Some Companies Report Huge Profits Despite Economic Decline Due To COVID-19
LEILA FADEL, HOST:
There's been a barrage of bad economic news this week, including the biggest ever drop in GDP. But when big companies announced their earnings to investors, some of them revealed they've been making huge profits during this very steep economic recession. NPR's Camila Domonoske joins us now. She's a reporter for our business desk. Good morning, Camila.
CAMILA DOMONOSKE, BYLINE: Hi, Leila.
FADEL: So who's making money during this economic disaster?
DOMONOSKE: Well, Procter & Gamble made a lot of money selling cleaning products, but the big winner was Big Tech. Apple CEO Tim Cook was almost apologetic about how much money his company made - I mean, almost. Here he is on an earnings call.
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TIM COOK: We're conscious of the fact that these results stand in stark relief during a time of real economic adversity for businesses large and small and certainly for families.
DOMONOSKE: And it makes sense, right? If we're all spending more time staying home, that's more time on our devices. Less time face-to-face means more time on Facebook means more money for Facebook. And, of course, there's online shopping for Amazon. The last few months have been a bonanza. Revenue went up by 40%, which is just absolutely enormous.
And, you know, it's not just the effect of the pandemic. These companies were dominating before this crisis. And just this week, they got fresh scrutiny from Congress for just how big and powerful they are.
FADEL: Of course, Apple, Facebook, Amazon - all financial sponsors of NPR. Camila, tell us who's struggling.
DOMONOSKE: Most of the economy is struggling, has taken an absolutely huge hit. Travel and hospitality companies, oil companies - Chevron and Exxon lost billions of dollars - and some smaller companies have entered bankruptcy. A lot of manufacturers are struggling. Ford and GM racked up losses. If you think about it, any company that relies on people moving around, like airlines, or gathering together, like hotels or even just physical stores, they're struggling. And that's a huge chunk of the economy.
FADEL: So we've been talking about these big companies, but what about small ones?
DOMONOSKE: Yeah, small businesses have been hit really hard by this crisis. And, you know, early in the pandemic, a lot of local restaurants and shops, they closed their doors, but they said it was temporary, right? They were planning on reopening. Right now, according to Yelp, more than half of local business closures are permanent. Sameera Fazili is with the Federal Reserve Bank of Atlanta, which has been talking to communities across the South.
SAMEERA FAZILI: I think in March and April, there was more hope that things were going to get better sooner.
DOMONOSKE: That hope has faded. In a survey released this week, most small-business owners don't expect the economy to recover until next year at the earliest. And Fazili says minority-owned small businesses were especially vulnerable coming into the crisis.
FADEL: So what does this mean for workers?
DOMONOSKE: Well, for workers at companies in crisis, it's meant huge numbers of layoffs and the astonishingly high unemployment numbers that we've seen, with millions of people struggling without jobs.
The situation is also affecting workers at the companies that are doing well. When unemployment is low, workers have more leverage. They can push for higher wages. That was actually starting to happen right before the pandemic hit. But when there are tons of people desperate for work, employers can keep pay low. Elise Gould is with the left-leaning Economic Policy Institute, and she says right now, with so many people looking for jobs...
ELISE GOULD: You're not really going to see some of those earnings gains actually translate into wage growth for most workers in this country.
DOMONOSKE: And, in fact, lots of people have taken pay cuts or furloughs to keep their jobs.
FADEL: That's NPR's Camila Domonoske. Thanks, Camila.
DOMONOSKE: Thanks, Leila.
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