Member Briefing April 1, 2024
PCE, Fed's Preferred Inflation Metric, Cools While Spending Rebounds
U.S. prices moderated in February, with the cost of services outside housing and energy slowing significantly, keeping a June interest rate cut from the Federal Reserve on the table.The personal consumption expenditures (PCE) price index rose 0.3% last month, the Commerce Department's Bureau of Economic Analysis said. Data for January was revised higher to show the PCE price index climbing 0.4% instead of 0.3% as previously reported. Goods prices rose 0.5% last month, boosted by a 3.4% jump in the cost of gasoline and other energy products. In the 12 months through February, PCE inflation advanced 2.5% after increasing 2.4% in January.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, jumped 0.8% last month. That was the largest gain since January 2023 and followed a 0.2% rise in January. When adjusted for inflation, consumer spending rebounded 0.4% after dropping 0.2% in January. The increase in the so-called real consumer spending suggested that consumption likely retained most of its momentum in the first quarter. That prompted the Atlanta Fed to raise its gross domestic product growth estimate this quarter to a 2.3% annualized rate from a 2.1% pace.
Q4 GDP Revised Up to 3.4%
In its latest revision to fourth quarter GDP, the Commerce Department flagged growth during the period at 3.4%, which is a faster clip than previous estimates. With the benefit of even more hindsight, consumer spending is now pegged at an annualized growth rate of 3.3% up from just 3.0% previously. What drove the adjustment higher was a better finish than expected for services outlays. While it may be encouraging to see sustained consumer spending growth in this sector, the staying power could be problematic for the Fed should the sustained demand there prevent a cooling in service prices.
Structures spending jumped to 3.7% from 2.4% in the prior estimate on upward revisions to private nonresidential construction spending. One theme we've highlighted is how a boom in manufacturing construction has scope to lift future output capacity. In the meantime it can be supportive to topline growth through stronger structures investment. Residential fixed investment growth was revised lower by a tenth of a percent.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Top U.N. Court Orders Israel to Ensure Aid to Gaza - NYT
- Ultra-Orthodox Israelis Resist Push for Military Service - Reuters
- Fighting Rages Around Two Gaza Hospitals as Pressure on Israel Rises - NYT
- Fighting Rages Across Gaza Amid Revival of Truce Talks – Reuters
- Biden Faces New Moment of Truth as Israel Presses in on Rafah – The Hill
- US Has Agreed to Send More Bombs and Warplanes to Israel, Sources Say – Reuters
- How China Ended Up Financing the Houthis’ Red Sea Attacks - Politico
- U.S. and Israel’s ‘Unprecedented’ Intelligence Sharing Draws Criticism - WSJ
- Can Jews Sing ‘Dayenu’ While There are Hostages? The Passover Seder Gets a Post-Oct. 7 Rethink. - JTA
- Interactive Map- Israel’s Operation in Gaza – Institute for the Study of War
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
- Ukraine
- Ukraine and Russia: The Latest News – The Guardian
- Evan Gershkovich’s Year in a Russian Prison - WSJ
- Zelenskyy Fires Senior Aide in Continuing Reshuffle – Politico
- Putin Signs Decree on Spring Military Conscription – Reuters
- As Russia Attacks, Ukraine Scrambles to Dig Enough Trenches - Politico
- Russia Says it’s ‘Hard to Believe’ Islamic State Group Behind Terror Attack; Death Toll Rises to 140 - CNBC
- Russia is Gearing Up for a Big New Push Along a Long Front Line – The Economist
- Putin Says Russia Will Not Attack NATO, But F-16s Will be Shot Down in Ukraine - Reuters
- Interactive Map: Assessed Control of Terrain in Ukraine – Institute for the Study of War
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Other Headlines
- Arrest of Indian Opposition Leader Draws U.S. Scrutiny - WSJ
- Data Confirms UK Economy Went into Recession Last Year – Economic Times
- Sudan Needs 'Immediate Action' on Hunger to Avert Widespread Death, UN-Backed Report Says – Reuters
- Myanmar Military Scales Back Annual Parade as Fighting Escalates – Nikkei
- Russian Propaganda Network Paid MEPs, Belgian PM Says – Politico
- Report: 19% of Global Food Wasted as Hunger Climbs - AP
- Turkey's Resurgent Opposition Knocks Erdogan in Pivotal Local Elections – Reuters
- Russia Blocks UN Expert Panel on North Korea Nuclear Program – Bloomberg
- China’s Recovery Picks Up as Stimulus Measures Sink In - WSJ
Policy and Politics
Gov. Hochul, Lawmakers Miss NY Budget Deadline Again
The New York state budget will be late this year — again. Gov. Kathy Hochul and lawmakers have until today to put an at least $233 billion budget into place before the start of the state’s fiscal year. But with a deal out of reach the governor and Legislature approved a temporary spending bill that will last through April 4. The move ensures the state’s payroll goes out as scheduled next week, and it buys the governor, Senate and Assembly another week to try to reach consensus on thorny issues like housing policy and funding for the state’s education and Medicaid systems.
Late budgets have long been an annual rite of passage in Albany, though Gov. Andrew Cuomo’s administration prioritized on-time — or at least almost on-time — budgets as a symbol of a functioning government after years of chronic delays. Assembly Speaker Carl Heastie, a Bronx Democrat, told reporters on Tuesday that he was cautiously optimistic about the state of budget talks, particularly in regards to housing. But he said there was still plenty of negotiation to be done. “Sometimes in the budget, you might be in a different galaxy,” Heastie said of his negotiating partners. “I think we're all now even on the same planet.”
Early Clues Emerge on Senate’s Plans for TikTok
The Senate plans to rework the recently passed House proposal to force a sale or ban of TikTok in the U.S., with ideas already circulating on Capitol Hill. But some lawmakers backing a crackdown on the Chinese-controlled social-media app worry that overly broad changes could significantly delay the effort or derail it permanently. Lawmakers and aides expect Sen. Maria Cantwell, the influential chairwoman of the Senate Commerce Committee, will make the push for changes. Senators appear to be digging in for a prolonged debate, and the deliberations have frustrated proponents’ hopes for quick consideration of the measure.
Various options are on the table. Because TikTok is expected to challenge any new law in court, senators want to adjust the language to make it more difficult to overturn. Some have floated extending the amount of time Chinese parent ByteDance would have to divest the U.S. operations due to the challenges of any deal, or broadening the bill to tackle other social-media woes. The pause in action has bought time for TikTok and its opponents to try to shape public opinion about the popular but controversial app through multimillion-dollar marketing campaigns.
Final Rule Issued on Employee Representation at OSHA Inspections
On March 29, the Department of Labor announced a final rule clarifying the rights of employees to authorize a representative to accompany an OSHA compliance officer during an inspection of their workplace will be published in the Federal Register on April 1. The Occupational Safety and Health Act gives the employer and employees the right to authorize a representative to accompany OSHA officials during a workplace inspection. The final rule clarifies that, consistent with the law, workers may authorize another employee to serve as their representative or select a non-employee.
Following OSHA’s release, National Association of Manufacturers Chief Legal Officer Linda Kelly released a statement which reads in part: “By unlawfully expanding third-party access to manufacturers’ worksites, this proposal clearly violates OSHA’s statutory mandate to conduct inspections within ‘reasonable limits and in a reasonable manner’ with ‘minimum burden’ on employers, and potentially violates manufacturers’ constitutional rights. And, for the first time, OSHA would determine who qualifies as an ‘authorized representative’ of employees, which until now has been exclusively recognized as the jurisdiction of the National Labor Relations Board.
Health and Wellness
Steady Rise in U.S. Suicides Among Adolescents, Teens
U.S. rates of suicide by all methods rose steadily for adolescents between 1999 and 2020, a new analysis shows. During those two decades, over 47,000 Americans between the ages 10 and 19 lost their lives to suicide, the report found, and there have been sharp increases year by year. "An overall increasing trend was observed across all demographics," the researchers wrote in a study published March 29 in the journal JAMA Network Open. The findings were based on federal death certificate data from 1999 through 2020.
As to factors driving the trends, Dr. Robert Dicker, associate director of child and adolescent psychology for Northwell Health's Zucker Hillside Hospital said one obvious culprit is the pressures put on kids by social media. "As social media became a primary area of teenage communication, that is when there was an increase in mood disorders, depression and suicide," he noted. Also, "from my readings and from my work with teenagers, a lot of concern has been expressed around the future of our planet and global warming, conflicts between countries, and again the polarization here in the United States," Dicker said. "I think they all add to tremendous stress."
Read more at US News and World Report
NYS COVID Update
The Governor updated COVID data for the week ending March 22nd.
Deaths:
- Weekly: 39
- Total Reported to CDC: 83,057
Hospitalizations:
- Average Daily Patients in Hospital statewide: 698
- Patients in ICU Beds: 74
7 Day Average Cases per 100K population
- 3.3 positive cases per 100,00 population, Statewide
- 4.5 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
- What to Expect in the April 2 Presidential and State Primaries – NY State of Politics
- NY-16 Primary: Who’s Endorsing Jamaal Bowman and George Latimer? – City & State
- Deepfakes Raise Alarm About AI in Elections – The Hill
- Real Clear Politics Latest GOP Primary Polls – Real Clear Politics
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Baltimore Harbor News
First Section of Mangled Steel Removed from Collapsed Baltimore Key Bridge
Engineers began carefully removing the first twisted hunk of steel from the collapsed part of Baltimore’s Francis Scott Key Bridge late Saturday, with the help of several massive cranes. The nearly 50-year-old bridge crashed into the Patapsco River in Maryland on Tuesday, after a massive cargo ship smashed into one of its main supports, killing six construction workers and blocking shipping traffic into the Port of Baltimore. It’s not clear how long it will take to completely remove the structure from the water and reopen the economically vital shipping lanes.
The team deployed to remove the crumbled bridge is immense: Seven floating cranes — including a massive one capable of lifting 1,000 tons — 10 tugboats, nine barges, eight salvage vessels and five Coast Guard boats are on site in the water southeast of Baltimore. The crew first intends to get a small auxiliary ship channel open so tugboats and barges can move freely. They also want to stabilize the site so divers can continue searching for the four missing workers who are presumed dead, officials said.
More Headlines
- Francis Scott Key Bridge Collapse Live Updates - NBC
- Salvage Crews Work to Lift First Piece of Collapsed Baltimore Bridge - Reuters
- How Francis Scott Key Bridge Was Lost: A Minute-by-Minute Visual Analysis of the Collapse – USA Today
- Lawyers Gear Up for Swift Start in Legal Fight Over Baltimore Bridge - WSJ
- World’s Largest Container Ship Company, MSC, Dumps Diverted Cargo Problem on US Companies - CNBC
- We Spoke With One of the Last Drivers to Cross the Key Bridge
- 22 Crew Members Stuck Aboard The Dali—The Ship That Knocked Down Baltimore’s Key Bridge. Here’s What We Know. - Forbes
- Ships Have Become Supersized Since Baltimore Bridge Was Built - WSJ
US Parents are Having Fewer Children, Later. What it Means for Society.
Of all the political and social debates roiling the country, the decline in childbearing may prove the most momentous and far-reaching, even if it doesn’t present as a crisis today. The topic is intensely personal but also shapes our collective future, one in which children are no longer as abundant and the voices of childless people matter more. Simply put, women in the U.S. are having fewer children, whether by choice or by circumstance, or deciding not to have any at all. The reasons for the slowdown are complex and don’t yield easily to empirical analysis. Nor is it clear that pro-natal government programs can reverse the trend, given the modest effects of such policies in other countries grappling with low fertility.
Some experts blame the economic pressures on families and the uncertainty couples face when trying to budget for a growing family. “People are waiting for a good time to have a kid, and the good time never seems to come along,” says Sarah Hayford, the Institute for Population Research director at Ohio State University.
Employee Tardiness Costs U.S. Businesses Nearly $61 Billion a Year, Study Finds
Arriving at work a few minutes late each day may not seem like a big deal, but the cost adds up quickly for U.S. employers. The average employee loses 35 minutes to lateness each week, which costs employers $166 per worker each year. That is among the findings of a survey from luxury watch company The Savvy Wrist. The company's survey of 3,000 employees found significant regional differences regarding tardiness. Montana and North Dakota workers are the most punctual, tallying just 10 minutes of lateness a week. On the other end of the scale, those in Maine are leisurely strolling into the office 15 minutes late each day (or 75 minutes per week), followed by New Hampshire workers, who are 70 minutes late each week. Because of California's size, it is unsurprising that its employees cost the most to the state economy. Lateness costs the Golden State's economy in excess of $10 billion each year.
Among the other findings:
On average, employees are tardy once a week, either physically arriving at work late or logging on from home behind schedule.
Three-fourths of respondents viewed the idea of using a smartwatch for monitoring punctuality as overly intrusive. However, 63% said they likely would be more punctual if their employer gifted them a luxury watch.
Six in 10 believe that wearing a particular brand or type of luxury watch could influence perceptions of a wearer's professional demeanor in a work environment.
UAW Membership Falls 3.3% to Lowest Level Since 2009
Unions commanded big headlines last year, but that didn’t translate into higher membership rates, according to government data released last week. The U.S. Bureau of Labor Statistics said 10% of hourly and salaried workers were members of unions in 2023, or around 14.4 million people. That is an all-time low, down from 10.1% of workers in 2022. The number of unionized workers in the private sector increased by 191,000 to 7.4 million last year. That includes workers at auto companies, Las Vegas hotels and Hollywood studios, all of whom went through high-profile contract negotiations in 2023. UAW membership fell 3.3 percent last year to 370,239, its lowest mark since 2009, according to the annual financial report filed by the union.
The unionization rate for public-sector employees, including government workers, teachers and police, was far higher, at 32.5%. But that sector didn’t see as much growth in employment. About 7 million public-sector workers were union members in 2023, which was unchanged from the year before.
Employers Take IRS Offer, Return $225M in 'Improper' Pandemic Employee Tax Credits
Employers who improperly received tax credits to retain workers during the pandemic have returned more than $225 million to the IRS as part of a voluntary disclosure program that ended on March 22. Congress created the employee retention tax credit, or ERC, to encourage employee retention. However, the credit spawned a number of fraudulent or ineligible claims. Last September, the IRS issued a moratorium on processing new claims, increased audits and gave employers ways to withdraw pending claims or send back money they already had received.
The money returned so far came from more than 500 employers who were required to disclose information about ERC firms they used to seek the credit. The IRS is reviewing 800 additional submissions, and more were arriving at the deadline, so the repayment total is expected to grow. Under the disclosure program, employers who determined they weren't actually eligible were allowed to keep 20% of the money, often about equal to the fees paid to ERC firms. The employers also got relief from interest and civil penalties. The IRS still is reviewing 1.2 million tax-credit claims. It is moving slowly through claims filed before mid-September 2023 and has yet to resume processing claims submitted after that date
DOE and DOL Partner on Training Guidelines for the Battery Workforce
The U.S. Department of Energy (DOE) has partnered with the U.S. Department of Labor (DOL) to release guidelines for registered apprenticeships for battery machine operators. The Battery Workforce Initiative (BWI)’s National Guideline Standards was created with the aid of battery manufacturers, community colleges, and unions, and it outlines training requirements to support the skilled workforce needed for electric vehicle (EV) production. Curricula is currently under development, including BWI’s Pilot Training Project and the Battery Workforce Challenge (BWC) Program Regional Workforce Training (RWT) Hubs Project.
In a recent quote, U.S. Secretary of Energy Jennifer M. Granholm said, “The Battery Workforce Initiative is part of our whole-of-government approach to revitalize industry and rebuild our economy from the bottom up and the middle out, providing American workers with good paying forward looking careers.”
Ford Cuts Electric F-150 to One Shift
Ford Motor Co. is cutting the production rate for its F-150 Lightning electric pickup truck, reducing the Dearborn, Mich., assembly operation from three shifts to one shift as of April 1. The decision will leave 700 workers at the Rouge Electric Vehicle Center, while another 700 will be transferred to the Michigan Assembly Plant in Wayne, Mich., where the Ford Bronco and Ford Ranger are assembled. Another 700 workers will be offered a retirement package or will be reassigned to other Ford operations in the Detroit area.
The move appears to be a response to slower EV sales overall, apparent consumer hesitancy to choose electric vehicle options over internal combustion engine models, and concern among auto industry leaders about the affordability of the current electric vehicle offerings. Earlier this year Ford announced it would add a third shift at the Michigan Assembly Plant to meet demand for the Bronco, Bronco Raptor, Ranger, and Ranger Raptor, and it indicated that shift would be comprised of workers from the electric pickup assembly line.
Read more at American Machinist
Biden Administration Issues Final Methane Rule
On Wednesday, the Biden administration issued a final rule aimed at reducing methane emissions from drilling operations on public lands. The Bureau of Land Management’s rule will make oil companies pay royalties on ‘wasted’ natural gas. That is the methane that operators either vent into the air or burn off rather than capture in a pipeline and sell. The rule—requires that drillers either commit to capturing 100% of the gas they produce or come up with plans to minimize non-emergency venting (the direct release of natural gas) and flaring (the burning of excess natural gas at the production well). It also mandates that operators submit plans to track and repair gas leaks in pipelines and other infrastructure. If found to be in noncompliance, operators can be denied drilling permits by the BLM.
In recent decades, manufacturers have been instrumental in bringing to market the innovative methane-capture and pipeline-repair technology that will be called on in the new rule’s implementation.
Read more at Politico’s EE News
New Strategy Will Streamline DoD Support for Defense Contractors’ Cybersecurity
As defense contractors are battling ever more sophisticated cyber threats and baffled by ever-stricter security rules, the Pentagon today wants them to know: We hear you, and help is on the way, real soon now. That was the message around last week’s rollout of the new Defense Industrial Base (DIB) Cybersecurity Strategy for 2024-2027, [PDF] a three-year plan to strengthen, streamline and centralize Department of Defense support to contractors and small subcontractors.
A long list [PDF] of free, taxpayer-funded services is already available. But they’re scattered across a multitude of different agencies. Those organizations don’t always work that well together, let alone with their ostensible customers in the defense industrial base. Congress took notice and, starting in the National Defense Authorization Act for 2020, required the Pentagon to come up with “a consistent, comprehensive framework.” That mandate helped put the Pentagon on the path to develop the strategy published this morning. One fix in the works: creating a single point of contact for companies confused by all the would-be helpers and the bureaucratic hurdles in the way of accessing those free services.
DOD to Increase Reliance on Commercial Satellite Services
Commercial satellite operators for years have urged the Department of Defense to rely less on government-owned satellites and more on their own services. While advocacy efforts haven’t resulted in a massive shift yet, a proposed increase in the 2025 budget allocation for commercial satellite communications integration offers a glimmer of hope, said a senior industry executive.
The Pentagon’s proposed budget for fiscal year 2025 includes a $134 million line item for “commercial satcom integration” — an increase from $71 million in the 2024 budget. While the amount is still dwarfed by the $1.2 billion the Space Force has for military satellite programs, the industry views it as a positive sign, Rebecca Cowen-Hirsch, senior vice president for government strategy and policy at Viasat, told SpaceNews.