The daily business briefing: January 11, 2023
The World Bank forecasts possible global recession in 2023, former Trump CFO Allen Weisselberg sentenced to five months for tax crimes, and more
World Bank forecasts high risk of 2023 recession
The World Bank on Tuesday forecast a high risk the global economy would slip into a recession in 2023. If that happens, it will be the first time since the 1930s that two recessions have hit in the same decade. The first recession occurred in 2020, when the global economy shrank 3.2 percent early in the coronavirus pandemic. Growth returned in 2021, but central bank interest rate hikes and Russia's war in Ukraine have dragged growth down again. The World Bank forecasts overall 1.7 percent growth this year, with developing countries hit hardest by the slowdown. The expansion will pick up in 2024, with 2.7 percent growth. The World Bank expects the U.S. economy to expand by just 0.5 percent in 2023.
Former Trump exec Allen Weisselberg sentenced to 5 months for tax crimes
A New York state court judge on Tuesday sentenced Allen Weisselberg, the longtime chief financial officer of former President Donald Trump's family real estate business, to five months in jail for his role in a five-year tax fraud scheme at the company. He will leave the firm after his release. Weisselberg, 75, pleaded guilty to helping the Trump Organization dodge taxes by giving himself and other executives luxury perks as part of their compensation. Weisselberg then appeared as the prosecution's star witness at the company's trial, which led to the company's conviction last year. Weisselberg's lawyer had asked for a lighter sentence, citing Weisselberg's age and frail health. Judge Juan Merchan rejected the request, saying the evidence justified a much longer sentence.
Powell: Fed must focus on inflation without political interference
The Federal Reserve remains committed to bringing down inflation, and must be free to do its job without interference from politicians, Fed Chair Jerome Powell said Tuesday. Bringing down high inflation "can require measures that are not popular in the short term as we raise interest rates to slow the economy," Powell said. It is essential that the central bank "stick to our knitting and not wander off" to pursue goals outside its mandate to keep inflation low and the job market strong, because, "We are not, and will not be, a 'climate policy maker,'" Powell added. Some Democrats and activists have urged the Fed "to take a more activist role in policing bank lending decisions to address climate change," The Wall Street Journal reported.
Stock futures higher after Tuesday gains
U.S. stock futures rose slightly early Wednesday after Tuesday's gains. Futures tied to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq were up about 0.2 percent at 6:45 a.m. ET. The Dow and the S&P 500 gained 0.6 percent and 0.7 percent, respectively, on Tuesday. The tech-heavy Nasdaq surged 1.0 percent, sealing its first three-day winning streak since November. The relief rally for risky parts of the market, including tech shares, came despite ongoing concerns about the looming earnings season and potential economic fallout from the Federal Reserve's aggressive interest rate hikes to bring down inflation.
Coinbase to cut 20 percent of staff
Cryptocurrency trading platform Coinbase said Tuesday it would lay off 20 percent of its workers in its latest round of cost cutting as crypto markets sink. The company told staff in an internal memo that it was slashing 950 jobs, after letting go of 1,100 employees in June, The New York Times reported. "In hindsight, we could have cut further" last year, Coinbase CEO Brian Armstrong told employees in the memo. Armstrong said broad economic problems contributed to Coinbase's issues, but "fallout from unscrupulous actors" contributed, too, a veiled reference to the implosion of FTX, according to the Times. "There could still be further contagion," he wrote.