Category: Business

The Delaware Supreme Court ruled to restore Elon Musk’s disputed $56 billion pay package on Friday, reversing another court’s decision that it had been awarded through an unfair process.

The decision comes after a nearly two-year battle over the fate of the then-unprecedented pay deal, following the Delaware Court of Chancery’s ruling that it had been improperly awarded. The earlier ruling said that the process had been unduly influenced by Musk and that members of the board were not independent. In response, Musk reincorporated some of his companies out of Delaware, including moving Tesla to Texas.

Musk said he had been “vindicated” by Friday’s ruling, adding in a later X post: “I try not to start fights, but I do finish them.”

The restoration of the pay package bolsters Musk’s position in Tesla, a publicly traded company in which he holds a massive, double-digit percentage stake that drives much of his more than $600 billion fortune.

Earlier this year Tesla shareholders voted to grant Musk an even larger, $1 trillion pay package — contingent on Musk hitting business milestones — that aims to tie him to the company for the next decade.

At the time of the ruling, the 2018 pay deal was unprecedented in scale. The Delaware judge who struck it down had written that it was “the largest potential compensation opportunity ever observed in public markets … 250 times larger than” the median earnings of someone in Musk’s position. It was also “33 times larger than the plan’s closest comparison … Musk’s prior compensation plan.”

The Delaware Supreme Court’s ruling Friday was succinct.

“We reverse the Court of Chancery’s rescission remedy and award $1 in nominal damages.”

The ruling said the Chancery court had erred in its remedy because reversing the package would leave “Musk uncompensated for his time and efforts over a period of six years.” Musk does not draw a traditional salary for his work at Tesla but instead is compensated through periodic pay packages consisting of stock awards.

A barrage of post-shutdown data this week has left economists with more questions than answers about the state of the U.S. economy.

Unemployment rose to a four-year high in November, inflation improved more than expected, and retail sales appeared surprisingly resilient in October — though economists say all of that is likely to be bogged down by low response rates, disruptions in data collection and other shutdown-related complications.

The result: More confusion about an economy that’s already confounded policymakers, politicians, and business owners for much of the year.

“We knew we’d have to take this data with a grain of salt; I just didn’t know we’d have to make it this salty,” said Diane Swonk, chief economist at KPMG. “This week’s data really adds more confusion than clarity.”

Employment data on Tuesday showed a decline of 41,000 jobs in October and November, while the unemployment rate inched up to 4.6%, offering a sobering picture of an already slowing labor market. Two days later, the Consumer Price Index came with more optimistic economic news: Inflation, it said, had cooled from 3% in September to 2.7% in November. But economists largely shrugged off both reports, saying they were unlikely to be reliable snapshots because the 43-day government shutdown had upended the way federal agencies gather data.

The Labor Department’s monthly household survey, used to calculate the unemployment rate, was scrapped altogether for October. The data for November was far less reliable than usual, with a survey response rate of 64%, the lowest on record. (Two years ago, by comparison, 70% of households responded.) As a result, some said they weren’t putting much stock into the 4.6% unemployment rate. It’ll take a few more months of data, they said, to get a better read on the job market.

“Yes, the unemployment rate rose, but I didn’t pay too much attention to it, to be honest,” said Kathy Bostjancic, chief economist at Nationwide. “The survey process was completely disrupted by the shutdown.”

That was also the case for Thursday’s Consumer Price Index. Economists widely dismissed the figures, saying it was probably skewed lower by delays in data collection. Government officials didn’t begin tabulating prices until Nov. 14, when many items had already been marked down for Black Friday sales and other holiday promotions. More significantly, a third of the inflation index looks lower than it otherwise would because the government’s data appears to show no increase at all in rent and homeowners’ housing costs for October.

“This inflation data was flawed, at best — and I think it would be inappropriate to be making policy or investment decisions based off the November report,” said Joe Brusuelas, chief economist at RSM US. “We have definitely entered a season of noise in economic data that isn’t likely to clear until early spring.”

A third government report this week, a delayed retail sales reading, showed that spending picked up at grocery stores, furniture shops, and online retailers in October but declined at restaurants, gas stations, and hardware stores. Economists, though, cautioned against reading too much into the findings, calling them “unusually noisy” because of the shutdown.

Even data unaffected by the government closure did little to shed light on exactly what’s happening. A consumer sentiment reading from the University of Michigan on Friday showed Americans’ views on the economy inched up slightly in December but are down significantly from last year, with 63% saying they expect worsening unemployment in the coming year.

Although the U.S. economy generally seems to be on stable footing, economists are concerned that weakness in the job market, worsening inflation, or a pullback in consumer spending could easily tip the scale toward recession.

President Donald Trump has also recently shifted his focus back to the economy, kicking off an “affordability tour” and addressing the nation in a prime time address this week, saying he is “bringing those high prices down and bringing them down very fast.” He was expected to speak about the economy again Friday evening in North Carolina.

The next snapshot of the economy comes Tuesday, with a Gross Domestic Product report that is expected to show another three months of brisk growth between August and October.

The lack of clarity is a particular challenge for the Federal Reserve, which is looking to the job market and inflation for clues on whether it should continue lowering interest rates early next year. Fed Chair Jerome H. Powell last week cautioned that upcoming economic reports should be viewed with a “skeptical eye” because they “may be distorted by very technical factors.”

“We’re going to get data, but we’re going to have to look at it carefully and with a somewhat skeptical eye,” he said at a news conference this month.

Newly released jobs market data paints a murky picture ahead for the tech industry, which continues to slash workers.

The unemployment rate for tech jobs has been steadily rising since May, ticking up to 4% in November, according to an analysis by CompTIA, a company that offers IT training and certifications. Between October and November, the number of technology workers across different industries fell 134,000, while the number of people working in the tech industry declined by more than 6,800. Tech job postings were also down by more than 31,800, the report found, citing data from the Bureau of Labor Statistics and California-based market intelligence firm Lightcast.

“The data is pretty definitive that the tech industry is struggling,” said Mark Zandi, Moody’s chief economist. “There’s a jobs recession in the industry, and it feels like that’s going to continue given the slide in postings.”

Over the last year, the tech industry has been reshaping itself amid economic uncertainty, reorganization around artificial intelligence, and a push to become more cost-efficient. Big Tech companies including Amazon, Meta, and Microsoft cut thousands of workers while raking in soaring revenue and making big investments in AI. Economists said the new data signals headwinds ahead even as some tech companies continue to hire, especially for AI roles.

“For the longest time, tech was the tailwind to jobs and the broader job market,” Zandi said, adding that it’s been a source of high-paying jobs. “That tailwind has now turned into a headwind, and that headwind feels like it may just blow harder going forward.”

The U.S. economic outlook has continued to be uncertain, with the Federal Reserve cutting interest rates earlier this month for the third time this year, citing a softening labor market. The unemployment rate in the tech industry still sits below the national rate, which in November hit 4.6%, the highest since 2021. However, that gap has been narrowing, with tech unemployment rising faster in recent months than is the case nationally.

In the tech industry, jobs for software, cybersecurity, and web development consultants have been among the roles to get axed, according to CompTIA. This is likely because companies are spending less on tech projects, and there’s been a pullback in government contracts and the ability to sell services overseas, said Tim Herbert, chief research officer at CompTIA.

Herbert said companies struggling from a slowing economy might put tech consulting on hold, which could serve as an insight into companies in other industries. “In some cases, it can be a bellwether on how other types of companies are performing when they stop hiring tech consulting services.”

Employers are largely in “wait and see” mode when it comes to hiring given the current uncertainties surrounding the economy and impact of AI, so they’re likely to delay backfilling, Herbert said citing CompTIA’s surveys of chief information officers. But Justin Wolfers, professor of public policy and economics at the University of Michigan, said uncertainty is likely to continue in the foreseeable future.

“I’m feeling substantially more pessimistic,” Wolfers said, recalling that Federal Reserve Chair Jerome H. Powell recently suggested that federal job numbers may be overstated. “That’s pretty grim.”

Technology companies have announced more than 141,000 job cuts so far this year, representing a 17% increase from the same period last year, according to outplacement firm Challenger, Gray & Christmas. At the same time Big Tech companies like Google, Microsoft, Meta, and Amazon have announced plans to invest up to $375 billion in AI infrastructure this year.

Though job postings declined in November, companies continued to hire, with high demand for workers in engineering and tech support. And AI is quickly becoming a requirement, with 41% of all active job postings representing AI roles or requiring AI skills, according to CompTIA’s analysis.

“If you have AI skills, there seems to be jobs,” Zandi said about the employment market. “But if you don’t, I think it’s going to feel like you’ve been hit by a dump truck.”

Herbert cautioned that it will be important to watch how the job numbers change over the next several months, as one month’s data may not provide a full picture.

AI will likely have a different impact depending on the sectors and jobs, Wolfers said. Coders and translators, for example, may feel the squeeze much sooner than other professions, he noted.