The daily business briefing: September 19, 2019

Harold Maass
Jerome Powell on a TV screen
Spencer Platt/Getty Images


Fed reduces interest rates as Trump demands deeper cuts

Federal Reserve policy makers voted Wednesday to cut interest rates by a quarter of a percentage point for the second time in two months, hoping to boost the economy as the U.S.-China trade war threatens to tip the economy into a recession. Fed Chair Jerome Powell said the economic outlook is "favorable," but the cut would "provide insurance against ongoing risks." Fed leaders were split 7-3 on the decision, and they gave few signs of what the central bank's next move would be. Economists have been expecting one more such rate cut this year. The latest reduction put the Fed's benchmark short-term rate target between 1.75 and 2 percent. Two of the dissenters wanted to hold rates steady. The third reportedly sought a larger, half-point cut. President Trump, who has pressured the Fed for bigger cuts, tweeted that it had "no guts." [The Wall Street Journal, Reuters]


U.S., China deputy trade negotiators resume talks

U.S. and Chinese trade negotiators on Thursday are scheduled to hold their first face-to-face trade talks in nearly two months. Deputy officials are aiming to use the Thursday and Friday negotiations to prepare for high-level talks in early October. The Chinese delegation, led by Vice Finance Minister Liao Min, will meet a U.S. team expected to be led by Deputy U.S. Trade Representative Jeffrey Gerrish. The two sides are expected to focus heavily on agriculture, including Trump administration demands for increased purchases of U.S. soybeans and other farm goods. Treasury Secretary Steven Mnuchin, who last month declared China a currency manipulator, said currency issues will be on the agenda in October. [Reuters]


Tesla Model 3 gets top safety award

Tesla's Model 3 sedan has earned the Insurance Institute for Highway Safety's highest safety honor, the auto nonprofit, which is backed by insurance companies, announced Thursday. The 2019 recognition marks the first time the electric car maker has won the organization's Top Safety Pick+ award. The Model 3, Tesla's first mass-market vehicle, received a "good" performance mark on all six of the IIHS crash tests, and its headlight and frontal-crash prevention systems also did well. The Tesla Model S sedan performed well previously, but not well enough to earn the award. The Chevrolet Bolt also passed the crash tests but fell short of the award due to a "poor" headlight test rating. [USA Today]


California governor signs new protections for gig economy workers

California Gov. Gavin Newsom (D) on Wednesday signed a bill requiring many companies to treat contract workers like employees, entitling them to more benefits. The new law could have far-reaching effects on the gig economy. The legislation stemmed from concerns that some powerhouses in the gig economy, including ride-hailing giants Uber and Lyft, had exploited drivers by treating them as independent contractors rather than employees, depriving them of benefits and protections, including sick leave and minimum wages. Unions backed the bill and said it would improve conditions for many people, while businesses, including tech companies and health-care providers, said the new rules would be hard for them to handle. Lyft said it might have to cut 300,000 drivers if it has to give everyone employee status. [The Sacramento Bee]


Stocks mixed after Fed decision

U.S. stock index futures were slightly lower early Thursday after the Fed's decision to cut overnight interest rates by a quarter point. Futures for the Dow Jones Industrial Average and the S&P 500 were down by about 0.2 percent, while those of the Nasdaq fell by 0.3 percent. The three main U.S. indexes closed mixed on Wednesday after the Fed cut rates as expected but sent mixed signals on further reductions later this year, despite trade tensions, a recent surge in oil prices, and other looming threats to global economic growth. Investors also are watching for developments from fresh face-to-face talks starting later Thursday between Chinese and American officials seeking a deal to end their trade war. [CNBC]