Reviewing a volatile 2015
China’s economic slowdown, commodities’ collapse drive action during a volatile 2015
ASHINGTON — China’s economy lost some luster and its leaders their aura of invincibility. A commodities boom went bust, spreading pain from Texas oil fields to Indonesian coal mines.
Seven years of near-zero interest rates ended in the United States, while easy money kept flowing elsewhere. Volkswagen cheated on emissions tests. And the rise of Uber intensified a debate about the definition of an employee.
China’s sharp slowdown was chosen as the top business story of 2015 by business editors at The Associated Press, followed by the plunge in energy prices.
Here’s a recap of some of the top news:
CHINA’S SLOWDOWN: It took five years for people to become really worried over China’s slow-motion economic deceleration. The freak-out finally hit global markets in August. Between Aug. 10 and Aug. 25, the Dow Jones industrial average plunged 11 percent on fears that everyone had underestimated China’s troubles and their impact on the rest of the world.
COLLAPSING COMMODITY PRICES: China’s slowdown and a global oil glut crushed commodities and energy prices. The Standard & Poor’s GSCI commodities index has plunged 34 percent this year to its lowest level since 1999, down 80 percent from its peak. And the main culprit was China’s slowdown. When they were booming, Chinese factories devoured about half the world’s copper, aluminum, nickel and steel.
Oil prices, too, tumbled from $98 a barrel two years ago to under $35. The biggest factor was unrestrained production across the world, which led to a huge supply glut.
THE END OF FREE MONEY: When the Fed cut short-term interest rates to near zero in December 2008, the American economy was losing hundreds of thousands of jobs a month. The financial system had nearly toppled. The rate cut was an emergency response. No one expected it to last.
But it did — for seven years. On Dec. 16, the Fed declared that the economy was finally healthy enough to withstand a modest rate hike: It raised the shortterm
rate it controls from a range of zero to 0.25 percent to one of 0.25 percent to 0.50 percent.
VOLKSWAGEN CAUGHT
CHEATING: In early 2015, Volkswagen passed Toyota as the world’s top-selling carmaker. The triumph didn’t last long. On Sept. 18, the Environmental Protection Agency revealed VW had cheated on emissions tests for hundreds of thousands of diesel cars it had marketed as “green.”
It was a stunning case of corporate malfeasance. CEO Martin Winterkorn resigned, VW announced plans to recall 11 million cars globally and set aside $7 billion to pay for them. In the United States, where more than 500,000 VW cars have been recalled, several government agencies are investigating. VW’s reputation was left in tatters.
GROWTH OF ‘GIG ECONOMY’: The growth of the ride service Uber ignited a debate about the “gig economy,” in which people don’t hold regular jobs in traditional workplaces, but rather work as some version of a freelancer: Uber drivers tooling around town in their own cars. Homebound app designers laboring to produce a hit for the Apple Store. Carpenters selling their services on the website Thumbtack.
Supporters say the gig economy drives innovation and gives workers unparalleled freedom. Critics worry
that it lets companies label workers as “independent contractors” to avoid providing overtime, workers’ compensation or unemployment insurance.
MEGA-CORPORATE
MERGERS: Corporate America received an overhaul in 2015: Companies announced a wave of mergers and acquisitions worth nearly $4.8 trillion, busting a record set in 2007, according to Dealogic. The number of mega-mergers worth $10 billion or more also set a record.
The list includes some whoppers: Arch-rival brewers Budweiser and Miller Genuine Draft would be joined by a $106 billion deal between Anheuser-Busch InBev and SAB Miller. Dow Chemical and DuPont announced a merger worth $60 billion in a desperate bid to counter shrunken commodities prices. Pfizer and Allergan reached a $149 billion deal to bring Pfizer’s Viagra and Allergan’s Botox under one roof.
TAKATA’S EXPLODING
AIR BAGS: Japan’s Takata Corp. admitted concealing evidence for years that its air bags could explode — a defect linked to eight deaths and more than 100 injuries worldwide. Takata agreed to pay U.S. regulators a $70 million fine. It also agreed to phase out air bag inflators that use ammonium nitrate, which was blamed for the explosions. Ford, Honda, Toyota and Nissan have decided against putting the inflators in cars and trucks now under development.
NET NEUTRALITY: Cable and telecom companies fought it out with regulators over control of the Internet. The Federal Communications Commission issued “net neutrality” rules designed to bar Internet service providers from offering preferential treatment to sites that pay for faster service. Consumer groups and content companies such as Netflix support the new rules. But service providers such as Comcast and Verizon say the rules would limit innovation and discourage investment in broadband infrastructure.
In 2014, a federal appeals court had struck down the FCC’s first attempt to mandate net neutrality. But a key federal judge who was part of that 2014 decision signaled in December that the agency’s revised plan might pass muster.
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