The daily business briefing: May 17, 2023
OpenAI CEO warns Congress of AI risks, Biden hints at debt ceiling progress, and more
OpenAI CEO urges Congress to address AI risks
OpenAI CEO Sam Altman on Tuesday warned lawmakers artificial intelligence could "cause significant harm to the world." Altman, testifying to Congress for the first time, said he was willing to cooperate with lawmakers to reduce risks by his company's ChatGPT and rival AI products. Altman called for regulations to address potential hazards, like the spreading of disinformation, emotional manipulation, or even the use of AI to target drone strikes. "If this technology goes wrong, it can go quite wrong," Altman said, although he said his company would continue developing and releasing new technology. Members of the Senate Judiciary subcommittee expressed fear that the technology was developing too fast for policy makers to keep up, with AI already killing some jobs and spreading misinformation.
Biden, congressional leaders express optimism but remain 'far apart' on debt ceiling
President Biden met with congressional leaders at the White House to resume discussions on raising the debt ceiling to avert a potential catastrophic default as soon as June. Biden called the meeting "good and productive." House Speaker Kevin McCarthy (R-Calif.) said Republicans and Democrats remained "far apart," but were hopeful progress was emerging toward a deal. Biden and his fellow Democrats are calling for raising the borrowing cap without conditions. Republicans are demanding spending cuts in exchange for raising the debt limit. White House officials said Biden would still go to a Group of Seven meeting in Japan but would shorten what was supposed to be a seven-day trip by canceling several stops to allow more time for talks.
FTC sues to block Amgen's $27.8 billion purchase of Horizon Therapeutics
The Federal Trade Commission filed a lawsuit Tuesday seeking to block Amgen's planned $27.8 billion acquisition of Horizon Therapeutics, arguing it would hurt drug-industry competition. The FTC said the deal would give Amgen greater power to offer discounts on a larger portfolio of drugs to get insurers to favor its products and squeeze out rivals. The move was seen as an unusually aggressive move after years of indications the commission would get tougher on drug industry mergers. FTC official Holly Vedova said the suit "sends a clear signal to the market: The FTC won't hesitate to challenge mergers that enable pharmaceutical conglomerates to entrench their monopolies at the expense of consumers and fair competition." Amgen shares fell 2 percent on Tuesday. Horizon shares fell 14 percent.
Stock futures rise after debt ceiling meeting
U.S. stock futures rose early Wednesday after President Biden and congressional leaders expressed optimism after meeting to discuss raising the debt ceiling. Futures tied to the Dow Jones Industrial Average and the S&P 500 were up 0.3 percent at 6:45 a.m. ET. Nasdaq futures were up 0.1 percent. "People are going to try to be anticipating what the next headline will be," said Sam Stovall, chief investment strategist at CFRA Research. Investors also continued to focus on corporate earnings. Home Depot reported on Tuesday that a three-year boom driven by consumers undertaking home-improvement projects during the pandemic ended in the first quarter of fiscal 2023, with sales falling 4.2 percent from the same quarter last year to $37.3 billion. Target on Wednesday reported earnings that exceeded expectations even as shoppers watched their spending.
Cities struggle as office-usage rate stalls
The return to the office has stalled, after average city office-occupancy rates reached 50 percent at the start of 2023 for the first time since the pandemic hit the United States three years earlier. Since then, office-usage rates haven't moved much. About 58 percent of companies let employees work part of the week at home, according to software firm Scoop Technologies. Just 42 percent of companies require full-time in-person work, down from 49 percent three months ago. The situation is devastating real-estate values, lowering property-tax revenue, and hurting small businesses like bars and restaurants that depend on office workers. "Every office sitting empty means less funding for everything from schools to affordable housing," New York City Mayor Eric Adams said.