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Recession calls are being issued by major corporate CEOs and leading economists as Federal Reserve policy to fight inflation weakens business spending and growth, as well as consumer demand.
Layoffs in the tech sector are leading a business retreat on aggressive hiring.
But an economic downturn is not showing up in the data on new business formation and Main Street may still add millions of jobs if the Fed does not entirely choke off the economy.
One of the pandemic’s most unexpected economic trends was the boom in entrepreneurship, and while the rate of new business creation dipped recently, it remains strong.

The Census Bureau reported almost 433,000 new business applications in October, up from 313,000 in December 2019, before the Covid pandemic began, and 413,000 as recently as June.
Mint Images | Mint Images Rf | Getty Images

If a recession is coming, someone forgot to tell the entrepreneurs.
As interest rates rise, inflation lingers and home equity that many business founders use to get started shrinks, small business formations are doing something unexpected – they’re rising. Indeed, after a small lull earlier this year, new business formations have recovered to the elevated levels seen last fall, and their owners are hiring quickly, said John Haltiwanger, a University of Maryland economist whose new paper with Federal Reserve economist Ryan Decker documents the trend.

If the data persists, the resilience in small business formation points to a “new plateau” of activity that may add millions of jobs to the economy, Haltiwanger says. But the risks include the Fed itself choking off financial conditions so much that the small business boom is smothered.
“Even with the volatility and the surge [earlier in the Covid pandemic] we’re still 30 percent higher in 2022 than in 2019,” Haltiwanger said. “People are being optimistic about the future and that’s a good sign.” 
The Census Bureau reported almost 433,000 new business applications in October, up from 313,000 in December 2019, before the Covid pandemic began, and 413,000 as recently as June. In between, new business applications soared, topping out at 552,000 in July 2020, declining to 350,000 by Christmas, and rebounding to 500,000 by mid-2021, according to the Bureau. 
Covid changed the economic equation
Tamara Meyer began her new business in the fall of 2020. Danny Sweis opened his in the summer of 2022.
Meyer, a veteran corporate attorney in St. Petersburg, Fla., left a job as a legal vice president at a top-three managed care company to open Lakewood Strategy & Consulting, which helps corporations organize their in-house legal departments. One big issue: managing Covid-related disruptions and retaining legal talent in a disrupted job market.

Sweis, a chef whose Jordanian-born parents raised him in Oklahoma City, opened Ragadan, which he says blends the cuisine of the Middle East and American cattle country, in the Uptown neighborhood of Chicago this August. 
Both tell familiar stories of years-old desire to strike out on their own, and how the Covid-induced restructuring of work and work-life balance, and economic conditions, presented at least as much opportunity as risk for each of them. 
“Conventional wisdom says, this close to retirement, why shuffle the deck?” said Meyer. Covid-driven changes in work, across industries, meant opportunity for consultants like her. “Covid shuffled the perspective deck for everyone. It was a critical time to look at what made your team tick.”
When Covid hit, Sweis was working for Chicago-based Cornerstone Restaurant Group, setting up a restaurant at Michael Jordan’s Florida golf course. When that project ended, the immediate impact Sweis saw was that commercial rents were being offered at huge discounts as other businesses closed. He held off, figuring he would make little money if he opened in 2020. He took time to plan, and he and his wife had a baby. But as stocks surged in 2020 and most of 2021, his confidence in the economic recovery grew, he said.
“People are going to eat,” Sweis said. “People like to complain about the economy, but most are pretty happy with where they personally are at.”
Newly formed businesses have followed patterns familiar to those who have followed the Covid news, or seen their own lives disrupted – which is nearly everyone.
Where new businesses are being created
The largest number of new businesses opened have been in non-store retailing, which surged as shoppers avoided stores in 2020 and has held its market share since. The second-biggest category of new companies were in professional services like Meyer’s, many started by people who decided to work from home or open an office near home. 
And the largest number of new entrants came in suburban areas, as workers moved their own workplaces – and their spending on lunch and other services – to where they live rather than city centers where they once headed to offices. That may help explain why the restaurant industry, long a leading small-business employer in city centers, is still down 300,000 jobs since February 2020.
The biggest question has been whether these new businesses were growing enough to create jobs for anyone other than their founders. Haltiwanger says the answer is yes.
Using data from the Labor Department’s Business Employment Dynamics series, Haltiwanger and Decker argue that new businesses are now creating as many as 1 million new jobs per quarter. If that lasts, that means 4 million per year, offset by 2.5 million lost as other small businesses close. 

“We’re actively looking at the [business formation data] for signs of an economic downturn,” Haltiwanger said. “So far in the labor market, we’re not seeing it. In other parts of the economy we are,” he said, pointing to the housing market and durable goods sales.
The hiring by new businesses that Decker and Haltiwanger describe is a major force in an economy that had over 153 million total jobs in October, up 5.3 million from a year earlier. Recent surveying of small business owners across the nation has shown that while layoffs get the headlines, entrepreneurs can’t find nearly enough workers for all the positions they want to fill.
“Its primary [macroeconomic] effect from where I’m standing is the labor market churn it’s causing,” Moody’s Analytics economist Steve Colyar said. He argues that the new companies appear to be soaking up many workers who have switched industries, accounting for part of the wage pressures that larger employers are reporting. “Even if the net job gains are smaller, the size of that reallocation of workers is really interesting.”
Sweis, whose neighborhood joint was just ranked by Chicago Magazine as one of the “10 Hottest Restaurants in Chicago right now,” said he joined the trend of locating outside the city center to work closer to home. 
After years working in downtown restaurants, he opened Ragadan in an economically-mixed area seven miles north of the Loop, he said. He has just added two part-time workers, he said, and hopes to have five to seven staffers within a year.  Meyer said she’s evaluating whether to add staff now, but says her process is slower because she needs highly specialized workers.
“The first year, you just work a lot,” Sweis said. 
There are still questions about how long the boom in new-business formation can last, and how big an impact it will have, Haltiwanger says. His paper with Decker lists the risks: Startup activity had slowed for years before Covid for reasons that aren’t well understood, it’s not yet known if the new companies will boost the economy’s productivity – and, they said, the Fed’s efforts to tighten monetary policy may lead to a recession.
“The young businesses started during the pandemic, and the continued elevated trend of business applications, may be at risk in the event of a broad economic slowdown,” they said.
But Sweis argues that Ragadan’s fate turns on a much simpler question.
“As long as I cook good food, none of that matters,” he said.
“The fact that so many businesses have opened suggests that it will be persistent,” Haltiwanger said. “It’s not going to change over the next few months.” More

Pfizer asked a federal court in Boston on Monday to dismiss Moderna’s lawsuit seeking monetary damages for alleged patent violations related to the Covid vaccine.
Moderna, in a complaint filed in August, accused Pfizer of copying two key pieces of technology that make the messenger RNA Covid vaccines possible.

Vials with Pfizer-BioNTech and Moderna coronavirus disease (COVID-19) vaccine labels are seen in this illustration picture taken March 19, 2021.
Dado Ruvic | Reuters

Pfizer has rejected allegations made by rival Moderna that its Covid-19 vaccine is a copy, accusing the Boston biotech company of rewriting history to lay claim to technology developed by a field of scientists over many years.
Pfizer asked a federal court in Massachusetts on Monday to dismiss Moderna’s lawsuit seeking monetary damages for alleged patent violations related to the Boston company’s Covid vaccine. Pfizer asked the court to stop Moderna from suing it or its partners again over three alleged patent infringements.

Moderna, in a complaint filed in August, accused Pfizer of copying two key pieces of technology that make the messenger RNA Covid vaccines possible.
Moderna accused Pfizer of using the same modification to mRNA that keeps the molecule stable long enough to program human cells to produce the crucial spike protein that triggers an immune response against Covid.
Moderna also accused Pfizer of using the same full-length spike protein in its Covid shots. Moderna says it demonstrated a full spike produced an immune response in 2015 when it developed an mRNA vaccine against the Middle East Respiratory Syndrome. That vaccine never went to market.
“The Moderna inventions that Pfizer and BioNTech chose to copy were foundational for the success of their vaccine,” the company claimed.
Pfizer and its German partner BioNTech vigorously rejected those allegations, saying the technological building blocks for the vaccines were developed by a field of research scientists before the pandemic began. They accused Moderna of trying to “place itself in the spotlight alone.”

“Moderna is wrong, and its revisionist history is not based on fact. Pfizer and BioNTech did not copy Moderna’s technology,” Pfizer said in its response. “Rather, Pfizer and BioNTech independently developed their vaccine by utilizing innovation from their respective scientists and relying upon decades of research conducted by others before the pandemic began.”
Pfizer said the modification to mRNA was developed by research scientists at the University of Pennsylvania, one of whom is now an executive at BioNTech. It rejected Moderna’s claim to own the full-length spike protein technology. Pfizer said scientists have worried about coronaviruses since the 2003 SARS outbreak and by 2009 scientists understood the full-length spike induced a strong immune response.
Pfizer and Moderna have generated tens of billions of dollars in revenue from the Covid vaccines and generated windfall profits since the shots were first authorized in December 2020.
Moderna is asking the court to award it monetary damages since March 2022 including royalties and lost profits with interest. The company is also seeking enhanced damages up to three times the amount of compensatory damages found.

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Warner Bros. Discovery CEO David Zaslav is prioritizing cash generation over everything else.
The company will have laid off thousands of people this year by the middle of this month.
Zaslav also faces a dilemma with TNT’s NBA rights, which are expensive and run out in 2025.

David Zaslav
Olivia Michael | CNBC

A few months ago, after a lengthy and sobering review of Warner Bros. Discovery’s business, Chief Executive David Zaslav gave his division heads a cutthroat mission.
Pretend your units are family businesses, Zaslav said. Start from scratch and prioritize free cash flow, he added, according to people familiar with the matter. Then, Zaslav said, come back to me with a new strategic plan for your unit.

Zaslav’s directive has led to what will amount to thousands of layoffs at the company by the middle of this month, said the people, along with substantial strategic changes at CNN, the Warner Bros. film studio and other divisions.
The CEO formed his plan after he took a hard look at the finances of the combined WarnerMedia-Discovery, a deal that closed in April. Zaslav determined the company was a mess. AT&T mismanaged WarnerMedia through neglect and profligate spending, he’d decided, according to people familiar with his discussions. The people asked not to be identified because the talks were private.
Warner Bros. Discovery’s total debt of about $50 billion was tens of billions more than the company’s market capitalization. About $5 billion of that debt is due by the end of 2024 after paying off $6 billion since the close of the merger. The company could push back the maturity on some bonds if necessary, but interest rates have risen dramatically, making refinancing much costlier.
To pay down debt, any company needs cash — ideally, from operations. But the near-term trends suggested Warner Bros. Discovery’s business was getting worse, not better. The company announced free cash flow for the third quarter was negative $192 million, compared to $705 million a year earlier. Cash from operating activities was $1.5 billion for the first nine months of 2022, down from $1.9 billion a year earlier.
Along with the rise in rates, Netflix’s global revenue and subscriber growth had slowed, prompting investors to bail on peer stocks — including Warner Bros. Discovery, which had spent the past three years developing streaming services HBO Max and Discovery+. Moreover, the advertising market was collapsing as corporate valuations flagged. Zaslav said last month the ad market has been weaker than at any point during the 2020 pandemic.

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Warner Bros. Discovery shares have fallen more than 50% since WarnerMedia and Discovery closed the deal in April. Its market value stands at about $26 billion.
In addition to job cuts, Zaslav’s directive spurred the elimination of content across the company, including scrapping CNN original documentaries, Warner Bros. killing off “Batgirl” and “Scoob 2: Holiday Haunt,” and HBO Max eliminating dozens of little-watched TV series and movies, including about 200 old episodes of “Sesame Street.”
The immediate decisions allowed Zaslav to take advantage of tax efficiencies that come with changes in strategy after a merger. Warner Bros. Discovery expects to take up to $2.5 billion in content impairment and development write-offs by 2024. The company, which has about 40,000 employees, has booked $2 billion in synergies for 2023. Overall, Zaslav has promised $3.5 billion in cost cuts to investors — up from an initial promise of $3 billion.
The underlying rationale behind Zaslav’s cost-cutting strategy centered on turning Warner Bros. Discovery into a cash flow generator. Not only would cash be needed to pay off debt, but Zaslav’s pitch to investors would be to view his company as a shining light in the changing entertainment world — a legacy media company that actually makes real money.
“You should be measuring us in free cash flow and EBITDA [earnings before interest, taxes, depreciation and amortization],” Zaslav said an investor conference run by RBC Capital Markets last month. “We’re driving for free cash flow.”
Zaslav is trying to give Warner Bros. Discovery a head start on what may be a year of downsizing among large media and entertainment companies. His strategy appears clear: Cash generation will coax Wall Street into seeing his company as an industry outperformer. But he’ll need to keep together a company made up of tens of thousands of ex-Time Warner and then ex-WarnerMedia employees who have been through round after round of reorganizations and layoffs.
“It isn’t going to be overnight, and there’s going to be a lot of grumbling because you don’t generate $3.5 billion of operating synergies without, you know, breaking a few eggs today,” Warner Bros. Discovery board member and media mogul John Malone told CNBC in an interview last month.

Cash rules everything

Malone has co-strategized and cheered Zaslav’s effort to focus the company on maximizing free cash flow, which is defined as net income plus depreciation and amortization minus capital expenditures.
“Whenever I talk to David, the first thing I say is manage your cash,” Malone said last month. “Cash generation will ultimately be the metric that David’s success or failure will be judged on.”
Even before Zaslav gave his directive to all of the division heads, the new CEO was already thinking about how to boost cash flow. That was at least part of the motivation to eliminate CNN+ just weeks after it launched, which had a spending budget of about $165 million in 2022 and an eventual $350 million, according to people familiar with the matter.
Warner Bros. Discovery owns streaming services, linear cable networks, a movie studio, a TV production studio and digital properties. It owns DC Comics, HBO, CNN, Bleacher Report, and oodles of reality TV programming. It has sports rights both internationally and domestically, including the NBA on TNT.
Zaslav hopes his reconstruction of Warner Bros. Discovery will deliver two results. First, it will showcase the company as a fully diversified content machine, featuring top brands and intellectual property in prestige TV (HBO), movies (Warner Bros.), reality TV (Discovery), kids and superheroes (Looney Tunes, DC), news (CNN) and sports (NBA, NCAA March Madness).

Liberty Media’s John Malone
Michael Kovac | Getty Images

Second, he wants it to prove that a modern media company that’s spending billions on streaming video can also generate billions in cash flow. The company has estimated 2023 EBITDA will be $12 billion. Warner Bros. Discovery will generate more than $3 billion in free cash flow this year, about $4 billion next year and close to $6 billion in free cash flow in 2024, according to company forecasts.
That would give Zaslav a selling point to investors compared to other legacy media companies. Disney has generated just $1 billion of free cash flow over the past 12 months and analysts estimate the company will have about $2 billion in 2023. That’s despite growing Disney+, its flagship streaming service, by 46 million subscribers during the period and owning a theme park business that generated $28.7 billion in revenue for the fiscal year — up 73% from a year earlier.
The low free cash flow relates largely to the money drain from streaming services and Disney’s large investments in theme parks. Over the past 12 months, Disney had $4.2 billion in operating income from its media properties, down 42% from a year ago. Returning Disney CEO Bob Iger said in a town hall last month he will prioritize profitability over streaming growth — a change from when he left the post in 2020. Outgoing boss Bob Chapek put into place a Dec. 8 price hike for Disney+ and other streaming services to accelerate cash flow.
“Discovery was a free cash flow machine,” Zaslav said earlier this year of his former company, which he ran for more than 15 years before merging it with WarnerMedia. “We were generating over $3 billion in free cash flow for a long time. Now, we look at Warner generating $40 billion of revenue and almost no free cash flow, with all of the great IP that they have.”

Wall Street vs. Sunset Boulevard

When AT&T announced it was merging WarnerMedia with Discovery Communications last year, Zaslav immediately went on a Hollywood “listening tour,” sensing an opportunity to become the new king of Tinseltown. Many Hollywood power players thought Zaslav would dedicate his first year as CEO to currying favor with the industry given his lack of history with scripted TV or movies. He even bought producer Bob Evans’ house for $16 million in Beverly Hills, a sign some thought meant he wanted to be Hollywood’s next mogul.
A year later, Zaslav isn’t the king. In fact, many consider him a villain.
It turned out Zaslav’s top priority as CEO of a large public company wasn’t to win over Hollywood. Rather, it was to convince investors his company could survive and flourish as a relative minnow against much larger sharks, including Apple, Amazon, Disney and Netflix, in an entertainment world that’s quickly moving to digital distribution.
Zaslav’s focus on investors before Hollywood makes business sense. The company must be financially sound before it can make big investments. But he’s taken a hit, reputationally, with some in the creative community.
“HBO Max is widely acknowledged to be the best streaming service. And now the execs who bought it are on the verge of dismantling it, simply because they feel like it,” tweeted Adam Conover, the creator and host of “The G Word” on Netflix and “Adam Ruins Everything” on HBO Max, in August. “Mergers give just a few wealthy people MASSIVE control over what we watch, with disastrous results.”
One Hollywood insider who met with Zaslav to give him advice before he stepped into the job said the Warner Bros. Discovery CEO has ignored 90% of his advice on how to manage the business.
Time will tell whether Zaslav’s year-one decisions have lasting ramifications with a spurned Hollywood community. Critics of Iger at Disney initially said he lacked “creative vision” when he first took over as chief executive nearly two decades ago.
Zaslav can counter that Warner Bros. Discovery hasn’t decreased content spending. The company spent about $22 billion on programming in 2022. But he’s also made cost consciousness a point of pride.
“We’re going to spend more on content — but you’re not going to see us come in and go, ‘Alright, we’re going to spend $5 billion more,'” Zaslav said in February. “We’re going to be measured, we’re going to be smart and we’re going to be careful.”
The company’s content decisions have been based on strategic corrections, such as eliminating made-for-streaming movies and cutting back on kids and family programming that don’t materially entice new subscribers or hold existing ones, executives determined. Warner Bros. Discovery’s HBO continues to churn out hits, including “White Lotus,” “Euphoria,” “House of the Dragon” and “Succession,” under the leadership of Casey Bloys.

V Anderson | WireImage | Getty Images

‘We don’t have to have the NBA’

Perhaps Zaslav’s biggest dilemma is what to do with the NBA.
Like other media companies, Warner Bros. Discovery rents the rights to carry games and pays billions to leagues for the privilege. Warner Bros. Discovery currently pays around $1.2 billion per year to put NBA games on TNT. In 2014, the last time the league struck a deal with TNT and Disney’s ESPN, carriage rights rose from $930 million to $2.6 billion per year.
Negotiations to renew TNT’s NBA rights will begin in earnest next year. Zaslav has said he has little interest in paying a huge increase just to carry games again on cable networks — a platform that loses millions of subscribers each year.
“We don’t have to have the NBA,” Zaslav said Nov. 15 at an investor conference. “With sport, we’re a renter. That’s not as good of a business.”
The problem for Zaslav is keeping legacy pay TV afloat may be his best way to keep cash flow coming, and putting NBA games on TNT may be his best chance to do that. In the third quarter, Warner Bros. Discovery’s cable network business had adjusted EBITDA of $2.6 billion on $5.2 billion of revenue. That’s compared with a direct-to-consumer business that lost $634 million.
If Warner Bros. Discovery is going to pay billions of dollars a year for the NBA, Zaslav wants a deal to be future-focused. He has the luxury of having NBA Commissioner Adam Silver’s ear for the next three years because the NBA will be on TNT through the end of the 2024-25 season.
“If we do a deal on the NBA, it’s going to look a lot different,” Zaslav said.

Charles Barkley on Inside the NBA
Source: NBA on TNT

Warner Bros. Discovery knows how to produce NBA games and airs a studio show, “Inside the NBA,” which is widely regarded as the best in professional sports. It’s possible Zaslav could strike a deal with another bidder, such as Amazon or Apple, which may allow Warner Bros. Discovery to produce their games while giving him a package of games that came with a lower price tag.
Ideally, Zaslav would like to do sports deals that include ownership of intellectual property. This is also appealing to Netflix, The Wall Street Journal reported last month. Acquiring leagues gets Zaslav out of the rental business. But while smaller professional sports leagues, such as Formula One and UFC, are owned by media companies (Malone’s Liberty Media and Ari Emanuel’s Endeavor, respectively), it seems unlikely NBA owners would agree to sell Warner Bros. Discovery a stake in the league.
Silver said last month at the SBJ Dealmakers Conference he was open to rights deals structured in novel ways.
“We’re in the enviable position right now of letting the marketplace work its magic a little bit, you know, to see where the best ideas are going to come from, what’s going to drive the best value,” Silver said.
It’s also possible Zaslav could walk away from the NBA completely. While “Inside the NBA” co-host Charles Barkley recently signed a 10-year contract to stay with Warner Bros. Discovery, it includes an out clause if Zaslav doesn’t re-up the NBA, according to The New York Post.
Live sports aren’t necessarily essential to most streaming services’ success. Netflix, Disney+ and HBO Max all have zero live sports — at least for now.
The one certainty is Zaslav’s decision will be squarely based on how a deal affects the company’s free cash flow.
“It’s how much do we make on the sport?” Zaslav said. “When I was at NBC, when we lost football [in 1998], we lost the promotion of the NFL, which was a huge issue. Then you have the overall asset value without the sport. So you have to evaluate all that.”
WATCH: John Malone on streaming platform distinctions

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Boeing has made the last 747 as it transitions to all two-engine wide-body jetliners.
Airlines are seeking new models that are cheaper to operate than the iconic hump-backed jet.
Cargo airline Atlas Air will take delivery of the last one, #1574, early next year.

Boeing’s last 747 aircraft, #1574, at its factory in Everett, Washington.
Leslie Josephs | CNBC

EVERETT, Wash. − Boeing’s final 747 is set to roll out of the company’s cavernous factory north of Seattle as airlines’ push for more fuel-efficient planes ends the more than half-century production run of the jumbo jet.
The 1,574th — and last — 747 is scheduled to leave the assembly plant late Tuesday before it is flown by a Boeing test pilot, painted and handed over to cargo and charter carrier Atlas Air Worldwide Holdings early next year.

“It’s a very surreal time, obviously,” said Kim Smith, vice president and general manager of Boeing’s 747 and 767s programs out of the assembly plant here. “For the first time in well over 50 years we will not have a 747 in this facility.”
The lone 747, covered in a green protective coating, sits inside the company’s massive assembly plant in Everett — the largest building in the world by volume, according to Boeing. The building was constructed specifically for the jumbo jet’s start of production in 1967.
Inside, Boeing crews have spent the last few days swinging the landing gears, fine-tuning cargo handling systems and finishing the interiors before the final 63-feet-tall and 250-foot-long aircraft leaves the building. Tails with customer logos that have bought the 747 line part of one of the doors.
The end of 747 production doesn’t mean the planes will disappear entirely from the skies, since the new ones could fly for decades. However, they’ve become rare in commercial fleets. United and Delta said goodbye to theirs years before the Covid pandemic, while Qantas and British Airways landed their 747s for good in 2020 during a worldwide travel slump.
“It was a great plane. It served us brilliantly,” British Airways CEO Sean Doyle said on the sidelines of an event at John F. Kennedy International Airport with partner American Airlines last week. “There’s a lot of nostalgia and love for it but when we look to the future it’s about modern aircraft, more efficiency, more sustainable solutions as well.”

The hump-backed 747 is one of the most recognizable jetliners and helped make international travel more accessible in the years after its first commercial flight in January 1970. Its four powerful engines were efficient for their time. The planes could carry hundreds of passengers at a time for long-haul flights.
The enormous jets also made it easier to fly air cargo around the world, helping companies cater to more demanding consumer tastes for everything from electronics to cheese.
The plane’s end comes as Boeing is working to regain its footing after a series of crises, including the aftermath of two deadly crashes of its bestselling 737 Max narrow-body planes that killed a total of 346 people.
The pandemic travel slump has given way to a boom in orders for new planes, but production problems have delayed deliveries of Boeing’s wide-body 787 Dreamliners. The company doesn’t expect its 777X, the largest new jet, to be ready for customers until early 2025. It also still has to deliver two 747s to serve as Air Force One, but those have been beset by delays and cost overruns as well.
Boeing shares are down about 8% this year through Monday’s close, compared with a roughly 16% drop in the broader market. Despite a recent loss, Boeing’s stock has surged about 53% so far this quarter. United’s plan to buy dozens of Dreamliners, possibly by the end of the year, has helped lift shares.

Boeing’s last 747 aircraft, #1574, at its factory in Everett, Washington.
Leslie Josephs | CNBC

Boeing CEO Dave Calhoun last month said that “there will be a moment in time where we’ll pull the rabbit out of the hat and introduce a new airplane sometime in the middle of the next decade,” saying that technology needs to offer more fuel savings.
The end of 747 production was “inevitable but it would be a little more palatable if they were making something new,” said Richard Aboulafia, managing director at consulting firm AeroDynamic Advisory.

For all of its milestones airlines have long clamored for more fuel-efficient planes. Boeing’s own twin-aisle and twin-engine 777s and 787 Dreamliners have taken the spotlight along with competitors from main rival Airbus.
Airlines have largely shunned four-engine jets to make way for two-engine aircraft.
“The biggest enemy of Boeing quads was Boeing twins,” said Aboulafia.
Airbus, too, has ended production of its Airbus A380 after a 14-year run, handing over the last of the world’s largest passenger plane a year ago. Such jumbo jets are intended to funnel passengers through hub airports, but travelers often seek shorter routes with nonstop flights.
In 1990, there were 542 Boeing 747s that made up 28% of the world’s passenger wide-body fleet, according AeroDynamic Advisory, citing Centre for Aviation data. With 109 Boeing 747 planes, the jets accounted for just 2% of the world’s wide-body passenger fleet this year, according to CAPA.
The jet’s domination of the air cargo market has also waned, even as air freight emerged as a bright spot during the pandemic. The 747 comprises 21% of the world’s wide-body cargo fleet, down from 71% in 1990, according to CAPA. Airbus has begun marketing a freighter version of its wide-body competitor the A350 and Boeing is selling a freighter version of the 777X, as airlines prepare for stricter emissions standards.
Engineers, mechanics and others who worked on the 747 will move on to other plane programs as the manufacturer tries to ramp up output, Smith said.
“Those programs are very eager and kind of knocking down our door to get this level of top talent to come join their team,” she said.
— CNBC’s Gabriel Cortes contributed to this article.

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The global airline industry is set to return to profitability again next year following a near-three year downturn, an industry body said Tuesday.
The International Air Transport Association (IATA) said it expects the industry to post a “small” net profit of $4.7 billion in 2023, with more than 4 billion passengers set to take to the skies.”
“[There’s] still a long way to go to get back to where we were in 2019, but we are heading in the right direction,” director general Willie Walsh told CNBC.

The global airline industry is set to return to profitability again next year following a near-three year downturn fueled by the Covid-19 pandemic, an industry body said Tuesday.
The International Air Transport Association (IATA) said it expects the industry to post a “small” net profit of $4.7 billion in 2023, with more than 4 billion passengers set to take to the skies.

Director General Willie Walsh told CNBC the predictions marked a “step in the right direction” for an industry clobbered by pandemic-induced travel restrictions and resultant staff shortages.
“The recovery is going well,” Walsh told CNBC’s Julianna Tatelbaum. “[There’s] still a long way to go to get back to where we were in 2019, but we are heading in the right direction.”
The forecasted uplift, outlined in a new report, points to the first profitable year for the airline business since 2019, when net profits were $26.4 billion, and signal an improvement on the association’s June outlook, when it said profitability was “within reach.”
For 2022, IATA also reduced its forecast for industry-wide losses to $6.9 billion from $9.7 billion in June’s outlook.

Challenges ahead ‘relatively small’

The airline industry has been hemorrhaging billions of dollars in recent years as coronavirus health restrictions have weighed on air travel and consumer demand.

In 2020, during the first year of the pandemic, the airline industry suffered losses of $137.7 billion, according to IATA. In 2021, those losses narrowed only partially to $42 billion as staff shortages and other disruptions continued to hamper the industry even as air travel in some places substantially resumed.

There will be challenges in 2023. But, quite honestly, these challenges are relatively small compared to what we’ve come through.

Willie Walsh
Willie Walsh, director general, IATA

Still now, wider pressures continue to weigh on the industry and the wider global economy, Walsh noted. But he said the industry is now better positioned to weather potential headwinds going forward.
“There will be challenges in 2023,” Walsh said. “But, quite honestly, these challenges are relatively small compared to what we’ve come through.”
“That’s why we’re optimistic that we can manage a way through these and get the industry back into very small levels of profitability, but profitability nonetheless,” he added.

Travel disruption set to ease

The airline industry is forecast to record total revenues of $779 billion in 2023, according to IATA, led primarily by a continued rebound in passenger demand.
North America is set to lead the charge, posting the greatest profit, followed by Europe and the Middle East. Covid-19 restrictions in China, however, will continue to weigh on travel demand in the Asia-Pacific region, which, alongside Latin America, is forecast to record additional losses next year.
“Passenger demand is expected to reach 85.5% of 2019 levels over the course of 2023 … with 4.2 billion travelers expected to fly,” the report said.

Flight cancellations, delays and staff walkouts became commonplace at many major airport in 2022 as airlines struggled to handle increased demand following staff layoffs.
Andreas Solaro | Afp | Getty Images

Cargo markets, meanwhile — which became a source of life support for airlines during the pandemic — will continue to account for a sizeable share of revenues in 2023, albeit at a lower level than recent years.
“Revenues are expected to be $149.4 billion, which is $52 billion less than 2022 but still $48.6 billion stronger than 2019,” according to the report.
The report also noted that higher costs relating to energy prices and labor, skill and capacity shortages will continue to weigh on revenues but at a lower level.
The forecasts follow a chaotic year for air travel, with flight cancellations, delays and staff walkouts commonplace at many major airports. However, Walsh said he thinks most of that disruption is now over, and passengers should expect a smoother travel experience going forward.
“I think most of that is behind us,” said Walsh. “We should be confident that those issues have been resolved. Certainly there is absolutely no excuse for the airports not to deliver on good service as we go into 2023.”

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The United States has just about 90 million planted acres of corn, and there’s a reason people refer to the crop as yellow gold.
In 2021, U.S. corn was worth over $86 billion, according to calculations from FarmDoc and the United States Department of Agriculture.

According to the USDA, the U.S. is largest consumer, producer and exporter of corn in the world.
“We’re really good at [corn production],” Seth Meyer, chief economist at the USDA, told CNBC. “And that’s why you see big acres, big demand, export competitiveness.”
It’s not just what we eat.
“We turbocharged the value of corn through the application of science,” Scott Irwin, agricultural economist and professor at the University of Illinois, told CNBC.
Corn is in what we buy, including medications and textiles, and corn is turned into ethanol, which helps to fuel cars across the nation.

The rest of the world relies on U.S. corn, too. 
At $2.2 billion in 2019, corn is the most heavily subsidized of all crops in the country.
“A lot of these subsidies … do get embedded into the cost of farmland and they essentially bid up the price of farmland marginally,” Joseph Glauber, senior research fellow at the International Food Policy Research Institute and former USDA chief economist, told CNBC. “So the benefits accrue largely to those who own land.”
The federal crop insurance program’s net spending is forecast to increase to nearly $40 billion from 2021 through 2025, according to the Congressional Budget Office.
At the same time, farmland values have reached all-time record highs.
“Do we get the corn acres because we’ve got the support, or do we have the support because we have the corn acres?” Meyer said, posing the chicken-and-egg question about the nation’s grain superpower.
Watch the video above to learn more about how corn fuels the U.S. economy from its people to its vehicles, the power of the corn belt states, the role of subsidies and where government policy for the industry may go from here.

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Mary Barra said GM’s decision to suspend advertising on Twitter was influenced by the fact that Musk’s electric vehicle company, Tesla, is a competitor.
Under Barra, GM has announced billions of dollars in spending to better compete against Tesla in the battery electric vehicle segment.
The Detroit automaker was among the first major companies to pause advertising following Musk’s takeover.

General Motors continues to monitor Twitter and evaluate its decision to suspend advertising on the social media platform following Elon Musk’s takeover of the company, CEO Mary Barra told CNBC Tuesday.
Barra said that the automaker’s decision to suspend advertising in October was in part an effort to protect its brands but was also influenced by the fact that Musk’s electric vehicle company, Tesla, is a competitor to GM.

“Anytime there’s a major change in a company, we would look to make sure we understand what the new philosophies are going to be. Our teams are having conversations,” Barra said on CNBC’s “Squawk Box.” “Remember it’s also a competitor. So, we want to make sure our advertising strategies are kept confidential.”
GM, as first reported by CNBC, was among the first major advertisers to pause advertising.
Under Barra, GM has announced billions of dollars in spending to better compete against Tesla in the battery electric vehicle segment. Automakers such as GM have worked with Twitter and other social media platforms on advertising campaigns as well as new vehicle unveilings and launches.

GM’s Twitter accounts have largely sat dormant since Musk acquired the company: Accounts for GM and Barra have not tweeted or retweeted anything since Oct. 27, when Musk took control.
Twitter did not immediately respond to an email for comment.

GM said at the time that it would suspend advertising on Twitter to “understand the direction of the platform” as a “normal course of business.” Other automakers as well as companies have since followed, as Musk has let several previously suspended accounts back onto the platform.
Musk has made several changes to the platform since taking the helm and has said he is a “free speech absolutist.”
According to Twitter internal communications obtained by CNBC, agencies and brands that paused advertising on Twitter after Musk took over are now waiting for updates on changes to company leadership, specifically teams working on brand safety.
They also want answers to questions about how Twitter Blue verification will work in the future and how Twitter plans to prevent brand impersonation. Under Musk’s leadership, Twitter rolled out and promptly rolled back a Twitter Blue Verified subscription service, after users who purchased the badges were able to impersonate celebrities, politicians and brands.
Advertisers’ also want reassurances that Twitter will be safe from hackers, with so many employees resigning or laid off, and they’re asking for more communication from new leadership about changes to the product and company.
– CNBC’s Lora Kolodny and Johnathan Vanian contributed to this report.

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The American shopper is still feeling “stressed” by inflation, and the effects aren’t being felt evenly across categories, Walmart CEO Doug McMillon said.
Shoppers are being more selective about their purchases, McMillon said, and skipping some electronics, for example, in favor of staples.
Walmart is among a slew of retailers that has seen a shift in shopping patterns, as inflation drives up the price of food, housing and more.

The American shopper is still feeling “stressed” by inflation, but the effects aren’t being felt evenly across categories, Walmart CEO Doug McMillon said Tuesday.
“We’ve got some customers who are more budget-conscious that have been under inflation pressure now for months,” he told CNBC’s “Squawk Box.” “That sustained pressure in some categories, I think, is something customers are having to deal with as we approach Christmas.”

Shoppers are being more selective about their purchases, McMillon said, and skipping some electronics, for example, in favor of staples. In the last couple quarters, he said much of company’s growth has come from people who are going to Walmart to save money.
Walmart is among a slew of retailers that has seen a shift in shopping patterns as inflation drives up the price of food, housing and more.
For the big-box retailer, that has led to challenges and opportunities. As the nation’s largest grocer, Walmart has used low-priced groceries to attract customers — including wealthier ones. About 75% of its market share gains in grocery came from shoppers with an annual household income of more than $100,000 in the past two quarters.

McMillon said Tuesday that prices for fresh food are more volatile and fluctuate more. Beef prices are down, for example, while chicken prices are still high and produce prices are relatively low relative to what they were before, he said.
“Dry grocery, processed foods and consumables are where the inflation’s most stubborn,” he said.

As it benefits from its grocery business, however, it has gotten tougher for Walmart to sell pricier items and discretionary items. Last month, Walmart Chief Financial Officer John David Rainey told CNBC that people are buying cheaper proteins such as hot dogs, beans and peanut butter instead of more expensive meats. They are holding out for sales when shopping for big-ticket items like TVs and buying less clothing and home goods, he said.
Walmart updated its forecast this summer to reflect that dynamic. It cut its profit outlook in July, as it aggressively marked down some merchandise and as consumers bought fewer high-margin discretionary items. But it raised its comparable sales projection because of stronger-than-expected grocery sales.
Last month, it gave a more cautious outlook than Wall Street expected. Walmart said it anticipates comparable sales for Walmart U.S. will rise about 3%, excluding fuel, in the holiday quarter. That was below Wall Street’s expectations of 3.5% growth, according to StreetAccount.

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