Welcome to the Weekly Scan. Here’s what we’re following for the week of May 3, 2021.
Verizon moves on from media. Telecommunications company Verizon will reportedly sell internet properties Yahoo and AOL, as well as its other media brands, to private equity firm Apollo Global Management. The deal, which is worth $5 billion, places the value of the companies at a much lower price than where they stood a few years ago. Verizon purchased AOL in 2015 and Yahoo in 2017 for $4.4 billion and $4.5 billion, respectively. Following the sale, which is expected to be solidified in the second half of 2021, Verizon will maintain a 10% stake in its media group, which will be renamed “Yahoo.”
- The takeaway: While other internet companies such as AT&T and Comcast have moved deeper into the world of media, Verizon appears to be backing out of the competition. Verizon also sold online publication HuffPost to BuzzFeed in 2020, and recently shut down Yahoo Answers. It sold the social media site Tumblr to the owner of WordPress in 2019.
Inflation nation. Prices for consumer goods such as diapers, toilet paper, and tampons are on the rise due to increased demand outpacing the supply, as well as inflation. Consumers were paying 0.6% more for goods in March, 2021, the biggest increase since August, 2012, according to the Consumer Price Index. Companies such as Procter & Gamble and General Mills are reportedly raising prices following a spike in demand as people spend more time at home. Additionally, with increased government funding via unemployment payments and stimulus checks, consumers have more money to spend, which is contributing to inflation.
- The takeaway: Retailers have been taking on the additional costs rather than increasing prices for consumers, since regulators have been on the watch for price gouging in the middle of the pandemic. However, as the economy begins to recover, brands are starting to put those increases on shoppers. The uptick in prices is predicted to affect low-income Americans in need of basics, such as toilet paper and diapers, the most.
Disaster Girl’s big payday. Chloe Roth, who is the face of the meme known as “Disaster Girl” sold a non-fungible token (NFT) of the meme for more than $430,000 in an auction April 16. The meme is an image of Chloe Roth as a four-year-old smirking in front of a burning house. The picture, which was taken by Roth’s father, is often Photoshopped to include different disastrous scenarios. The NFT was purchased for 180 Ether, which is a cryptocurrency that is recorded on the blockchain Ethereum. At the time of the sale, one Ether equaled approximately $2,200. The value of Ether changes frequently, and prices for all cryptocurrencies can be volatile. Roth, who is now 21 years old, has said that she will reportedly use the earnings from the NFT to pay off her student debt, and will donate some of the money to charity.
- The takeaway: NFTs have become an increasingly popular way for artists, athletes, and celebrities to monetize their online property. NFTs are similar to cryptocurrency. They are digital assets that rely on blockchain, or distributed ledger, to record transactions. When you purchase an NFT, you basically purchase the image or video, as well as a certificate of ownership. In March, 2021, Christie’s auction house sold its first NFT, a collage by the artist Beeple, for $69.3 million.
White House wage increase. President Biden issued an executive order mandating a $15 federal minimum wage for federal contractors. As of January 30, 2022, new contract solicitations from the federal government must include a $15 minimum wage, and by March 30, 2022, new contracts must include the new minimum. The order affects hundreds of thousands of federal contract workers. The current minimum wage for federal workers is $10.95.
- The takeaway: Biden made a $15 minimum wage for all workers nationally part of his 2020 campaign, but he was unsuccessful attaching a higher minimum to the $1.9 trillion stimulus. Raising the wage for federal contractors may be a first step toward increasing the federal minimum wage, currently $7.25.
Silver linings. The U.S. economy posted numbers demonstrating strong first-quarter growth as the economy recovers from the pandemic. The Gross Domestic Product (GDP) increased 6.4% annualized rate, compared to a growth rate of 4.3% in the fourth quarter of 2020. Adjusted for inflation, the value of domestically produced goods and services reached $19.1 trillion, approaching its pre-pandemic value of $19.3 trillion in 2019. Additionally, personal consumption of goods increased by annualized 10.7%, the second-fastest pace since the 1960s.
- The takeaway: After more than a year, the U.S. economy is beginning to strengthen as more people get vaccinated against Covid-19, allowing previously restricted activities such as live events and indoor dining to resume. The U.S. has become the leader in the larger global recovery from the pandemic, thanks in part to trillions of dollars of federal stimulus spending.
Find out what we covered in last week’s Scan.