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Netflix fared better than analysts anticipated during the first three months of the year, signaling the world’s largest video streaming service is still thriving as President Donald Trump’s policies cast a pall on the economy.The numbers released Thursday indicated Netflix is still building on the momentum that enabled it to add 41 million worldwide subscribers last yearthe biggest annual gain in the company’s 27-year history.But it’s unclear precisely how many more subscribers Netflix picked up during the January-March period because this report marks the first time that that the Los Gatos, California, company hasn’t provided a quarterly update on its total subscribers.Netflix announced last year it would no longer report subscriber numbers beginning with this quarter as the company seeks to shift investors’ focus to its profits after topping 300 million global subscribers in December. As part of that emphasis, Netflix is working to sell more advertising to supplement subscription dollars.Netflix’s sharper focus on its finances paid off in this year’s first quarter with earnings of $2.9 billion, or $6.61 per share, a 24% increase from from the same time last year. Revenue climbed 13% from the same time last year to $10.54 billion. Both numbers exceeded forecasts compiled by FactSet Research. Without providing details, Netflix cited ongoing subscriber growth as the main reason for its strong start this year.The robust growth came against a background of economic chaos and Trump’s fluctuating trade war. The tech industry has been hit particularly hard by the sweeping tariffs that Trump unveiled April 2 because so many bellwether companies rely on international supply chains that have been provided some relief by temporary freezes and exemptions from the fees.But Netflix’s global streaming service hasn’t been touched by Trump’s tariffs yet, making the company a notable exception that has enabled its stock price to increase 9% so far this year, while the market values of most other major tech companies have plummeted.“Netflix remains a standout in an otherwise volatile tech landscape,” said Andrew Rocco, a who tracks the stock market for Zacks Investment Research.The company’s shares rose nearly 3% in extended trading after its report came out.The trade war could still hurt Netflix if it triggers a recession or fuels inflationary pressures as many economists fear. In those scenarios, more consumers may curtail their discretionary spending on entertainment.The economic volatility could also result in a slowdown in advertising to the detriment of Netflix’s efforts to sell more commercials for a low-priced version of its streaming service that accounted for most of its last year’s subscriber growth.“We’re paying close attention clearly to the consumer sentiment and where the broader economy is moving,” Netflix co-CEO Greg Peters said during a Thursday conference call. “But based on what we are seeing by actually operating the business right now, there’s nothing really significant to note.”Peters also said Netflix’s low-cost option, currently priced at $8 per month in the U.S., should help insulate its video streaming service if households start tightening their belts.In a sign of its confidence, Netflix reaffirmed its previous prediction for annual revenue of roughly $44 billion, up 13% from 2024.“Historically in tougher economies, home entertainment value is really important to consumer households,” Netflix co-CEO Ted Sarandos noted during the conference call. Michael Liedtke, AP Technology Writer
Category:
E-Commerce
Donald Trump has stepped up his attacks on Federal Reserve Chair Jerome Powell at the same time that the Supreme Court is considering a case that could make it easier for the president to fire him.The developments are occurring against a backdrop of wider turmoil in the economy and financial markets, brought on by Trump’s sweeping taxes on imports. Most economists worry that an assault on the Fed’s longstanding independence from politics would further disrupt markets and add to the uncertainty enveloping the economy.In comments at the White House Thursday, Trump suggested he has the power to remove Powell and criticized him for not aggressively cutting interest rates.“If I want him out, he’ll be out of there real fast, believe me,” Trump said. “I’m not happy with him.”All the scrutiny threatens the Fed’s venerated independence, which has long been supported by most economists and Wall Street investors. Here are some questions and answers about the Fed. Why does the Fed’s independence matter? The Fed wields extensive power over the U.S. economy. By cutting the short-term interest rate it controlswhich it typically does when the economy faltersthe Fed can make borrowing cheaper and encourage more spending, accelerating growth and hiring. When it raises the ratewhich it does to cool the economy and combat inflationit can weaken the economy and cause job losses.Economists have long preferred independent central banks because they can more easily take unpopular steps to fight inflation, such as raise interest rates, which makes borrowing to buy a home, car, or appliance more expensive.The importance of an independent Fed was cemented for most economists after the extended inflation spike of the 1970s and early 1980s. Former Fed Chair Arthur Burns has been widely blamed for allowing the painful inflation of that era to accelerate by succumbing to pressure from President Richard Nixon to keep rates low heading into the 1972 election. Nixon feared higher rates would cost him the election, which he won in a landslide.Paul Volcker was eventually appointed chair of the Fed in 1979 by President Jimmy Carter, and he pushed the Fed’s short-term rate to the stunningly high level of nearly 20%. (It is currently 4.3%). The eye-popping rates triggered a sharp recession, pushed unemployment to nearly 11%, and spurred widespread protests.Yet Volcker didn’t flinch. By the mid-1980s, inflation had fallen back into the low single digits. Volcker’s willingness to inflict pain on the economy to throttle inflation is seen by most economists as a key example of the value of an independent Fed. What do Wall Street investors think? An effort to fire Powell would almost certainly cause stock prices to fall and bond yields to spike higher, pushing up interest rates on government debt and raising borrowing costs for mortgages, auto loans, and credit card debt.Most investors prefer an independent Fed, partly because it typically manages inflation better without being influenced by politics but also because its decisions are more predictable. Fed officials often publicly discuss how they would alter interest rate policies if economic conditions changed.If the Fed was more swayed by politics, it would be harder for financial markets to anticipateor understandits decisions. So does that mean the Fed is completely unaccountable? Well, no. Fed chairs like Powell are appointed by the president to serve four-year terms, and have to be confirmed by the Senate. The president also appoints the six other members of the Fed’s governing board, who can serve staggered terms of up to 14 years, though most governors leave before the end of their terms.Those appointments can allow a president over time to significantly alter the Fed’s policies. Former president Joe Biden appointed five of the current seven members: Powell, Lisa Cook, Philip Jefferson, Adriana Kugler, and Michael Barr. As a result, Trump will have fewer opportunities to make appointments. He will be able to replace Kugler, who filled an unexpired term ending January 31, 2026.Congress, meanwhile, can set the Fed’s goals through legislation. In 1977, for example, Congress gave the Fed a “dual mandate” to keep prices stable and seek maximum employment. The Fed defines stable prices as inflation at 2%.The 1977 law also requires the Fed chair to testify before the House and Senate twice every year about the economy and interest rate policy. But can the president fire Powell? Powell says the law establishing the Fed does not allow a president to fire a chair except for cause. There is some complication in that Powell was separately appointed as a member of the Fed’s board of governors, and then elevated to the position of chairby Trump, in 2017.Most legal scholars agree that Trump can’t fire Powell from the Fed’s board of governors, but there is less agreement over whether a president can remove him as chair. In January, Michael Barr, who was vice chair for supervision, stepped down from that post but remained on the board to avoid a potential legal clash over whether Trump could fire him.Should Trump try to fire Powell anyway, the ensuing fight would almost certainly end up at the Supreme Court. What could the Supreme Court do? We may get an early sign of how the Supreme Court would decide it this summer. There is already a case before the court on the issue of whether the president can fire top officials at independent agencies.The case stems from Trump’s firings of two officials, one from the National Labor Relations Board and the other from an agency that protects workers from political interference. The Supreme Court last week let the firings stand while it considers the case. It could rule this summer that the president, as the head of the executive branch, could fire officials at any federal agency even if Congress had intended it to be independent.The case would overturn a 90-year old precedent known as Humphrey’s Executor, in which the court ruled that the president couldn’t fire such officials.Powell said Wednesday he is watching the case closely, adding that it might not apply to the Fed. Lawyers for the Trump administration, seeking to narrow the focus of the case, have argued that it doesn’t involve the Fed.Both the Trump administration and the Supreme Court justices have carved out exemptions for the Fed before. In February, the White House issued an executive order that placed several financial regulatory agencies, including the Fed and the Securities and Exchange Commission, more directly under the president’s control. Yet the order specifically exempted the Fed’s ability to set interest rates from that order.And in a case in 2023, Justice Samuel Alito said in a footnote that the Fed is a “unique institution with a unique historical background” that made it different than other independent bodies. If the court does give presidents more poer over the heads of independent agencies, it could potentially exempt the Fed. Christopher Rugaber, AP Economics Writer
Category:
E-Commerce
The U.S. Consumer Financial Protection Bureau (CFPB), the agency created to serve as a watchdog for American consumers against predatory business practices, said on Thursday it planned to dismiss as much as 90% of its remaining workforce, resuming mass firings less than a week after a federal court ruling granted the Trump administration leeway in setting staff levels. Multiple agency sources said staff members had begun receiving formal notices on Thursday afternoon. A CFPB spokesperson confirmed the agency was moving to fire roughly 1,500 people across core divisions, including enforcement and supervision, leaving only 200 staff. Fox Business had earlier reported those numbers. The workforce action comes in the middle of legal action brought by an employee union and consumer advocates working to prevent what they said was the agency’s illegal destruction. In an emergency motion filed Thursday evening, lawyers for an employee union and consumer advocates told a federal judge the CFPB was flouting court orders requiring a “particularized assessment” prior to any such workforce reductions and that the agency retain enough staff to perform functions required by law. “It is unfathomable that cutting the Bureau’s staff by 90 percent in just 24 hours, with no notice to people to prepare for that elimination, would not ‘interfere with the performance’ of its statutory duties,” they said in the motion. According to one official notice seen by Reuters, the agency said the recipient’s dismissal would take effect in 60 days but that access to internal email systems and IT systems would be cut off on Friday evening. President Donald Trump and billionaire adviser Elon Musk called earlier this year for the CFPB’s elimination, accusing it of politicized enforcement, and with a court hearing showing the administration’s initial goal was to shut the agency down entirely. However, administration officials subsequently said the CFPB would continue to exist in some form, noting that Trump has nominated a new director. The White House did not immediately respond to a request for comment. Created after the 2008 financial crisis, the CFPB is the sole federal agency with power to enforce consumer financial laws at nonbank institutions such as mortgage originators and payment services. The agency, long criticized by conservatives, has been facing an onslaught of firings and changes under President Donald Trump. An appeals court last week partially reversed a decision handed down by a district court that ordered the administration to halt efforts to fire workers, scrap contracts and close offices. Democratic Senator Elizabeth Warren, who championed the creation of the CFPB, earlier this year said no one other than Congress could dismantle the agency and criticized Republican attempts to weaken the agency that has paid $21 billion in financial restitution to thousands of Americans. In a statement, Warren called the mass firings “yet another assault on consumers and our democracy by this lawless Administration.” (Additional reporting and writing by Pete Schroeder) Douglas Gillison and Tim Reid, Reuters
Category:
E-Commerce
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