The daily business briefing: April 23, 2021
Biden expected to propose hiking capital gains tax for the wealthy, U.S. could lift J&J vaccine pause within days, and more
Biden expected to propose nearly doubling capital gains tax for wealthy
President Biden plans to nearly double the capital gains tax rate for the wealthy to help pay for about $1 trillion for child care, universal pre-kindergarten education, and paid leave for workers, multiple news outlets reported Thursday. Some doubted the proposal could pass in Congress, due to Republican opposition. Goldman Sachs Chief Economist Jan Hatzius said in a note that instead of the proposed hike to a 39.6 percent rate, up from 20 percent, for people making more than $1 million, Congress would probably "settle for a more modest increase" to around 28 percent. White House Press Secretary Jen Psaki said the administration is "happy to look at" proposals by opponents to Biden's plans who want to "fix our infrastructure" but don't like how Biden wants to pay for it.
U.S. could lift pause on J&J coronavirus vaccine within days
Federal health authorities are "leaning toward" lifting the pause on the use of Johnson & Johnson's COVID-19 vaccine as soon as this weekend, The Washington Post reported Thursday. An influential advisory panel to the Centers for Disease Control and Prevention is meeting Friday to discuss putting the vaccine back into use. The FDA and CDC called for pausing the shots on April 13 "out of an abundance of caution" due to "six reported U.S. cases of a rare and severe type of blood clot" out of the millions of doses administered. Officials might recommend a warning like the one approved by the European Medicines Agency, which said that "unusual blood clots" should be listed as extremely rare potential side effects, but that the vaccine's benefits outweigh its risks.
Stock futures rise slightly after Thursday's losses
U.S. stock futures edged higher early Friday, rebounding modestly after Thursday's losses. The Dow Jones Industrial Average, the S&P 500, and the Nasdaq dropped by about 0.9 percent on Thursday after news outlets reported that President Biden was preparing to propose nearly doubling the capital gains tax for wealthy Americans to help pay for parts of his infrastructure and job creation plan. Futures for the Dow were up by 0.1 percent several hours before the opening bell on Friday. Those tied to the S&P 500 and the Nasdaq gained about 0.2 percent. "I think the immediate reaction was probably a bit overdone," said Kathy Jones, Charles Schwab chief fixed income strategist. "These proposals come out and you never know, especially with tax proposals, where we'll end up. So it looks like an opening bid."
Republican senators unveil $568 billion infrastructure counterproposal
A group of Republican senators on Thursday released a $568 billion, five-year infrastructure proposal to counter President Biden's $2.3 trillion, eight-year plan. The lawmakers called their offer "very, very generous." "This is the largest infrastructure investment that Republicans have come forward with," Sen. Shelley Moore Capito (R-W.Va.) said. "This is a robust package." Biden has discussed plans for spending on public works projects with Republicans, and says he welcomes their ideas. His fellow Democrats in Congress have promised to pass a major infrastructure package with or without GOP votes, suggesting they could use the same budget reconciliation process they used earlier this year to pass the latest COVID-19 relief package without GOP support.
Jobless claims drop to new pandemic-era low
Applications for unemployment benefits fell last week to 547,000, a new low since the start of the coronavirus pandemic more than a year ago. Initial jobless claims fell by 39,000 from the previous week's revised 586,000. The latest numbers mark a sharp drop from the peak of 900,000 in early January, before the winter COVID-19 surge eased. The latest numbers remain far higher than pre-pandemic levels, which typically ran around 230,000. Hiring has been picking up as new coronavirus cases remain far below the winter levels and the COVID-19 vaccination campaign helps ease the crisis, allowing more businesses to fully reopen. About 17.4 million people continued to collect unemployment aid last week, up from 16.9 million the week before.