We’re also covering:

• Leaked Microsoft surveys indicate employees feel much worse about culture and leadership now.
• How side hustles turned everyone’s leisure activities into work.
• The most popular watches among Silicon Valley’s elite.

A different kind of recession

And why would they? The Fed isn’t acting like it, either. Nor is the latest economic data.

Real gross domestic product in the US grew at an annualized rate of 2.4% in the latest quarter — as Insider’s Matt Turner writes, that’s just one of several recent statistics that suggest the economy’s dream scenario just got even closer.

And so, amid this optimistic backdrop, companies are hiring, small businesses are expanding, and workers are being paid higher wages — as if to say, “What recession?”

But the way businesses act and the way they actually think might be drastically different.

In a survey of business owners from Nationwide, two-thirds of owners said they’re expecting a recession in the next six months. Couple that with the latest report from NFIB’s Small Business Optimism Index — which found that businesses were anticipating a slowdown in consumer spending — and the economic forecast looks bleak.

They aren’t alone in their pessimism. Many Americans feel bad about the economy, despite the positive financial data. Of course, part of that disconnect stems from inflation eating into their budgets, but it may also be because Americans have grown accustomed to wild economic swings following the US’s unprecedented recovery from the pandemic. After that dizzying snapback, easing into a new normal could feel rocky.

Still, there are more and more signs that a recession this year is unlikely. We’re seeing strong growth and labor-market figures, inflation has been slowing, and a key gauge the Fed closely watches is at its lowest annual rate in almost two years.

But while the broader economy has held up surprisingly well, we are now seeing a downturn of a different kind — a rout in the secondary market for luxury watches. The Fed’s aggressive monetary tightening over the past five quarters has spooked investors, causing them to scale back luxury spending, and the most expensive timepieces have suffered the worst declines.

There’s been lots of speculation over the future of the US’s economic health. But in the luxury market, the Great Rolex Recession is already here.

3 things in markets

• Pope Francis is calling on Russia to rejoin the Black Sea grain initiative as wheat prices spike. Moscow recently bailed on the UN-brokered agreement, fueling fears of a global food crisis.
• China’s tech crackdown wiped $1.1 trillion off the valuation of its Big Tech firms. But now, authorities are trying to cozy up to the same firms because the economy is in deep trouble.
• The 38 stocks that Morgan Stanley thinks will rise. Ford, Bath & Body Works, and DraftKings are among the dozens of stocks that Morgan Stanley thinks will stand strong during the earnings season.

• Leaked Microsoft employee survey. Internal surveys indicate that employees feel significantly worse than they did at the beginning of the year (particularly about workplace culture and leadership effectiveness).
• The tech elite’s favorite watches. The useful accessory has become more than just a status symbol — it’s now also a personal branding tool. Elon Musk and Jeff Bezos have been seen wearing Omegas, while Oracle’s Larry Ellison was photographed wearing a Richard Mille.
• “He is in wartime”: Mark Zuckerberg is in the middle of a desperate, last-ditch attempt to remake himself — and Meta. A former high-ranking employee told Insider, “This is ‘save the company’ mode.”

• Cities where rent is rapidly becoming more affordable. Inflation is continuing to cool, and rent growth just hit a two-year low. The online rental platform Zumper identified dozens of cities, including San Jose, New Orleans, and Houston, where rent is actually lower than it was last year.
• Careers that workers will probably have to change by 2030. Thanks to AI and shifts in how we shop, a McKinsey study found that nearly 12 million US workers might need to switch jobs by 2030. This includes roles in office support and food service.
• The cost of homeowners insurance in Florida just keeps rising. Because of inflation and severe weather, the hidden cost of homeownership just keeps getting pricier. Florida rates are expected to increase by 40% in 2023.

RIP hobbies, shipwreck, & more

• Death of hobbies: Side hustles turned everyone’s leisure activities into work — and in the rush to monetize that passion, the fire a person has for that activity can be snuffed out
• Suspected Chinese malware has been identified in several US military systems. Unlike previous attacks, experts say the intent is most likely to disrupt rather than to surveil, The New York Times reports.
• It turns out Greenland may recently have been green. Lost samples from a secret Army base showed for the first time that Greenland’s ice vanished 416,000 years ago.
• Hot tip for anyone flying business class for the first time this summer: Our reporter shares that she made one major mistake: dressing too casually.
• Einstein vs. Oppenheimer. The two “were not friends,” said a nuclear-weapons historian. Plus, they fundamentally disagreed over government work.
• Ukraine shows off its new sea drone. It’s packed with explosives and video footage showed it attacking Russian ships.
• An “exceptional” ancient Roman cargo shipwreck was found off the coast of Italy. It had hundreds of 2,000-year-old jars still intact.

Earnings, tennis, & more

• Earnings on deck today: Mitsubishi Electric, Panasonic, Heineken, and other companies. See our calendar here.
• The Mubadala Citi DC Open main draw kicks off today. The hard-court tennis tournament features top players including Coco Gauff, Frances Tiafoe, and Andy Murray.
• It’s Fatboy Slim’s birthday Right Here, Right Now. HBD!

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