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Microsoft's longterm future with OpenAI

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After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

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From the Valley to D.C., Big Tech players like Facebook, Google and Amazon are under more scrutiny than ever as new technology develops and privacy and antitrust concerns grow in lockstep with companies’ ambitions.

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House returns for 12th speaker ballot after night of negotiations

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President Biden has made the COVID-19 crisis and a post-Trump return to national unity and traditional democratic ideals his top priorities. From vaccinations to stimulus to schools, Biden is seeking bipartisan compromise while showing a willingness to use executive authority and bare Democratic majorities in the U.S. House and Senate to implement his policies. Republican leaders are navigating deep party divisions over if and how to move beyond former President Trump.

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China is becoming the most formidable rival America has faced, and the risk of confrontation with Russia, North Korea or Iran still looms. Authoritarians are rising, the chaotic Afghanistan exit revealed the limits of U.S. power, and the pandemic, climate change and other critical challenges continue to pose grave threats.

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Ominous forecasts about the impact of climate change serve as the backdrop for the world — led by U.S. lawmakers and companies — to debate big action on the problem, which could upend energy systems and our way of life.

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A look at the scientific breakthroughs changing the world, explorations in space and in worlds beyond our own and the threats posed to us by our own planet, both out of our control and of our own making.

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Bills' Damar Hamlin speaking after breathing tube removed

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Shifts in technology and media are changing the way we play, watch and understand sports. Business models are adapting and social change is forcing those in charge of teams and leagues to reconsider decades-old practices.

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Interview: The future of EA’s gaming tech

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Hispanic lawmakers grill Mayorkas over new border policies

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Fewer autos and bigger profits for carmakers

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The House returned to session Friday for another speakership vote after GOP Leader Kevin McCarthy (R-Calif.) lost on an 11th straight ballot Thursday — making this the longest speaker contest of the post-Civil War era.

State of play: McCarthy hosted a GOP conference call Friday morning and expressed optimism after a night of negotiations, two sources on the call said. But no deal has been reached, and even an agreement with a handful of persuadable rebels would not clinch the votes McCarthy needs to become speaker.

McCarthy said on the conference call that more votes are possible over the weekend. 

Because the speaker contest relies on a majority threshold, member absences could reduce McCarthy's magic number down from 218 votes. But if it's McCarthy supporters who are absent, that could further empower the rebels.

The big picture: On the second anniversary of the Jan. 6 Capitol riot, Republican infighting has ground the House's work to a halt — with still no indication of a viable path to consensus.

Between the lines: Even moderates are not so blindly loyal that they'd vote for McCarthy regardless of the vast concessions he makes to his far-right detractors — thus creating an extremely fraught tightrope.

Asked if there was anything that could make him drop his support for McCarthy, Rep. Chris Stewart (R-Utah) said on MSNBC Thursday: "There actually is. And honestly, there's many of us who feel like we're very, very close to that."

Rep. Matt Gaetz (R-Fla.), a leading rebel who has been brutally honest in his hostility toward McCarthy, told reporters that the standoff ends with either McCarthy withdrawing or agreeing to a "straitjacket" that fully constrains him as speaker.

Go deeper: McCarthy talks escalate as speaker vote adjourns on Day 3

Editor's note: This story is developing and will be updated.

McCarthy expressed optimism about the direction of talks, but no deal has been reached.

U.S. House Republican Leader Kevin McCarthy (R-CA) (R) talks to Rep.-elect Chip Roy (R-TX) (C) and Rep.-elect Jim Jordan (R-OH) in the House Chamber

House Republican Leader Kevin McCarthy (R-Calif.) talks to Rep.-elect Chip Roy (R-Texas). Photo: Anna Moneymaker/Getty Images

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Employers finished the year with a burst of hiring: The economy added 223,000 jobs in December, while the unemployment rate fell back to a half-century low of 3.5%, the Labor Department reported on Friday.  

Why it matters: The labor market is still chugging along with healthy demand for workers, the latest sign that the economy is holding up despite recession fears. 

December's payroll gains are slightly higher than the 200,000 that economists forecast for the month. 

Jobs growth moderated from November's gains, which were revised down to 256,000. In October, updated figures show the economy added 263,000 jobs, 21,000 fewer than initially estimated.

Details: Average hourly earnings, one measure of wage growth, rose by 0.3% in December or 4.6% over the past 12 months — a slightly slower pace than the 0.4% monthly rise in November (which was revised lower from 0.6%). 

The share of people employed or searching for work, known as the labor force participation rate, ticked up only slightly to 62.3%, compared to 62.1% in November. 

The big picture: In an attempt to crush inflation, the Federal Reserve has swiftly raised interest rates and signaled further increases ahead. While job growth has moderated, the labor market has stayed resilient — a welcome development for workers.

The Fed, however, is concerned that hot demand for too-few workers will cause employees to keep raising wages in a way they view as unsustainable, and stoke inflation. 

Where it stands: The December jobs data is one of the last major labor market indicators of 2022, a solid year of job gains that brought the nation back to pre-pandemic levels of employment, and then some. (It is still short of the level where it would have been had the pandemic not happened at all.)

The economy added more than 4.5 million jobs last year, with an average of roughly 375,000 jobs added each month.

But overall labor force participation rate remains stubbornly below its pre-pandemic level. Some of that shortfall is due to deaths from COVID-19, but other reasons include excess retirements and slower immigration. 

Editor's note: This is story has been updated with additional details and a chart.

U.S. adds 223,000 jobs in December, capping a strong year for the labor market

The labor market is still chugging along with healthy demand for workers.

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On the second anniversary of the Jan. 6 insurrection, House Democrats said the speakership fight waged by 20 House GOP rebels is a sign of how little progress has been made toward unity.

Between the lines: "The whole campus is aware of this juxtaposition of these two dates and what they're attempting to do, which is to disrupt our democracy," said Rep. Annie Kuster (D-N.H.).

Axios interviewed multiple Democrats on Thursday who are in the Gallery Group, the roughly 20 House Democrats who formed an impromptu support group after huddling together in the House Gallery on Jan. 6.

"I've been thanking my lucky stars all week that Republicans weren't in charge two years ago," said Rep. Sara Jacobs (D-Calif.).

Rep. Susan Wild (D-Penn.) said GOP Leader Kevin McCarthy cowered "into submission to the extreme fringe" after Jan. 6, "and today, his conference can’t even come together to perform a threshold action."

"It was the government shutdown in ’19, the insurrection of ’21, and now the current chaos of ’23," Rep. Jason Crow (D-Colo.) told Axios. "The common denominator ... is having a handful of Republicans in the House of Representatives who have no interest in governing."

"It's not lost on us that some of these people were the actors that were involved on January 6," Kuster said, referencing House Freedom Caucus Chair Scott Perry (R-Penn.), one of the GOP defectors. "Mr. Perry asked for a pardon because of illegal acts. That's a part of this that is so troublesome."

A spokesperson for Perry did not respond to a request to comment.

Between the lines: The House adjourned Thursday night after 11 failed ballots for McCarthy — but with Republican leadership saying they were optimistic about making progress.

"I'm not putting any timeline on it. We've got some progress going on. Members are talking," McCarthy said Thursday.

The last time a speaker fight went this many ballots was 1859.

Driving the news: President Biden will, for the first time in office, award the Presidential Citizens Medal to 12 people at a ceremony honoring “exemplary contributions to our democracy" on Friday.

Recipients include Capitol Police officers who were injured or died during the riot and election workers who fought off attempts from former President Donald Trump to overturn the 2020 election results.

Incoming House Democratic Leader Hakeem Jeffries will also lead an event in the Capitol at 10 a.m. ET, multiple lawmakers tell Axios.

Shortly after, members of the "Gallery Group" are hosting Capitol Police officers for a lunch to commemorate the work they did on the same day two years ago, members of the group said.

House Democrats connect Jan. 6 to GOP's speakership fight

The anniversary serves as a reminder of how little progress has been made toward unity in the last two years.

Security barricades the door of the House chamber as protesters try to break in on January 6, 2021. Photo: Tom Williams/CQ-Roll Call, Inc via Getty Images

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The wave of layoffs in tech that continued to mount this week has felt like a shocking and sharp turnabout for an industry that stood on top of the world just a year ago.

Be smart: Tech was never immune from forces in the broader economy, and Silicon Valley has always followed a boom-bust rhythm. But the most recent boom ran so long, many forgot it would have to end someday.

Driving the news: Amazon said Wednesday it will cut a total of 18,000 jobs, including some announced last year as well as new reductions to its retail and HR teams, among others.

Salesforce is laying off 10% of staff, saying it over-hired during the pandemic.

StitchFix on Thursday said it will cut 20% of salaried staff.

Across the industry last year, more than 1,000 tech companies laid off more than 150,000 people, per Layoffs.fyi.

The big picture: Tech's reputation for driving economic growth has always been founded on its ability to deliver productivity gains.

The industry also grew by grabbing market share from a host of consumer and business segments that have moved from analog to digital.

The financial crisis of 2008-9 ushered in an easy-money era in which zero interest rates pushed seas of capital into tech.

The pandemic's arrival brought some sectors to a standstill — but strengthened tech firms, who saw demand spike.

"It’s been a more than decade-long party," said Margaret O'Mara, a University of Washington professor who studies the history of the technology industry. "It’s just extraordinary how long this boom has been."

There was an assumption, O'Mara says, that pandemic-related behavior changes, such as the shift to remote work and buying groceries online, would just continue.

That led many tech companies to go on a hiring spree during the pandemic. The parent companies of both Facebook and Google, for example, grew more than 20 percent last year, while other large tech companies have doubled since before the pandemic.

Then inflation hit, the Fed raised interest rates and the economy softened dramatically — just as many people were returning to pre-pandemic methods of working and shopping. Tech, for all its vast scale and high profit margins, was never going to be immune from that kind of shift.

Online advertising has been hit particularly hard, with Google, Meta, Microsoft and others all noting a pronounced slowdown beginning mid-2022. Many tech companies started by slowing or freezing hiring, but shifted quickly to layoffs once the broader downturn was clear.

The chip sector, whose products had been in short supply, is now having to deal with a glut. 

Micron said in December it would cut 10% of employees, and Intel is said to be weighing cuts that could be even deeper. 

Intel has already made a small number of job reductions and announced plans to cut billions of dollars in costs (which means more layoffs).

What they're saying:  "The next two years are probably going to be the most challenging," Microsoft CEO Satya Nadella said this week.

Yes, but: This isn't the dot-com bust, especially for the biggest companies. While the job cuts are significant, large tech companies are still vital to the economy and they are still making lots of money.

The layoff numbers suggest retrenchment rather than collapse. There are outliers — like Elon Musk's debt-saddled Twitter, which has shed roughly two-thirds of its 7000+ employees — but the most common cutbacks have been in the 10% range.

"They are right-sizing to some degree," O'Mara said. "In a way the pandemic might have delayed a reset that was coming."

What's next: Layoffs are likely to continue as companies that have yet to pare back staff feel compelled to do so — whether to boost profits and please investors, to keep their cost structure competitive with rivals, or to adjust to reduced demand at a time when everyone seems to be cutting back at the same time.

Big Tech's hiring splurge makes cost cuts even harder

Tech companies hit the brakes as slowdown looms

Layoffs are tech's new normal

Tech was never immune from forces in the broader economy, and Silicon Valley has always followed a boom-bust rhythm.

Illustration of a cursor pushing out a worker holding a cardboard box with their possessions.

Layoffs

Column / Signal Boost

A group of pricey breakthrough prescription drugs are poised to shake up the market this year — including an Alzheimer's treatment that could be approved today by the FDA. 

Why it matters: Though the drugs offer hope to patients with hard-to-treat conditions like Alzheimer's or sickle cell disease, or who struggle with obesity, their potentially eye-popping prices are sure to create dilemmas for insurers, government programs and patients themselves.

The big picture: The approvals could fuel already-contentious debates around affordability and equity, giving ammunition both to those who say innovation doesn't come cheap and others who contend medical advances are meaningless if patients can't access them.

Although some of the drugs could be transformative, "they will create choices that need to be made and they will also create potential burdens, particularly on the most vulnerable, on people who are the least well-insured and people who live in states or happen to have insurance coverage that is the least generous," said Rena Conti, a professor at Boston University's Questrom School of Business.

None of the drugs would be subject to the price controls that congressional Democrats included in the Inflation Reduction Act. 

Driving the news: The FDA is expected to today decide whether to approve Eisai and Biogen's lecanemab, a treatment for Alzheimer's disease, setting into motion another round of debate over how much the drug should cost and whether Medicare should cover it. 

It would become the second FDA-approved Alzheimer's treatment targeting amyloid plaques that are believed to contribute to the development of the disease. But it isn't likely to cause as much controversy as Biogen's Aduhelm did when it was approved in 2021. 

Biogen initially priced that drug at $56,000 a year, drawing outrage from critics and presenting big questions about how Medicare could absorb the large spending spike if millions of beneficiaries tried to get it. 

If lecanemab is approved, experts will be closely watching both its list price and whether the FDA limits its use to subgroups of Alzheimer's patients. Both factors will be crucial in determining potential spending on the drug. 

A cost-effective price would be between $8,500 and $20,600 a year, the Institute for Clinical and Economic Review said last month.

State of play: The drug pipeline is brimming with other experimental cures that could make headlines this year.

Data for another promising Alzheimer's treatment by Eli Lilly that is similar to lecanemab is expected midyear, per a recent Cowen research note, and Medicare will almost certainly have to revisit its coverage policy for the entire class of drugs.

Several multi-million dollar gene therapies have already been approved. But this year the pipeline includes two treatments for sickle cell disease, which has a much larger patient population. 

Clinical trial results for Eli Lilly's obesity drug candidate are also expected in April, potentially ushering a new entrant to what could become a booming market. Disputes over coverage of obesity drugs already on the market will almost certainty continue.

Between the lines: Some novel drugs present an inherent dilemma: They're worth a lot of money because of the way they can dramatically improve patients' lives. Even so, manufacturers can still price these drugs well above what experts say they're worth. 

Gene therapies may cost millions per patient. Other drugs could cost much less per course, but cater to enormous patient populations or may require long-term use. 

In any scenario, the expense could present complex problems to federal and state health programs, private insurers and patients who wind up on the hook for out-of-pocket costs.

"We're fortunate there are so many treatments in the pipeline that promise to transform the quality of care for people with devastating diseases. While we recognize there are concerns about cost, the facts point to a health care system that can sustain this incredible innovation over the long haul," said Priscilla VanderVeer, vice president of public affairs at PhRMA.

Yes, but: The final cost burden hinges on several factors, starting with where manufacturers set the launch price.  

But there's also the question of how many patients can access them, either because of FDA-imposed limitations on eligibility or payer restrictions on coverage. 

Zoom in: Medicare opted to heavily restrict coverage of Aduhelm due to questions about whether it worked, effectively dooming the treatment's commercial prospects. The program will have to revisit its coverage policy for this class of drugs if the FDA approves lecanemab. 

Commercial insurers already limit coverage of obesity drugs, as NBC News recently reported, and the price tag of the treatments without insurance makes them unaffordable to most patients. 

But insurers say the therapies have limitations and don't always warrant blank-check treatment. The obesity drugs, which are also approved to treat diabetes, "have not yet been proven to work well for long-term weight management and can have complications and adverse impacts on patients," said Kristine Grow, a spokesperson for America's Health Insurance Plans. 

The gene therapies, particularly for sickle cell disease, could force difficult budgetary tradeoffs for state Medicaid programs, which could lead to coverage restrictions.

The intrigue: The arrival of the new cures and higher pharmaceutical spending will likely coincide with the implementation of the drug pricing components of the Inflation Reduction Act, which will allow Medicare to negotiate the prices of some older drugs on the market that don't face competition. 

But the law doesn't apply to new drugs' launch prices, which some critics say weakens its impact.

"You don't have a system in the U.S. for negotiating in any meaningful way the launch prices of those kinds of treatments to ensure that people can access them," said Aaron Kesselheim, a professor at Harvard Medical School.

What we're watching: The drug approvals could drive a new round of conversations about changing the way the U.S. pays for some drugs.  

"These kinds of drugs, like cell and gene therapies or very expensive drugs that might cure sickle cell or very expensive drugs that could help with Alzheimer's may force us as a country to rethink whether we pay for all drugs in the same way," said Mark Miller, executive vice president of health care at Arnold Ventures.

A banner year for prescription drugs brings cost concerns

There's a large pipeline of promising yet expensive drugs that could get approved.

Prescription drugs

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Whats Next

Axios What's Next

A combination of regulatory threats and competitive pressure in the wake of Southwest Airlines' disastrous holiday meltdown could make it easier for travelers to assert their rights when travel plans go wrong. 

Why it matters: Nearly 1 in 4 U.S. flights was canceled or delayed between January and September 2022, according to the Department of Transportation.

There's no more vivid example of how bad things can get than Southwest's recent debacle, which affected nearly 1 million travelers at the height of the holiday travel season.

What's happening: Southwest's recent failure has reignited discussions about a proposed Airline Passengers' Bill of Rights.

Sen. Richard Blumenthal (D-Conn.) is re-upping a bill he introduced in 2021 that would essentially ensure that airlines give refunds and compensation for extra costs caused by delayed or canceled flights and lost luggage.

"Rental cars, hotel, meals, no questions asked, money back," Blumenthal said, per CBS News.

Meanwhile: Transportation Secretary Pete Buttigieg is threatening to crack down on Southwest if the airline fails to take care of affected customers.

"No amount of financial compensation can fully make up for passengers who missed moments with their families that they can never get back — Christmas, birthdays, weddings, and other special events," Buttigieg wrote in a recent letter to Southwest CEO Bob Jordan.

"That's why it is so critical for Southwest to begin by reimbursing passengers for those costs that can be measured in dollars and cents."

Where it stands: Southwest says it has largely resumed its normal schedule, with a 99.1% completion rate over the New Year's weekend.

The airline is still working to reunite customers with their lost luggage and to reimburse passengers caught up in the chaos.

In a "goodwill gesture," Southwest is offering 25,000 "Rapid Rewards" points worth $300 toward a future flight — on top of other refunds and reimbursements it has already paid out.

Zoom in: For Southwest passengers like Zack Griff, a senior writer at travel site The Points Guy, such payouts can add up.

He got a refund for his canceled Southwest flight, reimbursement for an alternate flight, a $250 travel voucher, plus the 25,000 rewards points, he tells Axios.

Essentially, he was compensated four times for Southwest's screw-up.  

The big picture: The Department of Transportation had already been turning up the heat on airlines in the wake of travel disruptions last summer.

It's proposing new rules that would enhance airline refund policies and require carriers to be more transparent about surprise add-on fees.

The agency also published a new customer service dashboard allowing travelers to see which services and amenities they should receive from particular airlines if they experience delays or cancellations caused by problems within airlines' control, like mechanical or staffing issues.

DOT officials say the pressure it's putting on airlines has inspired many to step up their game. Some are now guaranteeing meals and hotel accommodations when a flight is delayed or canceled, for example.

The bottom line: Refunds are costing the industry big bucks.

From January 2020 through September 2022, airlines issued $29.3 billion in cash refunds — just under $1 billion per month, according to Airlines for America.

Cash refunds through the first nine months of 2022 amounted to $8.3 billion, more than all refunds issued in 2021.

Southwest's meltdown could end up being good for travelers

The Southwest debacle could lead to big consumer-friendly changes

Illustration of an airplane ground crew member in front of a hundred dollar bill.

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