The daily business briefing: June 2, 2023

1. Senate approves debt ceiling suspension, averting default

The Senate on Thursday voted 63-36 to suspend the debt ceiling for two years and reduce government spending, sending the bill to President Biden's desk and averting an unprecedented default on U.S. financial obligations that could have hit as soon as Monday. The bill, negotiated by Biden and House Speaker Kevin McCarthy (R-Calif.), passed the House on Wednesday night with broad bipartisan support. In the Senate, four Democrats, 31 Republicans, and Sen. Bernie Sanders (I-Vt.) voted against the deal. "America can breathe a sigh of relief," Senate Majority Leader Chuck Schumer (D-N.Y.) said after the vote. "We are avoiding default." Biden said he looks forward to signing the bill "as soon as possible." Several conservative senators tried to delay the vote, demanding more defense spending.

The New York Times

2. Arizona limits construction in Phoenix area over groundwater shortage

Arizona said Thursday it would stop approving new Phoenix-area development that relies solely on groundwater after the state's water agency said groundwater aquifers currently serving 4.6 million people across metro Phoenix weren't keeping up with growth. The state's groundwater law bars construction of new homes unless the Department of Water Resources certifies that they have access to a 100-year water supply. "If we do nothing, we would face a 4% shortfall in groundwater supply over the next 100 years," Gov. Katie Hobbs (D) said as she released the new state groundwater model. She said the state would try to address the issue by repurposing $40 million in federal Covid-19 recovery funds to create a fund administered by the water agency to promote groundwater conservation.

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Arizona Republic

3. Vanguard fined over misleading account statements

The Financial Industry Regulatory Authority (FINRA) fined Vanguard Group $800,000 for overstating projected yield and projected annual income for nine money-market funds. The errors appeared in 8.5 million account statements. FINRA said Vanguard sent out statements containing the errors for nearly a year. Fifty customers pointed out the problem but the investing giant still was slow to fix it. FINRA, Wall Street's self-regulatory organization, said the errors occurred when automated data stopped overwriting some existing data. In September 2020 statements, for example, the estimated yield for one money-market account was 1.87%, but it was really 0.06%. "Vanguard Marketing Corporation takes its regulatory obligations seriously, and the firm is pleased to have resolved this matter," a Vanguard spokesperson said.

The Wall Street Journal Reuters

4. Stock futures rise after Senate approves debt deal with jobs report on deck

U.S. stock futures rose early Friday after the Senate gave final approval to a deal to suspend the debt ceiling for two years, averting an unprecedented default that could have devastated the economy. Futures tied to the Dow Jones Industrial Average, the S&P 500, and the Nasdaq were up about 0.5% at 7 a.m. ET. Fears of a possible default on the federal government's financial obligations rattled markets earlier in the week, as a June 5 deadline approached. On Friday, investors also will be watching the May jobs report. Economists surveyed by Dow Jones expect the Labor Department to report that U.S. employers added 190,000 jobs, down from 253,000 in April. That would be the slowest hiring since December 2020.

CNBC

5. Supreme Court rules against unionized truckers but preserves strikers' rights

The Supreme Court on Thursday ruled 8-1 against unionized truck workers who staged a walkout that left trucks loaded with wet concrete, handing businesses a victory. But the justices preserved workers' rights to time strikes to increase their impact. The court has ruled against labor several times in the last five years, and the truckers' case gave the court's conservative super-majority an opportunity to overturn a longstanding precedent protecting strikers' rights. "Virtually every strike is based on timing that will hurt the employer," said Stanford Law School professor William Gould, a former chair of the National Labor Relations Board. Labor groups worried the court would limit strikers' rights, "but that didn't happen," he told NPR.

NPR