The daily business briefing: August 20, 2019
The White House considers tax cuts to boost the economy, the U.S. extends a reprieve for Huawei, and more
Report: White House considers tax cuts to boost economy
White House officials have discussed a temporary payroll tax cut to help boost the slowing economy as fears of a looming recession rise, The Washington Post reported Monday, citing three people familiar with the discussions. No decision has been made yet on whether to formally ask Congress to approve a reduction in the 6.2 percent that millions of Americans pay to finance Medicare and Social Security. The Obama administration cut the rate to 4.2 percent to help boost consumer spending through the effects of the financial crisis a decade ago, but the tax returned to 6.2 percent in 2013. White House economic adviser Larry Kudlow also reportedly is pushing for a capital gains tax cut, which, unlike a payroll tax cut, would mostly benefit wealthy investors.
U.S. extends permission for tech sales to Huawei
Commerce Secretary Wilbur Ross said Monday that the Trump administration would extend authorization for limited sales to Chinese technology giant Huawei for another three months. The limited delay was designed to help rural U.S. internet and wireless providers that use Huawei gear, giving them support for existing equipment while they prepare for the ban on doing business with Huawei. The Trump administration blacklisted Huawei in May over concerns that its equipment could be used by China for spying. An initial temporary reprieve would have expired Monday. Along with the extension, Ross announced the U.S. was adding another 46 Huawei affiliates to the blacklist. Huawei denies it poses a security risk, and said the extension "does not change the fact that Huawei has been treated unjustly."
Stock futures edge up after Monday's gains
U.S. stock index futures fluctuated between slight gains and losses early Tuesday, struggling to add to the market's Monday surge. Futures for the Dow Jones Industrial Average, the S&P 500, and the Nasdaq all were down by less than 0.1 percent after giving back similarly small gains. On Monday, all three of the main U.S. indexes rose by about 1 percent or more as bond yields continued to rebound, easing fears of a looming recession, and the White House insisted the economy was strong. Global shares also struggled after starting Tuesday mostly higher following Wall Street's Monday gains, which came after the Trump administration announced a decision to give American suppliers another 90 days to sell equipment to blacklisted Chinese tech giant Huawei.
U.S. Steel plans layoffs at idled Michigan plant
United States Steel Corp. plans to temporarily lay off up to 200 workers in coming weeks at a Michigan facility where it is halting production, Reuters reported Monday, citing a company filing with the state. U.S. Steel, which is based in Pittsburgh, announced in June that it planned to idle the Great Lakes plant and another facility because of weak demand and low steel prices. The Michigan layoffs could continue for more than six months. The news came after President Trump imposed a 25 percent tariff on foreign steel imports in an effort to revive what he described as a "dead" business.
Home Depot lowers 2019 forecast, citing lumber prices and tariffs
Home Depot on Tuesday reported quarterly sales that fell short of analysts' expectations. The home-improvement retailer also lowered its outlook for the full year, joining a growing list of companies warning their sales and profits could be hurt by President Trump's tariffs. "Today we are updating our sales guidance to account primarily for continued lumber price deflation, as well as potential impacts to the U.S. consumer arising from recently announced tariffs," CEO Craig Menear said in a statement. The company said its 2019 sales should increase by 2.3 percent, down from its previous forecast of 3.3 percent. Home Depot's shares were up by close to 2 percent in pre-market trading.