--:-- Alex Osilev: Welcome to the PM edition of What's News, I'm Alex Osilev for The Wall Street Journal.
--:-- Alex Osilev: It's day one of the government shutdown, and the path to reopening looks murky. Plus, new payroll data gives an unwelcome surprise on the state of the jobs market. And it's not just your average homebuyers. Even the luxury housing market is starting to crack.
--:-- Alex Osilev: Luxury buyers and sellers pull back because they feel some uncertainty. That's an uncertainty that's going to be shared by everyone throughout the market.
--:-- Alex Osilev: It's Wednesday, October 1st.
--:-- Alex Osilev: Hundreds of thousands of workers across the federal government received furlough notices today, and it's not clear when or if they'll be coming back to work.
--:-- Alex Osilev: At the center of the debate over a spending deal between lawmakers, enhanced subsidies for Affordable Care Act health insurance plans that are set to expire at the end of the year.
--:-- Alex Osilev: Republicans had pushed to temporarily extend current government funding levels to buy time for negotiations. But Democrats say they won't vote for any bill that doesn't extend the ACA subsidies.
--:-- Alex Osilev: Top members of each party took to cable news and held press conferences on Capitol Hill today to point fingers.
--:-- Alex Osilev: On Fox News, Vice President J.D. Vance laid out the terms under which he'd be willing to negotiate.
--:-- Alex Osilev: I'd offer right now to the Senate Democrats, I'm happy, I will go to the Capitol right now to talk to Chuck Schumer and Senate Democrats about premium support for the Affordable Care Act, but only after they've reopened the government.
--:-- Alex Osilev: Meanwhile, speaking on the Senate floor, Senate Minority Leader Chuck Schumer laid the blame on Republicans.
--:-- Alex Osilev: If House Republicans bend to the insatiable whims and demands of their hard right flank, if they corrode the appropriations process with poison pills and extremist policy proposals, then they will responsible, will be responsible for moving us closer to a shutdown.
--:-- Alex Osilev: For more on the shutdown and how it may end, I'm joined now by WSJ White House reporter Natalie Andrews.
--:-- Natalie Andrews: Natalie, there was talk before the shutdown that some of those furloughs of government workers would turn into layoffs. Has there been any progress or comment made about that?
--:-- Natalie Andrews: The director of OMB, which is the budget office, Russ Vogt, told House Republicans in a private phone call on Wednesday that the layoffs are coming and that they will be consequential.
--:-- Natalie Andrews: He didn't give an indication or real specifics, but he said it'll be big and he said it will happen in the next day or two.
--:-- Natalie Andrews: Where does Congress stand? Like, where does this conversation around a path to reopening the government stand right now?
--:-- Natalie Andrews: I would say it's covered in mud, rocks and debris. It's a toxic relationship at this point between Democrats and Republicans.
--:-- Natalie Andrews: The Democrats have lost trust for Republicans so that why they putting their foot down now There politics at play Chuck Schumer got lambasted by his party for voting to keep the government open in March So that top of his mind They don trust that Trump wants to talk about health care for Americans because OMB has pulled back spending that Congress approved before.
--:-- Natalie Andrews: And it's going to be very hard for someone to blink and come together and somewhat repair this relationship enough to open the government.
--:-- Natalie Andrews: President Trump's say so is clearly needed in order to end this shutdown.
--:-- Natalie Andrews: Where does he stand on health care issues and this whole morass?
--:-- Natalie Andrews: The idea of expanding these Affordable Care Act subsidies or continuing them when they expire at the end of the year, that is a bipartisan thing.
--:-- Natalie Andrews: It's thought that that could be the way out of this because there are enough votes in the Senate to continue these enhanced ACA subsidies, which help the poorest of the poor Americans.
--:-- Natalie Andrews: But Democrats, they're using their only leverage they get. They're also asking for more than that. They are pointing to a lot of health care cuts that they say have happened by Republicans this year.
--:-- Alex Osilev: Thanks, Natalie.
--:-- Alex Osilev: The U.S. lost 32,000 private sector jobs in September. That's according to the payroll processor ADP.
--:-- Alex Osilev: And it's down from a revised loss of 3,000 in August.
--:-- Alex Osilev: Economists polled by The Wall Street Journal had expected an increase of 45,000.
--:-- Alex Osilev: For more, I'm joined now by WSJ economics reporter Konrad Putzier.
--:-- Konrad Putzier: So, yeah, this is bad news for the state of the economy. We're seeing weakness in a number of sectors.
--:-- Konrad Putzier: And a noteworthy one is leisure and hospitality, which shed 19,000 jobs last month.
--:-- Konrad Putzier: And that's really important for two reasons. One is leisure and hospitality has been a bright spot in the last few years since COVID.
--:-- Konrad Putzier: There's been a lot of wage gains, a lot of job gains in that sector.
--:-- Konrad Putzier: And the second one is it's a really cyclical sector that tends to weaken when the economy weakens.
--:-- Konrad Putzier: So this is certainly a warning sign for the health of the labor market and the health of the economy.
--:-- Konrad Putzier: The one caveat here is this is a survey by ADP, which economists generally say is less reliable and less important than this bigger survey by the Labor Department, which comes out usually once a month, this month, maybe not.
--:-- Konrad Putzier: Right. I was going to ask you about that with this government shutdown where many people are expecting not to get Friday's monthly jobs report from Bureau of Labor Statistics.
--:-- Konrad Putzier: How does ADP data generally stack up against BLS data? What are the differences?
--:-- Konrad Putzier: So the differences are basically the BLS data is a survey where they ask companies, hey, did you fire? Did you lay people off?
--:-- Konrad Putzier: ADP is a company that manages payrolls for a bunch of people, and they have this data set of around 26 million people across the country that they basically manage the payroll for, which sounds like a lot, but actually 170 million people in the U.S. work, so it really just a small part of the labor force
--:-- Konrad Putzier: And often what that means is the ADP data doesn match exactly with the Bureau of Labor Statistics survey which is this broader survey of the whole economy
--:-- Konrad Putzier: But with that said in recent months, ADP has been pretty good actually at predicting what the BLS data will say.
--:-- Konrad Putzier: It's become more reliable. And even if like individual months can be off, often the direction of the ADP data is still pretty meaningful.
--:-- Konrad Putzier: And so what we've had now is two straight months of job losses in the ADP data.
--:-- Alex Osilev: Thanks, Konrad.
--:-- Alex Osilev: Despite the shutdown and the jobs numbers, major U.S. stock indexes ended the day higher, driven in part by sharp gains across the pharmaceutical sector, following yesterday's announcements on drug pricing.
--:-- Alex Osilev: The Nasdaq rose about 0.4 percent, The S&P 500 was up roughly 0.3 percent, and the Dow added about 0.1 percent.
--:-- Alex Osilev: In business news, Walmart says it's working to remove synthetic dyes from all its store-brand foods.
--:-- Alex Osilev: It's the latest big food company to shift away from artificial ingredients in packaged goods, as the Trump administration and its Make America Healthy Again movement take aim at processed food.
--:-- Alex Osilev: And Meta says it'll start using people's conversations with its AI chatbot to help personalize ads and content.
--:-- Alex Osilev: Our tech reporter Megan Bobrowski explains how it'll work.
--:-- Megan Bobrowski: So for instance, if you ask their chatbot, hey, what are some good hiking trails nearby? You might start seeing ads for hiking boots or other hiking-related gear.
--:-- Megan Bobrowski: Obviously, Meta has a huge ads business. They've already been using AI to better match ads to users, and so this is yet another way they are planning to show you ads that you are most likely to click on and most likely to buy something from.
--:-- Alex Osilev: Users won't be able to opt out of the policy when it goes into effect on December 16th, but the company said that the content of some conversations, such as those involving religious or political views, sexual orientation, health and racial or ethnic origin won't be used to customize ads or content.
--:-- Alex Osilev: Coming up, the luxury housing market is slowing. What that says about the broader economy after the break.
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--:-- Alex Osilev: Arab mediators say that Hamas has indicated it's open to accepting President Trump's peace plan for Gaza but it asking for more time to review its conditions
--:-- Alex Osilev: The militant group is facing intensifying pressure from Muslim governments to agree to the proposal which is backed by Israel
--:-- Alex Osilev: The Supreme Court today allowed Federal Reserve Governor Lisa Cook to keep her job for now, and it scheduled arguments in January to consider President Trump's bid to fire her.
--:-- Alex Osilev: In a brief order, the court deferred a decision on the administration's emergency request to remove Cook from the central bank's independent board, while a lawsuit challenging her dismissal moves ahead.
--:-- Alex Osilev: And the Energy Department says the U.S. government is taking a 5% stake in lithium Americas, as well as a 5% stake in the Vancouver-based company's Nevada Mining Project.
--:-- Alex Osilev: It's a restructuring of a more than $2 billion U.S. government loan agreement from 2024.
--:-- Alex Osilev: With its stake, the government aims to boost the U.S. supply chain for lithium and to reduce reliance on overseas suppliers.
--:-- Alex Osilev: For the past few years, luxury homeowners have continued to buy and sell real estate, even as the overall housing market contracted.
--:-- Alex Osilev: Now, though, they're starting to slow down, too.
--:-- Alex Osilev: According to Redfin, the number of luxury home sales nationwide fell 0.7 percent year-over-year for the three months ending August 31st, the lowest level for that period since the company began tracking the market in 2013.
--:-- Alex Osilev: E.B. Solomon covers residential real estate for the journal and is here now with more.
--:-- E.B. Solomon: E.B., luxury homeowners are less impacted by interest rates, which have been higher recently. So what's slowing down the luxury housing market?
--:-- E.B. Solomon: It's a really interesting question because for the past few years, the luxury home sector has been really strong.
--:-- E.B. Solomon: But starting over the summer, the luxury market really pulled back.
--:-- E.B. Solomon: And one of the key reasons is the economic uncertainty of this spring.
--:-- E.B. Solomon: The tariffs and the trade wars from April really had a chilling effect on the market in the sense that there were wild swings in people's wealth.
--:-- E.B. Solomon: And for the first time in a long time, people were just a little bit uncertain about which way the economy was heading.
--:-- Alex Osilev: What relationship does a luxury housing market have to the broader housing market and the economy?
--:-- E.B. Solomon: It's such a great question because in so many ways, the luxury market is disconnected from the rest of the market.
--:-- E.B. Solomon: Remember, luxury buyers, they're not impacted as much by interest rates in the sense that they don't rely on that low interest rate in order to make a purchase.
--:-- E.B. Solomon: But remember that they do look at interest rates as a barometer for the economy and for their finances.
--:-- E.B. Solomon: Although the luxury market is disconnected in a lot of ways, there's a parallel.
--:-- E.B. Solomon: And so when luxury buyers and sellers pull back because they feel some uncertainty, that's an uncertainty that's going to be shared by everyone throughout the market.
--:-- Alex Osilev: Thanks, E.B.
--:-- Alex Osilev: And that's what's news for this Wednesday afternoon.
--:-- Alex Osilev: Today's show was produced by Pierre Bien-Aimé and Rodney Davis with Deputy Editor Chris Zinsley.
--:-- Alex Osilev: I'm Alex Osilev for The Wall Street Journal.
--:-- Alex Osilev: We'll be back with a new show tomorrow morning.
--:-- Alex Osilev: Thanks for listening.
