What letter will the economic recovery resemble? Everyone wants it to be a “V” — after a precipitous fall, straight up from here. But more realistic forecasters warn that it’ll likely be a long, wide “U,” taking years to rebuild. Scarier yet, some health officials say that we could see a “W” if the country reopens too early and there’s a resurgence of cases. Here’s the rest of the business news you need to know for the week ahead.
What’s Up? (May 10-16)
More Help Wanted
Even as parts of the country’s economy started showing signs of life, another 3 million jobless claims flooded in last week, continuing a trend of record-breaking unemployment filings over the past two months that now add up to a staggering 36 million. And it’s hard to know when the layoffs and business closings will stop, or when the jobs will come back. Even if the government says it’s safe to go out and buy things, can people afford to? (And more important, can lockdowns end without causing another surge of infections?) Both progressive and conservative lawmakers are pushing for guaranteed income programs as part of the government’s future relief efforts. And if the economy keeps looking like this, the idea may have legs.
Musk Gets His Way
Elon Musk has railed against California’s coronavirus response for weeks now, calling the safety precautions “fascist” and “dumb” and demanding to reopen a Tesla factory despite the statewide lockdown. This past week, he sued the county where his factory is located, threatened to move his business to a different state, and then decided to break the rules and reopen the plant anyway, daring police to arrest him. Local officials relented, but they’re asking that Mr. Musk at least provide protective equipment and observe safety measures for the plant’s 10,000 workers.
The Plot Thickens
The Federal Bureau of Investigation seized Senator Richard Burr’s cellphone this past week, a serious step in an investigation into whether he sold over a million dollars in stocks using insider information about the coronavirus’s threat to the economy that he received as part of his congressional briefings. Mr. Burr sold the stock on Feb. 12, around the same time that he was reassuring the public that the government was prepared for the virus. Insider trading laws prohibit officials from making decisions based on specific, nonpublic information they receive in the course of their work. While he has denied any wrongdoing, Mr. Burr has stepped down from his position as chairman of the Senate Intelligence Committee.
What’s Next? (May 17-23)
A Reckoning on the Recovery
The Federal Reserve chair, Jerome Powell, issued an unusual and dire warning to lawmakers this past week, asserting that the country faced economic challenges “without modern precedent” and would need more federal support to recover. But Treasury Secretary Steven Mnuchin disagreed, predicting that “next year we’ll be back to having a great economy just like we had before.” This Tuesday, both of them will testify (remotely, of course) in the first required report to Congress on whether its relief package is working. Expect different opinions on its adequacy, and what should be done.
Deals to Be Made
One industry that’s doing relatively well in the pandemic: food delivery. And now, Uber is bidding for a bigger piece of it. The company’s ride-sharing business may be in ruins, but Uber Eats — its food-delivery arm — is growing, and this past week it made a bid to buy its rival Grubhub, another platform that partners with restaurants to allow people to order food from home. Talks are ongoing, but the takeover offer is a sign of how companies are rapidly pivoting to meet new consumer demands. And while mergers and acquisitions are pretty dead these days, there are exceptions where money’s being made.
Awaiting a Decision
This past Tuesday, the Supreme Court heard oral arguments (over the phone) related to President Trump’s refusal to abide by subpoenas to release his financial records to the authorities. One of the cases concerns the investigation into hush-money payments made to two women, including the porn star Stormy Daniels, who said they had affairs with Mr. Trump. The court’s decision is expected within weeks, but it could go a number of different ways. The justices could require the president to hand over some financial records, or none at all, or they could send the cases back down to the lower courts — in which case, a decision probably wouldn’t happen before the November election.
For more perspectives on how the pandemic is affecting the business world and beyond, check out Live at Home, a new series of virtual talks and events. This Tuesday, the Corner Office columnist David Gelles will interview Mary Kay Henry, the international president of the Service Employees International Union, which represents almost 1.9 million workers — including many essential workers in health care and public service. Tune in here.