The daily business briefing: September 29, 2017
Volkswagen's diesel-scandal costs jump by $3 billion, Elon Musk aims to put a SpaceX crew on Mars in 2024, and more
VW says complications add $3 billion to diesel-scandal cost
Volkswagen shares dropped by 4 percent early Friday after the German automaker said it would face a surprise charge of $3 billion due to complexities in its plans to buy back or retrofit U.S. diesel cars tainted by its emissions-cheating scandal. The charge will erase more than half of VW's earnings this quarter, and bring the total damages from the two-year scandal to $30 billion. The news came 15 months after the company reached a settlement with U.S. authorities to buy back or retrofit 500,000 vehicles, including Golf, Jetta, and Audi A3 models. "It shows VW remains some distance from coming through the scandal," said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler.
Musk says SpaceX looking to send crew to Mars in 2024
Elon Musk said Friday that he had worked out a workable business plan for his space-flight company, SpaceX, to send people to Mars by 2024. Musk, speaking at the International Astronautical Congress in Adelaide, Australia, outlined a revised plan for a 42-engine rocket he has nicknamed the BFR that would get spacecraft to the red planet, and be able to move people between any two points on Earth within an hour. "This will enable the creation of a lunar base," Musk said. "It's 2017. We should have a lunar base by now. What the hell's going on?" Musk expects to start construction on the rocket within the next year, followed by a cargo launch in 2022. If SpaceX meets that deadline, another launch of cargo and crew would come in 2024.
Economy grew at faster pace than estimated in second quarter
The U.S. economy expanded at a 3.1 percent annual rate in the second quarter of 2017, slightly faster than previously estimated, the Commerce Department reported Thursday. The figure was revised up from the 3.0 percent rate reported last month. The pace quickened substantially from the 1.2 percent rate of the first quarter, marking the fastest growth in two years. The change came thanks to businesses' investments in inventory. The good news is fading somewhat in the third quarter. "The destruction caused by Hurricanes Harvey and Irma and the resulting disruption ... are expected to be a drag on third-quarter growth," said Jim Baird, chief investment officer at Plante Moran Financial Advisors in Kalamazoo, Michigan. "Nonetheless, the economy remains on track."
Trump adviser says he can't 'guarantee' lower taxes for middle class
President Trump's top economic adviser, Gary Cohn, said Thursday that the GOP's tax cut plan was "purely aimed at middle-class families," but he couldn't guarantee that some of those families wouldn't see their taxes rise. "There's an exception to every rule," Cohn, the director of the White House Economic Council, told ABC News' George Stephanopoulos. "I can't guarantee anything." Cohn said a typical family of four with $55,000 in income would get "a substantial tax decrease" of $650 to $1,000. Democrats and other critics have called the proposal an attempt to shower corporations and the super rich with trillions of dollars in tax cuts that would inflate the deficit.
IKEA continues tech push with deal to buy TaskRabbit
Swedish home goods giant IKEA Group has bought contract labor marketplace TaskRabbit, Recode reported Thursday, citing sources close to the situation. There was no immediate information on the price of the deal. TaskRabbit has raised $50 million since its founding nine years ago. It has 60 employees, and 60,000 independent workers using its platform. The deal, if it is completed, would mark the latest in a series of steps IKEA has made into technology. It recently said it would shift its 389 stores to electric car transportation and infrastructure, and released an Apple iPhone app, IKEA Place, letting users scan a room with their phone's camera, and virtually put IKEA products in to see how they look.