Member Briefing April 17, 2025
Industrial Production Falls in March, But Manufacturing Component Higher
Industrial production (IP) decreased 0.3% in March but increased at an annual rate of 5.5% in Q1, according to the Federal Reserve. The March decline was led by a 5.8% drop in the index for utilities, as temperatures were warmer than is typical for the month. In contrast, the indexes for manufacturing and mining grew 0.3% and 0.6%, respectively. At 103.9% of its 2017 average, total IP in March was 1.3% above its year-earlier level. Capacity utilization stepped down to 77.8%, a rate that is 1.8 percentage points below its long-run (1972–2024) average.
Manufacturing activity picked up across industries with computer & electronic products, aerospace, apparel and plastics being notable bright spots. The largest industries, chemicals and food & beverage manufacturing, rose but saw more muted gains. The sizable declines were traded to wood products, petroleum and textile production. Overall, the March gain drove the index to its highest post-pandemic reading, a notable breakout from the dull-drum trend of the past five years (chart). The unfortunate circumstance is this will likely be short-lived. Increased uncertainty around tariff policy has led many businesses to pause major cap-ex, which is set to bite domestic manufacturing.
NY Fed: Service Sector Activity Declined Significantly in April
Service sector business activity in the New York-Northern New Jersey region fell at a substantial pace for a second consecutive month, according to the April survey. The headline business activity index came in at -19.8. The business climate index fell nine points to -60.7, its lowest level since early 2021, with two-thirds of respondents saying that the business climate was worse than normal.
- The employment index moved up to 1.3, indicating that employment levels were little changed.
- The wages index held steady at 34.8, a sign that wage increases remained moderate.
- After rising to its highest level in nearly two years in March, the prices paid index was little changed at 57.6.
- The prices received index edged down to 26.0. The supply availability index fell nine points to -11.7, suggesting supply availability declined.
- After plunging twenty-five points last month, the index for future business activity sank another twenty-three points to -26.6, its lowest reading since April 2020, indicating that firms expect a significant decline in activity in the months ahead.
- The index for the future business climate also fell twenty-three points, to -50.0, marking its lowest level since 2009 and suggesting the business climate is expected to remain considerably worse than normal. The future employment index turned negative.
- The future supply availability index dropped to -36.1, with 44 percent of firms expecting supply availability to be worse in six months. Capital spending plans turned sharply negative.
Commerce Department Reports Retail Sales Increased 1.4% In March
Consumer spending was stronger than expected in March as demand remained high despite declining sentiment, the Commerce Department reported Wednesday. The advanced estimate of retail sales showed an increase of 1.4% on the month, better than the 1.2% Dow Jones estimate and higher than the 0.2% increase in February. Excluding autos, the numbers also were stronger than expected, with sales up 0.5% compared to the 0.3% forecast. The reading points to spending holding strong despite the crosscurrents of looming tariffs and expectations that the economy is weakening.
Motor vehicle manufacturers reported a big jump in auto sales in March, attributed by some to a rush by buyers "to try and beat the tariffs." Consumers are also stocking up on other imported goods. Bank credit and debit card data suggest spending continues to be driven by high-income households with low-income consumers struggling. Retail sales excluding automobiles, gasoline, building materials and food services rose 0.4% in March after an upwardly revised 1.3% advance in February. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product.
Global Headlines
Middle East
- Iran Says Its Right To Uranium Enrichment Is Non-Negotiable – Reuters
- Iran’s Negotiating Position Gets Worse and Worse – The Atlantic
- Houthis Mock U.S. "Failure" After Month of Attacks - Newsweek
- Israel Will Keep Gaza Buffer Zone, Minister Says, As Ceasefire Efforts Stall - Reuters
- Israeli Army Faces Growing Dissent – France 24
- Lebanese President Says Hezbollah Disarmament Will Come Through Dialogue Not ‘Force’ - AP
- Defense minister: Aid will enter Gaza only once civilian mechanism built to bypass Hamas – Times of Israel
- What Is Iran's Nuclear Programme And What Does The US Want? - BBC
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Rubio, Witkoff Head To Paris For Ukraine War Talks – France 24
- North Korea Is Making Billions From Russia's War on Ukraine - Newsweek
- Ukraine's Parliament Extends Martial Law Until August - Reuters
- NATO Chief Reaffirms Support For Ukraine During A Visit To The Port City Of Odesa - AP
- One Dead, Nine Wounded In Russian Strikes On Ukraine’s Kherson - AP
- Bogged Down In East Ukraine, Putin’s Russia Eyes ‘Opportunistic’ Gains In Northern Sumy – France 24
- Russian State Hackers Target European Diplomats — With Fake Wine-Tasting Events - Politico
- 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
- French Defense Minister Heads To US For Hegseth Talks Amid Transatlantic Tensions – Politico
- German parliament expected to meet May 6 to elect Friedrich Merz as the new chancellor - AP
- Canadian Universities Report Jump In US Applicants - Reuters
- UK Supreme Court Backs 'Biological' Definition Of Woman - BBC
- JK Rowling Reacts to UK Supreme Court's Trans Women Ruling - Newsweek
- Amid Trump’s Tariff War, Germany’s Next Leader Keeps Faith In Free Trade - Politico
- El Salvador’s Bukele Plans to Double Giant Prison Holding U.S. Deportees - WSJ
- China And Vietnam Sign Flurry Of Cooperation Deals Amid US Tarriff Tensions – France 24
- Peru's Ex-President, Ollanta Humala, And His Wife Sentenced To 15 Years In Prison – BBC
Policy and Politics
With a Discovery Compromise Within Reach Mental health Debate Will Take Center Stage In State Budget Negotiations
With a compromise on discovery changes in reach, New York state leaders are expected to return their attention to Gov. Kathy Hochul's controversial proposal to expand forced psychiatric treatment for New Yorkers with severe mental health conditions. Religious leaders from around the state rallied in the Capitol on Tuesday opposing the governor's plan to change involuntary commitment criteria — a stance most Democrats in the Legislature have taken since Hochul announced her policy agenda in January.
Hochul is standing firm on her top budget priority to make it easier to commit a mentally ill person who poses a risk to themselves or others into a hospital for treatment. She wants to clarify the information clinicians should consider, including a person's inability to provide things such as food, clothing, medical care, safety or shelter when deciding a person's condition would "result in serious harm." Critics argue there's inadequate services to force people into, and won't improve public safety.
Read more at NY State of Politics
What a Weaker Dollar Means for the Global Economy
The U.S. currency resumed its rapid weakening Wednesday, hitting fresh lows against the euro, the British pound, the Japanese yen and the Swiss franc. The dollar decline has been historic, with the ICE U.S. Dollar Index, a measure of the dollar against a basket of currencies, slipping 8% this year, its worst start to a year since 1995. Because of its role as the primary currency used for global trade and finance, swings in the dollar have significant global consequences. “For exporters, you’re not getting the currency eroding some of the tariff impact for the end U.S. consumer,” said Derek Halpenny, the London-based head of global markets research for the Japanese bank MUFG. “It has a bigger negative impact for sure.”
The unexpected weakening of the U.S. dollar is suddenly becoming the rest of the world’s problem. For foreign sellers of all manner of goods, including cars, cognac and Scottish tweed, the dollar’s steep slide is a double whammy, compounding losses caused by President Trump’s import levies. For central banks around the world, the rapid strengthening of their own currencies heaps pressure to cut interest rates more aggressively.
$2.7 Million Identified In Workers' Comp Fraud In 2024, New York Inspector General Says
The New York state inspector general’s office identified $2.7 million in workers’ compensation fraud during 2024, resulting in 14 arrests, a 30% increase from the year prior, according to its annual report released Tuesday. Inspector General Lucy Lang in the report noted that more than $1.4 million in restitution and fines were awarded to defrauded state agencies, insurers, and employers – also representing an increase in enforcement outcomes across the board compared to 2023. In 2023 there were 169,638 Workers’ Comp claims in New York State with an average payout of $29,750 for a total payout of more than $5 billion. Experts estimate that between 1 and 2% of claims are fraudulent equaling between $50 and $ 100 Million.
Lang credited an extensive public outreach through various television, print, radio, podcasts, online publications, task forces, and trainings, which resulted in 1,436 complaints alleging fraud by medical providers, employers, and claimants through those platforms.
Trump’s First 100 Days
- Almost 20,000 IRS Employees Taking Second Trump Buyout Offer – The Hill
- Elise Stefanik Is Considering Run for Governor in New York - WSJ
- 2 Top Hesgeth Advisor Placed On Leave Related To Alleged Leak - Forbes
- Republicans Quietly Hope Supreme Court Bails Them Out On Trump’s Trade War – The Hill
- DOGE Deactivates Nearly Half a Million Credit Cards - Newsweek
- Judge Orders Trump Administration To Resume IRA Funding – Supply Chain Dive
- Judge Finds Trump Administration Willfully Defied Court Orders in Deportation Case - Forbes
- How Trump’s Policies Will Slow—But Not Kill—A Transition To Cleaner Energy - WSJ
- Trump and Judiciary in Escalating Standoff Over Wrongfully Deported Migrant - WSJ
- Young People Are Now Overwhelmingly Republican - Newsweek
- Biden Blasts Trump 'Destruction' In First Post-Presidency Speech – France 24
- Federal Workers Are Facing a New Reality – The Atlantic
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
CDC Eyes Narrower COVID-19 Vaccine Guidance Ahead Of 2025–2026 Season
The Centers for Disease Control and Prevention's (CDC’s) vaccine advisory committee will meet on Tuesday for a two-day session to lay out new recommendations, including a proposal to scale back current COVID-19 vaccine guidelines. Dr. Lakshmi Panagiotakopoulos of the CDC is expected to present guidance on COVID-19 vaccine use for 2025–2026 and suggest the department adopt a "narrow" recommendation for it, "and only maintain this series for certain populations within these groups who we determine should be vaccinated."
The 70-page presentation outlines three possible policy options for COVID-19 vaccines, including a shift away from recommending annual shots for everyone over 6 months old. Currently, annual COVID-19 shots are recommended for ages 6 months and older. One proposed policy option would continue the current universal policy, while another would recommend vaccines only for people at higher risk of severe illness, such as older adults, those with underlying health conditions, pregnant women and healthcare workers. A third option would blend the two, keeping universal recommendations for people 65 and older but limiting shots for younger groups to those at higher risk.
Industry News
Trade War Updates
- Japan Set To Kick Off Trump Tariff Talks In Washington – Reuters
- Trump Wants To Make A Deal With China. Here’s How He’s Trying To Make That Happen. - Politico
- Some U.S. Autos Get A Tariff Exemption From Canada—If They Keep Production Plants - Forbes
- Auto Tariffs Start To Slow Some Buy-Sell Deals, While Others Stay On Track – Automotive News
- Americans Want More U.S. Factory Jobs—As Long As They Don’t Have To Work Them - Fortune
- China Now Faces 245% Trump Tariff - Newsweek
- Heineken Initially Downplayed Tariffs. Now The Brewer Is Concerned - CNBC
- Hong Kong Post Suspends All Package Shipments To The U.S.—Blames Tariffs - Forbes
- China Appoints A New Trade Negotiator During Tariff Fight With The US – AP
China Q1 GDP Growth Tops Expectations, But US Tariff Shock Looms Large
China's first-quarter economic growth outstripped expectations, underpinned by solid consumption and industrial output, but analysts fear momentum could shift sharply lower as U.S. tariffs pose the biggest risk to the Asian powerhouse in decades. Data on Wednesday showed China's gross domestic product (GDP) grew 5.4% in the January-March quarter from a year earlier, unchanged from the fourth quarter, but surpassed analysts' expectations in a Reuters poll for a rise of 5.1%.
Growth momentum is expected to cool sharply in the next few quarters, however, as Washington's tariff shock hits the crucial export engine, heaping pressure on Chinese leaders to roll out more support measures to keep the world's second-largest economy on an even keel. Exports have remained a lone bright spot in China's economy, with a trillion-dollar trade surplus last year helping to underpin growth even as a prolonged property sector slump and sluggish domestic demand continue to undercut a solid recovery. That complicates the policy challenge for Beijing as Trump's relentless focus on China's vast trade engine threatens to choke off a key growth driver.
Signs of Recovery Seen in Machine Tool Demand
The latest monthly summary of machine tool orders shows U.S. machine shops and other manufacturers increased their capital investments to $389.9 million during February 2025, up 9.9% from January and up 12.5% from February 2024. The U.S. Manufacturing Technology Orders report issued by AMT - the Assn. of Manufacturing Technology shows the two-month total for manufacturing technology orders in 2025 is $744.74 million, 8.8% higher than the January-February 2024 total.
AMT noted the improved results in the value of orders from contract machine shops, the largest buying segment for manufacturing technology. Those operations’ February orders were up nearly 25% from January. In contrast, AMT reported that aerospace manufacturers’ orders decreased “sharply” from January to February, although the number of units ordered rose “slightly.” AMT offered two alternative readings on the impact that widespread tariffs on imported products may have on demand for new machines: that businesses lowered stock valuations may reduce corporate earnings, and thus weaken business and consumer confidence; or, that businesses may choose to invest in new technology, in order to recover the profitability that may be lost due to reduced valuations.
Read more at American Machinist
Nvidia Faces $5.5 Billion Hit From US Export Curbs
New restrictions on AI chip sales to China spark industry-wide selloff and raise national security concerns. the US government has imposed new export restrictions on its H20 AI chips to China. The decision, announced on April 16, 2025, is expected to cost chip designer Nvidia approximately $5.5 billion, raising concerns across the semiconductor industry. The restrictions are part of a broader strategy by the US to curb China's access to advanced technology amid escalating tensions over artificial intelligence supremacy. The Biden administration's regulations require Nvidia to obtain a special license to sell its H20 chips, which were designed specifically for the Chinese market. This new requirement marks a significant tightening of export controls since previous limitations were first introduced in October 2022.
In an official filing, Nvidia stated that the new rules were implemented to mitigate the risk that its products might be “used in, or diverted to, a supercomputer in China.” As a result, the company anticipates reporting substantial charges in the financial quarter ending April 27, 2025, due to existing stocks of H20 chips and sales commitments. Advanced Micro Devices (AMD), a key competitor in the AI market, also felt the impact and the ramifications were felt globally, with South Korean semiconductor giants like Samsung Electronics and SK Hynix experiencing declines of up to 3% in overnight trading.
ASML Misses Order Expectations Amid Tariff Uncertainty
Dutch semiconductor equipment giant ASML on Wednesday missed order expectations and said that uncertainty from new U.S. trade restrictions may affect demand for its critical chipmaking machines. The company reported net sales of 7.74 billion, against 7.8 billion euros expected and net profit: 2.36 billion, versus 2.3 billion euros expected. ASML said net bookings — a key indicator of order demand — came in at 3.94 billion euros ($4.47 billion) for the first three months of 2025. That was lower than a forecast of 4.89 billion euros from analysts. Shares of ASML were down 5% Wednesday morning.
In comments accompanying the results, ASML CEO Christophe Fouquet said that the demand outlook “remains strong” with artificial intelligence staying as a key driver. However, he added that “uncertainty with some of our customers” could take the company into the lower end of its full-year revenue guidance. Ben Barringer, equity research analyst at Quilter Cheviot, said impacts from U.S. tariffs on ASML could be “widespread” but added that, at this stage, it’s too early to tell what effect they’ll have.
Samsung Reportedly Hits the Brakes on U.S. Investment, with Taylor Fab Likely Pushed to 2027
While TSMC is ramping up its Arizona expansion amid Trump’s tariff push, rival Samsung appears to be slowing down. According to South Korean media outlet The Elec, Samsung has once again delayed its Taylor, Texas plant, now targeting a February 2027 launch. Notably, this would not be Samsung’s first time to push back on the schedule. When the Taylor investment was announced in late 2021, production was set for 2024—but the timeline has been pushed back multiple times since, as per The Elec.
The report attributes Samsung’s move to weak customer orders. Contractors have pulled out, and Samsung has slashed its on-site workforce to just a quarter of its original size, as noted by the report. As per a previous SamMobile report, Samsung intended to produce 2nm and 3nm chips at its Taylor plant using gate-all-around (GAA) tech to challenge TSMC. Meanwhile, TSMC is expected to continue using EUV for 3nm and adopt GAA starting at 2nm, the report adds.
Q1 Bank Earnings Solid In Face of Tariff Uncertainty
Citigroup beat Wall Street estimates for first-quarter profit on Tuesday and moved closer to its profitability target as its traders reaped a windfall from volatile markets that fueled client activity. Citi's net income climbed 21% to $4.1 billion, or $1.96 per share, in the three months ended March 31, above estimates of $1.85 per share. Stock trading revenue jumped 23% in the first three months of the year, as investors rejigged their portfolios during a period of heightened uncertainty. Investment banking revenue increased 12% in the first quarter, mainly from advising on mergers and acquisitions. – Yahoo Finance
Morgan Stanley reported first-quarter results that topped estimates as stock trading revenue surged 45% amid rising global volatility. The company reported earnings of $2.60 a share vs. $2.20 a share estimated and revenue was $17.74 billion vs. expected. The company said earnings rose 26% to $4.32 billion, or $2.60 per share, while revenue climbed 17% to a record $17.74 billion. Equity trading was the standout this quarter, as revenue jumped 45% to $4.13 billion, about $840 million more than the StreetAccount estimate. - CNBC
Bank of America Corp. topped Wall Street’s earnings and revenue targets as it marked its 12th straight quarter of growth in its sales and trading business. First-quarter profit climbed about 10% to $7.4 billion, or 90 cents a share, from $6.7 billion, or 76 cents a share, in the year-earlier quarter. The bank topped the FactSet consensus estimate of 82 cents a share. First-quarter revenue rose 6% to $27.4 billion, ahead of the analyst estimate of $26.97 billion. Sales and trading revenue rose 11% to $5.7 billion. – MarketWatch
JPMorgan Chase topped first-quarter profit estimates on record equities trading and higher fees from debt underwriting and advising on mergers, but the bank remained wary about a possible global recession this year. Earnings were $14.6 billion, or $5.07 a share, for the three months ended March 31. That compares with $13.4 billion, or $4.44 a share, a year earlier. Excluding one-time costs, the bank earned $4.91 per share, higher than estimates of $4.61, according to data compiled by LSEG. Trading revenue climbed 21% to $9.7 billion. Equities trading surged 48% to a record $3.8 billion. Investment banking fees climbed 12% to $2.2 billion, helped by higher debt underwriting and advisory fees. - Reuters
Wells Fargo reported lower-than-expected quarterly revenue and a decline in net interest income. Adjusted earnings per share were $1.33 adjusted, versus $1.24 expected and revenue was$20.15 billion, versus $20.75 billion expected. Net income for the quarter of $4.89 billion marked a 6% gain from $4.62 billion. Revenue fell 3% from $20.86 billion in the same quarter last year. Noninterest income, which includes investment banking fees, brokerage commissions and advisory fees, rose 1% to $8.65 billion from last year’s $8.64 billion. - CNBC
Rethinking Strategy as Trade Models Crumble
For years, manufacturers have lived and breathed globalization. Whether chasing cost advantages, tapping into emerging markets or streamlining production across continents, the playbook was familiar: centralize, outsource, scale. And they got good at it. But that playbook is no longer reliable. In fact, it is dying very quickly. The rise of nationalism and protectionism across continents is changing the game. Today, we're navigating a different reality—one where risk, resilience and regional relevance have taken center stage. It's not just about supply chains getting longer or costs creeping up. We’re experiencing a fundamental business shift.
Whether you call it the rise of regionalization, or just a return to basics, it’s pushing manufacturers to rewire how they think about operations, pricing, investment and talent. This isn’t a blip. It’s a structural change that’s reshaping the rules for the next decade. Regionalization doesn’t mean isolation. It means designing your business for the realities of the world we now live in. It’s about knowing when to standardize and when to localize. When to centralize, and when to empower. And perhaps most importantly, it’s about staying close enough to your markets that you can see what’s coming before it hits. Manufacturers who act on this now—who rewire their systems, shift their mindset and get serious about regional intelligence—won’t just adapt. They’ll lead.
U.S. Sustainable Aviation Fuel (SAF) Market To Hit $7 Billion by 2030
A new report predicts the U.S. sustainable aviation fuel (SAF) market will grow to a value of $6.97 billion by the end of the decade. The study by management consultancy MarketsandMarkets appraised the value of the SAF market last year at under a billion dollars. There are several processes for SAF production, including biofuels (using organic feedstocks, such as waste fats and oils), power-to-liquid (utilizing renewable electricity to produce SAF from synthesized “green” hydrogen and atmospheric carbon dioxide), and gas-to-liquid (converting natural gas to SAF). Advancements in biofuel technologies and the fuel’s scalability in production are expected to support the increasing demand for SAF in the U.S. While biofuels have thus far dominated the market, the forecast indicates that the power-to-liquid segment is predicted to grow at the highest compound annual growth rate (CAGR) through 2030.
Conventional jet fuel contains aromatic compounds that help fuel system gaskets swell and prevent leakage, while synthetic fuels such as SAF do not. Modern aircraft and engines were designed to account for the lack of aromatics. As it is, SAF is presently only approved for use in blends of up to 50% with conventional jet fuel. Yet the study predicts that the above-50% blend (once approved) will account for the fastest-growing CAGR in the U.S. SAF market, with increased regulatory support and subsidies for higher blends driving the growth.
Read more at Aviation International News
One-Quarter Of Small Employers Ditch Health Premiums Every Year
About 27% of the small employers that were paying health insurance premiums in 2022 stopped paying the premiums in 2023, according to a new report from a research arm of JPMorgan Chase. A 10% increase in the premiums pushed the drop rate up by 1.3 percentage points. The coverage drop rates reflect only businesses that managed to stay in business in both 2022 and 2023. About 3% of the small employers that were paying for health insurance in 2022 closed.
Chris Wheat and other analysts at the JP Morgan Chase research arm based their analysis on JPMorgan Chase business deposit bank account user data. The analysts defined a small employer as an employer with fewer than 50 employees. The analysts noted that some of the small employers that stopped paying for health insurance might have continued to offer health benefits, possibly by setting up a cash-for-coverage plan or having a professional employer organization provide the coverage.