Member Briefing April 18, 2023
April Empire State Manufacturing Survey Shows Activity Increasing for the First Time in Five Months
Manufacturing activity grew in New York State for the first time in several months, according to the April survey. Delivery times held steady, and inventories moved higher.
- The general business conditions index climbed thirty-five points to 10.8,
- The new orders index rose a whopping forty-seven points to 25.1, and the shipments index climbed thirty-seven points to 23.9. .
- The unfilled orders index rose to 0, a sign that unfilled orders were unchanged.
- The delivery times index also came in at 0, indicating that delivery times held steady.
- The inventories index moved up ten points to 8.2, suggesting that inventories grew modestly.
- The index for number of employees remained negative for a third consecutive month at -8.0, and the average workweek index held below zero at -6.4,
- The prices paid index fell nine points to 33.0, indicating that input price increases moderated.
- The prices received index held steady at 23.7, suggesting the pace of selling price increases was little changed.
- The index for future business conditions edged up to 6.6, suggesting that firms do not expect activity to improve much over the next six months.
- The capital spending index rose three points to 16.5, and the technology spending index came in at 10.3.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine’s Counter-Offensive is Drawing Near – The Economist
- Social-Media Account Overseen by Former Navy Noncommissioned Officer Helped Spread Secrets - WSJ
- Slovakia Gives Ukraine Remaining 9 of 13 Promised Warplanes - AP
- Ukraine Seeks Re-Opening of Grain Transit Via Poland as Import Bans Mount - Reuters
- US Ambassador Visits WSJ Reporter Jailed in Russia - The Hill
- Iran: Jail Terms for Those Behind Downing of 2020 Ukraine Flight - AP
- Putin Critic Jailed in Treason Case for 25 Years - Reuters
- Oklahoma Businesses Recruit Tech Workers From Ukraine - 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
G7 Ministers Set Big New Targets for Solar and Wind Capacity
The Group of Seven rich nations on Sunday set big new collective targets for solar power and offshore wind capacity, agreeing to speed up renewable energy development and move toward a quicker phase-out of fossil fuels. But they stopped short of endorsing a 2030 deadline for phasing out coal that Canada and other members had pushed for, and left the door open for continued investment in gas, saying that sector could help address potential energy shortfalls.
G7 ministers finish two days of meetings on climate, energy and environmental policy in the northern Japanese city of Sapporo on Sunday. In their communique, the members pledged to collectively increase offshore wind capacity by 150 gigawatts by 2030 and solar capacity to more than 1 terawatt. They agreed to accelerate "the phase-out of unabated fossil fuels" - the burning of fossil fuels without using technology to capture the resulting C02 emissions - to achieve net zero in energy systems by 2050 at the latest.
U.S., Allies Weigh How to Reduce Economic Ties With China
The U.S. and its allies are grappling with how to pare their economic relationships with China, attempting to limit ties in certain sectors they view as strategic while preserving broader trade and investment flows with the world’s second-largest economy. The Group of Seven advanced democracies are growing concerned that China, a dominant supplier of many goods and materials, could similarly cut off key exports in the event of a conflict or another pandemic, according to top Western economic officials. They also worry that Western investment and expertise, if left unrestricted, could help develop Beijing’s military.
But G-7 officials say they are also trying to avoid beggar-thy-neighbor steps that undermine global economic growth as they try to unify behind specific policy measures that reduce dependence on China. The G-7 comprises the U.S., Canada, France, Germany, Italy, the U.K. and Japan.
COVID News – Covid is Still a Leading Cause of Death Though Americans are Skeptical
Millions of Americans gathered maskless in homes and houses of worship this month for Passover, Easter and Ramadan - the latest evidence that coronavirus has retreated from public view as the pandemic winds down. But retreat is not the same thing as eradication: Federal health officials say that covid remains one of the leading causes of death in the United States, tied to about 250 deaths daily, on average, mostly among the old and immunocompromised.
Few Americans are treating it as a leading killer, however - in part because they are not hearing about those numbers, don’t trust them or don’t see them as relevant to their own lives. The actual toll exacted by the virus remains a subject of sharp debate. Since the earliest days of the pandemic, skeptics have argued that physicians and families had incentives to overcount virus deaths, and pointed to errors by the Centers for Disease Control and Prevention in how it has reported a wide array of covid data. Those arguments were bolstered earlier this year by a Washington Post op-ed by Leana Wen that argued the nation’s recent covid toll is inflated by including people dying with covid, as well as from covid.
New York Took in Nearly $3B More in Income Taxes than Expected, Still $9.5 billion Less Than Last Year
A report released Monday by state Comptroller Tom DiNapoli's office found New York took in $2.9 billion more than initially expected in tax revenue for the fiscal year that ended April First. That's the good news for the state's coffers. The more complicated picture: New York received $9.5 billion less than the previous year, according to the report. All told, New York received $111.7 billion in tax collections, much of it from the personal income tax, the main driver of New York's revenue. Collections from the personal income tax reached $58.8 billion — nearly $12 billion less than the previous year.
The report is being released as a state budget for the current fiscal year ending April 1, 2024 remains unresolved. Democratic lawmakers are calling for increased taxes on people who earn more than $5 million a year, a move that Gov. Kathy Hochul has resisted. The revised figures also come as economists are bracing for a potential recession amid sustained inflationary pressures.
Highs and Lows of U.S. Cashflow Will Make for a Bumpy Debt Ceiling Ride
The U.S. will default on its $31.4 trillion debt this year if Congress doesn’t raise the nation’s borrowing cap. But when, exactly? That’s harder to answer. While Congress sets the nation's annual budget, the Treasury Department actually manages trillions of dollars beyond that, with millions of payments flowing in and out of the government’s accounts each day. And just like an everyday checking account, cash flow varies: Sometimes the government gets a flood of dollars from tax receipts, and other times it needs to pay the bills. Those dips and surges add another wrinkle to a political drama that threatens to tank the global economy.
Before the nation reaches the point of default, it could come alarmingly close several times over the next few months as spending and revenue rise and fall — a fluctuation that could spook Wall Street, escalate pressure on negotiations between congressional leaders and President Joe Biden, and potentially force a short-term fix. Here’s what the next few months could look like, based on estimates from the Bipartisan Policy Center and the Congressional Budget Office.
Homebuilder Sentiment Rises for Fourth-Straight Month as Housing Steadies
The National Association of Home Builders/Wells Fargo's gauge of builder sentiment rose one point to 45 according to figures released Monday, matching Wall Street expectations. This measure still reflects general caution among builders as we head into the heart of housing's spring selling season. Readings under 50 for this index show a larger proportion of builders responding to the survey see conditions as "poor" than those who see conditions in the market as "good."
Recent data from realtor.com showed there were nearly 60% more homes on the market in March compared to the same month last year. But inventory levels still stood more than 50% below what prevailed during the years leading up to the pandemic. A major factor contributing to stronger optimism among homebuilders is the modest pullback in rates seen in recent weeks. The average 30-year mortgage rate stood at 6.27% last week, down from closer to 6.75% in early March and nearly 7% in late 2022.
US: UoM Consumer Confidence Index Improves Modestly to 63.5 in April vs. 62 Expected
Consumer sentiment in the US improved modestly in early April with the University of Michigan's (UoM) Consumer Confidence Index rising to 63.5 from 62 in February. This reading came in better than the market expectation of 62.
"Year-ahead inflation expectations rose from 3.6% in March to 4.6% in April," the UoM further noted. "Uncertainty over short-run inflation expectations continues to be notably elevated, indicating that the recent volatility in expected year-ahead inflation is likely to continue. The bumpiness in inflation expectations is limited to the short run as long-run inflation expectations remained remarkably stable."
Major Supply Chain Problems Continue to Impact Chemical Manufacturing
The majority of business leaders surveyed by the American Chemistry Council (ACC) said the disruptions are affecting their U.S. manufacturing business, with most reporting that they have modified operations because of supply chain issues and/or transportation disruptions that occurred in the latter half of 2022. “There are signs that conditions have improved, but the transportation problems plaguing our members are far from resolved,” Emily Sanchez, economist for ACC, said in a press release announcing the survey’s findings.
93% of companies said supply chain and freight transportation disruptions are impacting their US chemicals manufacturing business. Compared to conditions in the first half of 2022, 67% of companies reported supply chain and freight transportation disruptions were generally better in the second half of the year. 86% of respondents said they modified operations because of supply chain issues and/or transportation disruptions and delays in H2.
Moderna/Merck Cancer Vaccine Plus Keytruda Treatment Delays Skin Cancer Return
An experimental mRNA cancer vaccine developed by Moderna Inc. and Merck & Co. cut the risk of death or recurrence of the most deadly skin cancer by 44% compared with Merck's immunotherapy Keytruda alone, U.S. researchers reported at a medical meeting on Sunday. The findings suggest that adding a personalized cancer vaccine based on mRNA technology to Keytruda, which revs up the immune response, could prolong the time patients have without recurrence or death, said Dr. Jeffrey Weber of the NYU Langone Perlmutter Cancer Center, who presented the findings.
The Merck/Moderna collaboration is one of several combining powerful drugs that unleash the immune system to target cancers with mRNA vaccine technology. BioNTech SE and Gritstone Bio Inc are working on competing cancer vaccines based on mRNA technology. The vaccine is custom-built based on an analysis of a patient's tumors after surgical removal. The vaccines are designed to train the immune system to recognize and attack specific mutations in cancer cells.
Europe’s Largest Nuclear Reactor Launches as Continent Splits Over Atomic Energy
Finland has started regular electricity output at Europe’s largest nuclear reactor, a move that contrasts with developments in other European countries, where opposition to nuclear power is stronger. The long-delayed Olkiluoto 3 reactor is the first new European nuclear-power facility to open in 16 years. Alongside two other nuclear reactors on the Olkiluoto island off Finland’s west coast, the new 1.6-gigawatt reactor will eventually produce nearly one-third of the country’s electricity.
Production at the new reactor began on Sunday, hours after Germany shut down its three remaining nuclear power plants, marking the end of a nuclear era in that country spanning six decades. The German step followed a law passed by the country’s center-left government in 2002, and public antinuclear protests after the 2011 Fukushima disaster.
Jeep Dominating The Plug In Hybrid Market With Wrangler And Grand Cherokee 4xe Models
Jeep’s entrenchment in the PHEV market has become even clearer this year. Wrangler 4xe sales increased 72 percent in the first quarter, representing 38 percent of the total for the nameplate, and it was joined at the top by another Jeep, the Grand Cherokee 4xe that went on sale in late 2022. Jeep sold 7,222 Grand Cherokee 4xe models in the quarter, accounting for 13 percent of that nameplate’s total volume.
Jeep expanded the Wrangler 4xe family by making the powertrain available on the Willys for the 2023 model year. The refreshed 2024 Wrangler will see the 4xe technology trickle down from the higher trim offerings to the Sport S. Pricing hasn’t been revealed, but the four-door, gasoline-powered Sport S is $40,490 with shipping.
Boeing Testing its massive 777X at Hawaii Airport
Kona International Airport was recently the testing site for Boeing’s newest airplane, the 777x model. Boeing calls it the world’s largest and most fuel-efficient twin-engine jet. Designed to seat 426 passengers, the model 7779 is longer, wider, and more spacious than its predecessors. Boeing said crews were on the Big Island to run tests to ensure safety, reliability and performance.
The plane and its testing crews are now back in Seattle, but say they loved working in Hawai’i. The company said it’s received hundreds of orders from airlines around the world, with the first 777X to be in the air in 2025.
SpaceX Scrubs Launch of Starship's First Integrated Test Flight From Texas
SpaceX scrubbed the Monday morning liftoff of the first test launch of the company's fully integrated Starship vehicle minutes before it was scheduled to occur. The company pivoted to a "wet dress rehearsal" of the launch, broadcasters said on SpaceX's live stream, continuing with preparations right up until 10 seconds before the scheduled launch. The launch will be postponed at least 48 hours. "A pressurant valve appears to be frozen, so unless it starts operating soon, no launch today," SpaceX CEO Elon Musk tweeted.
If everything goes according to plan with the postponed launch, it will mark the first time the combined system – Super Heavy booster below and Starship vehicle on top – takes flight from Starbase, a SpaceX-owned facility just outside Brownsville, Texas. Previous test flights, which often ended explosively, only featured the Starship vehicle itself, but this time the combined 400-foot vehicle is taking flight.