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The Week in Business: The Debt Limit and Politics

Giacomo Bagnara

The United States hit its borrowing cap of $31.4 trillion on Thursday, setting the stage for a bitter fiscal fight in Congress over raising the limit. Treasury Secretary Janet L. Yellen said the government would take “extraordinary measures,” at least until early June, to keep paying its bills. Democrats and the White House, as well as forecasters and economists, have warned that the nation risks a financial crisis and other dire economic scenarios if lawmakers do not raise the limit before the Treasury Department exhausts its ability to buy more time. But Republicans have said that they will not raise the borrowing limit again unless President Biden agrees to steep cuts in federal spending.

As the government continues building a case against the founder of the cryptocurrency exchange FTX, Sam Bankman-Fried, more details are emerging about the workings of the exchange. Rivals said that Mr. Bankman-Fried often promoted digital currencies, known as “Samcoins.” Mr. Bankman-Fried was said to use his influence to persuade people to buy large quantities of the coins, inflating their value artificially, to make his crypto trading firm, Alameda Research, look healthier than it really was. (Mr. Bankman-Fried has denied accusations that he tried to manipulate cryptocurrency markets.) Also, documents obtained by The New York Times show that FTX executives voiced concerns over the use of customer funds in the weeks leading up to the collapse of the firm.

Two of the tech industry’s biggest players announced last week that they would be cutting thousands of jobs. Microsoft said on Wednesday that it would lay off about 10,000 workers, and Alphabet, the parent company of Google, said on Friday that it would lay off 12,000 employees. Across the tech industry, employers are pulling back after several years of frenetic hiring to meet the pandemic-fueled surge in online services. Nearly 200,000 tech workers have lost their jobs since the start of 2022, according to, which tracks job cuts in the sector. Even the industry’s power players have been affected: Apple is the only major firm that has not yet announced significant cuts. Satya Nadella, Microsoft’s chief executive, said at the World Economic Forum meeting in Davos, Switzerland, last week that “quite frankly, we in the tech industry will also have to get efficient.”

The Bureau of Economic Analysis will release on Thursday initial estimates of economic growth in the United States in the fourth quarter of 2022. The report on gross domestic product is likely to show that economic output, adjusted for inflation, increased at an annual rate of 1.5 percent in the quarter, according to predictions from forecasters. That would represent a slowdown from the rate of 3.2 percent in the third quarter. The Federal Reserve’s campaign to rein in inflation by raising interest rates is taking a toll on the economy, especially the housing market. Although consumer spending has slowed, the economy has shown surprising resilience after contracting in the first half of last year.

The major airlines are in the midst of reporting their earnings, which will show how their bottom lines in the fourth quarter were affected by a holiday season marred by cancellations and storms. The carriers suffered further woes this month, when a Federal Aviation Administration system outage halted flights. Most of the attention will be on Southwest because of its meltdown over the holidays. Southwest will release earnings on Thursday, along with American, JetBlue and Alaska. Delta and United, which released their earnings last week, surprised analysts with strong fourth-quarter results. Both companies expressed optimism about the months ahead.

Though many consumer-focused business have done reasonably well over the past year, cracks are beginning to show. Companies have passed on rising energy, transportation and labor costs to consumers, and until recently, consumers have paid the higher prices. Inflation has moderated some. But the holiday season showed that consumers may finally be pushing back. Retail sales fell in December, following a decline in November. Procter & Gamble’s annual sales dropped last quarter for the first time in over five years. The company, which makes products like Tide detergent, Head & Shoulders shampoo and Charmin toilet paper, said that its sales dropped 1 percent in the three months through December, compared with the same period a year earlier. The sales volume, or amount of goods consumers bought, also fell 6 percent. The shift came as the company increased prices 10 percent last quarter from a year earlier.

The price of bitcoin rallied. California joined other states in suing major drug companies over the price of insulin. Reed Hastings, a founder of Netflix, cedes his co-chief executive title to become the company’s executive chairman. Tax filing season begins on Monday.

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