The daily business briefing: June 1, 2021
Global economic recovery gains speed but remains uneven, Tesla raises prices due to supply chain problems, and more
Global economic recovery picking up, but some countries lagging
The global economic rebound from the pandemic is gaining speed but remains hampered in many countries due to multiple problems, including the lack of vaccines in poorer nations, according to the latest economic outlook published Monday by the Paris-based Organization for Economic Cooperation and Development. "The first and main risk ... remains the virus," OECD chief economist Laurence Boone said. The OECD said coronavirus relief measures in wealthier nations have helped fuel the recovery from the pandemic-induced recession, with global output set to rise by 5.8 percent this year, up from a December forecast of 4.8 percent following last year's contraction of 3.5 percent. The growth predicted in 2021 would be the fastest since 1973. U.S. economic growth is expected to reach 6.9 percent, up from the previous forecast of 6.5 percent.
Tesla raising prices due to supply chain difficulties
Tesla is raising prices for some of its electric-vehicle models due to supply chain problems plaguing auto makers, CEO Elon Musk announced Monday in a tweet. "Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially," Musk wrote. Tesla hiked prices on its Model 3 and Model Y vehicles for the fifth time in several months, according to the Electrek website. In April, Musk also announced that the company was fighting through "insane" supply chain difficulties, including a chip shortage that has hampered production for most auto makers. The semiconductor bottleneck is expected to cost car makers around the world $110 billion in 2021. Ford and General Motors have slashed their earnings expectations by billions of dollars due to the crunch.
Virtual climate talks start in preparation for November summit
The United Nations climate office in Bonn, Germany, on Monday launched three weeks of climate talks that will be held virtually due to pandemic restrictions. Participants will have to attend virtual sessions before dawn or late at night, depending on their time zones. "This is not ideal at all," said Marianne Karlsen, chair of one of the two international bodies holding the talks. Tosi Mpanu Mpanu, who chairs the second body at the talks, said "we're going to be engaging on substantive issues and really try to make progress." Negotiators will focus on rules for international carbon markets, providing aid to developing nations, and other unresolved issues stemming from the 2015 Paris climate accord. The talks are seen as a key step to prepare for the U.N. climate summit in Glasgow, Scotland, in November.
Stock futures rise ahead of manufacturing data
U.S. stock index futures rose early Tuesday ahead of the release of manufacturing data expected to provide fresh clues about the state of the economic recovery from the damage of the coronavirus pandemic. Futures for the Dow Jones Industrial Average were up by 0.4 percent several hours before the opening bell. Futures tied to the S&P 500 and the tech-heavy Nasdaq gained 0.3 percent. The Institute for Supply Management's survey of purchasing managers at U.S. factories is due out at 10 a.m. It is expected to show that manufacturing activity picked up in May as factories worked through supply chain difficulties, transportation bottlenecks, and hiring challenges. Wall Street struggled in May but finished the month with gains as concerns about an inflation spike eased.
Biden set to take minimum global corporate tax plan to G-7
President Biden's push for a 15 percent minimum global corporate tax is expected to get a boost this week from the finance ministers of America's six biggest allies at a Group of Seven meeting in London on Friday. Corporations are lobbying against the plan, which could raise as much as $600 billion a year for governments worldwide. Taxes as a share of economic output have been shrinking for decades, as companies sought out competitive tax advantages in an increasingly globalized world. The Biden administration hopes to secure an agreement in principle with the other G-7 nations — Britain, France, Germany, Canada, Italy, and Japan — this summer and seal a final agreement with the Group of 20 nations at a leaders' summit in Rome in late October.