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The U.S. economy could quickly shed a million jobs and fall into recession if lawmakers fail to raise the nation’s borrowing limit before the federal government exhausts its ability to pay its bills on time, the chief economist of Moody’s Analytics, Mark Zandi, will warn a Senate panel today, the New York Times reported. The damage could spiral to seven million jobs lost and a 2008-style financial crisis in the event of a prolonged breach of the debt limit, in which House Republicans refuse for months to join Democrats in voting to raise the cap, Mr. Zandi and his colleagues Cristian deRitis and Bernard Yaros wrote in an analysis prepared for the Senate Banking Committee’s Subcommittee on Economic Policy. The warning comes at a moment of fiscal brinkmanship. House Republicans are demanding deep spending cuts from President Biden in exchange for voting to raise the debt limit, which caps how much money the government can borrow. That debate is likely to escalate this week when Mr. Biden releases his latest budget proposal on Thursday. The president is expected to propose reducing America’s reliance on borrowed money by raising taxes on high earners and corporations. But he almost certainly will not match the level of spending cuts that will satisfy Republican demands to balance the budget in a decade. The report also warns of stark economic damage if Mr. Biden, in an attempt to avert a default, agrees to those demands. In that scenario, the “dramatic” spending cuts that would be needed to balance the budget would push the economy into recession in 2024, cost the economy 2.6 million jobs and effectively destroy a year’s worth of economic growth over the next decade, Mr. Zandi and his colleagues wrote.

Akorn Pharmaceuticals has announced they are filing chapter 7 bankruptcy and laying off hundreds in Decatur, Ill., WCIA.com reported. In a company-wide video call, Akorn President Douglas Boothe announced to employees that Wednesday would be the last day they can visit the office to pack up their belongings. Mayor of Decatur Julie Moore Wolfe estimates about 450 workers were laid off by Akorn. Boothe said the company had been looking for potential buyers since last year. “The company’s owners have just informed us they will not provide any additional financing required to run the business,” Boothe said. “Their decision leaves us, the board and the ownership and the management team, with no other alternatives to conclude the sales process and initiate bankruptcy proceedings.” The pharmaceuticals company will terminate all benefits from employees at the end of the month. Boothe also said they will be unable to pay severance or provide COBRA health insurance coverage to their former employees. Akorn previously filed for chapter 11 protection in 2020. Illinois Rep. Sue Scherer (D-Decatur) believes the company broke state law. Illinois’ WARN Act requires companies of more than 75 employees to give state and local officials 60 days’ notice before a mass layoff if they are laying off more than a third of the location’s workforce, or 250 workers. If the company is found violating the WARN Act, Akorn is liable to give backpay and benefits to their workers for every day they are in violation.

The National Labor Relations Board has ruled that laid-off workers cannot be required to sign agreements that contain confidentiality clauses and other provisions that could deter them from exercising their rights under federal labor law in exchange for receiving severance, Reuters reported. The board in a 3-1 decision on Tuesday overturned a pair of Trump-era rulings that said severance agreements only violate federal labor law when employers engage in other unlawful conduct when asking workers to sign them. The NLRB's Democratic majority said those rulings were misguided and "granted employers carte blanche to offer employees severance agreements that include unlawful provisions." The case involves a Michigan hospital operator, McLaren Macomb, that furloughed 11 employees when the surgery center where they worked was closed during the COVID-19 pandemic. The board said it was illegal for the company to offer the workers severance agreements that included confidentiality and non-disparagement provisions because they could be discouraged from filing complaints with the NLRB or publicizing labor disputes.

A federal appeals court on Wednesday blocked a California law that prohibited employers from requiring their workers to resolve legal disputes in private arbitration, Reuters reported. A three-judge panel of the U.S. Court of Appeals for the Ninth Circuit in San Francisco in a 2-1 decision held that the law cannot be enforced because it conflicts with a federal arbitration law. The ruling handed a victory to business groups, including the U.S. Chamber of Commerce, which had sued the state. California was the first state to ban mandatory arbitration of all employment-related disputes in the wake of the #MeToo movement. The 9th Circuit panel in 2021 upheld the law 2-1, but later agreed to reconsider the decision. One of the three judges switched sides for Wednesday's order, which revived a ruling by a lower court against the law.

The U.S. government posted a $39 billion budget deficit for January after a $119 billion monthly surplus a year earlier, as revenues dipped and one-time costs, including the bailout of a union pension fund, pushed outlays sharply higher, the Treasury Department said on Friday, Reuters reported. The report, which comes as Treasury employs extraordinary cash management measures to avoid breaching the federal debt limit, showed receipts at $447 billion last month, down $18 billion, or 4%, from January 2022. Outside of the one-time costs, the budget data did not show major shifts from recent trends of slightly slowing revenues and rising costs for Medicare, Social Security and interest on the public debt.

The U.S. government may have misspent roughly $191 billion in pandemic unemployment benefits, a top federal watchdog is set to tell Congress on Wednesday, as Washington continues to uncover the vast and still-growing extent of the waste, fraud and abuse targeting coronavirus aid, the Washington Post reported. The new estimate — computed by Larry D. Turner, the inspector general of the Labor Department — is likely to galvanize House Republicans as they look to intensify their scrutiny of the roughly $5 trillion in emergency funds approved since the start of the crisis. Turner plans to present the information at a hearing Wednesday convened by Rep. Jason T. Smith (R-Mo.), chairman of the House Ways and Means Committee. When millions of Americans suddenly found themselves thrust out of a job in early 2020, Democrats and Republicans banded together to approve a historic expansion of the country’s unemployment insurance program. Their efforts — signed into law starting under President Donald Trump — at one point added an extra $600 to workers’ weekly checks and provided new benefits to those who previously would not have qualified for federal help. The money helped rescue the economy from the worst crisis since the Great Depression. But it also invited an unprecedented wave of theft and abuse, as criminals seized on the government’s generosity — and its race to disburse aid — to bilk state and federal agencies for massive sums. On Wednesday, top watchdogs plan to tell the House Ways and Means Committee that they still cannot compute the total amount of federal COVID aid subject to fraud and abuse. But Turner’s prepared testimony notes that the country’s misspending on unemployment benefits, in particular, may be far greater than previously known. His new estimate — “at least $191 billion” in possible improper payments — is significantly more than the roughly $163 billion that the government identified a year earlier. Like before, though, the figure is a projection that reflects fraud as well as sums erroneously paid to innocent Americans. Federal officials computed it after surveying unemployment spending, computing a rate of misspending and applying that to the wider set of jobless aid over the pandemic.

The labor market shattered expectations in January as the economy added 517,000 jobs and the unemployment rate dropped to 3.4 percent, a low not seen since May 1969, according to data released Friday from the Bureau of Labor Statistics, the Washington Post reported. Job gains had been steadily dropping for months, but January’s stunning job growth reflects unexpected tightness in the labor market, even amid fears of a looming recession as high-profile layoffs spread across the tech industry. The Federal Reserve has been making an all-out effort to lower inflation, hoping it can manage to hoist interest rates to slow the labor market without undercutting all of its strength. But that task appears much more difficult to pull off, with scant signs of a cool-down in a labor market that created more than a half-million jobs in January. The job gains were spread across a wide swath of industries, particularly those that provide services, with the largest increases in leisure and hospitality, professional and business services, and health care. The economy added more than 128,000 jobs in leisure and hospitality in January, with the largest gains in bars and restaurants. Professional and business services created 82,000 jobs. And employment in health care rose by 58,000 jobs, reflecting the aging population and a backlog of demand for care as the economy emerges from its coronavirus lockdown.