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Companies are leaving jobs behind to cut costs

Businesses are positioning themselves for an increasingly competitive landscape by doing everything they can to ramp up productivity and cast off excess costs.

Why it matters: Much of that cost savings will likely come from cutting jobs and adding new ones more slowly, as companies look to invest in new technology and what Carlyle Group's head of global research Jason Thomas calls intangibles.


  • Intangibles are things like R&D, software, patents or "inventory management technology, customer acquisition software ... to increase efficiency and dampen the practical impact from cutbacks in other areas," he writes in a new paper.

What we're hearing: "Almost every client that we deal with, irrespective of sector, is trying to drive cost down and make their products and services more affordable," Tim Ryan, U.S. chair and senior partner at consulting and tax firm PwC, said during a call with reporters Tuesday.

  • "Regardless of sector, most would tell you that they operate in a hyper-competitive sector — whether it be retail, insurance, health care — and there has been this ongoing focus and search for productivity and ways to drive costs down to be more competitive."

What's happening: The dueling realities of the U.S. K-shaped recovery not only mean that some industries and workers will suffer big losses while others prosper, it also means there are limited spoils for the winners.

  • Now fighting for a “bigger piece of a smaller pie” and unable to raise prices meaningfully — but also needing to push forward with technology upgrades and investment to compete — businesses have already begun looking at cutting back in other areas.

The big picture: Companies historically spend more money on things like software, patents and content, while spending less on employees, facilities, warehouses and delivery trucks coming out of recessions.

  • Carlyle's data show the percentage of fixed income spending used on intangibles has increased — rising following every recent recession, from 3.4% after the 1981–82 recession to 7.5% following the 2007–2009 recession.
  • The share is on pace to grow to 11% in 2020.

The bottom line: "Past increases in the intangible share of corporate outlays have been associated with slower recoveries in employment," Carlyle's Thomas says.

  • "If that relationship holds this cycle, a return to full employment in the U.S. may be much further off than the late 2021 or 2022 recovery in GDP."

Supreme Court backs religious groups on New York coronavirus restrictions

The U.S. Supreme Court ruled late Wednesday that restrictions imposed on New York places of worship by Gov. Andrew Cuomo (D) during the coronavirus pandemic violated the First Amendment, per Bloomberg.

Why it matters: The decision in a 5-4 vote heralds one of the first significant actions by the new President Trump-appointed conservative Justice Amy Coney Barrett, who cast the deciding vote in favor of the Catholic Church and Orthodox Jewish synagogues.

Editor's note: This a breaking news story. Please check back for updates.

Trump agency head who often skips mask tests positive for coronavirus

The acting administrator of the United States Agency for International Development informed senior staff Wednesday he has tested positive for coronavirus, two sources familiar with the call tell Axios.

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COVID-19 shows a bright future for vaccines

Promising results from COVID-19 vaccine trials offer hope not just that the pandemic could be ended sooner than expected, but that medicine itself may have a powerful new weapon.

Why it matters: Vaccines are, in the words of one expert, "the single most life-saving innovation ever," but progress had slowed in recent years. New gene-based technology that sped the arrival of the COVID vaccine will boost the overall field, and could even extend to mass killers like cancer.

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Beware a Thanksgiving mirage

Don't be surprised if COVID metrics plunge over the next few days, only to spike next week.

Why it matters: The COVID Tracking Project warns of a "double-weekend pattern" on Thanksgiving — where the usual weekend backlog of data is tacked on to a holiday.

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Trump pardons Michael Flynn

President Trump on Wednesday pardoned his former national security adviser Michael Flynn, who pleaded guilty in December 2017 to lying to the FBI about his Russian contacts.

Why it matters: It is the first of multiple pardons expected in the coming weeks, as Axios scooped last night.

This is a breaking story and will be updated with more details.

The emerging cybersecurity headaches awaiting Biden

The incoming administration will face a slew of cybersecurity-related challenges, as Joe Biden takes office under a very different environment than existed when he was last in the White House as vice president.

The big picture: President-elect Biden's top cybersecurity and national security advisers will have to wrestle with the ascendancy of new adversaries and cyberpowers, as well as figure out whether to continue the more aggressive stance the Trump administration has taken in cyberspace.

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Past friction between Biden and Erdoğan foreshadows future tensions

Ankara — The incoming Biden administration's foreign policy priorities and worldview will collide with those of the Turkish government on several issues.

Why it matters: The U.S. needs its NATO ally Turkey for its efforts to contain Russia, counter Iran and deal with other crises in the Middle East. But relations between Biden and Turkish President Recep Tayyip Erdoğan are expected to be strained.

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Tesla's wild rise and European plan

Data: FactSet; Chart: Axios Visuals

Tesla's market capitalization blew past $500 billion for the first time Tuesday.

Why it matters: It's just a number, but kind of a wild one. Consider, via CNN: "Tesla is now worth more than the combined market value of most of the world's major automakers: Toyota, Volkswagen, GM, Ford, Fiat Chrysler and its merger partner PSA Group."

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