The daily business briefing: August 27, 2021
Supreme Court blocks Biden administration eviction ban, Education Department forgives $1.1 billion in student loans, and more
Supreme Court blocks Biden administration's latest eviction ban
The Supreme Court on Thursday blocked the Biden administration's extension of the eviction moratorium imposed by the Centers for Disease Control and Prevention to keep people from losing their homes during the coronavirus crisis. The court's six-member conservative majority said Congress would have to improve the policy for it to continue. "Congress was on notice that a further extension would almost surely require new legislation, yet it failed to act," the court wrote in an unsigned, eight-page opinion. The court's three liberal justices dissented. The majority said the CDC's moratorium was based on a statute letting it "implement measures like fumigation and pest extermination," but it "strains credulity" to suggest it has the "sweeping authority" necessary to ban evictions nationwide.
Department of Education forgives $1.1 billion ITT Tech student loans
The Department of Education said Thursday it would forgive $1.1 billion in federal loans to about 115,000 former students who attended the now-defunct ITT Technical Institute but left after March 2008 without finishing their degree. ITT Tech shut down in 2016, closing more than 130 schools after the Education Department said it could no longer enroll new students who needed federal loans and grants. Students had long accused the for-profit college of using fraudulent recruitment practices, and the Education Department launched an investigation. The department found that "for years, ITT hid its true financial state from borrowers while luring many of them into taking out private loans with misleading and unaffordable terms that may have caused borrowers to leave school."
Peloton shares drop after quarterly loss widens
Peloton shares plunged by about 7 percent in after-hours trading on Thursday after the company said its quarterly loss widened as revenue growth slowed. The rising cost of a treadmill recall also contributed to the $1.05 per share loss, which was more than double the 45 cents per share analysts had expected. Peloton also warned that earnings would soon take a hit from a roughly 20-percent cut in the price of its original stationary exercise bike. In addition to the internal problems, Peloton is facing mounting competition from other at-home fitness companies, including Hydrow, Tonal, and Lululemon-owned Mirror. The lifting of pandemic restrictions has also given customers the option of returning to gyms and in-person fitness classes.
Coronavirus inoculation shortfalls to cost global economy trillions
Delayed coronavirus vaccination efforts will cost the global economy trillions of dollars between 2022 and 2025, the Economist Intelligence Unit said in a report released this week. The total will reach $2.3 trillion for countries that fail to get 60 percent of their populations vaccinated by the middle of next year, meaning that wealthy countries with the lion's share of vaccine supplies will fare the best. "Emerging countries will shoulder around two-thirds of these losses, further delaying their economic convergence with more developed countries," wrote Agathe Demarais, EIU global forecasting director. Asia will be the continent hit hardest, with $1.7 trillion in projected losses, amounting to 1.3 percent of their GDP. Countries in sub-Saharan Africa will suffer the biggest proportional losses, estimated at 3 percent of their GDP.
Stock futures rise as investors watch annual Fed gathering
U.S. stock futures rose early Friday as investors awaited details from the Federal Reserve's annual Jackson Hole symposium on the central bank's plans to dial back its efforts to boost the economic recovery. Futures tied to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq were up by about 0.3 percent several hours before the opening bell. All three of the main U.S. indexes fell on Thursday. The S&P 500 and the tech-heavy Nasdaq dropped by 0.6 percent, snapping five-day winning streaks after setting the latest in a string of record highs. The Dow lost 0.5 percent, ending a four-day winning streak. Analysts said Thursday's suicide bombing in Afghanistan, which killed 13 U.S. service members and dozens of Afghans, contributed to rising uncertainty.