In the early days of COVID, restaurants cut menus and are now adding new options or bringing back items like the return of Taco Bell’s Mexican Pizza.

Details: Arby’s said Monday that the Wagyu Steakhouse Burger will be available through July 31 at participating restaurants nationwide. Prices start at $5.99 but may vary by location.

The burger features an American Wagyu blended burger topped with American cheese, shredded lettuce, tomato, pickles, red onion and a special burger sauce on a brioche bun.

There’s the option to add bacon and ranch to the burger.

Arby’s said the 6.4-ounce burger is 50% larger than McDonald’s Quarter Pounder.

What they’re saying: “Instead of focusing on making billions of mediocre burgers, we’re taking a stance on high-quality meat that deserves to be cooked properly,” Patrick Schwing, Arby’s chief marketing officer, said in a statement shared with Axios. 

“As the meat experts, we’ve spent over two years of dedicated research and development to deliver a premium burger that redefines what’s possible from a drive thru,” Schwing said.

Arby's first-ever burger features Wagyu beef

The fast-food chain known for being about "the meats" just released the Wagyu Steakhouse Burger.

Arby's burger with cheese, tomato, lettuce and onion on bun

Arby's has added the Wagyu Steakhouse Burger to the menu for a limited time. Photo: Arby's

Fast food

Health: Broadway theaters will require masks through June — The pandemic pushed an exodus from public schools — COVID cases rise in almost every state.

Vaccines: Pfizer says COVID vaccine more than 80% effective in kids under 5 — Which age groups are eligible for the different COVID vaccines — CDC director authorizes Pfizer COVID booster for children 5-11. 

Politics: Federal judge blocks Biden from ending COVID border policy — Fauci says he won’t stay if Trump is re-elected — Biden orders flags at half-staff for 1 million deaths.

Global: Total confirmed cases as of 1:00 p.m. ET on Monday: 525,778,539 — Total deaths: 6,277,818 — Total vaccine doses administered: 11,445,077,393.

U.S.: Total confirmed cases as of 1:00 p.m. ET on Monday: 83,194,060 — Total deaths: 1,002,022.

What should I do? Axios asked the experts:

When you can be around others after contracting the coronavirus

Traveling, asthma, dishes, disinfectants and being contagious

Answers about the virus from Axios experts

Download our app and follow the Coronavirus channel to get the latest news.

Editor's note: Johns Hopkins University stopped reporting U.S. COVID-19 recoveries on its dashboard on Dec. 15, citing a Coronavirus Tracking Project post that explained the national data is incomplete since several states do not keep records of recovered patients. It stopped reporting global recoveries and began reporting doses administered in May. 

COVID-19 dashboard

The latest headlines that you need to know.

Illustration of a coronavirus cell falling into a time warp.  

Health Care

Coronavirus

Politics

President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

Politics & Policy

The U.S. faces a range of health care flashpoints — unaffordable drugs, opioids, vaping — as we debate whether to adopt universal care. For now, the Affordable Care Act is the law of the land, but Republicans want to issue it a final death blow.

Health

Axios Pro Rata

Private equity fundraising for the past decade has been monolithic in its ease, with humility as the only real limiting factor. But now there's legitimate uncertainty.

Why it matters: Private equity fundraising cycles are long, so what happens today could impact deal activity for years to come.

The big picture: Most limited partners in PE funds typically invest based on a target allocation to the asset class. This could be anywhere from a few percentage points into the double-digit range (public pension giants CalPERS and CalSTRS each recently boosted their target PE allocations to 13%).

When stock markets are soaring, these percentages translate into bigger dollars. But when stock markers sink, so too does the PE allocation's buying power. This is the so-called denominator effect.

In theory, the stock market correction should mean that many institutional investors are suddenly over-exposed to private equity. It's why many publicly listed PE firms have seen their own share prices fall, as investors are concerned that new funds will be harder to raise, thus slowing the creation of new fee streams.

In practice, however, not everyone is slamming on the brakes. Partially because some LPs expect a public equities rebound. Partially because some LPs are scared of baling on long-term partners who've made them lots of money.

Or, as one major fund manager told me this morning: "Everyone says that the denominator effect is making fundraising harder, but then adds that 'it must be hitting everyone else because it's not impacting me.'"

The most fortunate firms, of course, are those that aren't in market. A close second are those focused on active areas like energy or turnarounds.

The least fortunate would, at least in theory, seem to be those focused on areas like growth tech, due to valuation tumult. Or at least second-tier players in those markets, as top-tier firms tend to hurdle the denominator effect.

What to watch: Q2 fundraising numbers, which we should get by the middle of July.

That data will largely include final closes of funds that secured most of their commitments before the new normal, like the recent $14 billion fund from Clearlake (which only targeted $10 billion), but it also could reflect delayed fund closes or other difficulties.

If we do see a significant drop-off, then it means the optimists are just talking their books. If we don't, then it may be another example of how private equity is structured to float over short-term economic waves.

Private equity's fundraising flux

The "denominator effect" is back, at least in theory.

Illustration of line graph turning into a question mark

Private equity

Broadcom is in talks to buy VMware, the cloud computing giant controlled by Michael Dell, per multiple reports. VMware had a $40 billion market cap prior to the news, and its stock price spiked nearly 20% at this morning's open.

Why it matters: Broadcom has become one of tech's biggest acquirers, even if it doesn't get lumped into "Big Tech."

In 2018 the company paid nearly $19 billion for IT management software giant CA Technologies, after government regulators blocked its $130 billion agreement to buy rival chipmaker Qualcomm. 

Later it paid $10.7 billion for Symantec's enterprise security business, after first discussing a takeover of Symantec in its entirety.

Cap table: Michael Dell holds a 40% stake in VMware, which spun out of Dell Technologies in 2021, while his private equity partner Silver Lake has nearly a 10% position.

Bloomberg explains the rationale: "Broadcom makes a wide range of electronics, with its products going into everything from the iPhone to industrial equipment. But data centers have become a critical source of growth, and bulking up on software gives the company more ways to target that market." 

Broadcom preps mega-deal for VMware

Broadcom has become one of tech's biggest acquirers.

Illustration of a cloud in the shape of a play icon.

Cloud computing

Starbucks announced Monday that it will permanently close its stores in Russia, putting an end to its 15 years of operation in the country.

Why it matters: Like other international companies, Starbucks suspended its operations in Russia in March, during the early days of Russia's invasion.

The announcement comes a week after McDonald's said it would exit the country.

The big picture: "Starbucks has made the decision to exit and no longer have a brand presence in the market," the company said in a press release.

Starbucks added that it will continue to pay its 2,000 employees in Russia for six months and will help them transition to new jobs.

The coffee giant has 130 stores in the country.

Starbucks closes its 130 Russian stores amid war in Ukraine

The announcement comes a week after McDonald's said it would sell its businesses in the country.

A closed Starbucks at the Afimall City shopping mall on March 26 in Moscow. Photo: Oleg Nikishin/Getty Images

Russian invasion of Ukraine

Russia

It’s no secret that Americans’ newfound remote work lifestyles drove demand for larger homes with more comfortable workspaces. 

What's new: That demand may be responsible for more than half of the surge in real estate prices during the pandemic, according to a working paper published by the National Bureau of Economic Research.

It's one of the first papers that aims to quantify how remote work reshaped the housing market.

Why it matters: If the research holds up, it signals a fundamental shift in the housing market — that it wasn't just low-interest rates and fiscal stimulus that drove up housing prices.

By the numbers: It found that remote work led to about 15 percentage points of the 24% average increase in house prices between December 2019 and November 2021.

Details: The paper’s authors are John A. Mondragon, an economist at the Federal Reserve Bank of San Francisco, and Johannes Wieland, of the University of California, San Diego’s economics department.

The researchers found that after controlling for COVID migration, regions with the highest rates of remote work experienced much higher home price growth during the period.

They also observed a similar effect on residential rents — along with declines in commercial rents — in these areas.

What they’re saying: This implies a shift in demand, as many pandemic homebuyers and renters sought to upgrade to larger, and more expensive homes to support their telework lifestyles, Mondragon told the San Francisco Chronicle.  

The bottom line: Policymakers like those at the Fed would be wise to pay close attention to the evolution of remote work because it will help determine the future of home prices — and of overall inflation, the economists wrote. 

Remote work drove home price surge

WFH may be responsible for 15 percentage points, or more than half, of pandemic home price gains.

Illustration of office chair on a “welcome” home mat

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