Member Briefing April 12, 2023
IMF Cuts GDP Forecasts, Says Global Economy Heading for Weakest Growth Since 1990
The International Monetary Fund on Tuesday released its weakest global growth expectations for the medium term in more than 30 years. The Washington, D.C.-based institution said that five years from now, global growth is expected to be around 3% — the lowest medium-term forecast in an IMF World Economic Outlook report since 1990. In the short term, however, the IMF expects global growth of 2.8% this year and 3% in 2024, slightly below the fund’s estimates published in January.
Looking at some of the regional breakdowns, the IMF sees the United States economy expanding by 1.6% this year and the euro zone growing by 0.8%. However, the United Kingdom is seen contracting by 0.3%. China’s GDP is expected to increase by 5.2% in 2023, according to the IMF, and India’s by 5.9%. The Russian economy — which contracted by more than 2% in 2022 — is seen growing by 0.7% this year.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- U.S. in Crisis Mode With Allies After Ukraine Intel Leak – Politico
- Blinken Reassures Ukraine of ‘Ironclad’ Support After Bruising Leaks – The Hill
- Russia Pounds Ukrainian Cities - Reuters
- Kyiv Reported to Rethink Counter-Offensive After Leak – Reuters
- U.S. Intelligence Leak Deals Severe Blow to Ukraine War Effort – The Hill
- Defiant Kremlin Critic Vladimir Kara-Murza Likens His Case to Stalin’s Show Trials – The Guardian
- U.S. Deems WSJ Reporter Evan Gershkovich ‘Wrongfully Detained’ by Russia - WSJ
- Missing Marine Vet Confirmed Killed in Ukraine – Military Times
- ‘Hunting rifles’ — Really? China Ships Assault Weapons and Body Armor to Russia – Politico
- Russia Starts Fuel Supplies to Iran By Rail -Sources - Reuters
- 'More Comfortable than a Rolls-Royce': Ukrainian Tank Drivers Eagerly Await Western Rides – Military Times
- 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
Climate Change and Poverty Pose Challenge to World Bank and its Likely New President
The World Bank, embarking on a comprehensive overhaul of its lending practices, faces a tough question: How should it use its limited resources to fund climate projects while still helping the world’s poor? The bank’s wealthy member countries are reluctant to add more to its coffers. But they are also demanding that it lend more money to programs that would fight climate change.
Figuring out how to tackle that assignment—and still work to alleviate poverty—will likely fall to Ajay Banga, an India-born American businessman with little background in multilateral development work or climate policy but with ample experience in running large organizations. The former chief executive of Mastercard Inc. is President Biden’s nominee to be the next World Bank president.
Federal Budget Deficit Hits $1.1 Trillion Over Six Months: CBO Estimates
The federal budget deficit reached $1.1 trillion in the first six months of fiscal 2023, the Congressional Budget Office (CBO) estimated in a report released Monday. The estimate is $430 billion higher than the shortfall recorded during the same period last year, the office said, as spending rose 13 percent from the previous six-month window and revenues fell by 3 percent. The government brought in $2 trillion in receipts in the six-month period beginning Oct. 1, the CBO said in the latest monthly budget review report. The figure is $73 billion lower than the same period in fiscal 2022. Income and payroll tax receipts fell by 2 percent, or $33 billion.
estimates showed government spending also jumped over the six-month stretch when compared to the previous year, as outlays rose by 13 percent, or $357 billion. Overall, the CBO estimates total outlays hit $3.1 trillion between October and March. The spike coincides with an estimated increase of 11 percent, or $132 billion, on net for the government’s largest mandatory spending programs, including Social Security and Medicare.
COVID News – Biden Signs Bill Ending Covid-19 National Emergency
President Joe Biden on Monday signed a House bill immediately ending the Covid-19 national emergency, first enacted during the Trump administration in 2020. The White House initially announced plans to extend the Covid-19 national emergency, as well as the public health emergency, until May 11. But shortly after, House Republicans put forth bills to end both imminently. The bill that the president signed into law on Monday ended only the national emergency.
In a Statement of Administration Policy, the Biden administration said that an abrupt end to the emergency declarations would “create wide-ranging chaos and uncertainty throughout the health care system.” Despite this, Biden told Senate Majority Chuck Schumer last month that he did not plan to veto it — marking the second time in recent weeks that the president has signaled opposition to a Republican-sponsored bill, only to later decline to veto it.
Bail Law Changes Continue to Take Up Lion's Share of New York Budget Talks
Potential changes to New York's bail law remains the dominate issue in the ongoing budget talks, now 10 days past its due date. State Assembly Speaker Carl Heastie told reporters Monday the negotiations continue to center around Gov. Kathy Hochul's effort to make it easier for judges to set cash bail when defendants face serious criminal charges. "I think everytime a concept is brought up, you actually have to walk through the process," Heastie said."
Heastie said the negotiations have been almost exclusively about the bail changes as well as talks around the governor's proposal for a statewide housing plan meant to boost housing by 800,000 units in the next 10 years. It's possible with both matters settled, a broader deal can be reached on a range of issues like the state's minimum wage, along with tax policy and mass transit spending.
Read more at NY State of Politics
New York Updates Sexual Harassment Policy for Employers
New York state officials have finalized an updated policy for combating sexual harassment in the workplace for employers in the private, as well as non-profit sectors, Gov. Kathy Hochul on Tuesday announced. Changes include how to address remote workers, gender discrimination and retaliation in the workplace. At the same time, the Department of Labor also announced a new training video for employers, as well as online resources to help workers understand the new policy and mandatory training requirements.
State Department of Labor officials, as well as the Division of Human Rights, developed the new policy alongside workers and advocates during a public comment period and public hearing. New York first put a statewide harassment policy in place in 2018, requiring employers of all sizes to create a sexual harassment prevention plan and provide training to workers. The new training video will be made to employers across the state and a public relations and outreach campaign is also planned.
Read more at NY State of Politics
Banks in ‘More Precarious Situation’ Creating Risks for Global Growth, IMF Chief Economist Warns
Interest rate rises have increased banks’ vulnerabilities — and their response presents a significant risk to global growth, the International Monetary Fund’s chief economist warned Tuesday. Central bank hikes have increased funding costs for banks, while lenders have also seen some losses in assets like long-term bonds. “Banks are in a more precarious situation. They have healthy cushions, but it’s certainly going to lead them to be a little bit more prudent and maybe cut down lending somewhat,” Pierre-Olivier Gourinchas said.
In one scenario, the IMF sees funding conditions for banks tightening further and squeezing lending, bringing its forecast of 2.8% global growth in 2023 down to 2.5%. Financial stability has been in the spotlight in recent months, amid the collapse of several U.S. banks, the swift sale of Credit Suisse in Europe, and turmoil in the U.K. bond market that nearly toppled pension funds last fall.
Teens More Likely To Work than Twenty-Somethings
Labor force participation among teenagers has been on a steady rise. In March, 37.4% of Americans age 16 to 19 were actively employed or looking for work, according to the Labor Department. That’s up substantially from pre-pandemic levels, thanks in part to higher starting wages in the service industry. Higher starting wages have helped reverse a longstanding trend of declining teen workforce participation, said Ron Hetrick, a senior labor economist with Lightcast..
But it’s a different story for slightly older members of Generation Z, born from 1997 to 2012. Participation rates in the 20 to 24 age bracket are still lagging. “The 20-, 24-year-olds were the bullseye of the COVID years,” Hetrick,said. “They would have been starting out freshmen, sophomores, juniors in college. Because of that disruption, he said some of them put their higher education on hold. Others are slowing down or spacing out their college years.
Sound Familiar? Construction Industry Has Work, Needs More Workers.
Spending on nonresidential construction for February, the most recent month available, totaled $982 billion, nearly 17% higher than a year earlier and steady with January, according to the U.S. Census Bureau. “I’ve got more work to look at and bid on than I could possibly handle,” said Jeff Harper, president of Harper Construction Co. in San Diego. “I’ve said ‘no’ to 10 jobs in the last four months.”
Deere & Co., Caterpillar Inc. and other construction-equipment manufacturers expect higher machinery sales in the U.S. this year. “We feel good about nonresidential construction in North America,” Caterpillar Chief Executive Jim Umpleby told investors in March at a construction-equipment trade show in Las Vegas. “That business has been improving and will continue to improve.” For factories, energy projects and other industrial jobs, the backlog was 10.4 months in February, an increase of two months from January and 3.8 months from February 2022.
ChatGPT is Changing the Job Hiring Process
How many business leaders are currently using AI tech in day-to-day operations or plan to? Based on new research, a lot. Half of the companies ResumeBuilder surveyed in February said they are using ChatGPT; 30% said they plan to do so. The data included 1,000 responses from the ResumeBuilder’s network of business leaders. Stacie Haller, chief career advisor at ResumeBuilder, said the data might be the tip of the iceberg. Since the survey was completed, more professionals have started using generative AI.
“We saw ChatGPT replacing jobs in the HR department first, the people writing job descriptions or responding to applicants,” Haller said. “I don’t know many people that love writing job descriptions, and I’ve been in this world for a long time.” When businesses automate writing tasks, it leaves money available for more strategic areas of the company. According to the data, half the firms implementing AI said they saved $50,000, and a tenth of companies said they had saved $100,000.
U.S. Begins Study of Possible Rules to Regulate AI Like ChatGPT
The Biden administration said Tuesday it is seeking public comments on potential accountability measures for artificial intelligence (AI) systems as questions loom about its impact on national security and education. ChatGPT, an AI program that recently grabbed the public's attention for its ability to write answers quickly to a wide range of queries, in particular has attracted U.S. lawmakers' attention as it has grown to be the fastest-growing consumer application in history with more than 100 million monthly active users.
The National Telecommunications and Information Administration, a Commerce Department agency that advises the White House on telecommunications and information policy, wants input as there is "growing regulatory interest" in an AI "accountability mechanism." The agency wants to know if there are measures that could be put in place to provide assurance "that AI systems are legal, effective, ethical, safe, and otherwise trustworthy."
Auto, Other Manufacturers Push Rising Machine Tool Orders
Machine shops and other manufacturers ordered $467.8 million worth of machine tools during February 2023, improving on the January new-order value by 33.0%, but still trailing last year’s comparable total by -1.3%. Interestingly, although the overall month-to-month improvement is considerable, the 1,628 machines sold during February was -3.0% lower than the total number of units (1,679) sold during January.
The February report’s regional data confirms the strong demand for new capital equipment in the automotive sector, with a 127.3% rise in new orders for metal-cutting machinery from the North Central-East region. The $182.48 million total for those orders is also 81.3% higher than the similar figure for February 2022, and it raises the regional year-to-date new order total to $267.76 million, a 17.7% improvement.
Read more at American Machinist
Global PC Shipments Slide in First Quarter, Apple Takes Biggest Hit, IDC Says
Global shipments of personal computers slumped by nearly a third in the first quarter of 2023, with Apple Inc (AAPL.O) dropping the most among the market heavyweights as the industry struggles with a post-pandemic slowdown in consumer spending. In separate reports published on Monday, market research firms IDC and Canalys blamed weak demand, excess inventory and a bleak economic outlook for the shipment declines of 29% and 33%, respectively.
Of the top five PC makers analysed in the reports, Apple saw the largest drop with a fall of more than 40%. That was followed by Dell Technologies Inc (DELL.N) with a drop of around 31%. Lenovo Group Ltd (0992.HK), Asustek Computer Inc (2357.TW) and HP Inc (HPQ.N) also faced declines, the reports said.
Boeing Targets 2025 for Return to Pre-Crisis 737 MAX Production Rates
Boeing Co intends to restore production of its bestselling 737 MAX jet to its 2019 rate of 52 a month by January 2025 as it seeks to fully recover from two deadly crashes and the COVID-19 pandemic that curtailed output, two people familiar with the matter said. After increasing monthly MAX production rates to 38 in June, Boeing's current plans call for 42 MAXs a month by January 2024 and 47 by June 2024, the sources, who asked not to be identified, told Reuters.
As Boeing fights to recover from those crises, faster rollouts of the lucrative MAX are seen as the most critical task for Boeing Commercial Airplanes and the unit's CEO Stan Deal, who told reporters in March production rates would rise from the current rate of 31 jets "very soon." If successful, the 52-production rate would mark the first time Boeing has manufactured the jet at that volume since 2019, when it curtailed monthly production to 42 planes in the wake of the crashes.
Vetoed But Not Forgotten: What's Next for WOTUS?
The fate of the Biden administration's signature water rule remains unclear even after the president's second-ever veto issued a stern rebuke to Congress this week. Republican lawmakers pushed almost immediately for a veto override targeting the "waters of the U.S.," or WOTUS, rule on Thursday in the hours after President Joe Biden nixed a resolution that would roll it back. While Congress almost certainly lacks the votes for such an effort, enraged GOP members lashed out at the White House.
The Biden administration’s version of the rule replaced NAM-backed regulations from the previous administration. The Supreme Court is expected to make a decision this year on Sackett v. EPA, a case brought by an Idaho couple who have been blocked from building a house on their land for more than 15 years after the Environmental Protection Agency said part of the property was a wetlands. Issuing a new rule prior to a Sackett v. EPA decision only confuses things for manufacturers.