Member Briefing April 13, 2023
Inflation Rises Just 0.1% in March and 5% From a Year Ago as Fed Rate Hikes Take Hold
Inflation cooled in March as the Federal Reserve’s interest rate increases showed more impact, the Labor Department reported Wednesday. The consumer price index, a widely followed measure of the costs for goods and services in the U.S. economy, rose 0.1% for the month against a Dow Jones estimate for 0.2%, and 5% from a year ago vs. the estimate of 5.1%. Excluding food and energy, core CPI increased 0.4% and 5.6% on an annual basis, both as expected.
A 3.5% drop in energy costs and an unchanged food index helped keep headline inflation in check. Food at home fell 0.3%, the first drop since September 2020. A 0.6% increase in shelter costs was the smallest gain since November, but still resulted in prices rising 8.2% on an annual basis. Used vehicle prices, a major contributor to the initial inflation surge in 2021, declined another 0.9% in March and are now down 11.2% year over year. Medical care services costs also fell 0.5% for the month.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine Probes Video Purported to Show Soldier’s Beheading - AP
- Zelenskiy Urges World Leaders to Act Over PoW Beheading Video – The Guardian
- Putin Personally Approved Arrest of US Reporter Evan Gershkovich - Bloomberg
- Russia Set to Overhaul Draft System, Making it Nearly Impossible to Avoid Military Conscription - NBC
- Leak Shows Western Special Forces on the Ground - BBC
- Ukraine Confident in Spring Counteroffensive Despite Leaks, Pentagon Chief Says – The WSJ
- Poland to Test Quality of Ukraine Grain Amid Farmer Protests – Seattle Times
- The Talk-Show Hosts Telling Russians What to Believe - BBC
- U.S. Steps Up Effort to Fight Against Russian Disinformation - WSJ
- 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
IMF Says U.S-China Tensions Could Cost the World About 2% of its Output
The International Monetary Fund said in a Wednesday report that global tensions could disrupt overseas investment and eventually lead to a long-term loss of 2% of the world’s gross domestic product. Companies and policymakers across the globe are exploring ways to make their supply chains more resilient by “moving production home or to trusted countries,” the IMF warned in its report, adding that this will lead to fragmenting foreign direct investment.
The IMF pointed to recent bills adopted against the backdrop of rising tensions between the U.S. and China, such as Washington’s Chips and Science Act. Japan recently imposed its own restrictions on 23 types of semiconductor manufacturing equipment, joining U.S. efforts to curb China’s ability to make advanced chips. IMF economists said that money is now flowing into what are considered “geopolitically close countries.” The rise of “friend-shoring” could hurt less developed markets the most, the organization said.
Fed Minutes: May Interest-Rate Increase Remains Table, Predict Recession Later This Year
Fed officials considered skipping a rate increase at their meeting last month but concluded that regulators had calmed banking-sector stresses enough to justify a quarter-point rate increase, according to minutes of the March 21-22 gathering released Wednesday. Looking ahead, officials concluded that given the strength of price pressures and demand for labor, “they anticipated that some additional policy firming may be appropriate” to bring inflation down to the central bank’s 2% goal, the minutes said.
Notably, the Fed staff forecast presented at last month’s meeting anticipated a recession would start later this year due to the fallout from the banking-sector stresses, leading the unemployment rate to rise through early 2024. Previously, the staff had judged a recession was roughly as likely to occur as not this year.
COVID News – Is the COVID Pandemic Really Over?
The national emergency proclaimed by President Trump on March 13, 2020, quietly came to a conclusion after 1,124 days, with a Monday evening notice from the White House announcing that Biden had signed a resolution putting the emergency to an end. The president did so without a ceremony. On other occasions, he has sought to highlight bipartisan legislation. But not this time. Instead, he was eager to get on with things, to put the virus into the rearview mirror.
Officially, the coronavirus will cease to be a “pandemic” when the World Health Organization (WHO) drops the designation. There are now clear guidelines for doing so, but WHO Director-General Tedros Ghebreyesus is clearly moving in that direction. Not that the pandemic is really over, with about 120,000 people across the United States contracting the coronavirus each week and about 1,700 dying weekly from the disease, according to the Centers for Disease Control and Prevention.
New York's State Budget is Late. That’s Just Fine With Gov. Hochul.
New York was supposed to have a budget in place by April 1, the start of its fiscal year. But in her less than two years in office, Hochul has made clear she’s willing to blow past that deadline in order to hold out for her major priorities, including further changes to the state’s bail reforms and a housing plan that would increase state control over some local projects. It’s a move that increases her leverage in negotiations, since state law prevents legislators — but not the governor — from collecting their paychecks while the budget is overdue.
There are few practical implications of a budget that’s a couple days or weeks late, so long as lawmakers continue to pass extensions so state workers get paid and the public’s patience doesn’t wear thin. But the tardiness also leaves Hochul vulnerable to criticism from some lawmakers and political observers who say a late budget is a symbol of government dysfunction, made worse by the fact that the governor’s office and both houses of the Legislature are firmly in Democratic hands.
Use of DEI Consultants Declines, Survey Funds
An HR Dive survey of HR leaders found the percentage of those using diversity and inclusion consultants dropped from 12% in 2022 to 10% in 2023 as employers cut back on diversity, equity and inclusion costs. "I think on the whole, the trend that we've been seeing is that often DEI leaders are being asked to do more with less," says Crystal Styron, senior principal at Gartner. Other studies have also indicated a potential “recession” for diversity work. DEI initiatives are often “the first to go” when costs need to be cut, recruiters told Monster in an early 2023 report, while access to DEI initiatives fell in late 2022, according to Glassdoor analysis.
“If you ask organizations if they think DEI is important, they are going to say ‘yes,’” she said. But the “complicated calculus” of managing investor expectations for something like DEI work — for which return on investment is not usually immediate or even fast — could make some organizations wary of missteps in an already harsh environment.
Sunak Says Discussed 'Economic Opportunities' With Biden
British Prime Minister Rishi Sunak said he spoke to U.S. President Joe Biden on Wednesday about the “incredible economic opportunities” for Northern Ireland, and described both countries as “very close partners". "We spoke in particular about the incredible economic opportunities that are there in store for Northern Ireland," Sunak said. "I know he shares my ambition to see institutions here back up and running, that's what people and businesses in Northern Ireland deserve."
Speaking to reporters after the meeting, Mr Sunak said: "[Mr Biden] and I had a very good discussion today about a range of issues, [like] economic investment in Northern Ireland, but also a range of foreign policy issues, [like] the importance of economic security, and that comes on the back of a meeting I had with him last month in the US."We are very close partners and allies, we cooperate and talk on a range of things - whether that is supporting Ukraine or as I said economic security.
Even With Less Demand, a Constricted Worker Supply is Keeping Pressure on Wages
By historical standards, the labor market remains remarkably strong. Payroll growth last month clocked in above 230,000, more than double what was once considered normal. The unemployment rate, at 3.5%, stayed near its lowest in more than 50 years. Several crosscurrents are at work beneath the surface, and a closer look suggests the labor market is cooling quite rapidly. And yet it hasn’t cooled enough for the Federal Reserve to conclude inflation is going to fall back to its 2% target. So while labor demand hasn’t fallen to recessionary levels, it may still.
To understand why, it helps to identify three distinct forces currently at work: first, Covid-19 and its aftermath; second, the normal business cycle; third, the supply of labor. Add it all up, and there simply isn’t as much labor for employers to draw on. So even if their need for labor has cooled, they must still pay up. Wage growth has slowed in recent months, but not to levels consistent with 2% inflation.
EPA Seeks to Boost EVs With Toughest-Ever Rules on Tailpipe Emissions
The Biden administration is proposing new limits on vehicle tailpipe emissions, seeking to spur U.S. auto makers to generate two-thirds of their sales through electric vehicles in a decade. The new standards for light-duty vehicles, announced Wednesday by the Environmental Protection Agency, will apply to the 2027 to 2032 model years. They would be the nation’s toughest-ever restrictions on car pollution and one of President Biden’s most aggressive moves yet to combat climate change.
The EPA projects that the EVs could account for 67% of new- vehicle sales by the 2032 model year. A separate proposal, covering medium-duty vehicles such as box trucks and school buses, is expected to electrify nearly half of those vehicles by the 2032 model year. Auto-industry executives have warned that their shift to electrification faces a number of barriers, including an insufficient availability of public and private EV charging stations and access to raw materials used to produce batteries.
Roughly 6 in 10 Say EVs Only Help Address Climate Change a Little or Not at All: Gallup
The Gallup poll published Wednesday found that 35 percent of respondents said that electric vehicles address climate change “only a little,” while 26 percent said they do not address climate change at all. Just 12 percent said that electric vehicles help a “great deal” and 27 percent said that they help a “fair amount.”
The poll also found that 41 percent of Americans said that they would not buy an electric vehicle, and 43 percent said that they might consider one in the future. Only 4 percent of respondents said they currently own an electric vehicle and 12 percent said that they are “seriously” considering purchasing one. The poll also found that 41 percent of Americans said that they would not buy an electric vehicle, and 43 percent said that they might consider one in the future. Only 4 percent of respondents said they currently own an electric vehicle and 12 percent said that they are “seriously” considering purchasing one.
Managers are Struggling; Here’s Where Training Can Help
According to recent Gallup research, managers work a half-day longer than individual contributors every day, while one-third report significant stress throughout their workday. And the pressure is on if burnout from that workload trickles down to their relationship with their employees; Gallup found that half of employees polled left their organizations directly because of their manager. Because managers can yield influence in multiple directions simultaneously they have the potential to be a “powerful force for change.”
Among the needs manager training can address are basic workflow and productivity concerns: According to Gallup, nearly half of managers surveyed strongly agree that they face competing priorities, while they are also less likely than individual contributors to be able to properly delegate work tasks. But modern management training needs to dive deeper than the nuts and bolts of the job—helping people leaders sharpen certain soft skills that can enable them to lead their teams through the changes happening in the world of work.
Top 30 U.S. Port Report Shows Supply Chain Disruption Risks Remain High in Post-Pandemic Era Despite Volume Decline
U.S. TEU (Twenty Foot Equivalent Unit) imports for 2022 retreated more than 3%, compared with the year before, although they were still 17% above pre-pandemic 2019. But despite the year-on-year decline, indicators continue to point to challenging global supply chain performance in 2023. These include the underlying uncertainty over the economy, war in Europe, tensions in Asia-Pacific, unresolved West Coast ports labor situation, changing U.S. industrial and climate migration policies, among others. This according to the Top 30 U.S. Port Report, published recently by Descartes Datamyne.
The issues mentioned above, along with heavy import traffic, were also major factors that caused business leaders to rethink their supply chain and resiliency strategy last year. One of the ways they tried to keep their international business on track was to shift trade away from the American West Coast in favor of East and Gulf Coast ports, the shipping data showed.
China Records World's First Human Death from H3N8 Bird Flu, WHO Says
A Chinese woman has become the first person to die from a type of bird flu that is rare in humans, the World Health Organisation (WHO) said, but the strain does not appear to spread between people. The 56-year-old woman from the southern province of Guangdong was the third person known to have been infected with the H3N8 subtype of avian influenza, the WHO said in a statement late on Tuesday.
The Guangdong Provincial Centre for Disease Control and Prevention reported the third infection late last month but did not provide details of the woman's death. The patient had multiple underlying conditions, said the WHO, and a history of exposure to live poultry. Sporadic infections in people with bird flu are common in China where avian flu viruses constantly circulate in huge poultry and wild bird populations.
Understanding the Forces That Drive Recycled Resin Pricing
Finding resin to add to plastic parts used to be a simple process — when comparable recycled material cost less than virgin, processors purchased recycled resin from a relatively stable source and mixed it in to reduce the final cost of the part. Brand owners appreciated the savings. It’s a little more complicated nowadays. More brand owners are dictating using recycled resin regardless of the cost, the available supply fluctuates and new forces are at work pushing collection, processing and use of recycled materials.
How does the recycled resin market look for processors? Emily Friedman, recycled plastics senior editor for ICIS in Houston says “From a recycled plastics perspective, I would say I can speak to two different trends,” Friedman said. “One, if a recycled resin is cost-sensitive driven — i.e., it is being purchased because it is a cheaper alternative to virgin, that material is still seeing very weak demand coming off a market oversupply after last year.” The second trend pertains to sustainability-driven recycled resins such as food grade in clear or natural colors. “The grades of recycled resin are still seeing strong demand due to companies wanting to make progress against their own goals or against the regulations they have to meet,”
Used Car Prices Set To Rise Again, But These Models Already Sell For More Than New Ones
Used car prices are set to rise again—and some models are already selling for more than new ones. So while the typical used vehicle costs an average of $3,700 less than a factory-fresh equivalent, one-year-old Ford Maverick compact pickup trucks, for example, are going for an average 12.3% more, a $4,000 difference. Used-car prices that climbed by a whopping 45% from June 2020 to June 2021 fell by 8.8% over the 12-month period ending this past December, which seemed like good news for shoppers.
Unfortunately, experts caution that the roller coaster ride is expected to continue with regard to pre-owned vehicle prices. The just-released Manheim Used Vehicle Index suggests that prices of pre-owned models should again be trending upward in the months ahead. That’s because wholesale prices have jumped by 8.6% in the first quarter of 2023. As a result, Cox Automotive has revised its 2023 forecast for the used-car market as showing a 1.6% average price increase by the end of the year, instead of its original prediction of a 4.0% decrease.