RACHEL MARTIN, HOST:
Extra unemployment benefits to help Americans get through the pandemic expire today. Congress has yet to extend them. And that lack of action tops off a week of bleak economic news. We have learned that the country's economic output dropped by 32.9% in the second quarter, which is the largest contraction in modern American history. Yet some companies are still making record profits. NPR's chief economics correspondent, Scott Horsley, is covering this and joins us now. Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Rachel.
MARTIN: Let's start with the unemployment benefits that are expiring today. We're still waiting to see if lawmakers approve some sort of extension. But, I mean, this is a huge deal for so many millions of American families who've been making it through the pandemic because of this federal help, right?
HORSLEY: That's right, Rachel. Those benefits have not only been a lifeline for millions of families. They've also been an important crutch for the broader economy. And that showed up in those GDP figures we saw this week. One thing we know about unemployment benefits is a very high proportion of this money gets spent, you know, to buy groceries or pay the rent or pay the electric bill. Unlike some of those $1,200 relief payments that might get squirreled away in savings accounts and just sit there, unemployment benefits go right back out into the economy. And that helps landlords and grocers pay their bills. So now those benefits are going away, which is not only going to be a personal hardship for jobless workers but a drain on the overall economy, which is already sputtering thanks to the surge of new coronavirus infections.
MARTIN: So let's talk about those who may be winning in this moment - Big Tech. Executives from those companies were answering questions from lawmakers this week. They're doing OK, right? Investors seem to be pretty happy with the performance of these companies. What did we learn from their earnings reports?
HORSLEY: Yeah, investors should be happy. A day after they were grilled by lawmakers, the four tech giants' market value went up by a combined $250 billion. For Amazon in particular, the pandemic has just pushed the gas pedal on growth. The company more than doubled its profits from this time last year. A lot of people are spending - shopping from home. And those profits went up even though Amazon is spending heavily on new workers and additional safety equipment.
Facebook's also doing really well. More people who are worried about socializing in person are turning to the social network. Apple's selling a lot of iPhones and iPads to people who are maybe working from home. Google's parent company, Alphabet, however, actually reported a small drop in revenue during its most recent quarter. It was only about a 2% drop, but that's the first time that company's revenues have ever shrunk. So even the mighty are not immune from the broader slowdown in the U.S. economy.
MARTIN: So we're all on our computers all the time. So it makes sense that tech's doing well. You know what I haven't driven, though, in a long time, Scott? My car. I mean, how are older, more industrial companies like car manufacturers doing right now?
HORSLEY: Yeah. Automakers are churning out cars and trucks again. But Ford says it expects a loss for the full year. General Motors also report a quarterly loss just this week. Obviously, airlines are feeling the strain from the sharp drop in air travel. And airplane manufacturers are having problems, too. Boeing, of course, was struggling even before the pandemic and had cut about 10% of its workforce. Boeing warned this week more cuts are coming.
MARTIN: Big Tech have been drivers of the stock market's gains. Explain what does - what that does and doesn't tell us about the economy.
HORSLEY: You know, despite a few down days this week, the stock market's had a really spectacular recovery. But remember, most stocks are held by those at the top of the income ladder. So the rebound doesn't mean a lot for most Americans, who depend on paychecks, not stock dividends.
MARTIN: NPR chief economics correspondent Scott Horsley. Thank you, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.
