The daily business briefing: May 20, 2022
Senators approve a bill to help low-income families access baby formula, Musk denies sexual misconduct allegation, and more
Senate approves bill to help low-income families get scarce baby formula
The Senate on Thursday approved a bill by unanimous consent that aims to boost low-income families' access to baby formula amid a nationwide shortage caused by supply-chain disruptions and the safety-related shutdown of the biggest U.S. formula plant. The House approved the bill, the Access to Baby Formula Act, on Wednesday, so it now goes to President Biden for his signature. The legislation authorizes the Agriculture Department to waive certain requirements to allow families to buy a wider array of baby formula with Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) benefits during a public health emergency, product recalls, and other supply-chain issues.
Report: SpaceX paid $250,000 to settle sexual misconduct claim against Musk
SpaceX paid a flight attendant $250,000 in 2018 to settle a sexual misconduct claim against the space-flight company's founder, Elon Musk, Business Insider reported Thursday. The attendant, who worked on contract for SpaceX's corporate fleet, said Musk offered to buy her a horse in exchange for an erotic massage, exposed his erect penis to her, and rubbed her leg without her consent, Insider reported, citing interviews and documents it obtained. Some of the details about the alleged 2016 incident came from a declaration signed by a friend of the attendant. Musk told Insider in an email the report was a "politically motivated hit piece." Musk tweeted late Thursday that the claims were "utterly untrue."
More experts warn U.S. economy on brink of recession
A growing number of banks and economists are warning that the U.S. economy could be heading toward a recession in the next year, The Washington Post reported Thursday. Early this week, an ex-Goldman Sachs chief executive warned of the "very, very high risk of recession," and Wells Fargo CEO Charlie Scharf said there was "no question" a downturn is coming. Former Federal Reserve chair Ben Bernanke warned of possible stagflation, combining a slowing economy and high inflation. "Recession risks are high — uncomfortably high — and rising," Mark Zandi, chief economist at Moody's Analytics, told the Post. "For the economy to navigate through without suffering a downturn, we need some very deft policymaking from the Fed and a bit of luck."
Sri Lanka defaults on its debts
Sri Lanka has defaulted on its debts for the first time in its history as it faces economic and political troubles exacerbated by COVID-19 and Russia's invasion of Ukraine, The Guardian reported Thursday. The governor of Sri Lanka's central bank said it was in a "preemptive default" after the deadline passed for making $78 million worth of payments to international creditors. A default, which occurs when a government is unable to repay some or all of its debt payments, can have a damaging effect on a country's reputation, currency, and economy. "Our position is very clear," central bank governor Nandalal Weerasinghe said Thursday: "Until there is a debt restructure, we cannot repay."
Stock futures rise with S&P near bear-market territory
U.S. stock futures rose early Friday as the S&P 500 teetered near bear-market territory and China's central bank cut a key interest rate. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.9 percent and 1.1 percent, respectively, at 6:45 a.m. ET. Nasdaq futures were up 1.5 percent. The S&P 500 fell 0.6 percent on Thursday, ending regular trading down 18.6 percent from its January record high, just below the 20 percent drop that qualifies as a bear market. The Dow and the tech-heavy Nasdaq fell 0.8 percent and 0.3 percent, respectively. Wall Street struggled this week as shares of big-box retailers Walmart and Target fell after they reported that rising transportation and inventory costs were hurting profits.