Carvana

Carvana Lays Off 2,500 Employees As It Looks To “Align Staffing With Sales Volumes”

Online automotive retailer Carvana Co. has announced it’s letting go of 2,500 employees — nearly 12% of its workforce — as they look to “better align staffing and expense levels with sales volumes.” Additionally, executives will forgo their pay for the remainder of the year in order to help pay the severances for departing employees.

In a filing with the Securities and Exchange Commission, the Tempe, Arizona-based company referred to the moves as “right-sizing initiatives,” while noting most of the jobs expected to be terminated over the next several weeks are in Ohio and other logistical hubs.

The announcement of the layoffs came the same morning Carvana announced their acquisition of Adesa U.S.’s used vehicle auction — which totals around 56 sites and 6.5 million square feet of buildings — for $2.2 billion.

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“We believe these decisions, while extremely difficult, will result in Carvana restoring a better balance between its sales volumes and staffing levels and facilitate Carvana returning to efficient growth on its mission to change the way people buy and sell cars,” the filing stated.

CEO Ernie Garcia expanded upon the targeting of the company’s operational employees in an email. “I wish the burden were shared more evenly across the company, but our operations teams have grown the most over the last several months and are therefore furthest out of balance with the sales we are seeing,” Garcia — who possesses a net worth of $1.4 billion — said.

Carvana assured they’re looking to provide assistance, resources, and support for those laid off, which includes recruiting and resume assistance, extended healthcare coverage, and continued participation in company programs.

The move has received backlash, with some employees stating on social media they were fired over Zoom, a practice other companies have adopted during the pandemic times. A Carvana spokesperson explained “less than half” of the layoffs were done over Zoom, and they conducted as many in-person conversations as they could.

In the first quarter of 2022, Carvana saw a revenue of $3.497 billion, a year-over-year increase of 56%. The company also sold 105,185 units, a year-over-year increase of 14%. Beyond those numbers reveal a bleaker outlook for Carvana as they posted their first-ever sales decline of $506 million despite a time when car demand and sales are at record highs.

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Carvana, known for its hard-to-miss “car vending machines,” sells only used cars online and delivers them to buyers. As Jalopnik explained, the company’s first quarter collapse could be chalked up to Carvana purchasing a large quantity of used cars in anticipation for rising demand.

However, it’s bet to capitalize on the vehicle surge didn’t pay off when demand swiftly fell due to “rising interest rates, rising fuel prices and macroeconomic uncertainty.” In April, the consumer price index (CPI) for new cars rose 1.1%, while used cars and trucks fell -0.4%.

Supply chain issues have also contributed to the overall downturn of not just Carvana, but countless other companies in multiple industries. Carvana has also seen their stock fallen mightily, as they’re down -256.51 (-86.03%) throughout the last six months. At the time of the news Tuesday, shares fell 5.4% to $36.68.

Federal Reserve

Federal Reserve Raises Interest Rates By 0.5% In Largest Move Since 2000

On Wednesday, the Federal Reserve raised short-term interest rates by 0.5% to 1.00%, marking the largest increase in over two decades as it attempts to fight the ever-increasing inflation that has continued to cause financial burdens for Americans.

Since 2000, the Fed has only raised interest rates in increments of 0.25%. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures,” the Fed said in a FOMC statement. “The Committee is highly attentive to inflation risks.”

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In March, inflation rates rose to 8.5%, up 0.6% from February’s 7.9% and 1.5% from December’s 7%. It’s now the highest inflation rate the country has seen since the 1980s, though forecasts project a downturn over the coming months. The increased interest rates will take time to lower the inflation, however.

The Fed explained it’s monitoring the situation of the 10-week-old Russian invasion of Ukraine — citing “tremendous human and economic hardship” — among other global issues that have essentially stalled production and sent the supply chain spiraling.

“The invasion and related events are creating additional upward pressure on inflation and are likely to weigh on economic activity. In addition, COVID-related lockdowns in China are likely to exacerbate supply chain disruptions.”

As for what this all means for the average citizen, borrowing will become more expensive. Higher interests rates will occur for mortgages, student debt, car loans, credit cards, and business loans for both small and large companies.

Higher mortgage rates are a particularly hard pill to swallow for those in the already difficult-to-navigate real estate market, as home prices alone have shot up during the COVID-19 pandemic. In the first quarter of 2021, the average home sold for $507,800.

Currently, a 30-year fixed-rate mortgage rate sits at over 5%, up from 3.10% in early-December and 4.16% in mid-March. The Fed will now discuss increased interest rates between 0.75% to 1.00% in June and July, while some officials have advocated for raising rates to 2.5% by the end of 2022.

Following the Fed’s announcement, the Dow Jones Industrial Average spiked up 900 points to 34,064 before dropping 1,000 points Thursday morning, or 2.9%. The S&P 500 saw a 3.3% drop, while the Nasdaq Composite fell 4.6%. Similarly, Google’s parent company, Alphabet, had a 5.3% slide.

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Speaking Wednesday, Fed Chairman Jerome Powell attempted to relay that the bank understands the financial hardship Americans are going through, and explained the raising interests rates were done in order to relief that inflation tension. “Inflation is much too high, and we understand the hardship it is causing,” Powell said.

Powell also emphasized his belief that the economy can withstand the higher rates, with unemployment rates dropping by 0.2% from February to March and total job openings rate at 7.1%, a year-over-year increase of 1.6%. “Nothing about it says it’s close to or vulnerable to a recession,” he said.

President Joe Biden has previously supported the Fed’s monetary decisions. “The Federal Reserve provided extraordinary support during the crisis for the previous year and a half,” he said back in January. “Given the strength of our economy and pace of recent price increases, it’s appropriate — as Fed Chairman Powell has indicated — to recalibrate the support that is now necessary.”

The actions aren’t without concerns, however. As the Associated Press notes, many have criticized the Fed for taking too long to tackle inflation, leading to doubt from analysts that a recession can ultimately be avoided.

Netflix on Phone

Netflix Stock Drops After Company Loses Subscribers For First Time In Over 10 Years

In the first quarter of 2022, Netflix announced that it lost 200,000 subscribers, and it expects to lose an additional two million in the second quarter. It’s the first time the company has lost subscribers in a quarter since October of 2011.

Netflix currently has 221.6 million subscribers worldwide. The news of Netflix’s losses sent stocks down nearly 25% in after-hours trading.

The reality of the first quarter was far off from what the company had previously forecasted, which was an increase of 2.5 million subscribers that would have vaulted them to around 224 million in total. Netflix’s profit was still positive in Q1, however, with $1.6 billion, while their revenue rose 10% to $7.9 billion.

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In a letter sent out to shareholders, the company noted that in the near term, they’re not “growing revenue as fast as we’d like.” The company highlighted COVID-19 and the over two-year long pandemic, saying the the growth in 2020 — due to people staying at home and streaming shows — “obscured the picture until recently.”

Several issues at play were addressed within the letter, one being that the subscriber loss can be attributed to the fact that a person doesn’t necessarily need to buy their own account – they can just password share, which has become a huge issue for the streaming service.

“Account sharing as a percentage of our paying membership hasn’t changed much over the years, but, coupled with [growth being dependent on factors Netflix can’t control], means it’s harder to grow membership in many markets – an issue that was obscured by our COVID growth.”

Netflix estimated that more than 30 million U.S. and Canadian households are using a shared password to access its content, while more than 100 million households are using a shared password worldwide. Co-chief executive Reed Hastings had previously stated the practice as being “something you have to learn to live with.”

Now, it appears Hastings may be going back on his words. The company noted those who don’t pay for Netflix represent “huge growth potential.” Indeed, Citi analyst Jason Bazinet estimated streaming services lose $25 billion due to password sharing, with Netflix accounts totaling 25% of that.

The company seems to be intent on capitalizing that potential by cracking down on password passouts through a number of still being tested methods, like forcing those who share to pay additional fees. Of course, drastic changes like these run the risk of losing Netflix more consumers.

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Netflix also blamed the plunge on Russia’s invasion of Ukraine. In response to the invasion, they — along with 400 other companies — pulled out of (and halted all future projects within) the country, which costed them 700,000 subscribers. Among other factors Netflix noted include a sluggish economy and increasing inflation.

One of the major changes that could occur from this downturn includes Netflix’s acceptance of ads. While the company has been admanted over the last decade about not utilizing advertisements, Hastings told investors that they will look into a lower-priced tier supported by ads over the next couple years.

For the service, the ongoing struggle could be quite the eye-opener as it finds itself in the midst of a streaming war. Disney+, Apple TV, HBO Max, Hulu, and Amazon Prime Video are all vying for subscriptions and revenue.

Though Netflix still ended 2021 with more customers than any of the above, Prime Video (200 million subscribers worldwide) and Disney+ (129.8 million worldwide) weren’t far behind. CNN Business estimated that Netflix’s report was likely to roil the streaming industry due to the fact that so many firms have changed their strategies to compete with the company.

New Data Reveals How The End Of Covid-19 Pandemic Protocols Could Negatively Impact US Healthcare 

Whenever the Covid-19 pandemic ends, the US healthcare system may be disrupted greatly due to the amount of hospital systems who have been able to acquire new technology and resources to keep up with temporary emergency measures throughout the pandemic.  

When the many temporary emergency measures that have been implemented throughout the US’s healthcare system end, an estimated 15 million Medicaid recipients will likely need to find new coverage. Congress will need to take action in order to preserve the broad telehealth access that many Medicare users have been able to use throughout the pandemic. 

Beyond just patients, payment policies are also likely to change for doctors, hospitals, and insurers. Many are raising concerns over these issues because of their tie to the coronavirus public health emergency declaration that was made more than two years ago and needs to be periodically renewed in order to keep these protective policies in place. 

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The state of emergency is set to end on April 16th, and it’s expected that Biden will likely extend it through July, but many healthcare workers are hoping for a more secure extension that will last longer. Juliette Cubanski is a Medicare expert working with the Kaiser Family Foundation who recently spoke on the potential consequences of stepping back from the state of emergency. 

“The flexibilities granted through the public health emergency have helped people stay covered and get access to care, so moving forward the key question is how to build on what has been a success and not lose ground.”

Medicaid currently covers 79 million people through its state-federal health insurance program which is designed to assist low income individuals. The amount of people covered by Medicaid has increased at record rates throughout the pandemic. 

The Urban Institute revealed research that estimates about 15 million people could lose their Medicaid coverage when the public health emergency ends, at a rate of 1 million individuals per month. Matthew Buettgens of the Urban Institute stated that almost all of the people losing Medicaid will likely be eligible for “another source of coverage through employers, the Affordable Care Act or, for kids, the Children’s Health Insurance Program.”

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“But that’s not going to happen automatically. Cost and lack of awareness about options could get in the way. This is an unprecedented situation. The uncertainty is real,” said Buettgens. Chiquita Brooks-LaSure is an administrator at the federal Centers for Medicare and Medicaid Services, CMS, and she advises states to take it slow when it comes to rolling back on policies so that they have time to connect with Medicaid recipients who will be disenrolled to provide them with additional coverage. 

“We are focused on making sure we hold on to the gains in coverage we have made under the Biden-Harris administration. We are at the strongest point in our history and we are going to make sure that we hold on to the coverage gains,” said CMS Administrator Chiquita Brooks-LaSure. 

The end of the public health emergency could impact telehealth access for millions enrolled in traditional Medicare and other insurers. 

“Congress has given itself 151 days after the end of the public health emergency to come up with new rules. If there are no changes to the law after that, most Medicare beneficiaries will lose access to coverage for telehealth,” the Kaiser Foundation’s Cubanski said.

Health and Human Services Secretary Xavier Becerra recently told The Associated Press that his department is “committed to giving ample notice when it ends the public health emergency. We want to make sure we’re not putting in a detrimental position Americans who still need our help. The one that people are really worried about is Medicaid.”

Uber App on Phone

Uber Reaches Deal With Yellow Taxis In NYC

Over the course of history, unthinkable partnerships have been made. Rocky Balboa trained with Apollo Creed. Tom and Jerry stopped fighting every once in awhile. Now one more can be added to the list: Uber and yellow taxis.

Due to a shortage in drivers and an upsurge in food delivery requests, Uber will now be listing New York City taxis on their app in an attempt to benefit both parties, which have had a heated rivalry since the transport company’s debut now over a decade ago.

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While the Wall Street Journal noted that this isn’t the first time Uber has partnered with taxis — both overseas and in several U.S. cities where Uber users can book taxis if cab drivers choose to be listed on the app — it is the first citywide partnership in New York City. The deal is expected to start later this spring.

As part of the agreement, the New York City Taxi and Limousine Commission’s (TLC) technology partners will integrate their apps (of which the nearly 14,000 taxis in NYC use) with Uber’s. According to Uber, passengers will pay the same fare for a taxi as they would an Uber X, typically the cheapest Uber option available.

Uber drivers receive a minimum time and distance rate set by the TLC, though Uber says drivers typically receive more than that rate and that cab drivers who take Uber passengers will earn the same. According to the labor group Intellectual Democratic Workers Union (IDWU), the average NYC Uber driver makes $25.91 per ride and can make up to nearly $80,000 gross income per year before taxes.

Of course, taxis are different because of their metered rate, so cab drivers will see expected earnings before a ride and can decline rides they don’t feel are worth it, Uber said. Following the news, Uber’s shares rose 5% to $34.70 on Thursday.

The company previously saw a year-over-year revenue growth of $5.8 billion (83%) in 2021, along with a YoY gross booking growth of 51%. They anticipate gross bookings in the first quarter of 2022 to grow from $25 billion to $26 billion.

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“It’s bigger and bolder than anything we’ve done,” Uber’s Global Mobility Chief Andrew Macdonald told WSJ. For Macdonald and co., however, NYC is only the beginning. By 2025, the company wants to have every taxi in the world listed on its app. “It’s certainly ambitious, [but] I certainly think it’s possible.”

Uber’s introduction was a piercing thorn in the side of taxis, and would eventually change the way the transportation industry was played. From Uber’s pricing system to their “easy as tapping a button” business model, along with a bevy of ride options, taxi groups have worked to ban the app or limit their impact through laws in numerous countries.

For cab drivers, this deal could also be looked at as a necessity. The COVID-19 pandemic left many taxis barely hanging on, and with rising gas prices — the national average sits at $4.2 ($4.3 in NY) — business by way of any mean was needed.

Uber Lyft

Uber And Lyft Now Adding Fuel Surcharges To Rides As Gas Prices Continue To Rise 

Uber and Lyft announced this week that customers will be paying more for rides temporarily, as both companies are now adding a surcharge to deal with the rise in gas prices nationwide. 

In a statement made to the media, Lyft said that the company is asking riders to pay a “temporary fuel surcharge” which will go directly to the drivers as a means of compensation for the rise in gas prices nationwide. 

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“We’ve been closely monitoring rising gas prices and their impact on our driver community,” a company spokesperson said.

The company didn’t specify how much the surcharge would be, but it will likely be dependent on the length of the trip for the rider. Uber announced last week that they would also be adding a surcharge on all Uber trips and Uber Eats services for the next 60 days. After that, the company will reassess the charges. 

“We know that prices have been going up across the economy, so we’ve done our best to help drivers and couriers without placing too much additional burden on consumers,” Uber said in a statement.

Uber customers will be paying a surcharge of either $0.45 or $0.55 on every trip, while Uber Eats deliveries will now include a charge of either $0.35 or $0.45 on each order, depending on the location of delivery. 

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Uber said the surcharges will also go directly to the drivers. Uber also clarified that the surcharge will not apply to rides that begin in New York City of Uber Eats deliveries within the city’s limits because drivers there are receiving a 5.3% increase to the city’s minimum earnings standard for the past month. 

Following Russia’s invasion of Ukraine, gas prices have risen exponentially all around the nation. Uber and Lyft have both stated that the rise in fuel prices is the reason they’re both implementing the surcharges into their ride policies. 

As of this Monday, the average cost of a regular gallon of gas has reached $4.325, according to AAA. That price reflects a 26 cent increase in the past week alone.

Around this time last year the average price for a gallon of regular gas cost around $2.859. 

President Biden announced a ban on all US imports of Russian oil and gas, a move that he acknowledged would likely cause the price of gas to increase nationwide. Biden also pledged to do everything in his power to not have the rise in gas prices impact Americans and their wallets. 

“Defending freedom is going to cost, however, it’s going to cost us as well in the United States,” Biden said.

Amazon Opens Up First Cashierless Whole Foods 

Amazon has officially brought its cashierless Just Walk Out technology to a Whole Foods store for the first time. Customers can now shop and leave the store with all their items without having to interact with any cashier. 

The revamped Whole Foods opened up on February 23rd in Washington, DC’s Glover Park location, where there’s been a Whole Foods for over 20 years. 

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While Amazon has introduced this technology in Amazon Go and Amazon Fresh branded stores, this is the first time the cashierless technology is being fully implemented into a Whole Foods store. 

Amazon bought the Whole Foods grocery chain back in 2017 for $13.7 billion, but up until this point Amazon’s integration with the chain has been more minimal; offering discounts and free delivery services to Prime account holders. 

The Whole Foods is a 21,500 square foot location, however, the Amazon Fresh store in Washington is the largest Amazon location to implement Just Walk Out cashierless technology. Amazon’s implementation of this technology in a preexisting Whole Foods location with no additional Amazon branding being added to the overall design and aesthetic is proving to experts that the tech company is very confident in the cashierless technology.

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There’s no official word yet if Amazon plans to bring the technology to all Whole Foods stores, but it’s likely more Just Walk Out stores will begin to appear throughout the nation. 

According to a reporter who went to the DC Whole Foods location, the store features Amazon’s palm-recognition technology for entry, alongside with QR codes. The store still has employees staffing various counters who are also there to assist customers who may not fully understand the cashierless technology at first. 

The store is overall leaning into a more self-service model. Customers are able to cut their own loafs of bread and other features that promote independence. 

The cashierless technology is being met with mixed reactions, especially from DC residents who were used to shopping regularly at that specific Whole Foods location. 

The second Whole Foods store that’s set to open with cashierless Just Walk Out technology is located in Los Angeles. The brand announced that it will likely be opening later this year.

Amid Inflation, Retail Sales Rise 3.8% In January

Despite continuing Omicron concerns, retail sales last month rose to 3.8% — a total of $649.8 billion — the U.S. Department of Commerce reported Wednesday morning. Those numbers come after December saw a tough 2.5% slide during the typically-busy holiday season.

Inflation, which quickly rose to 7% in 2021 (the fastest pace since 1982) and 7.5% in January, helped to pump the numbers up. The monthly sales are also up 13% from a year prior, while sales from November to January 2021 were up 16% from that same period in 2020.

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Furniture and home furnishing stores saw a 7.2% change, while online retailers led the way with a 14.5% rise. Rounding out the top producers is motor vehicle dealers with 5.7%. Meanwhile, electronic and appliances stores registered a 1.9% rise, while food and restaurants saw a 0.9% decline due to rising fears and increased precautions over the spreading COVID-19 variants.

Bankrate.com senior industry analyst Ted Rossman explained to ABC News that Omicron cases — along with the cost — could be the culprit for falling gasoline prices as well, which declined 1.3%. However, gasoline stations saw the biggest year-over-year jump with 33.4%. According to AAA, the average price for a gallon of gas currently sits at around $3.5 dollars, up from $2.5 dollars a year ago.

This economic resilience in the face of a new COVID wave is certainly one to be admired. Omicron looked to be more dangerous and contagious than the Delta variant, and the U.S. endured a pandemic-high 1.4 million new cases on Jan. 10. With workers out sick, a shortage began, forcing many stores to cut hours.

However, cases have since seen a decline, with the current seven-day average laying around 141,000. In addition to retail sales, jobs also prevailed despite the surge – nonfarm payrolls rose by 467,000 last month, 150,00 more than Wall Street’s estimate, while the unemployment rate increased by 0.1% to 4%. Wages increased 0.7% on the month and 5.7% for the year, the biggest yearly move since May 2020. Even with inflation, consumers were able to spend more freely with the extra cash.

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“Even taking into account the December decline, retail sales in recent months have been increasing much faster than prices, so households are purchasing larger volumes of goods and services, not just paying higher prices,” PNC chief economist Gus Faucher told CNBC.

Among other monthly declines include sports, music, and book stores (-3.0%, the highest decline endured by any retailer), health and personal stores (-0.7%), and miscellaneous store retailers (-0.1%). The only retailer that saw a year-over-year decline was electronics with -2.9%.

While clothing retailers had a meager 0.7% rise, they finished third overall in year-over-year change with +21.9%, behind gas and food and restaurants (+27%). The overall rate greatly outperformed economists’ predictions, which expected the final total to fall around a 2% rise. The report covers only a third of overall consumer spending, and doesn’t include services like plane tickets.

Peloton Replaces CEO, Set To Cut Around 2,800 Jobs

Peloton, which saw a huge surge in its at-home, state-of-the-art stationary bikes during the COVID-19 pandemic, is now undergoing sizeable company changes in order to combat its downward trend. John Foley, who first came up with the idea of Peloton in 2011 and managed to jumpstart it on Kickstarter, will be stepping down from the position of chief executive officer.

Taking his place will be Barry McCarthy, who previously served as CFO at Spotify and Netflix. “We have to be willing to confront the world as it is, not as we want it to be if we’re going to be successful,” McCarthy said in a memo obtained by CNBC, adding that he’s “here for the comeback story.”

“If you thought today’s news meant John [Foley] would be scaling back his involvement with Peloton, then let me assure you … I plan on leveraging every ounce of John’s superpowers as a product, content, and marketing visionary to help make Peloton a success as my partner.”

McCarthy worked with Netflix from 1999 to 2010, taking the once mailbox-subscription service to the go-to streaming platform. Business Insider noted that under McCarthy, Netflix’s shares rose from $1.21 in 2002 to $25 by McCarthy’s departure in 2010.

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Peloton will be cutting up to 2,800 jobs (nearly 20% of their overall workforce) in an effort to lower costs, though fitness instructors, who make up to $500,000 a year, will not be part of the layoffs. The company also canceled plans for a $400 million factory — which would have been their first — in Ohio, one that was expected to provide around 2,000 jobs.

According to the Associated Press, Peloton will be reducing owned and operated warehouses and delivery locations, and instead building upon third-party relationships. AP stated the company is looking to reduce its planned capital expenditures in 2022 by about $150 million.

With many unable to go to the gym during guarantee in the early days of the pandemic, Peloton saw a huge rise in profits with a 2020 second quarter revenue of $466.3 million, up $238.3 million from the previous quarter. Peloton’s quarterly revenues would continue to grow from that point on, eventually reaching $1.2 billion in the third quarter of 2021.

However, the situation has become much more bleak as people slowly return to in-person gyms with restrictions easing. While Peloton did earn a revenue of $313.2 million — up 54% from a year ago and around $9 million more than expected by experts — they also posted a fourth quarter net loss of $313.2 million, compared to a net income of $89.1 million the year prior.

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Peloton is still seeing subscribers, which rose $114 year-over-year to 2.33 million, though they are seeing less workouts. Peloton’s “connected fitness quarterly workouts” fell from over 149,000 in the third quarter of 2021 to 134,000 in the fourth quarter, while also seeing a drop in average monthly workouts per connected fitness subscriber in the same period (26.0 to 19.9).

The company had previously announced in August they were cutting the sale of their Peloton bikes by 20%. Typically, the bikes retail for around $1,495 — $39 a month with a financing plan — although some packages can range up to $2,000. A monthly membership, meanwhile, goes for $12.99.

Economy Stock Market

U.S. Economy Rose 5.7% In 2021, Marking Fastest Growth Since 1984

According to the U.S. Bureau of Economic Analysis, the United States’ gross domestic product (GDP) — a measure of all goods and services produced — rose by 5.7% in 2021, not only rebounding from a brief recession from March 2020 but also marking the fastest growth since 1984’s 7.2% growth.

In the fourth quarter of 2021, thanks to increased consumer spending, real GDP increased by 6.9%. That’s a solid step up from the third quarter, which saw a disappointing GDP rise of 2.3% – the slowest mark since the second quarter of 2020. As CNN Business notes, that fourth quarter final was much better than many economists had predicted.

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All told, it’s a 9.1% swing when looking at the yearly change. In 2020, with COVID-19 sending businesses and people into lockdown, GDP decreased by 3.4% — the lowest since 1946 — with the second quarter hitting a minus 31.4%. During that time, over 22 million saw their jobs lost.

Meanwhile, the price index for GDP increased by 3.9% this year (compared to 2020’s 1.2% raise). Exports — along with inventories, investments, and PCE — were a crucial factor in the growth for both goods and services, with consumer goods, industrial supplies and materials, and food being the leading export contributors.

That export number also helps to offset the rise in imports, which subtracts from the GDP. According to BEA’s goods and services deficit report, the U.S. had accumulated $224.2 billion in exports and $304.4 billion in imports in November.

President Joe Biden commented on the rise in a White House press release, pointing out that for the first time in 20 years, the U.S. economy grew faster than China’s (which saw a 2021 GDP growth of 8.1% and a fourth quarter growth of 4%).

“This is no accident. My economic strategy is creating good jobs for Americans, rebuilding our manufacturing, and strengthening our supply chains here at home to help make our companies more competitive.”

Biden also stated that small businesses have grown by more than 30% since 2019, and that he plans to urge Congress to pass legislation that would keep the U.S. competitive while bolstering supply chains — which have seen continual pandemic issues — and investmenting in families and clean energy.

Speaking to NBC News, Bankrate chief financial analyst Greg McBride explained that the fourth quarter surge can be contributed to rising inventories, which accounted for 71% of fourth quarter growth. However, while degression should be expected early on in the new year due to COVID-19 variants, McBride sees the overall growth continuing in the coming months.

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“Omicron will put a dent in first quarter economic growth — we’re already seeing some of this with increased jobless claims — but demand remains strong, the labor market is tight, and the economy is poised for another year of solid, above-trend growth,” McBride said.

The final quarter of 2021 was able to avoid any potential variant hits due to Omicron first appearing in late November/early December. Consumer activity ramped up late into the year, with holiday sales rising 8.5%, the highest growth in 17 years.

That surge sent businesses spiraling into shortages of both supplies and workers, which in turn affected prices. While the GDP rose, so did inflation, which hit 7% in 2021 (the highest since 1982).