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Elon Musk’s ‘super bad feeling’ about the economy doesn’t mean mass layoffs are ahead

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Elon Musk’s ‘super bad feeling’ about the economy doesn’t mean mass layoffs are ahead

Tesla Chief Government Elon Musk introduced plans to chop 10% of the electric-car maker’s salaried workforce as a result of he has a dire view of the place the financial system is headed, a projection that raised alarm on whether or not different corporations will do the identical.

Not so quick, economists say.

“Broadly, even the tech sector continues to rent, manufacturing is extremely robust proper now and consumption and enterprise funding is powerful within the U.S., even because the U.S. Fed is rising rates of interest to manage inflation,” mentioned Leo Feler, a senior economist at UCLA Anderson Forecast.

U.S. employment numbers launched Friday confirmed the financial system continues so as to add a wholesome variety of jobs. And though some sectors have seen job cuts in latest months, the strikes appear to be confined for now to corporations that boomed within the pandemic — for instance, Peloton and Netflix — after which needed to shortly modify to curtailed income, or tech corporations hit by slumping markets or decrease valuations.

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Musk despatched a message to Tesla executives Thursday, in accordance with a Reuters report, saying that he has a “tremendous dangerous feeling” in regards to the financial system and that Tesla ought to scale back about 10% of its salaried workers, in addition to pause international hiring as a result of the corporate has turn out to be “overstaffed in lots of areas.”

In one other e-mail, Musk clarified that this “wouldn’t apply to anybody truly constructing vehicles, battery packs or putting in photo voltaic” and that “hourly headcount will improve,” in accordance with Reuters.

“The truth that he’s chopping down on non-production workers is known as a assertion on how the corporate is performing when it comes to effectivity moderately than how the financial system is doing,” Feler mentioned.

Requested at a information convention Friday about Musk’s feedback, President Biden pointed to persevering with investments by Tesla’s rivals, Ford and Stellantis (previously Fiat Chrysler), and mentioned Ford not too long ago introduced the addition of 6,000 new union jobs in three states. “So, you understand, a number of luck on his journey to the moon,” Biden mentioned of Musk.

Nonetheless, the often-provocative phrases of the world’s richest man can transfer markets and have an effect on company sentiment extra broadly, they usually don’t are available in a vacuum. JPMorgan Chase Chief Government Jamie Dimon instructed buyers Wednesday to organize for an financial “hurricane” as a result of rate of interest will increase and Russia’s conflict in Ukraine.

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Mark Zandi, chief economist at Moody’s Analytics, mentioned the job market has to chill down or the avalanche of recent jobs and wage development may worsen inflation.

The financial system added 390,000 jobs in Could, greater than many analysts anticipated, and according to month-to-month development of about 400,000 jobs — not the everyday image for an financial system many concern is on the brink of a recession.

However job development will finally sluggish, and cuts will turn out to be inevitable as companies reassess their boom-time hiring plans.

“The roles market is booming, however it truly has to decelerate as a result of the financial system could be very near, if not already at, full employment. If it doesn’t sluggish, the financial system will blow previous full employment, inflation will turn out to be persistent and the wage development will exacerbate excessive inflation,” Zandi mentioned. Full employment is when everybody who desires to work has a job.

Employment development ought to sluggish to about 150,000 jobs a month to succeed in a secure employment market, he mentioned, and meaning “we’re going to hear extra CEOs discuss pulling again on hiring plans, asserting a freeze and even layoffs.”

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It’s commonplace that Musk is likely one of the first and loudest voices, Zandi mentioned. “We should always count on to listen to extra on this.”

Corporations which have introduced layoffs or hiring freezes for the reason that starting of the yr have cited decrease earnings or larger prices.

In Could, on-line automotive vendor Carvana mentioned it might lay off 2,500 workers, or about 12% of its workers, and Netflix introduced its second spherical of layoffs, of about 150 individuals due to a stoop in subscribers and income. In one other adjustment within the streaming market, Warner Bros. Discovery Inc. shut down the CNN+ streaming service in April, simply weeks after its launch.

Cryptocurrency startups have reacted shortly to market declines. Coinbase, the trade platform, introduced a hiring freeze, and Gemini Belief, one other crypto trade, mentioned it might lay off 10% of its workforce.

Sixty-six tech corporations have had layoffs in 2022 up to now, affecting greater than 16,000 jobs, in accordance with tech job tracker Layoffs.fyi. Twitter introduced a hiring freeze and different cost-cutting measures weeks in the past.

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At Tesla, layoffs have been almost as unstable as the corporate’s inventory.

Musk’s first order of enterprise after asserting he would take over as the corporate’s chief govt in 2008, because the monetary disaster gripped the world, was to announce a spherical of layoffs. Subsequent layoffs associated extra to firm points than the higher financial system.

In 2017, after Tesla purchased Photo voltaic Metropolis, Musk introduced he could be slashing 2% of the Tesla and Photo voltaic Metropolis workforce in what he described as performance-related firings. Many have been contract staff.

In 2018, whereas experiencing severe manufacturing issues with the brand new Mannequin 3, Musk introduced that almost 10% of the Tesla workforce could be laid off. Late within the yr, he acknowledged that the corporate was “single digit weeks” away from chapter.

Analysts count on Tesla to put up weak second-quarter outcomes subsequent month, largely due to a weeks-long COVID closure at its Shanghai plant.

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Economists count on to see an employment slowdown seem first in sectors which are notably delicate to excessive rates of interest, similar to housing. A number of small to medium-size mortgage corporations are chopping workers.

The retail sector misplaced 61,000 jobs in Could, underscoring the continued shift in consumption patterns after pandemic restrictions eased and other people ventured again out into the world.

“Slowdown in retail corresponds with what we thought customers would do when pandemic [conditions] would ease: cease shopping for as a lot items and as a substitute begin shopping for experiences, like touring or going to leisure venues,” Feler mentioned.

UCLA Anderson’s newest forecast predicts the unemployment charge will inch up modestly, from 3.6% to 4.2% by mid-2023, because the tempo of financial development is predicted to decelerate.

“However we additionally count on the labor power participation to proceed rising, which might imply that the unemployment charge would partly improve as extra individuals search for jobs, and never solely as a result of the numbers of jobs have shrunk,” Feler mentioned.

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Instances workers writers Russ Mitchell and Laurence Darmiento contributed to this report.

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Cleveland-Cliffs Signals a Possible New Bid for U.S. Steel

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Cleveland-Cliffs Signals a Possible New Bid for U.S. Steel

A possible new takeover bid for U.S. Steel emerged on Monday, teeing up more turmoil over the once-dominant company’s future after President Biden’s decision to block its acquisition by a Japanese company.

Lourenco Goncalves, the chief executive of an American competitor, Cleveland-Cliffs, said his company had “an All-American solution to save the United States Steel Corporation,” stressing that acquiring U.S. Steel was a matter of “when,” not “if.” But he offered no details of the bidding plans.

The renewed expression of interest from Cleveland-Cliffs comes less than two weeks after Mr. Biden blocked a $14 billion takeover of U.S. Steel by Nippon Steel, arguing that the sale posed a threat to national security. Cleveland-Cliffs tried to buy U.S. Steel in 2023, an offer that was rejected in favor of Nippon’s higher bid.

CNBC reported on Monday morning that Cleveland-Cliffs would seek to take over U.S. Steel and sell off its subsidiary, Big River Steel, to Nucor, another American producer. But Mr. Goncalves, at a news conference later in the day, would not confirm any partnership with Nucor on a bid.

U.S. Steel and Nucor did not immediately respond to requests for comment.

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Investors seemed pleased by the potential bid, sending shares of U.S. Steel up as much as 10 percent on Monday when CNBC reported the potential offer. Shares of U.S. Steel finished about 6 percent higher on Monday but are down 23 percent over the past year, including Monday’s spike.

But the fate of Nippon’s proposed takeover remains in limbo. U.S. Steel and Nippon sued the United States government last week in the hopes of reviving their merger, accusing Mr. Biden and other senior administration officials of corrupting the review process for political gain and blocking the deal under false pretenses.

The companies filed a separate lawsuit against Cleveland-Cliffs, Mr. Goncalves and David McCall, international president of the United Steelworkers union. They argue that Cleveland-Cliffs and the head of the union illegally colluded to undermine the Nippon deal, assertions that both defendants called “baseless.”

On Saturday, the companies said the Biden administration had delayed enforcement of its executive order blocking Nippon’s takeover until June, to give the courts time to review the lawsuit.

“The problem is, we can’t make anything happen until the current management and the current board of U.S. Steel make the decision to abandon the merger agreement with Nippon Steel,” Mr. Goncalves said at a news conference in Butler, Pa., on Monday.

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Given this rancor, it is unclear how receptive U.S. Steel would be to a new bid by Cleveland-Cliffs. If U.S. Steel does not engage, one option would be for Cleveland-Cliffs to take an offer to shareholders.

U.S. Steel was once the world’s largest steel producer, but the company has fallen in global rankings in recent years. Concerns about its long-term future are rooted in a failure to quickly adopt alternatives to traditional mills that are more energy-efficient and cost-effective. Nippon, U.S. Steel has argued, is the only buyer that can make substantial investments in multiple steel mills and protect jobs.

The United Steelworkers, which represents 11,000 U.S. Steel employees, has voiced strong opposition to the proposed merger with Nippon. The powerful union has said the Japanese company engaged in illegal trade practices and dealt with the union in bad faith. Previously, the union expressed its preference for a merger with Cleveland-Cliffs, which is unionized.

A new bid by Cleveland-Cliffs, if it materializes, risks antitrust scrutiny from federal antitrust regulators, though regulators in the Trump administration are widely expected to take a less aggressive approach to merger enforcement than their Biden administration predecessors.

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Supreme Court denies oil industry plea to block climate lawsuits filed by California, other blue states

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Supreme Court denies oil industry plea to block climate lawsuits filed by California, other blue states

The Supreme Court dealt a major setback to the oil industry Monday, refusing to block lawsuits from California and other blue states that seek billions of dollars in damages for the effects of climate change.

Without a comment or dissent, the justices turned down closely watched appeals from Sunoco, Shell and other energy producers.

In Sunoco vs. Honolulu, the oil industry urged the justices to intervene in these state cases and rule that because climate change is a global phenomenon, it is a matter for federal law only, not one suited to state-by-state claims.

“The stakes could not be higher,” they told the court.

But none of the justices said they wanted to hear their claim, at least not now.

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The decision clears the way for more than two dozen suits filed by states and municipalities to move forward and try to prove their claim that the major oil producers knew of the potential damage of burning fossil fuels but chose to conceal it.

“Big Oil companies keep fighting a losing battle to avoid standing trial for their climate lies,” said Richard Wiles, president of the Center for Climate Integrity. “With this latest denial, the fossil fuel industry’s worst nightmare — having to face the overwhelming evidence of their decades of calculated climate deception — is closer than ever to becoming a reality.”

Two years ago, California Gov. Gavin Newsom and Atty. Gen. Rob Bonta filed a lawsuit in San Francisco County Superior Court against five of the largest oil and gas companies — Exxon Mobil, Shell, Chevron, ConocoPhillips and BP — and the American Petroleum Institute for what they described as a “decades-long campaign of deception” that created climate-related harms in California.

“For more than 50 years, Big Oil has been lying to us — covering up the fact that they’ve long known how dangerous the fossil fuels they produce are for our planet,” Newsom said in announcing the suit.

In recent days, California officials have blamed climate change for the devastating weather conditions that contributed to the deadly wildfires that destroyed thousands of homes and other structures, leading to what many experts expect to become the costliest natural disaster in U.S. history.

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California’s suit followed the pattern set by similar claims from the cities of Baltimore, New York, Chicago and San Francisco as well as blue states including Massachusetts, Connecticut, Rhode Island, New Jersey and Minnesota.

These suits argue that the oil producers used deceptive marketing to hide the danger of burning fossil fuels. Under state law, companies can be held liable for failing to warn consumers of a known danger.

In June 2024, the court asked the Justice Department to weigh in on the issue. In December, lawyers for the Biden administration urged the court to stand aside for now because the suits are at an early stage.

Justice Samuel A. Alito Jr. said he took no part in the decision to deny the appeals, presumably because he owns stock in companies affected by the dispute.

The climate change lawsuits were patterned after the successful mass lawsuits filed by states and others against the tobacco industry over cigarettes and the pharmaceutical industry over opioids.

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Cigarettes and opioids were sold legally, but the suits alleged that industry officials conspired to deceive the public and hide the true dangers of their highly profitable products.

Under state law, plaintiffs can seek damages for broad and open-ended claims such as a failure to warn of a danger, false advertising or creating a public nuisance. All three claims are cited in California’s lawsuit. Federal law, by contrast, is usually limited to damage claims that are authorized by Congress.

Had the Supreme Court agreed to hear the oil industry’s appeal in the Hawaii case, it “would have frozen the cases for a year or more and could have resulted in a death blow for all of them,” said Patrick Parenteau, an environmental law expert at the Vermont Law School.

Los Angeles lawyer Theodore J. Boutrous Jr., who represents Chevron, said the company “will continue to defend against meritless state law climate litigation, which clashes with basic constitutional principles, undermines sound energy policy.”

Meanwhile, Alabama and 20 red states urged the court to throw out these blue-state lawsuits. They said liberal states and their judges should not have the power to set the nation’s policy on the energy industry. The court has not ruled on that claim yet.

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The case dismissed Monday began five years ago when the city and county of Honolulu sued Sunoco and 14 other major oil and gas producers, alleging a failure to warn and creating a nuisance.

The Hawaii Supreme Court last year rejected the industry’s motion and refused to dismiss the suit.

“Simply put, the plaintiffs say the issue is whether defendants misled the public about fossil fuels’ dangers and environmental impact. We agree …. This suit does not seek to regulate emissions and does not seek damages for interstate emissions,” the state court said in a unanimous opinion. “Rather, plaintiffs’ complaint clearly seeks to challenge the promotion and sale of fossil-fuel products without warning and abetted by a sophisticated disinformation campaign.”

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How the NFL Moved the Vikings-Rams Playoff Game Away From the L.A. Fires

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How the NFL Moved the Vikings-Rams Playoff Game Away From the L.A. Fires

Matthew Giachelli got the call he anticipated on Thursday morning: The N.F.L. was moving the Rams’ playoff game to Arizona because of the wildfires raging in Los Angeles, and the league needed 200 gallons of paint pronto.

The game on Monday between the Rams and the Minnesota Vikings would now be held at State Farm Stadium outside Phoenix, and it had to look and feel as if it were being played in the Rams’ usual home, SoFi Stadium. That included painting the field with the team’s and league’s logos and colors. The hometown Cardinals, though, did not have some of the needed hues on hand, including the Rams’ blue and yellow.

Giachelli’s company, World Class Athletic Surfaces in tiny Leland, Miss., provides paint to most N.F.L. and top college teams. Within hours, he and his co-workers had loaded five-gallon buckets of nine custom paint colors, as well as stencils for the N.F.L. playoff logos, onto a truck that left Thursday afternoon on a 1,500-mile journey to Arizona.

“I definitely regret what’s going on in California, but I’m glad we could meet their needs,” said Giachelli, the vice president of production and distribution.

Getting the right paint was just one of hundreds of details that the league, the Rams, the Vikings, the host Arizona Cardinals and ASM Global, which operates State Farm Stadium, have juggled since the N.F.L. decided to move the wild-card round game.

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The N.F.L. has canceled preseason games and postponed and moved regular-season games over the years because of hurricanes, snowstorms and other calamities. But it had not moved a winner-take-all playoff showdown since 1936, when the site of its championship game was changed from Boston to New York to drum up ticket sales.

A battalion of people — from the front-office workers to the training staffs to the thousands of game-day workers — have been mobilized on short notice. Each game, particularly in the playoffs, generates tens of millions of dollars for television networks, advertisers and stadium operators, and with the season coming down to its last few weeks, there was little margin for error.

“If it can be played, they play it, and in this case, it can be played in Glendale,” said Joe Buck, who will call the game for ESPN on Monday. “We’re in the playoffs now, and you’ve got all this pressure to get this first round finished before Kansas City and Detroit,” which had first-round byes, “get back in.”

A big reason the N.F.L. is the world’s most valuable league is scarcity. There are just 272 regular-season games and 13 playoff games, so each one is of critical importance to the 32 teams. (By contrast, there are about 400 Major League Baseball games every month during the season.) They are also critical to the owners of those teams and the league, as well as broadcast networks, sponsors and other companies that spend billions of dollars a year to attach their businesses and brands to the N.F.L.

It has not escaped notice that one of those businesses, State Farm, will have its name attached to Monday night’s broadcast less than a year after it announced that it would not renew 30,000 homeowner policies and 42,000 policies for commercial apartments in California. (The N.F.L. has donated $5 million to Los Angeles relief efforts.)

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With so much riding on each contest, the N.F.L. does everything it can to play every game every year. When the league creates its season schedule each spring, it prepares contingency plans including an alternate site for each game. In 2022, when a massive snowstorm hit western New York, the Buffalo Bills played a home game at Ford Field in Detroit.

During the pandemic, outbreaks in locker rooms forced the league to postpone several games, though none were canceled. When pandemic conditions in Santa Clara County, Calif., deteriorated, the San Francisco 49ers moved to Arizona for a month, playing three home games in State Farm Stadium. Arizona was also a backstop in 2003 when the Chargers moved their home game against the Miami Dolphins because of fires in San Diego.

This time, the fires spread so quickly, the league decided to move the game five days before kickoff. Kevin Demoff, the president of the Rams, said the team had been in constant contact with officials in Los Angeles, who initially thought the game could be held at SoFi Stadium in Inglewood, which was unaffected by the fires.

But that changed midweek, when fires broke out close to the team’s training facility in Woodland Hills, forcing some players and staff to evacuate their homes and for one practice to be cut short. Demoff said he did not want the players and staff to be distracted, nor did he want city and county resources to be diverted for the game when they could be used to help others in need.

Moving the game is “just a recognition that there’s some things bigger than football and we owe this to our community to make sure that this game can be played safely and not be a distraction,” Demoff said Friday.

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ESPN was on hold as well. Four of its production trucks were en route to Los Angeles from Pittsburgh when the league told the network on Wednesday night that the game could be moved to Glendale. The crews spent the night in Kingman, Ariz. On Thursday, the plan was to set up in both stadiums in case the league waited until Saturday to decide where to play. So the trucks continued on to Los Angeles while another set of trucks left for Glendale. When the N.F.L. said Thursday that the game had been moved, the first set of trucks, which had reached Ontario, Calif., turned around and arrived in Glendale with time to spare.

The Cardinals also helped out the Rams in ways beyond just lending their stadium. The team’s owner, Michael Bidwill, sent two team planes to Los Angeles to help the Rams get their entourage and equipment to Arizona.

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