Economics

The impact of the Baltimore bridge disaster

Published

1 year ago

March 31, 2024

Business Finance News

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Editor’s note (March 27th): Police in Maryland said that the six people who remain missing following the Key Bridge’s collapse are now presumed dead.

THE VIDEO footage of the collapse of Baltimore’s Francis Scott Key Bridge was shocking. At around 1.30am on March 26th, when a container ship rammed into one of its support columns, the central section of the 1.6-mile (2.6km) structure collapsed into the Patapsco river below, sending people and vehicles into the water. Workers repairing potholes were on the bridge at the time. “Never would you think that you would see…the Key Bridge tumble down like that,” Baltimore’s mayor, Brandon Scott, told reporters. “It looked like something out of an action movie.”

Maryland’s governor declared a state of emergency. Six people are thought to have drowned. Beyond the human toll, the immediate questions concerned the causes and consequences of the disaster—one of the most significant in America for decades, according to Jerry Hajjar, president of the Structural Engineering Institute of the American Society of Civil Engineers (ASCE). The FBI has said that terrorism was unlikely to have been behind it.

The 300-metre-long ship, the Dali, was heading from Baltimore to Colombo, in Sri Lanka, when it “lost propulsion”, according to an unclassified Cybersecurity and Infrastructure Security Agency report. The crew reportedly notified officials that a bridge collision was likely. Eyewitnesses say the ship’s lights flickered just before impact. Locals heard a loud thunder-like rumble in the middle of the night. “The house started shaking,” says Cyrus Gilbert, a resident of Locust Point, directly across the harbour.

Investigators will want to know why the Dali lost control. Nada Sanders of Northeastern University, an expert on the global supply chain, says that the ship had an inspection issue last June. According to Equasis, a shipping database, Chilean authorities gave it a “deficiency” for propulsion and auxiliary machinery (though no deficiencies were recorded in a follow-up inspection in New York).

The bridge could have been structurally sound. A report by the ASCE gave Maryland a B for its bridges and a B- for ports in 2020. “Bridges are not designed to withstand lateral loads from ships on their columns,” said Masoud Hayatdavoodi, of the University of Dundee’s School of Science and Engineering. “There is no question that the bridge would collapse due to the impact on the columns.”

President Joe Biden promises to foot the bill to get the bridge rebuilt as soon as possible. But the impact on the city is already being felt. The port is closed until further notice, causing ripples beyond the harbour. The port supports over 15,000 direct jobs, and roughly 140,000 jobs are linked to it in some way. Daraius Irani, of the Regional Economic Studies Institute at Maryland’s Towson University, says the port closure alone will probably cost roughly $50m a day in lost activity.

The harbour is an important link in America’s supply chain. More than 50 ocean carriers make nearly 1,800 annual visits. It is especially important in the automotive world. Its private and public terminals handled nearly 850,000 cars and light trucks in 2023, the most of any American port. It also ranked first in the country in handling farm and construction machinery, as well as imported sugar and gypsum, and ranks second for coal exports.

If another port experienced a hiccup (because of labour disputes, say, or cyber-attacks), the toll on the American economy could be severe. For now, though, the national impact is likely to be limited. Other ports, such as New York-New Jersey and Virginia, should be able to pick up the slack. Mark Zandi, chief economist at Moody’s, a ratings agency, says the national economy will be OK, but Baltimore will suffer. Commuters and lorry drivers will face disruption. Last year the bridge served 34,000 commercial and passenger vehicles a day, about 15% of traffic in the area.

The harbour has long been a symbol of resilience. In the war of 1812 against the British, the Americans successfully defended Fort McHenry in Baltimore Harbour, an event immortalised by Francis Scott Key in his 19th-century poem that became the national anthem. The tragedy will give the city and port time to implement upgrades that would be harder when the port is active. Baltimore may emerge with a better bridge and harbour. ■

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Economics

Friday’s jobs report likely will show hiring cooled in May. What to expect

Published

6 hours ago

June 5, 2025

Business Finance News

There seems little doubt now that hiring slowed considerably in May as companies and consumers braced for higher tariffs and elevated economic uncertainty. The main question is by how much.

A small dip from the recent trend likely wouldn’t be viewed as worrisome. But anything beyond that could set off a fresh round of fears about the labor market and broader economy, possibly pushing the Federal Reserve into a quicker-than-expected interest rate action.

Economists expect that when the Bureau of Labor Statistics reports the May nonfarm payroll numbers (NFP) Friday at 8:30 a.m. ET, they will show a gain of just 125,000, down from an initial tally of 177,000 in April and the year-to-date monthly average of 144,000. That represents a slide but not a collapse, and markets will hinge on the degree of decline.

“Going into the NFP print, expectations have been reset lower and a reading of around 100,000 (vs. the 125,000 expected by the consensus) could fall in the ‘not-as-bad-as-feared'” camp, wrote Julien Lefargue, chief market strategist at Barclays Private Bank. “Anything below the 100,000 mark could reignite recession fears, while a stronger-than-expected print could perversely be negative for risk assets as it would likely put upward pressure on [Treasury] yields.”

Consequently, the report will be a balancing act between competing concerns of a slowing labor market and rising inflation.

Data tell different stories

A broad range of sentiment indicators, including manufacturing and services surveys as well as gauges of small business sentiment, indicate flagging optimism toward the economy, led by worries over tariffs and the inflation they could ignite.

Moreover, hard data this week from ADP showed that private payrolls essentially were flat last month, growing by just 37,000 in May, a two-year low. Jobless claims also have also recently been edging higher, with last week hitting the highest since October.

Friday’s payroll report, then, could be a key arbiter in determining just how much worry there is in the economy where it counts, namely the labor market, which in turn provides clues about the strength of consumers who drive nearly 70% of all U.S. economic activity.

“We do think it’s going to slow down. We do think that tariffs are going to start biting a little bit,” said Dan North, senior economist at Allianz Trade North America. “Everybody hates the economy, but if you look at the hard data, it’s not so bad.”

North expects it will still take several months before the sentiment surveys — “soft” data — take their toll on other economic readings, such as payrolls.

Tariff impacts are key

In the interim, markets will be watching further developments on the trade front as President Donald Trump continues in a 90-day negotiating window that investors hope will ease some of the “Liberation Day” tariffs that are on pause.

“We don’t expect to see a crash this month, probably not the month after this, but certainly a weight on the economy, not just from the tariffs but also from uncertainty. It’s as if tariff policy is a specter in the mist,” North said.

There are a variety of views on Wall Street, from Goldman Sachs, which expects a below-consensus 110,000 growth in payrolls, to Bank of America, which is looking more for a number around 150,000.

From there, investors will try to figure out whether the latest numbers move the needle on Fed policy, with markets currently not expecting further interest rate cuts until September. Most policymakers of late have been focusing on tariff-induced inflation impacts, with the caveat that they are watching the jobs numbers as well.

“One encouraging sign about economic activity is the resilience of the labor market,” Fed Governor Adriana Kugler said Thursday in New York. “We will get the May employment report tomorrow, but the data in hand indicate that employment has continued to grow and that labor supply and demand remain in relative balance.”

The consensus estimate also sees the unemployment rate holding at 4.2%, while average hourly earnings are projected to show a 0.3% monthly gain and 3.7% annual increase.

Economics

Here are the companies making job cuts

Published

8 hours ago

June 5, 2025

Business Finance News

Layoffs are illustrated by an oversized pair of scissors, that looms over seven workers sitting in office chairs suspended by strings.

Mathisworks | Digitalvision Vectors | Getty Images

While Elon Musk has ended his government cost-cutting initiative that resulted in thousands of federal job cuts, mass layoffs are still roiling corporate America.

Companies are under increasing pressure to trim costs against the backdrop of global economic uncertainty brought on by President Donald Trump‘s tariff policies. Several companies have announced price hikes. Layoffs mark another way to pull back.

Trade tensions have also raised concerns about the general health of the U.S. economy and the job market. While the April jobs reading was better than expected, a separate reading from ADP this week showed private sector hiring hit its lowest level in more than two years.

Though many companies declined to provide specific reasoning for announced workforce reductions — instead lumping the layoffs in with larger cost-cutting strategies or growth plans — tech leaders are starting to cite artificial intelligence as a clear consideration in hiring and headcount adjustments.

Klarna CEO Sebastian Siemiatkowski told CNBC last month the fintech company has shrunk its headcount by 40%, in part due to investments in AI. Likewise, Shopify CEO Tobias Lütke told employees in April that they will have to prove why tasks can’t be performed by AI before asking for more headcount and resources.

Here are some of the companies that have announced layoffs in recent weeks:

Procter & Gamble

Pampers and Tide maker Procter & Gamble said on Thursday it will cut 7,000 jobs, or about 15% of its non-manufacturing workforce, over the next two years as part of a restructuring program.

CFO Andre Schulten said during a presentation that the company is planning a broader effort to implement changes across the company’s portfolio, supply chain and corporate organization.

The company did not specify the regions or divisions that would be impacted.

Microsoft

Microsoft said last month it would reduce its workforce by about 6,000 staffers, totaling about 3% of employees across all teams, levels and geographies.

A Microsoft spokesperson told CNBC at the time one objective of the cuts was to reduce layers of management. The company announced a smaller round of layoffs in January that were performance-based. The spokesperson said the May cuts were not related to performance.

Citigroup

People walk by a Citibank location in Manhattan, New York City, on March 1, 2024.

Spencer Platt | Getty Images

Citigroup said in a statement Thursday it plans to reduce its staff by around 3,500 positions in China.

The cuts mostly affect the information technology services unit, which provides software development, testing and maintenance. Some of the impacted roles will be moved to Citi’s technology centers elsewhere, the bank said.

Under the leadership of CEO Jane Fraser, Citi has undertaken a large-scale reorganization with an eye toward profitability and stock performance. The bank consistently underperformed its major bank peers in recent years.

Citi announced a broader plan last year to reduce its workforce by 10%, or about 20,000 employees globally.

Walmart

Last month, Reuters reported Walmart was planning to slash about 1,500 jobs in an effort to simplify operations. The teams affected include global technology, operations and U.S.-based e-commerce fulfillment as well as Walmart Connect, the company’s advertising business.

Walmart employs around 1.6 million employees, making it the largest U.S. private employer. CFO John David Rainey told CNBC during an interview last month that Walmart shoppers would likely see price increases at the start of the summer in response to tariffs.

Klarna

Klarna’s Siemiatkowski told employees last month that the Swedish buy now, pay later firm would lay off 10% of its global workforce.

“When we set our business plans for 2022 in the autumn of last year, it was a very different world than the one we are in today,” Siemiatkowski told employees.

The week before that announcement, he told CNBC that Klarna has shrunk its workforce by about 40% due to investments in AI and natural attrition in its workforce.

CrowdStrike

Cybersecurity software maker CrowdStrike announced plans last month to cut 500 employees, or about 5% of its staff.

CEO George Kurtz in a securities filing attributed the move largely to artificial intelligence.

“We’re operating in a market and technology inflection point, with AI reshaping every industry, accelerating threats, and evolving customer needs,” he said, adding that the move was part of the company’s “evolving operating model.”

Disney

A water tower stands at Walt Disney Studios on June 3, 2025 in Burbank, California.

Mario Tama | Getty Images

The Walt Disney Company said earlier this week it plans to cut several hundred employees worldwide across several divisions. The layoffs impact teams in film and TV marketing, TV publicity and casting and development.

The cuts are part of a larger effort to operate more efficiently, a Disney spokesperson said.

Chegg

Online education firm Chegg said last month it would lay off 248 employees, or about 22% of its workforce. The cuts come as AI-powered tools like OpenAI’s ChatGPT take over education.

CEO Nathan Schultz said on the company’s May earnings call that the layoffs are part of a cost reduction plan and he expects cost savings of between $45 million and $55 million this year, followed by a further $100 million to $110 million next year.

Amazon

Amazon said in May it would eliminate about 100 jobs in its devices and services division, which includes the Alexa voice assistant, Echo hardware, Ring doorbells and Zoox robotaxis.

A spokesperson for Amazon told CNBC at the time the decision was part of an ongoing effort to “make our teams and programs operate more efficiently.”

The cuts come as CEO Andy Jassy has sought out cost-trimming efforts at the company. Since the beginning of 2022, Amazon has laid off roughly 27,000 employees.

Warner Bros. Discovery

Warner Bros. Discovery will lay off fewer than 100 employees, according to multiple media reports this week.

No particular network or channel would be affected more than others, according to the reports.

The WBD cuts follow the company’s move to reorganize into two divisions: a global linear networks division and a streaming and studios unit. That process was completed during the first quarter.

— CNBC’s Amelia Lucas, Jordan Novet, Anniek Bao, Melissa Repko, Ryan Browne, Annie Palmer, and Reuters contributed to this report.

Economics

Trade deficit fell by a record amount in April as demand dropped for imports

Published

11 hours ago

June 5, 2025

Business Finance News

U.S. trade deficit tumbles to $61.6B vs. $66.3B estimated

The U.S. deficit with its global trading partners tumbled by the largest amount on record in April as companies and consumers no longer rushed to get imports ahead of President Donald Trump’s tariffs.

Following a record-breaking surge in the trade imbalance, the deficit slid to $61.6 billion, a decrease of $76.7 billion from the prior month and below the Dow Jones consensus forecast for $66.3 billion, according to a Commerce Department report Thursday.

The move reverses a massive surge in imports that came ahead of Trump’s April 2 “Liberation Day” announcement.

In a move that was even more aggressive than anticipated, Trump slapped 10% across-the-board duties on U.S. imports and released a menu of so-called reciprocal tariffs aimed at what he considered unfair trade practices from dozens of countries.

Since then, Trump has backed off the reciprocal charges in lieu of a 90-day negotiating period. Similarly, he ratcheted down the levies aimed specifically at China, which responded in kind as talks continued.

Imports slowed sharply in April, falling 16.3% to $351 billion. At the same time, exports accelerated, rising 3%.

“‘Deficit’ implies something bad, but in this case the story is more nuanced. International trade has been good for the U.S. economy — importing more than we export has benefited Americans, by and large,” said Elizabeth Renter, senior economist at consumer site NerdWallet. “So when the trade deficit shrinks we should be cautious of interpreting this as fully positive news.”

On a year-to-date basis, the deficit has risen 65.7% from the same period in 2024.

The largest goods imbalance came with China, at $19.7 billion, followed by the European Union ($17.9 billion) and Vietnam, ($14.5 billion).

In the latest developments on the trade front, Trump on Thursday said additional talks have taken place with China and more are likely soon. Trump said he spoke to Chinese President Xi Jinping for 90 minutes in what he deemed a “very good” call.