Today's Scoop:

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Here’s what you need to know…

1. The US government might shut down next week.

2. Food costs are likely to keep rising as ingredient costs climb.

3. More cities are abolishing the subminimum wage.

S&P 500: 4,274.51
1Mo: -4% | 1Yr: +15% | 5Yr: +47%

The market wavered today without a major news event. Investors are stuck in a dull period of speculation without much new data on inflation, jobs, or corporate profits. A looming government shutdown makes things worse.

Congress is still divided over how to prevent a government shutdown. [🤓] If a resolution on spending bills is not reached by September 30th, the shutdown will go into immediate effect on October 1st. Republicans and Democrats in the Senate collaborated on a bill to fund the government for a little longer, providing more time for negotiations, but the House doesn’t seem interested. House Republicans are looking for steep spending cuts.

Groceries may keep getting more expensive, thanks to extreme weather. Prices for various food ingredients - from meat to oranges, sugar, and cocoa - have climbed in the past few months, hitting new highs for the year. Hurricanes in Florida and hotter temperatures in Brazil and Mexico have reduced orange harvests. Droughts in the Midwest have damaged grasslands and hayfields, forcing farmers to shrink their cattle herds. Sugar and cocoa prices rose to the highest levels in over a decade as extreme weather in Thailand, India, and Brazil affected harvests. Profit margins are already slim for food producers, so these higher input costs will likely mean higher price tags at the grocery store.

Tipped workers are getting a pay raise. Chicago is the latest city to abolish the subminimum wage of $9.48/hour for tipped employees, like bartenders, servers, and others, requiring them to earn the regular $15.80/hour minimum wage. Advocates say the new law will ensure a living wage for working-class staffers and address issues of racism and sexism in tipping practices. The bill could change the business model for an industry that employs millions of workers across the US.

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• Merck’s covid treatment may be causing mutations

• JPMorgan settles another lawsuit over Epstein sex trafficking connection

• Uber teams up with taxis to settle the beef

• Starbucks develops more climate-resistant coffee trees

• UPS holiday workers earn a big pay bump from union contract 

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What is a government shutdown?

A US government shutdown occurs when Congress can't agree on a budget for the upcoming fiscal year. It's a political standoff, often due to disagreements on where money should be spent, causing disruptions until a compromise is reached. When this happens, many federal agencies and services stop operating due to lack of funding. Essential services, like the military and air traffic control, keep running, but others, like national parks, might close. Government support services likely stay operating but may experience delays or disruptions. The longest shutdown was for 34 days in 2018.

When the US government shuts down, federal employees are placed on unpaid leave (furloughed), but they receive back pay for the time they were furloughed once the government reopens. Federal contractors, though, do not automatically receive pay. Their pay depends on their contracts' terms, and they may not recoup lost wages even after the government reopens.

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