Member Briefing April 25, 2023
Kevin McCarthy, House GOP Debt-Limit Plan Face Crucial Test This Week
Speaker Kevin McCarthy and House Republicans face a crucial test this week as they scramble to unite their factious party around a bill that would slash government spending in exchange for raising the nation’s borrowing limit. The Limit, Save, Grow Act would return the government’s discretionary spending to fiscal year 2022 levels, cap annual spending growth at 1% for a decade and raise the debt ceiling until March 31, 2024, or until the national debt increases by $1.5 trillion, whichever comes
With the health of both the economy and his speakership potentially on the line in the debt-limit fight, Mr. McCarthy and his allies have begun the process of wrangling the 218 votes needed for passage of their plan. In the narrowly divided 222-213 House, Republicans can afford no more than four defections, if all Democrats vote no, as expected. Mr. McCarthy, asked about the bill’s prospects last week, remained upbeat. “I think we’re in very good shape,” he said. “We’re working, talking through all the members.”
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine Gears Up to Hit Russians—and Show West It Can Win - WSJ
- Those Leopard 1 Tanks Ukraine Is Getting Won A Lopsided Victory In Bosnia In 1994. But The Battle Easily Could’ve Gone The Other Way - Forbes
- Iran Ships Ammunition to Russia by Caspian Sea to Aid Invasion of Ukraine- WSJ
- Ukraine War Spurs Record Global Spending on Military, Stockholm Think Tank Says - Reuters
- Air Defense Top Priority for Ukraine Contact Group Amid Leak Revealing Missile Stockpiles Running Out – Breaking Defense
- Ukraine Is Spoofing Russian Drones Out Of The Sky - Forbes
- Russia ‘Will Not Forget or Forgive’ US Refusal of Journalist Visas – The Hill
- Russia’s Economy Can Withstand a Long War, But Not a More Intense One – The Economist
- Targeted Killings Spark Debate Within Russian Opposition - 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
No YTD Growth in Global Steel Output
Global raw steel production rose to 165.1 million metric tons during March,13.7% higher than in February and 1.7% more than the March 2022 level. The report, issued by the World Steel Assn. and representing data from 63 countries – with about 97.0% of global steelmaking capacity – shows an industry that has stabilized over recent months, but one that apparently is still affected by weak industrial demand.
The new monthly data shows a steady improvement in output by the two largest steelmaking nations – China and India – while tonnages continues to fall in other major centers. Chinese steelmakers produced 95.7 million metric tons of raw steel during March – well more than half of all the steel produced globally – and 6.9% more than China’s March 2022 result. Through March, China’s year-to-date output total is now 261.6 million metric tons, 6.1% higher than the January-March 2022 result.
Read more at American Machinist
S&P Global: World Economy Gets Boost From US & EU, But Inflation Worries Linger
U.S. and European business activity rose in April at the fastest pace in about a year, a boost for the global economy but a potentially complicating factor for central banks working to reduce high inflation. Demand for services drove the growth, according to surveys by data firm S&P Global covering U.S., eurozone and U.K. businesses. That kept pressure on price increases in regions where inflation last year reached its highest level in decades.
The U.S. surveys of purchasing managers indicated both manufacturing and services output accelerated in April. Job growth picked up, and average prices charged for goods and services rose at the fastest pace since September. JPMorgan economists estimate the U.S. economy grew at a 3.3% annual rate in the first quarter. Europe’s economy also kept growing in April, the S&P Global surveys indicated, suggesting the European Central Bank is on course to raise its key interest rate in May. The Bank of England is also expected to raise its key rate for the U.K. later that month.
COVID News – Weekly COVID Deaths Hit New Record Low, CDC Data Shows
COVID-19 deaths hit a new low last week, reaching levels not seen since late March 2020, when the pandemic was just beginning. An estimated 1,160 Americans died from the virus this week, according to the Centers for Disease Control and Prevention. The next lowest point was the week of March 18, 2020, with 169 deaths. Cases have also significantly declined, with less than 100,000 people testing positive this week. Experts have warned that case counts may be a gross underestimate due to the widespread availability of at-home tests.
Over 1 million people have died from COVID-19 in the U.S. since the start of the pandemic. "It's very unlikely that COVID deaths will go to zero, because we have a virus that is now here to stay and, in all likelihood, will constantly evolve to outpace our immunity," said Dr. John Brownstein, an ABC News contributor and chief innovation officer at Boston Children's Hospital.
Budget Progress Reported – But Another Extender Needed To Fund State Until Friday
State lawmakers and Gov. Kathy Hochul approved a fifth temporary stopgap budget measure on Monday, funding New York's government through Friday with a spending plan now more than three weeks late. Still, the top Democrat in the state Assembly the same day signaled lawmakers had made progress toward a final budget agreement. "I think we're getting closer," Assembly Speaker Carl Heastie said. "There are still a few things that have to be worked out. But hopefully the end is near."
Measures to address the environment and climate change as well as potentially expand charter schools in New York City are yet to be decided. A plan to address illegal sales of cannabis is also under discussion. But legislators and Hochul have largely moved on from issues like the governor's plan to expand housing in New York. Lawmakers and Hochul are also yet to settle on more fiscal-related issues in the budget. A proposal from legislative Democrats to raise tax rates on people who earn more than $5 million a year remains undecided.
Read more at New York State of Politics
The Share of Students Graduating With EE Degrees Has Declined
Many areas of science and engineering help power innovation, growth, and competitiveness, but electrical engineering (EE) is one of the most critical, given the importance of electronics and computing. This is why it is concerning that U.S. bachelor’s, master’s, and doctorate EE degrees have declined as a share of all degrees, while the number of American citizens and permanent residents obtaining EE degrees has grown only slightly.
Moreover, the CHIPS and Science Act will likely lead to an increase in the demand for EE jobs. If the United States wants to fill these and future jobs, it will need to produce more graduates in EE. In addition, if the United States wishes to outcompete China in advanced industries, it will require strong EE capabilities. Absent changes in policy and administration of research universities to generate more EE degrees, the United States will likely continue to fall behind in EE-related industries.
New York Working Out Alternatives to Regents Exams for Graduation
A committee that convened in December will make recommendations on other ways to graduate, although Regents exams would remain as an option for students. The board received an update on the committee’s work on April 17 and will make the final decision after receiving the recommendations. The committee plans to issue recommendations after one year of work, a year earlier than scheduled, due to the “outcry” for alternatives, members said.
At the same time, the Education Department is starting a pilot program in which school districts can start offering other ways to prove mastery of required skills, instead of taking the math, science, English and history exams. Schools will be selected to participate in the pilot for this fall and fall of 2024. “This is not about getting rid of Regents exams,” said Angelique Johnson-Dingle, deputy commissioner for P-12 Instructional Support. “The idea is all students are provided the opportunity to demonstrate their skills and knowledge in the best way that suits them.”
Read more at the Albany Times Union
Why Apple’s Partnership With Goldman Is The Future Of Banking
Last week Apple effectively dropped the mic on the nation's banking industry. While the average bank is paying less than a half a percent on savings accounts, the $2.6 trillion technology company announced it would be offering 4.15% annual returns to savers – no minimums, no lockups and FDIC-insured. The new product rollout comes at a time when regional banks are scrambling in the wake of the Silicon Valley Bank crisis to maintain their deposit bases, and cash-starved fintech startups are likewise struggling. Technically Apple doesn’t have a banking license. It is fronting for Goldman Sachs Bank USA, otherwise known as Marcus, which has a state charter and is FDIC-insured.
The new high yield savings account is only available to customers with Apple’s credit card, Apple Card. These users can have an account set-up in minutes and their spend rewards, called daily cash, are automatically funneled into the high yield account. The account will be displayed on a dashboard in Apple’s digital wallet where users can track their balance and interest earned. The product allows Apple to offer yet another sticky iPhone benefit by strengthening its built-in digital wallet.
BLS State Employment Report: Ohio Wins Mfg Employment Crown in March
Ohio created the most net new manufacturing jobs in March, adding 4,200 workers. Other states with notable employment growth for the month included Arizona (up 1,900), Kentucky (up 1,800), Pennsylvania (up 1,800), Tennessee (up 1,500) and Texas (up 1,400). At the same time, Texas (up 36,700) had the most manufacturing employment growth over the past 12 months. Other states with significant year-over-year gains included California (up 20,800), Florida (up 12,900), Missouri (up 12,400) and Ohio (up 11,000).
In March, the U.S. unemployment rate edged back down to 3.5%. At 1.9%, South Dakota had the lowest unemployment rate nationally, followed closely by Nebraska (2.1%), North Dakota (2.1%), Alabama (2.3%) and Montana (2.3%). At the other end of the spectrum, Nevada had the highest unemployment rate in the country at 5.5%. Other areas with elevated rates included the District of Columbia (4.8%), Washington (4.5%), California (4.4%), Delaware (4.4%), Illinois (4.4%) and California (4.4%).
Risk Management Consulting Services in Manufacturing Market Is Expected to Generate $55.6 Billion by 2031
According to a report published by Allied Market Research, the global operational risk management consulting services in manufacturing market garnered $17.3 billion in 2021, and is estimated to generate $55.6 billion by 2031. The report provides an extensive analysis of changing market dynamics, major segments, value chain, competitive scenario, and regional landscape. Leading market players of the global operational risk management consulting services in manufacturing market analyzed in the research include Gartner, Inc. , Oliver Wyman, LLC, Boston Consulting Group, Roland Berger GmbH, PwC, Deloitte, Accenture, Bain and Company, Inc., KPMG International, McKinsey and Company.
The systems risk/technological failure segment held the highest share in 2021, accounting for around one-third of the global operational risk management consulting services in manufacturing market, and is expected to continue its leadership status during the forecast period.
Bed Bath & Beyond Plans to Liquidate All Inventory and Go Out of Business
Once an unstoppable retailer — deemed a "category killer" for its triumph over many rivals — Bed Bath & Beyond has now filed for bankruptcy. It plans to begin closing its 360 Bed Bath & Beyond stores and 120 BuyBuy Baby stores. A vision of this chain's survival is bleak.
Bed Bath & Beyond enters bankruptcy distraught and turbulent, after several misfired turnarounds, abrupt leadership shakeups, a rise and crash as a meme stock, store closures, job cuts and numerous last-gasp financing deals. For months, the chain has been losing both money and shoppers, struggling to restock shelves as suppliers and banks cut off its tab.
Volkswagen Pivots to North America as Europe Loses Its Shine
Volkswagen AG, Europe’s largest car maker, said Friday that it would invest more than $5 billion in its planned battery-cell factory in Canada, making it the company’s largest in the world and creating thousands of jobs. The move is part of a strategic pivot to capture a bigger share of U.S. electric-vehicle markets, driven by attractive subsidies, Europe’s ponderous bureaucracy and uncertain economic prospects, and the need to diversify away from China.
VW’s U.S. pivot, initiated a couple of years ago, has accelerated considerably since President Biden signed the Inflation Reduction Act into law last August. It has seen VW slow-walk or put on ice various expansion plans in Europe, including a giant battery plant in the Czech Republic. The shift illustrates the growing competition for investment in factories and jobs between the U.S. and Europe, which has struggled to respond to the IRA and whose recovery is being threatened by Russia’s war in Ukraine, high labor costs and expensive energy.
Tesla Wins Bellwether California Trial Over Autopilot Car Crash
A California state court jury on Friday handed Tesla Inc. a sweeping win, finding the electric vehicle maker's Autopilot feature did not fail in what appeared to be the first trial related to a crash involving the partially automated driving software. Tesla has been testing and rolling out an Autopilot and more advanced "Full Self-Driving" system, which CEO Elon Musk has touted as crucial to the company's future but which has drawn regulatory and legal scrutiny.
Justine Hsu sued in 2020, saying her Tesla Model S swerved into a curb while on Autopilot, and an airbag was deployed "so violently it fractured Plaintiff's jaw, knocked out teeth, and caused nerve damage to her face.” She alleged defects in the design of Autopilot and the airbag, and sought more than $3 million in damages. In Los Angeles Superior Court on Friday, the jury awarded Hsu zero damages. It also found that the airbag did not fail to perform safely, and that Tesla did not intentionally fail to disclose facts. After the verdict, jurors told Reuters that Tesla clearly warned that the partially automated driving software was not a self-piloted system, and that driver distraction was to blame. Tesla shares gained 1.3 percent to close at $165.08 on Friday.
Argentina's Lithium Pipeline Promises 'White Gold' Boom as Chile Tightens Control
In Argentina's mountainous north, a strong pipeline of lithium projects close to coming online looks set to unlock a wave of production that could see its output of the key electric vehicle battery metal as much as triple within the next two years. The world’s fourth largest producer of the silvery-white metal sits within the so-called "lithium triangle" and has been luring investment from Canadian to Chinese mining firms with a regional and market-led model, even as a wave of resource nationalism has spread in the region.
Neighboring Chile, the region's top lithium producer, last week unveiled plans for a state-led public-private model, spooking investors. Bolivia has long maintained strict control over its huge though largely untapped resources, while Mexico nationalized its lithium deposits last year. In Argentina, despite state energy firm YPF starting to explore for lithium last year, the sector has largely been driven by private enterprise and regular approvals of new projects as the government has looked to bring in more export dollars through mining, a rare bright spot amid economic turmoil.
‘Incredibly Resilient’ Construction Market Buoys Nucor, Alcoa and Steel Dynamics Outlooks
“…The objective measures as we look into Q2, we think Q2 is going to be a stronger quarter,” Leon Topalian, the chairman, president and CEO Nucor Corp. told analysts on an April 20 conference call to discuss his team’s first-quarter results. Charlotte-based Nucor reported first-quarter profits of $1.1 billion on net sales of $7.1 billion. Total sales to outside customers rose slightly from a year ago but substantially lower prices meant operating profits fell by more than 40%.
The Nucor team’s peers at Steel Dynamics Inc. and Alcoa Corp. voiced similarly confident assessments. Alcoa President and CEO Roy Harvey said “the demand is still there” for his firm’s products and that there are relatively limited options available to quickly ramp up supply, which is putting a solid floor under prices after the steep decline of last spring and summer.“ Based on our backlog, customer sentiment and manufacturing momentum, we expect steel fabrication earnings to remain strong throughout the year, including the second half,” Steel Dynamics CFO Theresa Wagler said April 20.