Foot traffic at the IDS Center, a skyscraper housing offices and retail shops in Minneapolis, was sparse on Tuesday.Credit…Tim Gruber for The New York Times Government data is expected to show that economic growth slowed sharply over the summer, as supply-chain bottlenecks and the resurgent pandemic restrained activity at stores, factories and restaurants.

The Commerce Department on Thursday will release its preliminary estimate of economic output in the third quarter. Forecasters surveyed by the financial research firm FactSet expect the report to show that gross domestic product, adjusted for inflation, rose less than 1 percent from the previous quarter, or 3.5 percent on an annualized basis, down from 1.6 percent in the second quarter . Some forecasters warn that the report could show an outright stall, or even a contraction.

The slowdown was partly a result of the spread of the Delta variant of the coronavirus, which led many Americans to pull back on travel, restaurant meals and other in-person activities. More recent data suggests that people have returned to those activities as virus cases have fallen, and most economists expect significantly faster growth in the final three months of the year.

But another major restriction on growth may be slower to recede. The pandemic has snarled supply chains around the world, even as demand for many products has surged. The resulting backups have made it hard for U.S. stores and factories to get the products and parts they need. Economists initially expected the disruptions to be short-lived, but many now expect the issues to linger into next year.

Many businesses are also struggling to find enough workers to make, sell and deliver products — another supply shortage that is holding back growth longer than economists expected.

“The economy doesn’t have a demand problem,” said Ben Herzon, executive director of IHS Markit, a forecasting firm. “It has a supply problem.”

The combination of strong demand and limited supply has resulted in higher prices: Inflation soared last spring and has remained elevated.

Still, the economy is in much better shape than forecasters expected for most of last year. Gross domestic product returned to its prepandemic level in the second quarter, although it has not caught up to where it would be if the pandemic had never occurred. Government aid, along with reduced spending during the pandemic, has left Americans flush with cash, which should support spending for the rest of the year.

“Supply chain disruptions together with Delta conspired to hold back growth,” said Constance L. Hunter, chief economist for KPMG, the accounting firm. “It’s a speed bump not a slowdown.”

As Royal Dutch Shell announced its quarterly earnings on Thursday, including a jump in profit that failed to meet investor expectations, company executives were dealing with an activist fund’s proposal that the oil giant be broken up.

Third Point, a New York-based activist fund management firm, has taken a stake in Shell and called for it to be broken up into “multiple stand-alone companies” that could address competing shareholder interests.

These companies could include a unit encompassing Shell’s legacy oil- and gas-extraction businesses and another with its renewable-energy and liquefied-natural-gas activities, said Third Point’s chief executive, Daniel S. Loeb, in a letter to investors.

Mr. Loeb called Shell “one of the cheapest large-cap stocks in the world.” He also said that by most metrics Shell was trading at a 35 percent discount to its rivals Exxon Mobil and Chevron, despite what he called “higher quality and more sustainable” business lines.

He blamed the company’s “attempting to appease multiple interests but satisfying none” for the lack of investor interest in Shell.

Shell said that it had “preliminary conversations with Third Point and we will engage with them, as we do with all our shareholders.”

Third Point’s move recalled the successful battle waged this spring by another activist hedge fund, Engine No. 1 , to install three directors on the board of Exxon Mobil with the goal of pushing it to reduce its carbon footprint.

News of the Third Point’s interest came as Shell, Europe’s largest oil company, reported $4.1 billion in adjusted earnings for the third quarter of this year, a substantial increase over the $955 million reported in the period a year earlier, thanks mainly to higher oil and gas prices. The earnings came in below analysts’ expectations.

Executives of some of the world’s biggest oil and gas companies — Exxon Mobil, Chevron, BP and Shell — are set to appear before a congressional committee Thursday to address accusations that the industry spent millions of dollars to wage a decades-long disinformation campaign to cast doubt on […]

source U.S. economic report for the third quarter is expected to show weak growth.

editor Stocks , ,

Leave a Reply