Happy Thursday and welcome back to On The Money. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.
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THE BIG DEAL — U.S. Economy shrank 3.5 percent in 2020: The U.S. economy shrank 3.5 percent in 2020 as the coronavirus pandemic shuttered businesses, schools and events, marking the first annual contraction since the Great Recession, according to data released by the Commerce Department on Thursday.
- U.S. gross domestic product (GDP) suffered its largest annual decline since 1946 due to the coronavirus pandemic, according to the Commerce Department release.
- The outbreak of COVID-19 caused the steepest economic collapse since the Great Depression, wiping out more than 20 million jobs and years of economic growth within two months.
U.S. GDP increased by an annualized rate of 4 percent in the final three months of 2020, according to the data released Thursday, following an annualized gain of 33.4 percent in the third quarter and a 31.4 percent annualized decline in the second quarter. But the economic rebound staged in the second half of 2020 has been dampened by the continued rapid spread of COVID-19 throughout the country. The Hill’s Niv Elis and I break it down here.
LEADING THE DAY
Lawmakers rip Robinhood’s decision on GameStop: Lawmakers on both sides of the aisle erupted in anger Thursday after online stock trading platforms barred users from buying skyrocketing shares of companies targeted by a Reddit forum.
The decisions allowed hedge funds and other well-established investors to continue buying the stocks, spurring charges of hypocrisy across the political spectrum from such figures as Rep. Alexandria Ocasio-Cortez (D-N.Y.) and Sen. Ted Cruz (R-Texas.)
- The Democratic leaders of the Senate Banking and House Financial Services committees announced they would each convene hearings on the state of the stock market, online trading platforms and how Congress should bolster financial rules meant to protect amateur investors.
- The SEC is likely to be inundated with complaints from Robinhood users, but may also face pressure to investigate whether the Reddit-inspired trades that fueled Thursday’s meltdown violated the law.
- An angry group of traders filed a class action lawsuit in the Southern District of New York almost immediately, accusing the app of manipulating the market and demanding an award for plaintiffs. A subreddit dedicated to suing Robinhood launched earlier Thursday already has 30,000 members.
The Hill’s Chris Mills Rodrigo and I explain here.
Byrd Rule, politics threaten $15 per hour minimum wage: Democrats face a series of steep political and procedural challenges as they plot a path to raise the minimum wage to $15 per hour using a budgetary process known as reconciliation that would sidestep the filibuster.
Budget reconciliation theoretically would allow Democrats in the 50-50 Senate to pass the long-sought progressive goal with Vice President Harris casting the tie-breaking vote.
But it’s not clear Democrats will be united in raising the minimum wage to $15 per hour, even if they use reconciliation.
- Centrist Democrats such as Sen. Joe Manchin (W.Va.) are concerned about an immediate hike to $15 and are pushing for legislation that would raise the minimum wage more gradually.
- The restaurant industry and other business groups are also launching an intense lobbying campaign against the effort to raise the minimum wage from $7.25 to $15 per hour by 2025. They say it would deal a crushing blow to restaurants, which have already been hurt by the coronavirus pandemic.
Niv breaks it down here.
Friday 1/29 beginning at 12:30 PM ET | Reset 2021: A New American Start
The inauguration of President Biden and Vice President Harris marks a new era in Washington. As with any presidential transition, priorities and goals will be recalibrated. The administration has outlined a broad policy framework with proposals focused on improving infrastructure and expanding universal access to broadband, revitalizing immigration, supporting environmental sustainability, providing meaningful support to those harmed by the COVID-19 pandemic, and, of course, reviving the economy. Looking ahead to the first 100 days, what steps will be used to drive economic recovery and environmental sustainability and to address immigration? Reps. Peter DeFazio, Stacey Plaskett, David Schweikert and Ted Detuch, USCC’s Tom Donohue, Kevin Hassett, UnidosUS’s Janet Murguía and more. RSVP today for one session or both.
GOOD TO KNOW
- A group of House progressives is urging President Biden and Vice President Harris to support recurring direct payments in order to help people cover their basic expenses during the ongoing coronavirus pandemic.
- The Office of the Comptroller of the Currency (OCC) is shelving a controversial rule meant to prevent banks from rejecting corporate customers based solely on their industry.
- Weekly unemployment claims dropped to a seasonally adjusted total of 847,000 in the week ending Jan. 23, a decrease of 67,000 from the previous week, but still a historically high figure amid the ongoing COVID-19 pandemic.
- Federal spending on the nation’s food stamp program experienced a nearly 50 percent increase in 2020 amid the economic crisis spurred by the coronavirus pandemic, according to data released Wednesday by the U.S. Department of Agriculture (USDA).
ODDS AND ENDS
- Sen. Elizabeth Warren (D-Mass.) called a CNBC reporter’s “bluff” after the reporter suggested that wealthy Americans would leave the U.S. over a new tax.
- Lawmakers on both sides of the aisle Thursday said the U.S. is in a strong position to use technology to help protect the environment, and highlighted the domestic and international opportunities for the industry.