Business
Why 'economic headwinds' are suddenly to blame for everything
An atmospheric disturbance is whipping through the job market.
When Volvo announced it was cutting more than a thousand jobs last year, its CEO cited a particular phenomenon for the cuts. When the founder of the Messenger announced to his hundreds of employees that they were all laid off without severance, less than a year after the online publication booted up, the same weather pattern got the blame.
Chief executives at accounting firms, cookie companies and Crypto.com have all laid off thousands of workers in the last year, and pointed the finger at one metaphorical culprit: economic headwinds.
The phrase evokes a solemn CEO scanning the sky from the deck of the corporate ship. Eye on the horizon, he senses a change in the weather, a different snap to the rippling canvas, a new chop to the sea. With a grim set to his jaw, he concludes that only one course of action can save the voyage: massive layoffs.
Headwinds have always blown around in business English, but the phrase economic headwinds serves a special purpose: a majestic waving of the hand, an abandon to the fates, an inkling of force majeure.
“It’s a useful term, because we can’t control the wind,” said Thomas C. Leonard, a historian of economics at Princeton University. “If you’re a corporation trying to sell unhappy outcomes to shareholders or regulators, it’s a way of saying it’s a tough environment, but more importantly it’s a tough environment beyond our control.”
It’s a phrase heard often these days in the tech and media sectors, which face real challenges.
Tech companies that could raise and spend cash freely when interest rates were close to zero are struggling to stay afloat. The ad market has hit the doldrums — in part because all those companies that used to have cheap cash to pump into ads now have to keep their powder dry — which has taken the wind out of the sails of many media businesses, which had been facing financial problems for decades. And in L.A., Hollywood studios have been slow to pick up the pace of production after last year’s strikes, as they face questions over the viability of the streaming business model.
Executives in these industries are using the term precisely because of the contrast between their challenges and the wider world, Leonard said.
“The wild thing is, notwithstanding the headwinds in media and technology, the economy is doing unbelievably well,” Leonard said. Inflation is down, unemployment is at historically low levels, the U.S. is outperforming other rich countries, the stock market is booming, and even inequality of wealth and income is falling, Leonard said.
This presents a conundrum for those tasked with swinging the ax: how to explain why your company is ailing when everybody can see blue skies above?
By leaning on economic headwinds, executives can acknowledge a problem while avoiding getting into the messy details — say an outdated business model or internal failings.
EDGAR, the online database of the Securities and Exchange Commission, confirms that economic headwinds are being evoked more now than ever. In the 2000s, only a slight breeze was blowing, with public filings showing a handful of economic headwinds mentions. Things picked up in 2008 and 2009, as the financial crisis battered corporate America, but conditions seemed to subside in the middle of the last decade.
Then high interest rates rolled in. Since 2022, when the Federal Reserve started ratcheting up the federal funds rate to cool down the economy, EDGAR has been logging record after record. Nearly 500 companies mentioned economic headwinds in 2022. In 2023, that more than doubled to over 1,000.
A scan of the Newspaper Archive, which stretches back to the 18th century, tells a similar story. Through the booms and busts of the Gilded Age, the cataclysms of the Great Depression and the whirlwind of the 1970s oil crisis and stagflation, economic headwinds were barely worth mentioning. Most early mentions are riffs on the metaphor of the ship of state, with entire nations beating against the breeze, or come as puns in stories about airplanes or shipping companies.
But something changes after Y2K. Press usage of the phrase follows the same trajectory as the SEC record — with mentions up through the recession, followed by a dip, and now heading to new heights.
The collective experience of the last few years — pandemic, recession, inflation and now interest rate hikes — may have led to a turning of the rhetorical tides, said Robert Reich, professor of public policy at UC Berkeley and former secretary of Labor.
“The dominant economic assumption for really the entire post-World War II era has been that Keynesian macroeconomic management can tame the uncertainties and extremes of the economy,” Reich said. But since 2020, it’s been difficult to avoid the sense that things are spiraling out of control. “Most people felt at sea, and there’s something not necessarily comforting but seemingly realistic about these metaphors now.”
The economy stopped feeling like a precision machine in need of a tuneup, pointed surely toward growth, and started feeling more like an unpredictable journey to an unknown shore.
“Seeing the economy as a boat, one of those old galleons, or a three-masted schooner, tossed on the great waves of uncertainty and the waves of this roiling system makes much more sense to people,” Reich said.
It’s also “a wonderfully convenient way of avoiding responsibility” when things go sideways, Reich added.
Nautical metaphors are nothing new for the world of commerce — trade, finance and the joint-stock company can all trace their roots to seafaring merchants engaged in risky adventures to haul holds full of goods across the world in capital-intensive ships. And business euphemisms aren’t just limited to the seas. Few parts of the natural world have been spared from the corporate lexicon, with its changing landscapes and seismic shifts. Even the cosmos is fair game, especially in a tech world known for its moon shots and escape velocities.
Such fanciful phrases might serve a more grounded purpose: smoothing things over with investors. Research has shown that euphemisms actually work to soften bad news in the financial markets.
Kate Suslava, a professor of accounting at Bucknell University, spent years tracking how the use of metaphors in corporate earnings calls changes how the stock market reacts to new information. She found that investors aren’t total rubes — the stock prices of companies whose executives used negative metaphors like speed bumps or economic headwinds, or mentioned the need to tighten our belt or sharpen our pencils to get back to work after a series of missteps, indeed went down on the day of the earnings call.
What surprised her was that over the following months, the stock prices of the companies in question continued to drift down. “Investors take it as bad news, but it should be even worse news,” Suslava said. “If the market was efficient, they would completely capture it on the date of the call.”
In other words, a softening metaphor gets investors to under-react to the bad news. “Which is exactly the point of euphemisms,” Suslava said. “They work.”
Business
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Business
Civil case against Alec Baldwin, ‘Rust’ movie producers advances toward a trial
Nearly two years after actor Alec Baldwin was cleared of criminal charges in the “Rust” movie shooting death, a long simmering civil negligence case is inching toward a trial this fall.
On Friday, a Los Angeles Superior Court judge denied a summary judgment motion requested by the film producers Rust Movie Productions LLC, as well as actor-producer Baldwin and his firm El Dorado Pictures to dismiss the case.
During a hearing, Superior Court Judge Maurice Leiter set an Oct. 12 trial date.
The negligence suit was brought more than four years ago by Serge Svetnoy, who served as the chief lighting technician on the problem-plagued western film. Svetnoy was close friends with cinematographer Halyna Hutchins and held her in his arms as she lay dying on the floor of the New Mexico movie set. Baldwin’s firearm had discharged, launching a .45 caliber bullet, which struck and killed her.
The Bonanza Creek Ranch in Santa Fe, N.M. in 2021.
(Jae C. Hong / Associated Press)
Svetnoy was the first crew member of the ill-fated western to bring a lawsuit against the producers, alleging they were negligent in Hutchins’ October 2021 death. He maintains he has suffered trauma in the years since. In addition to negligence, his lawsuit also accuses the producers of intentional infliction of emotional distress.
Prosecutors dropped criminal charges against Baldwin, who has long maintained he was not responsible for Hutchins’ death.
“We are pleased with the Court’s decision denying the motions for summary judgment filed by Rust Movie Productions and Mr. Baldwin,” lawyers Gary Dordick and John Upton, who represent Svetnoy, said in a statement following the hearing. “He looks forward to finally having his day in court on this long-pending matter.”
The judge denied the defendants’ request to dismiss the negligence, emotional distress and punitive damages claims. One count directed at Baldwin, alleging assault, was dropped.
Svetnoy has said the bullet whizzed past his head and “narrowly missed him,” according to the gaffer’s suit.
Attorneys representing Baldwin and the producers were not immediately available for comment.
Svetnoy and Hutchins had been friends for more than five years and worked together on nine film productions. Both were immigrants from Ukraine, and they spent holidays together with their families.
On Oct. 21, 2021, he was helping prepare for an afternoon of filming in a wooden church on Bonanza Creek Ranch. Hutchins was conversing with Baldwin to set up a camera angle that Hutchins wanted to depict: a close-up image of the barrel of Baldwin’s revolver.
The day had been chaotic because Hutchins’ union camera crew had walked off the set to protest the lack of nearby housing and previous alleged safety violations with the firearms on the set.
Instead of postponing filming to resolve the labor dispute, producers pushed forward, crew members alleged.
New Mexico prosecutors prevailed in a criminal case against the armorer, Hannah Gutierrez, in March 2024. She served more than a year in a state women’s prison for her involuntary manslaughter conviction before being released last year.
Baldwin faced a similar charge, but the case against him unraveled spectacularly.
On the second day of his July 2024 trial, his criminal defense attorneys — Luke Nikas and Alex Spiro — presented evidence that prosecutors and sheriff’s deputies withheld evidence that may have helped his defense . The judge was furious, setting Baldwin free.
Variety first reported on Friday’s court action.
Business
California’s gas prices push Uber and Lyft drivers off the road
The highest gas prices in the country are making it tougher for some gig drivers to make a living.
Gas prices have shot up amid the war in the Middle East. On average, California gas prices are the most expensive in the United States, according to data from the American Automobile Assn. The average price of regular gas in California is almost $6. The national average is a little above $4.
While Uber and Lyft drivers have concocted clever ways to cut gas consumption, they say that without some relief they will be forced to leave the ride-hailing business.
John Mejia was already struggling to make money as a part-time Lyft driver when soaring gas prices made his side hustle even harder.
“Unfortunately, it’s the economics of paying less to drivers and gas prices,” he said. “It actually is pulling people out of the business.”
Guests at The Westin St. Francis hotel get into an Uber.
(Jess Lynn Goss / For The Times)
Gig work offers drivers the freedom to work for themselves and more flexibility, but being independent contractors also means they must shoulder unexpected costs.
Ride-sharing companies say they’re trying to help, but drivers say the gas relief comes with caveats. For now, drivers say they’re being pickier about what rides they accept, cutting hours and are looking at other ways to make money.
Mejia, who started driving for Lyft more than a decade ago, said in his early days, he would sometimes make $400 in three hours. Now it takes 12 hours to rake in $200.
The San Francisco Bay Area consultant is an active member of the California Gig Workers Union, so he knows he isn’t alone. California has more than 800,000 gig rideshare drivers, according to the group, which is affiliated with the Service Employees International Union.
On social media sites such as Reddit and Facebook, gig workers have posted about how the higher gas prices are eating into their earnings. Among the tricks they are suggesting: reducing the number of times the ignition is turned on or off, avoiding traffic, working in specific neighborhoods and at times with high demand and switching to electric vehicles.
Gig drivers usually have only seconds to decide whether to accept a ride on the app, but they have become more strategic about which rides and deliveries they accept.
That means they are more likely to sit back in their cars and wait for higher fares for quick pick-up and drop-off.
“I highly recommend the ‘decline and recline’ strategy, rejecting unprofitable rides until a better one appears,” wrote Sergio Avedian, a driver, in the popular blog the Rideshare Guy.
Pedestrians cross the street in front of a Lyft and Uber driver on Wednesday. High gas prices have made it hard for gig drivers to make a living, cutting into their profits.
(Jess Lynn Goss / For The Times)
Uber, Lyft and other companies have unveiled several ways to help drivers save on gas.
Uber said drivers can get up to 15% cash back through May 26 with the Uber Pro card, a business debit Mastercard for drivers and couriers. Based on a worker’s tier, they can get up to $1 off per gallon of gas through Upside — an app that offers cash rewards — and up to 21 cents off per gallon of gas with Shell Fuel Rewards. The company also offers incentives for drivers who want to switch to electric vehicles.
“We know the price of gas is top of mind for many rideshare and delivery drivers across the country right now,” Uber said in a blog post about its gas savings efforts.
Lyft also said it’s expanding gas relief through May 26 because the company knows that the extra cost “hits hardest for drivers who depend on driving for their income.”
The company is offering more cash back, depending on the driver’s tier, for drivers who use a Lyft Direct business debit card to pay for gas at eligible gas stations. They can get an additional 14 cents per gallon off through Upside.
Drivers say the fine print on the offers dictates which card they use and where they fill up gas, making it difficult for them to save money.
“If I do the math, it’s ridiculous,” Mejia said. “They’re offering us nothing.”
Uber declined to comment, but pointed to its blog post about the gas relief efforts. Lyft also referenced the blog post and said “the gas savings were structured through rewards to maximize stackable opportunities.”
Guests at The Westin St. Francis hotel get into an Uber.
(Jess Lynn Goss / For The Times)
Gig workers have struggled with rising gas prices in the past.
In 2022, Lyft and Uber temporarily added a surcharge to their fares amid record-high gas prices following Russia’s invasion of Ukraine. This year, Uber is adding a fuel charge to its fares in Australia for roughly two months to offset the high cost of gas for drivers. Lyft said it hasn’t added a fuel charge in the U.S. or elsewhere.
Margarita Penalosa, who drives full time for Uber and Lyft in Los Angeles, started as a rideshare driver in 2017. Back then, gas was cheaper. She would easily hit her goal of making $300 in eight hours. Now she’s making just $250 after working as much as 14 hours.
Gas prices, she said, used to be less than $3 per gallon. Now some gas stations are charging more than $8 per gallon.
“Take out the gas. Take out the mileage from my car and maintenance. How much [do] I really make? Probably I get $11 for an hour,” she said.
Jonathan Tipton Meyers wants to spend fewer hours as a rideshare driver.
He already juggles multiple gigs even while driving for Uber and Lyft in Los Angeles. He’s a mobile notary and loan signing agent, a writer and performer.
Driving is “a very challenging, full-time job,” he said. “It’s very taxing and, of course, wages were just continually decreasing.”
John Mejia, a longtime Lyft and Uber driver, poses for a portrait before attending a meeting about unionizing gig drivers.
(Jess Lynn Goss / For The Times)
Even if oil continues to flow through the Strait of Hormuz, which Iran reopened Friday, it could take a while for gas prices to come down to earth, said Mark Zandi, the chief economist at Moody’s Analytics.
“There’s an old adage that prices rise like a rocket and fall like a feather,” he said. “I think that’ll apply.”
In the meantime, it will be survival of the fittest drivers. If enough of them decide to leave the apps, the ride-hailing companies could be forced to raise fares further to attract some back.
“Those who approach rideshare driving strategically, tracking expenses, choosing trips carefully, and optimizing efficiency are far more likely to weather periods of high gas prices,” wrote Avedian in the Rideshare Guy blog. “For everyone else, a spike at the pump can quickly turn rideshare driving from a side hustle into a money-losing venture.”
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