--:-- Caitlin McCabe: It's Wednesday, October 8th. I'm Caitlin McCabe for The Wall Street Journal. And here's the AM edition of What's News, the top headlines and business stories moving your world today.
--:-- Caitlin McCabe: The federal government is officially now one week into its shutdown, and signs of strain are starting to ripple across the U.S. Fresh uncertainty has emerged as to whether furloughed employees will receive back pay once the government reopens, after the Trump administration floated the idea of denying it in a new memo yesterday.
--:-- Caitlin McCabe: The memo, prepared by the Office of Management and Budget, asserts that the administration isn't obligated to pay furloughed employees under a 2019 law that was designed to guarantee back pay after a shutdown ends. President Trump himself signed the law during his first term, but seemed to backtrack yesterday when asked if such workers should be paid.
--:-- Caitlin McCabe: I would say it depends on who we're talking about. I can tell you this, the Democrats have put a lot of people in great risk and jeopardy, but it really depends on who you're talking about. But for the most part, we're going to take care of our people. There are some people that really don't deserve to be taken care of, and we'll take care of them in a different way.
--:-- Caitlin McCabe: The threat to federal workers' pay comes as lawmakers are locked in a standstill over negotiations to reopen the government, with neither side giving much ground. In the meantime, cracks are starting to show up in other ways, from the friendly skies to businesses on the ground that rely on federal contracts or regulatory approvals in order to do their work.
--:-- Caitlin McCabe: One of the most evident signs of pain so far has been within the U.S. aviation system. On Monday and Tuesday, more than 9,000 flights in and out of U.S. airports were delayed, with the Federal Aviation Administration seeing a, quote, slight tickup in air traffic control workers requesting sick leave.
--:-- Caitlin McCabe: Staffers within that unit and TSA, or the Transportation Security Administration, are essential workers and must continue working, even as they face the prospect of missing their next paychecks as the shutdown lingers. These are folks who, many of whom work paycheck to paycheck, live paycheck to paycheck. And so as they continue to work without receiving compensation, that is creating a major toll.
--:-- Caitlin McCabe: And so as a result you are starting to see some workers choosing to call out sick in response. That Wall Street Journal travel reporter Jacob Passy He says Chicago O Nashville International and Hollywood Burbank were among the airports that have seen issues this week.
--:-- Caitlin McCabe: Outside aviation, frustration is trickling out too. Many entrepreneurs and small businesses that rely on the federal government are facing massive uncertainty. Some economists worry the pain could spread to the broader economy if the stalemate stretches into weeks.
--:-- Caitlin McCabe: The consulting firm Oxford Economics estimates the shutdown could cut annual economic growth by as much as 0.2 percentage point for every week it lasts. It continues to be an unsettled time for the jobs market as the government shutdown keeps the lights off at the Bureau of Labor Statistics.
--:-- Caitlin McCabe: Last week, we reported how the delays in federal data releases, including the September jobs report, were causing economists and investors to closely watch non-government data. And now, unofficial numbers are starting to come in from Wall Street, and they're pointing to the U.S. labor market losing steam.
--:-- Caitlin McCabe: This week, Bank of America said it is seeing signs of rising unemployment and slowing job growth in its customers' data. Meanwhile, Goldman Sachs said its measure of labor market tightness fell last month back to levels seen in 2015, indicating a tough landscape for job seekers.
--:-- Caitlin McCabe: These alternative data sources do have their drawbacks. They often only cover a small share of the labor force, and using them to estimate the state of the broader job market can be tricky. However, the non-government numbers are indicating a broader trend of a cooling job market, where few companies are hiring.
--:-- Caitlin McCabe: Alarm bells are ringing for American soybean farmers over the loss of their biggest customer, China, as they anticipate a bumper harvest. China hasn't booked any U.S. soybean purchases for months, making the oilseed a potent weapon in Beijing's trade fight with Washington.
--:-- Caitlin McCabe: In a bid to reduce their reliance on China, many U.S. farmers are seeking new markets in other countries, including Vietnam and the Philippines. We've reported that the Trump administration is considering allocating $10 to $14 billion more to farmers to help mitigate fallout from this year's trade battles.
--:-- Caitlin McCabe: President Trump and his team are considering the use of tariff revenue to fund much of the aid. According to a White House official, the president is expected to meet with Agriculture Secretary Brooke Rollins to make a final determination of where the money for a farmer bailout should come from.
--:-- Caitlin McCabe: And Supreme Court justices have voiced skepticism that states can ban counseling the aims to change a young patient's sexual orientation or gender identity. Colorado's 2019 law prohibits licensed mental health providers from using conversion therapy with patients under 18.
--:-- Caitlin McCabe: The restrictions were challenged by a licensed professional counselor, arguing that Colorado was violating the Constitution's guarantee of free speech by stopping her from counseling young people who wanted guidance informed by Christian convictions. The American Psychological Association and American Psychiatric Association support Colorado stating conversion efforts are not legitimate therapeutic treatment.
--:-- Caitlin McCabe: Coming up, a look at how Milan became the place to be for the globe rich and French President Emmanuel Macron faces a political crisis. Those stories and more after the break.
--:-- Margarita Stancati: The city of Milan is known for its finance and fashion, and now also as a home for the globe-trotting rich. The Italian city is in the midst of a renaissance, thanks in part to enticing tax breaks that have lured high-net-worth individuals from all around the world.
--:-- Margarita Stancati: One Italian law firm that specializes in tax law estimates that the new tax policy has been used by around 5,000 people who have moved to Italy. The shift comes as another global city, London, has gone in the opposite direction, scrapping a benefit that allowed foreigners living in the UK to pay tax only on what they earn domestically.
--:-- Margarita Stancati: The Journal's Rome correspondent, Margarita Stancati, says that's benefiting Milan. Margarita, your story mentions that Milan was historically thought of as the place where people came to work, not enjoy life. But seems like that's changing now.
--:-- Margarita Stancati: Yes, absolutely. I mean, Milan had the reputation among Italians of being very functional, but a bit gloomy and not somewhere where people went to have fun, but where people went to work. And it always had for decades, fashion industry, design industry, and finance.
--:-- Margarita Stancati: But it's become much more livable, much more cosmopolitan, And it's undergone something of a makeover. Your story mentions new high-end restaurants, real estate seems to be booming. What is it like there now?
--:-- Margarita Stancati: So there's been a period of kind of urban renewal. We've seen new skyscrapers rising, new metro lines, better public areas, including parks and bicycle lanes. And as more people came to Milan, both Italians and foreigners, the city has adapted to this demographic change.
--:-- Margarita Stancati: and many of these people are higher net worth individuals. So we're seeing more and glitzier restaurants opening, more art galleries opening, and also real estate prices going up. And so seems like a big driver of this renewal is tax breaks. Is that right?
--:-- Margarita Stancati: Absolutely. So Italy introduced a series of tax breaks, some of them aimed at high net worth individuals, basically anyone who moves to Italy, whether foreign or Italian, but who's a new resident to Italy gets to pay a lump sum tax, which has succeeded in luring many millionaires, many of them who previously lived in London.
--:-- Margarita Stancati: So depending on the year of arrival, the tax is either 100,000 euros or 200,000 euros on all foreign income. So any income that is made in Italy will still be taxed It similar to the non regime that was in place in the UK until a few months ago And also there basically no inheritance tax in Italy which is another aspect that makes Italy kind of fiscally attractive
--:-- Margarita Stancati: And obviously, it's not just all about taxes here. It's about lifestyle too. What is the lifestyle like?
--:-- Margarita Stancati: 100%. I mean, some of the people we spoke to compared Milan to London, Paris and New York, but without the chaos. Someone said, you know, it's as though you put all those cities in a shrinking machine and you get Milan.
--:-- Margarita Stancati: So people like Milan because it has this global feel. There's a lot going on, but also it's much smaller. It's easier to move around within the city. And it's also very easy to get out of the city. So one of the draws of Milan is that it has so many weekend getaway options, whether it's Portofino or the Dolomites or, you know, train ride from Venice.
--:-- Margarita Stancati: There's just so many options. Well, seems like Milan is the place to be right now. Margarita, thank you for joining us. Thank you for having me.
--:-- Caitlin McCabe: Staying in Europe, Swiss tech giant ABB is set to sell off its robotics business to Japan's SoftBank in a deal that values it at just over $5 billion. SoftBank said today that the acquisition of the division would significantly strengthen its artificial intelligence robotics operations.
--:-- Caitlin McCabe: aligning with its broader strategy of investing in the technology, including open AI, AI chips, and data centers. And it would appear France's Emmanuel Macron is running out of moves and allies.
--:-- Caitlin McCabe: After the resignation of his fourth prime minister in just over a year, Macron finds himself increasingly isolated, battling to govern without a parliamentary majority. His latest appointee, Sébastien Lecornu quit barely a month into the job, unable to unite lawmakers around a plan to shrink France's deficit.
--:-- Caitlin McCabe: Macron, still refusing to step down before his term ends in 2027, is now testing the limits of the Fifth Republic's constitution. Former allies, including his one-time premier Edouard Philippe, warn the system itself is starting to crack under the strain.
--:-- Caitlin McCabe: For a president once hailed as France's great modernizer, the question now is whether Macron's determination to stay in power is a source of even greater instability for France.
--:-- Caitlin McCabe: And that's it for What's News for this Wednesday morning. Today's show is produced by Kate Boulivant. Our supervising producer is Pierce Lynch. And I'm Caitlin McCabe for The Wall Street Journal. We'll be back tonight with a new show. Until then, thanks for listening.
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