Member Briefing April 21, 2022
The Odds of a Recession are 35%, “Soft Landing 50%,” Says Moody’s Economist Mark Zandi
Although many economists and financial experts started the year forecasting that 2022 would be the year that the U.S. put supply-chain issues in the rearview mirror and produced another strong four quarters of economic growth, those hit the wall in February when Russia invaded Ukraine and inflation continued to spiral upward. Since January 2021, one economist in particular has gotten cited repeatedly by the Biden administration, and he doesn’t even work in the White House.
That’s Mark Zandi, Moody’s chief economist, and even he is worried about a recession in the next two years, although that’s not quite the full story. On Tuesday, Zandi noted that he believes there’s about a 35% probability that the U.S. will enter a recession in the next two years, but he sees bigger potential for something else. Rather than a recession, Zandi says the most probable outcome is that the economy will evolve into what’s called a “self-sustaining economic expansion,” in which the U.S. will be back to full employment and the sky-high inflation levels retreat. He said there’s about a 50% chance of this scenario playing out.
Invasion of Ukraine Headlines
- Ukraine and Russia: What You Need to Know Right Now – Reuters
- Russian Offensive Bears Down on Donbas as West Races to Supply Ukraine With More Weapons – WSJ
- The West Should Settle in for a Long War in Ukraine – The Hill
- The Soldiers of Mariupol Brace for a Final Assault – Fox
- As Russia Mounts New Offensive, Western Allies’ Help for Ukraine Could be Too Little, Too Late – Politico
- Humanitarian Corridor for Mariupol Opened on Wednesday – WSJ
- ‘Panicked’ Russians Withdrew $9.8 bln in FX from Banks in March – Reuters
- Ukrainian Refugees Surpass 5 million – The Hill
- Wimbledon Bans Russian and Belarusian Players Over Invasion of Ukraine- Washington Post
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Inflation Persistence: NY Fed Economists Ask: How Much Is There and Where Is It Coming From?
The surge in inflation since early 2021 has sparked intense debate. Would it be short-lived or prove to be persistent? Would it be concentrated within a few sectors or become broader? The answers to these questions are not so clear-cut. In the authors’ view, one should ask how much of the inflation is persistent and how much of it is broad-based. In this post, they address this question through a quantitative lens.
They find that the large ups and downs in inflation over the course of 2020 were largely the result of transitory shocks, often sector-specific. In contrast, sometime in the fall of 2021, inflation dynamics became dominated by the trend component, which is persistent and largely common across sectors.
DOJ to Appeal Mask Ruling After CDC Request
The Department of Justice (DOJ) on Wednesday said it would appeal a ruling striking down the mask mandate for public transportation after the Centers for Disease Control and Prevention (CDC) requested it appeal. The administration is now in the position of having to carry out a legal fight to maintain masking powers for the future, even though officials are seeking to project more of a sense of normalcy and Democratic governors across the country previously lifted mask mandates in other settings.
The CDC said in a Wednesday statement that “to protect CDC’s public health authority beyond the ongoing assessment announced last week, CDC has asked DOJ to proceed with an appeal in Health Freedom Defense Fund, Inc., et al., v. Biden, et al. It is CDC’s continuing assessment that at this time an order requiring masking in the indoor transportation corridor remains necessary for the public health,” the agency added.
US COVID – This is No Time to Stop Tracking COVID-19
Around the world, the frequency of national reporting has slipped below five days a week for the first time since the early months of the pandemic, according to the publishers of the website Our World in Data. In the United States, the Centers for Disease Control and Prevention (CDC) is still reporting nationwide data, but there’s less real-time reporting of death and infection figures at the local level. All but eight states have scaled back to reporting data five or fewer days per week.
In many countries, political sentiments are shifting towards adopting a ‘new normal’. Of course, national budgets are being stretched thin as governments look to increase public expenditure on subsidizing fuel and food as the world plunges from dealing with the pandemic to tackling the global impacts of war in Ukraine. But scaling back virus surveillance at this time is short-sighted. It’s like stopping a course of antibiotics at the first sign of symptoms easing: it increases the risk that the infection will roar back.
Moderna Announces Step Toward Updating COVID Shots for Fall
Moderna hopes to offer updated COVID-19 boosters in the fall that combine its original vaccine with protection against the omicron variant. On Tuesday, it reported a preliminary hint that such an approach might work. Today’s COVID-19 vaccines all are based on the original version of the coronavirus. But the virus continues to mutate, with the super-contagious omicron variant — and its siblings — the latest threat.
Before omicron came along, Moderna was studying a combination shot that added protection against an earlier variant named beta. Tuesday, the company said people given that beta-original vaccine combination produced more antibodies capable of fighting several variants — including omicron — than today’s regular booster triggers.
Mask Mandates are Falling. Should HR Be Ready to Bring them Back?
Fewer companies than ever currently have mask mandates in the workplace—but employers should be prepared to put face-covering requirements back in play if COVID-19 cases continue to increase. Most mask mandates were dropped in the past couple of months as Omicron cases drastically fell after they surged to a pandemic all-time high around the holidays. It’s not out of the realm of possibility that employers will reinstate mask mandates for employees, as well, especially if cases continue to rise.
As with most things from the pandemic, employers would be wise to be flexible and adaptable in their mask and testing strategies and to tell employees that policies are subject to change, says Dr. Jeff Levin-Scherz, population health leader at Willis Towers Watson. “It’s good to set an expectation [with workers] that, ‘We’ve looked at the situation right now, and there’s no requirement to wear a mask, but we’re going to keep on monitoring the situation. We really care about everybody’s safety, and if the situation changes and cases go up, masks might come back.’ ”
Should You Wear a Mask Anyway as Federal Mandates Are Dropped for Airports, Airlines?
Although much of the U.S. no longer requires people to wear masks in indoor public settings, there are still scenarios where wearing a mask could be beneficial, public health and infectious disease experts say. Factors that help determine whether you should consider masking include local Covid-19 levels, where you are going and your underlying health conditions.
Good ventilation can help clear the virus from the air, filtering out virus-carrying particles known as aerosols that are created when an infected person coughs, speaks or breathes. But it isn’t often easy to tell how well a space is ventilated. Public-health experts continue to encourage people to wear masks in crowded, indoor settings, particularly those with poor ventilation. The closer people are packed together and the longer they are in contact, the higher the risk for spread, according to infectious-disease experts.
Hudson Valley Region Unemployment Rate Drops to 3.5% in March
The March 2022 unemployment rate for the Hudson Valley Region is 3.5 percent. It is down from 3.7 percent in February 2022 and down from 5.7 percent in March 2021. In March 2022, there were 39,800 unemployed in the region, down from 42,300 in February 2022 and down from 64,400 in March 2021. Y
Year-over-year in March 2022, labor force increased by 12,700 or 1.1 percent, to 1,145,600.
NYS Redistricting Case Heads to Appellate Court in Rochester
An appellate judge in Rochester heard arguments Wednesday to decide whether or not to uphold a lower court ruling invalidating new New York state Legislature and congressional maps. Former U.S. Rep. John Faso, an advisor to the Republican petitioners that brought the lawsuit, said he’s optimistic. “We think the very clear language in the constitution, it means what it says, and for the appellate judges to ignore that over politics, I just don’t think that’s where they’re going. I think these judges are going to consider it fairly and certainly that’s our hope,” he said.
Faso said the petitioners view several recent developments as good signs. Late last week, the League of Women Voters, a non-partisan organization, filed an amicus brief with the court supporting them and the state Supreme Court ruling that the Independent Redistricting Commission violated the state constitution by failing to submit two sets of maps to the Legislature.
U.S. Dollar Rockets to 20-Year Peak vs Yen on Central Bank Policy Differences
The dollar surged on Tuesday to a 20-year high against the Japanese yen, underpinned by the divergence in monetary policy between a Federal Reserve determined to keep a lid on soaring inflation and a Bank of Japan that has kept interest rates ultra-low. The greenback hit 128.97 yen , the highest since May 2002. It was last up 1.5% at 128.94 yen. The dollar has risen 5.9% on the yen so far this month, on pace for the largest monthly percentage rise since 2016.
Morgan Stanley, in its latest research note, said the yen’s decline versus the dollar was justified amid Japan’s worsening terms of trade, with soaring raw materials driving up import costs, as well as contrasting inflation outlooks between the countries.
U.S. Home Prices Hit a Record of $375,300 in March
U.S. home prices reached a record $375,300 in March as mortgage-interest rates shot up and a shortage of homes for sale continued to thwart buyers. Existing-home sales fell 2.7% in March from the prior month to a seasonally adjusted annual rate of 5.77 million, the National Association of Realtors said Wednesday. March sales fell 4.5% from a year earlier.
The median existing-home price rose 15% in March from a year earlier, NAR said. The $375,300 figure is a record high in data going back to 1999. Mortgage-interest rates have surged since the start of the year. The average rate on a 30-year fixed-rate mortgage was 5% as of Thursday, up from 3.04% a year earlier. At the same time, home-buying demand continues to exceed the extremely low inventory of homes for sale. Many homes on the market receive multiple offers, pushing prices higher.
“Card Check 2.0” — NLRB General Counsel Seeks to Resurrect Long-Dead Joy Silk Doctrine to Help Unions Organize Employees
During his campaign, President Biden vowed to be “the most pro-union president you’ve ever seen.” His appointment of Abruzzo as NLRB GC, and her swift and radical pro-union agenda, has given life to that vow. GC Abruzzo has wasted no time in setting out to fundamentally shift NLRB policy in an effort to tilt the playing field in favor of labor unions.
On April 11, 2022, the National Labor Relations Board’s General Counsel, Jennifer Abruzzo, filed a brief in a case pending before the NLRB, Cemex Construction Materials Pacific, seeking a return to the NLRB’s long-abandoned Joy Silk doctrine. Under that doctrine, unions may obtain representational status, simply by claiming to have the support of a majority of a private employer’s employees (typically through union card signing)—and putting the burden on the employer to affirmatively demonstrate a good-faith doubt as to that majority status in order to lawfully refuse to recognize the union as the employees’ exclusive representative without an election.
Tesla Earnings Rise Despite Production Disruptions in Shanghai
Tesla (TSLA) reported its Q1 earnings after the bell Wednesday, beating analysts’ expectations on the top and bottom line and recording a record quarter with revenue up 81% year-over-year. Revenue was $18.8 billion versus $17.9 billion expected
Adjusted earnings per share were $3.22 versus $2.27 expected.
Tesla, like many of the world’s automakers, continues to grapple with pandemic-induced supply chain problems and a global chip shortage. Tesla was forced to shutter its Shanghai plant for three weeks amid a city-wide lockdown geared toward stopping COVID infections. “Challenges around supply chain have remained persistent, and our team has been navigating through them for over a year. In addition to chip shortages, recent COVID-19 outbreaks have been weighing on our supply chain and factory operations,” the company said in a statement.
Pentagon Calls for Wartime Weapons Production Ramp-Up
As Pentagon officials gauge the defense industry’s ability to ramp up arms production in response to the ongoing Russia-Ukraine conflict, firms are still grappling with pandemic-related supply chain and workforce woes.
According to Bill Greenwalt, who served as deputy undersecretary of defense for industrial policy during the George W. Bush administration, it has historically taken the U.S. defense industrial base 18 months to 3 years to get ready for conflicts. “Our budget, appropriations, requirements, and acquisition systems are stuck in a peacetime mode where time doesn’t matter, and it will be difficult to pivot out of those processes quickly,” Greenwalt, now with the American Enterprise Institute, said in an email.