Afternoon Coffee: U.S. investigates Visa’s acquisition of Plaid; U.S. GDP sees record Q3 growth; Hurricane Zeta and a trail of damage

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The U.S. Department of Justice announced this week that it would investigate Visa’s proposed $5.3 billion acquisition of venture-backed Plaid, which allows applications to connect with a user’s bank account, according to Tech Crunch.

The tool has powered a chunk of fintech offerings. The DOJ has reportedly spent the last year looking into how the deal will affect the broader market for new financial services coming from start-ups.

The investigation has come from a petition filed in the U.S. Court for the District of Massachusetts to compel Bain — a consulting firm that worked on Visa’s bid for Plaid — to comply with the agency’s civil investigative demand, according to the article. The DOJ alleged that Bain withheld documents demanded by asserting privilege over the documents, which has essentially stalled the DOJ investigation.

“American consumers rely on the Antitrust Division to investigate mergers promptly and thoroughly,” Assistant Attorney for the Antitrust Division, Makan Delrahim, said in a statement. “Collecting relevant third-party documents and data is essential to the division’s ability to analyze these transactions. Too often, third parties seek to flout these requirements, hoping the division will lose interest and focus its enforcement efforts elsewhere.”

U.S. GDP grows 33.1% in third quarter

The U.S. Commerce Department reported on Thursday that U.S. gross domestic product (GDP) accelerated at a 33.1% annualized pace in the third quarter, according to CNBC.

The economy grew at the fastest pace ever in the third quarter after the worst quarter in history due to the initial shock from the COVID-19 pandemic. The 33.1% Q3 gain came after a 31.4% plunge in the second quarter. Dow Jones economists estimated a 32% gain for the third quarter, the article reported. The previous record was in the post-World War II era with a 16.7% burst.

Increased consumption from cautious reopening and business and residential investments fueled the third quarter rebound. While the news about this quarter was positive, economists warn the U.S. faces a tough road ahead as coronavirus cases increase and worries grow over the health and economic impacts. Nearly half the 22 million jobs lost in March/April remain unfilled, and the unemployment rate sits at 7.9%, the article said. The announcement comes just days before the presidential election.

“This is going to be seized upon by both ends of the political spectrum as either evidence of the strength of the post-lockdown economic rebound or a cursory warning that the gains could be short-lived,” James McCann, a senior global economist at Aberdeen Standard Investments, told CNBC. “The reality is that the GDP numbers demonstrate that the U.S. economy did indeed rebound strongly as lockdown measures were lifted.”

Hurricane Zeta hits Louisiana, continues damage in other states

Hurricane Zeta made landfall on the southeastern Louisiana coast on Wednesday as a Category 2 hurricane and made its way along the U.S. Southeast as a tropical storm on Thursday, according to the Associated Press.

The storm left a trail of damage and more than 2 million homes and businesses in the dark in Atlanta and beyond. New Orleans was pounded with winds and waters that wrecked homes and left at least three dead, the article reported. Power outages were reported across Louisiana, Alabama and Georgia. Georgia led the states with the most outages before dawn, with more than 1 million customers in the dark.

Officials warned that life-threatening conditions could last into the day. Zeta is expected to cross the mid-Atlantic states as a tropical storm and move offshore around Delaware and southern New Jersey.

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