The same technology companies that helped drag the U.S. stock market back from the depths of the pandemic recession in 2021 led the market into a sharp plunge on Thursday after Meta Platforms, the company that owns Facebook, revealed that user growth on its marquee product has hit a plateau, and revenue from advertising has fallen off sharply.

Meta was not the only U.S. tech company to suffer on Thursday. Snap Inc., the owner of Snapchat; Pinterest, Twitter, PayPal, Spotify and Amazon all suffered sharp sell-offs during trading.

U.S. tech stocks are facing a variety of major challenges right now, including a possible economic slowdown, changes to privacy rules, increased regulatory pressure and competitive challenges that have pushed users — especially young people — to new platforms such as TikTok.

Every major U.S. stock index was down significantly on Thursday, with the Dow Jones Industrial Average falling by 1.45%, the S&P 500 down 2.44%, and the tech-heavy Nasdaq down 3.74%.

Meta’s Facebook struggles

Although the pain was spread broadly across the tech sector Thursday, it was the travails of Facebook that captured much of the public’s attention. The company’s shares, which were trading at $323 when the markets closed Wednesday, opened on Thursday at $242.48 and never recovered, closing at $237.76.

The 27% decline in the company’s share value translated into a loss of more than $230 billion in market value, an utterly unprecedented one-day loss for a single firm.

The share price began its tumble after the company announced for the first time ever that its total number of monthly users had not risen in the fourth quarter of 2021. Additionally, in its key North American market, Facebook saw monthly users decline slightly.

The stagnant user figures raised concerns about the company’s ability to grow even as more bad news poured in from its advertising business, which generates the overwhelming majority of the company’s profits.

Last year, Apple changed the privacy setting on its iPhones and other devices, requiring apps, including Facebook, to get each user’s explicit permission to track their activity on the internet. Prior to that change, Facebook had made extensive use of tracking software to deliver targeted advertising to its users — something its advertising clients were willing to pay a significant premium for.

Since Apple instituted the change, the majority of users have declined to allow Facebook to track their browsing, greatly diminishing the company’s ability to target advertisements. On Thursday, Meta Chief Financial Officer David Wehner told investors the company expects the changes to cost it $10 billion in advertising revenue in 2022.

Trouble with young users

Facebook has long struggled to attract younger users to its platform, and on Thursday, company officials admitted that the firm is finding it difficult to compete with TikTok, an app created by the Chinese firm ByteDance, which allows users to share brief videos.

In a call with investors, Meta CEO Mark Zuckerberg said the company’s answer to TikTok, a service called Reels, is still being developed.

“Over time, we think that there is potential for a tremendous amount of overall engagement growth” he said. “We think it’s definitely the right thing to lean into this and push as hard to grow Reels as quickly as possible and not hold on the brakes at all, even though it may create some near-term slower growth than we would have wanted.”

Zuckerberg, who holds 55% of the voting shares of Meta, giving him de facto control of the company, saw his personal wealth fall by an estimated $24 billion as a result of Thursday’s market rout.

Economic headwinds

Over the past year, investors have consistently pushed the share prices of U.S. tech firms higher. Now, though, with the Federal Reserve preparing a series of interest rate increases meant to cool the U.S. economy and slow price inflation, investors appear to be reconsidering the prices they are willing to pay.

Investors typically judge the value of a stock based on its price-to-earnings (P/E) ratio, which is determined by dividing the share price by the fraction of the company’s earnings represented by an individual share of stock.

When a company’s shares trade at a high P/E ratio that is usually because investors expect the underlying business to continue growing. However, that growth can be hampered by a slowdown in the broader economy, something many investors expect to see in the coming m

Political challenges

In addition to concerns about economic headwinds, the tech sector is facing a distinctly unfriendly regulatory environment in the U.S. Lawmakers in both parties have expressed their concern that big technology companies enjoy too much influence over areas like popular culture and political discourse but face too little accountability.

Facebook and its subsidiary, Instagram, were subjected to hostile congressional hearings last year, after a whistleblower revealed internal documents that showed the companies understood that their products could be harmful to some users but took little action to address the issue.

During the hearings, high-profile lawmakers, including Democratic Senator Elizabeth Warren, called for Facebook to be broken up into multiple, smaller companies.

 
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Mali has failed to meet debt payments of some $40 million in treasury bonds, blaming sanctions imposed on the country’s military junta by West African bloc ECOWAS.

The Malian Economy and Finance Ministry released a statement on Tuesday saying that recently imposed sanctions have prevented them from paying debt on treasury bonds totaling almost $5 million.

UMOA-Titres, the agency that manages public securities in the West African CFA franc zone, issued three separate statements to investors this week stating that Mali has missed several payments totaling $40 million.

Both the Economic Community of West African States and the West African Economic and Monetary Union imposed sanctions on Mali last month after the country’s military junta, which seized power last year, postponed elections.

The sanctions froze Mali’s assets held by the Senegal-based Central Bank of West African States (BCEAO).

Modibo Mao Makalou is an economist and former economic advisor to the Malian presidency. Speaking from Bamako via messaging app, he said that because of the sanctions, not only will the Malian government be unable to pay the state’s debt, but it will also be unable to pay for internal operations.

“If the state does not manage to refinance itself, not only with regard to the expenses for staff, but also energy, communication expenses, expenses for missions, including military operations — this will prevent the state from functioning on a daily basis,” he said.

The Central Bank of West African States serves the eight countries in West Africa that share a common currency, the West African CFA franc.

Kobi Annan, a risk consultant based in Accra with Songhai Advisory, an economic and risk consultancy firm focused on sub-Saharan Africa, says that Mali has some reserves that will carry the country through the next few months.

He says making Mali default on the debt is exactly how the West African sanctions are designed to work, to put pressure on the transitional authorities.

“This would be fully expected; this is part of why it’s done that way, to make things more difficult for Mali,” said Annan. “If you default on debt or if you don’t pay back debt, then you are deemed a higher risk, meaning that borrowing when you are able to becomes more expensive.”

Annan and Makalou both assert that eventually, as the Malian government becomes less able to access or borrow money and as its reserves dwindle, social services are likely to be affected, bringing the effects of the financial sanctions against the state into the lives of ordinary Malians.

Mali’s transitional military government has widespread support from the Malian population. Since being sanctioned, the government has not proposed a new election timeline, but has expressed a willingness to continue dialogue with ECOWAS.

The ministry’s statement added that debts would be paid as soon as restrictions are lifted.
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Угоду про створення зони вільної торгівлі між двома країнами підписали премʼєр-міністр України Денис Шмигаль та міністр торгівлі Туреччини Мехмет Муш
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The most recent COVID-19 cases in China have put even more stress on an already strained supply chain, causing delays in the shipping of everyday items to the United States. VOA’s Elizabeth Lee shows what one business is doing to alleviate the problem.
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Суд у тексті рішення вказує на те, що жоден документ не дає Раді НБУ повноважень здійснювати дисциплінарні провадження
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The Treasury Department this week reported that the total national debt of the United States surpassed $30 trillion for the first time in history, an amount equal to nearly 130% of America’s yearly economic output, known as gross domestic product. The eye-popping figure makes the U.S. one of the most heavily indebted nations in the world. 

The federal debt has been high and rising for decades, but the federal government’s response to the coronavirus pandemic, which involved massive infusions of cash into the U.S. economy, greatly accelerated its growth.  

At the end of 2019, prior to the pandemic, the national debt stood at $22.7 trillion. One year later, it had risen by an additional $5 trillion, to $27.7 trillion. Since then, the nation has added more than $2 trillion in further debt. 

A grim reminder 

While the $30 trillion figure, by itself, has no significant meaning, it may serve to focus attention on what some see as a major concern for the future health of the country. 

“Hitting the $30 trillion mark is a reminder of just how high our debt is and just how much we’ve been borrowing,” said Marc Goldwein, senior vice president and senior policy director for the Committee for a Responsible Federal Budget.  

“Debt held by the public, which is the measure we prefer to use, is about as large as the economy,” Goldwein told VOA. “In a decade, it’ll be larger than any time since World War II. Meanwhile, we have the highest inflation rate we’ve had in 40 years, and there doesn’t seem to be any sign that the borrowing is going to let up.” 

Different debtors 

The $30 trillion in outstanding debt is owed to a wide variety of creditors, including the federal government itself. 

According to the Treasury Department, as of January 31, $6.5 trillion of the national debt was classified as “intragovernmental holdings.” This includes Treasury securities held by various agencies of the federal government, most prominently the Social Security Administration, which maintains a trust fund to provide income to senior citizens. 

The far larger portion of the debt is classified as debt held by the public, which amounts to $23.5 trillion. The term “public” can be somewhat misleading because the category includes not just the debt instruments held by individual investors but also the debts held by the Federal Reserve, large investment funds and foreign governments. 

According to the Treasury Department, foreign governments hold about $7.7 trillion in U.S. debt, though no country holds more than 5% of the total. As of the end of November, the most recent data available, Japan was the largest foreign holder of U.S. debt, with $1.3 trillion. China was the second-largest holder of U.S. debt, with $1.1 trillion, while the United Kingdom was in distant third place, with $622 billion. 

The cost of debt 

The cost of servicing the country’s outstanding debt has become a major part of the federal budget as the outstanding debt has grown. In 2021, the government made $562 billion in interest payments on outstanding debt. That is more than the annual budget of every individual federal agency except for the Treasury, the Department of Health and Human Services (which manages the Medicare and Medicaid government health insurance programs), and the Department of Defense. 

Surprisingly, during the early part of the pandemic, the federal government’s interest payments fell even as the debt increased, because of a broad decline in interest rates. 

However, with the Federal Reserve poised to begin raising interest rates in an attempt to ward off rising inflation, the rate the Treasury has to pay on newly issued debt will likely rise, meaning that the overall cost of servicing the federal debt will likely go up in the relatively near future. 

Comparison with other countries 

The United States’ ratio of debt to GDP, the measure most commonly used to gauge a country’s level of indebtedness, places it among the most indebted countries in the world. 

According to data gathered by the World Bank in October, the country with the world’s highest debt-to-GDP ratio is Japan, which carries debt equivalent to 257% of its economic output. Other developed economies with very high debt-to-GDP ratios include Greece, at 207%, and Italy, at 155%. 

With a ratio of 133%, the U.S. is the 12th most indebted country overall, and the fourth most indebted among the developed economies that make up the Organization for Economic Co-operation and Development. The OECD average is an 80% debt-to-GDP ratio. 

Both parties added to debt 

The national debt is the cumulative total of annual federal deficits. The U.S. has seen federal surpluses in just four of the past 50 years, from 1998 to 2001, encompassing the last three years of the administration of Bill Clinton, a Democrat, and the first year of the administration of George W. Bush, a Republican.  

In recent decades, both Democrats and Republicans have contributed to the rising levels of federal borrowing, with the debt increasing on a regular basis, regardless of which party controlled Congress and the White House. 

It’s a fact that causes some members of Congress to express frustration with their colleagues over a seeming lack of concern about the problem. 

“$30 trillion in debt is an obscene number, but what’s even more depressing is the fact that most politicians in both parties don’t really care,” Senator Ben Sasse, a Nebraska Republican, said in a statement. “Someone is going to have to pay that money when these politicians are long gone, and — spoiler alert — it won’t be paid by them but instead by our kids.” 

 
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Торги на міжбанку завершуються на рівні 28 гривень 28–30 копійок за долар
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Наглядова рада «Укрзалізниці» не працювала з кінця вересня 2021 року
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