Happy Fourth of July. Between strong jobs growth in June, rising consumer confidence and a record-high stock market, there’s much to celebrate in the economy. So fire up the grill, watch the fireworks and enjoy the long holiday weekend. — Charlotte Cowles
What’s Up? (June 27-July 3)
June Jobs Rally
According to the most recent jobs report, hiring increased by 850,000 in June. It was the strongest gain in ten months and an encouraging sign that the labour market’s recovery is gaining traction after a sluggish start to the year. Consumer confidence is also at an all-time high since the pandemic began, and stocks finished the first half of the year at all-time highs. According to the Congressional Budget Office, the economy is on track to recoup all of the jobs lost during the pandemic by the middle of next year.
Turning Up the Heat
The Trump Organization has been accused of running a 15-year scheme to help its executives avoid taxes by compensating them with off-the-books perks. Allen H. Weisselberg, former President Donald J. Trump’s long-serving and devoted chief financial officer, is charged with 15 felonies, including grand larceny and tax fraud. Mr. Trump was not named in the charges, but they could have a financial impact on him and lay the groundwork for additional investigations into his business dealings.
The stock-trading application As it prepares for its highly anticipated initial public offering, Robinhood, which has built a massive (and notoriously unpredictable) customer base of amateur traders, revealed financial details for the first time. Its filings showed skyrocketing revenue last year, followed by significant losses in the first quarter of 2021 as it dealt with the meme stock frenzy. As part of its mission to make stocks more accessible to the general public, Robinhood intends to allow its customers to purchase shares in its initial public offering at the listing price prior to public trading — a benefit typically reserved for private investors. In addition, the company agreed to pay a $70 million fine (the largest ever imposed by the Financial Industry Regulatory Authority) for misleading its customers about how it made money from their trades and harming their bottom line with service outages.
What’s Next? (July 4-10)
Amazon has requested that the new chair of the Federal Trade Commission, Lina Khan, recuse herself from any antitrust investigations into the company, claiming unfair bias. Ms. Khan has long been a critic of the e-commerce giant’s business practises, as evidenced by her scholarly writings. Amazon is currently the subject of an F.T.C. investigation as well as state attorney general investigations. Amazon claims that if Ms. Khan is involved in those proceedings, it will violate federal ethics rules as well as the company’s right to due process.
Last week, a judge dismissed the United States government’s lawsuit against Facebook, an embarrassing setback for federal regulators’ efforts to break up the social media platform. The judge’s reasoning: Regulators failed to demonstrate that Facebook has a monopoly in the social networking market. However, he left the door open for the Federal Trade Commission to resubmit its lawsuit in the next 30 days, presumably after strengthening its case.
Fight for 15
Global taxation is not an exciting topic, but it has proven to be far more popular than anyone anticipated. Last week, 130 countries and jurisdictions agreed to a 15% minimum corporate tax rate. The agreement is notable (and surprising) because it includes China, Russia, and India — large economies that are typically wary of tax crackdowns that may drive away businesses. The agreement, which was originally proposed by the United States, would also require technology behemoths such as Amazon and Facebook to pay taxes in countries where their goods or services are sold, even if they have no physical presence there. In the coming week, ministers from the Group of 20 major economies will work out more details of the agreement.
As companies abandon leases and embrace remote work, nearly 19 percent of all office space in Manhattan is vacant — the highest level on record. Hertz has emerged from bankruptcy just in time to take advantage of a thriving rental car market and a resurgent travel industry. And, as of this week, Jeff Bezos will be formally replaced as CEO of Amazon by his deputy, Andy Jassy.