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Member Briefing August 11, 2025

August 11, 2025

Posted By: Harold King in Daily Briefing,

Top Story

US Productivity Rebounds Strongly in Second Quarter as Output Picked Up

Labor productivity in the U.S. saw a significant rebound in the second quarter of 2025, according to preliminary data released by the Labor Department on Thursday. The report said labor productivity shot up by 2.4 percent in the second quarter after tumbling by a downwardly revised 1.8 percent in the first quarter. The rebound was underpinned by a sharp recovery in output growth (+3.7% annualized) that outpaced a 1.3% annualized gain in hours worked.

The second quarter's rebound in productivity growth coincided with a strong gain in labor costs. Hourly compensation rose at a 4.0% annualized rate, a bit firmer than the separately reported and less volatile Employment Cost Index. Over the past year, hourly compensation is up 3.9%, running ahead of its pre-pandemic (2010-2019) average of 2.5%. Despite the strength in nominal compensation growth, the labor market's inflationary impulse has been quelled by the solid trend in productivity growth. Unit labor costs (ULCs), which can be thought of as the productivity-adjusted cost of labor, rose at a 1.6% annualized rate in Q2 and the four-quarter average is up 2.2% over the past year. As such, the still-solid pace of nominal compensation growth remains unlikely to be the force that keeps inflation meaningfully above the Fed's 2% inflation target, thanks to the firm trend in productivity.

Read more at Wells Fargo

Uncertainty About Tariffs And Consumer Spending Continues To Weigh On Manufacturers

President Trump has claimed that his sweeping tariff regime will reshore American companies and revive manufacturing in the U.S. So far, that hasn’t happened. Economic activity tied to manufacturing has shrunk for most of Trump’s second term. A few investments and pledges aimed at beefing up domestic manufacturing appear timed to appease the president, and may or may not come to fruition. Beneath the shiny announcements lies a sector that can’t seem to get off the ground. But it’s still early.

From March to July, U.S. manufacturing activity contracted, according to the Institute for Supply Management’s monthly survey. The Manufacturing PMI last registered at 48, below the 50 score that differentiates growth and decline. The effective average tariff rate on all imported goods now stands at roughly 18% versus 2.3% last year, the highest levels since the 1930s. Still, some economists say Trump’s tariffs, set to take broader effect on Thursday, aren’t high enough to bring companies back. Tariff levels might be high enough to bring back production of some textiles but probably not enough to encourage additional production of cars and steel in a significant way, said William Reinsch, senior adviser at the Center for Strategic and International Studies. “The obvious candidates are sectors where labor is proportionally a smaller cost of production and where input materials are available domestically or from nearby sources,” he said.

Read more at The WSJ

Optimism Surfaces From Several Corners of the Industrial World

Slack consumer spending, hamstrung by concerns about the labor market and tariff-induced inflation, is seen by many observers as playing a key role in that trend. However, the second-quarter earnings season that’s winding down has provided some hope that the goods-producing part of the U.S. economy is prepared to pick up some of the slack. Looking beyond Wall Street analysts’ earnings estimates (which are broadly rising after being slashed during the spring’s tariff turmoil) to what various executives have been saying, there’s an argument to be made that significant parts of industrial America looks to be in solid shape—and lining up to strengthen heading into 2026.

Steve Laxton, CFO of steel manufacturer Nucor Corp., for example, said the company’s sales teams are seeing “robust quoting activity and believe this reflects improved business confidence among our customers servicing the construction and infrastructure markets.” At Caterpillar Inc., recently named CEO Joe Creed told investors he is “increasingly optimistic about the top-line expectations” after a quarter in which the equipment giant’s orders and backlog both grew. These upbeat sentiments were by no means universal, but the do point to cause for some optimism.

Read more at IndustryWeek

Global Headlines

Middle East

Ukraine

Policy and Politics

Hudson Valley Power Plant Permit To Test Hochul's Climate Act Strategy

Lawmakers and environmentalists pushing the state to deny a required permit for a Hudson Valley power plant said the upcoming decision will test Gov. Kathy Hochul's commitment to the 2019 Climate Act. The state Department of Environmental Conservation continues to consider an application for Title V and IV air quality permits that allow a natural gas-fired power plant to operate in Orange County. Democratic lawmakers and environmentalists are pressuring the agency to deny the permit and close the Competitive Power Ventures Valley Energy Center, arguing it violates the state’s Climate Law. The power plant has operated without a finalized permit for seven years.

The DEC first denied this power plant’s air permit in 2018, before the 2019 Climate Law that imposed strict requirements for the state to reduce its greenhouse gas emissions. The state's top energy official said this week the state is likely to fall short of the law's requirement to slash emissions 40% by 2030. A 2019 state Supreme Court ruling allows the facility to continue operating until the DEC completes the plant's renewal application process. CPV has not proposed operational changes nor new emission sources and its application indicates the facility’s continued operation would not disproportionately burden any designated disadvantaged communities, according to the DEC.

Read more at NY State of Politics

Pattern Annual Housing Report Shows Widening Gap Between Wages And Housing Costs For Renters, Prospective Homeowners

Hudson Valley Pattern for Progress last week released ‘Out of Reach 2025,’ a new report that illustrates the growing strain on tenants and prospective homebuyers throughout the region as the cost of housing continued to rise faster than wages. This yearslong trend - documented in many reports by thier Center for Housing Solutions - has brought many deleterious effects to our region. The disappearance of modest rents has resulted in more families living on public assistance in hotels. And thousands of households continue to leave the region each year in search of more affordable living in other parts of the United States.

The data in Out of Reach show that the region’s housing affordability crisis is worsening. For many years, single renters have not been able to afford fair-market rents without spending more than 30 percent of their income on housing costs. But now we see that households with two working renters also cannot statistically afford rent in five of our counties. The outlook for prospective homebuyers also became more troubling over the past year. An analysis by Pattern found that median-earning households cannot attain enough mortgage to purchase the median priced home anywhere in the Hudson Valley. Year-over-year, the gap between mortgage access and housing costs jumped by tens of thousands of dollars in every county across the region.

Read More Pattern for Progress

Senators Pitch $1.5 Trillion Investment Fund For Social Security: What To Know

A bipartisan duo in the Senate has been garnering attention for a pitch aimed at shoring up the solvency of Social Security. The idea, pushed by Sens. Bill Cassidy (R-La.) and Tim Kaine (D-Va.), calls for investing $1.5 trillion over the next five years into an investment fund that would then be given 70 years to grow. “It is something to save Social Security, and to save the benefits flowing to the people, frankly, will either already depend on them or will depend upon them going forward,” Cassidy told The Hill last month.

While the senators have yet to release text for the plan, Cassidy said the government would create an investment fund separate from the existing Social Security trust funds, into which the government would place $300 billion annually over the next five years. That money would be invested into stocks, bonds and other investments, and Cassidy said it would be held “in escrow for 70 years. Any dividends being paid, for example, flow back into the investment fund. As that occurs, we also repeal the law requiring that benefits be cut to match income,” Cassidy told The Hill. The Treasury Department would be responsible for making up the payments for those 75 years, at which point the fund would pay back the Treasury Department and use its remaining funds to supplement Social Security payments, according to the senators.

Read the more at The Hill

Political Headlines

Health and Wellness

Startup Enables Patients Who Need Transplants To Grow New Mini-Organs

Every year, over 50,000 patients die from liver disease in the United States. For many of these patients, a liver transplant is their only hope for treatment. But there often aren’t enough donor livers to go around. Michael Hufford wants to change that. He’s the CEO of Pittsburgh-based Lygenesis, which has developed the technology to induce a patient’s own lymph nodes to grow miniature livers, which can carry out many of the liver’s functions and help patients stay healthy.

Lymph nodes are the body’s own miniature cellular factories, constantly building cells that help the immune system fight off disease. What Lygenesis does is to take advantage of this factory plus the liver’s own ability to regenerate itself. It extracts a special kind of liver cell called hepatocytes from a donor organ and then injects them into a lymph node. Once inside the lymph node, the liver cells induce it to start growing a miniature version of a liver, called an ectopic organ, which has the same function as the original. Right now, Lygenesis’ technology is already being tested on patients in a small clinical trial that has enrolled four people with end-stage liver disease. But Lygenesis isn’t only focused on the liver, Huffard said. It’s also working on inducing lymph nodes to produce other ectopic organs, including the kidneys to treat renal disease, the pancreas to treat type 1 diabetes and the thymus to treat age-related issues and autoimmune disease.

Read more at Longevity

Industry News

Trade Wars

Toyota Braces for $9.5 Billion Hit From US Tariff Turmoil

Japan's Toyota Motor said on Thursday it expected a hit of nearly $10 billion from President Donald Trump's tariffs on cars imported into the United States, the highest such estimate yet by any company, underscoring growing margin pressures. The world's top-selling car maker also cut by 16% its forecast for full-year operating profit, reflecting challenges for global manufacturers grappling with rising costs from U.S. levies on cars, parts, steel and aluminium.

Toyota's North American business swung to an operating loss of 63.6 billion yen in the first quarter, from profit of 100.7 billion a year earlier, as it took a hit of 450 billion from the tariffs. Its broad production operations, which include U.S., Canadian, Mexican and Japanese plants, expose it to tariffs not only on direct exports but also on vehicles and parts shipped across borders within North America. The first-quarter results highlight the pressure U.S. import tariffs are putting on Japanese automakers, even as a trade pact between Tokyo and Washington offers potential relief.

Read more at Reuters

Intel’s CEO, Under Attack From Trump, Is Already at Odds With His Board

Intel Chief Executive Lip-Bu Tan was already at odds with some board members before President Trump jumped into the fray. Tan and some Intel directors have disagreed in his first months in the role about questions as central as whether the company should stay in the manufacturing business or exit it entirely, according to people familiar with the matter. Recent efforts by Tan to raise new capital and acquire an artificial-intelligence company have been stalled by people on the board, they said. Last Thursday, the internal tensions were heightened when Trump unexpectedly called for Tan’s ouster, claiming he is “conflicted” by business ties to China. Intel so far is standing by Tan.

Intel reigned for decades as the world’s most valuable semiconductor company, but its failure to foresee the rise of AI helped cut its market value in half since the beginning of last year. Tan and Intel board chairman Frank Yeary disagree about whether Intel should remain in the business of making chips for itself and its clients or exit manufacturing, the people said. The segment that includes Intel’s chip factories, which last year supplied around a third of Intel’s revenue, has been a money loser. But some view it as politically important because it helps secure the U.S.’s semiconductor supply chain.

Read more at The WSJ

Continuing Claims For Unemployment Benefits Hit Highest Level Since November 2021

Americans filing for unemployment insurance on an ongoing basis reached the highest level since November 2021 at the end of July. In the week ending July 26, 1.974 million continuing claims were filed, up from 1.936 million the week prior and the highest level seen since November 2021, according to data from the Department of Labor released Thursday morning. Economists see an increase in continuing claims as a sign that those out of work are taking longer to find new jobs.

Meanwhile, weekly filings for unemployment benefits increased to 226,000 in the week ending Aug. 2, up from 221,000 the week prior. Oxford Economics lead economist Nancy Vanden Houten wrote in a note following the release that the level of weekly jobless claims is "consistent with a low pace of layoffs." "The rise in continued claims since April — a sign that unemployed persons are finding it tough to find new jobs — makes even more sense after the sharp downward revisions to job growth in May and June," Vanden Houten wrote Thursday.

Read more at Yahoo Finance

GM-Hyundai Partnership Yields Five New Vehicles

General Motors and Hyundai Motor will co-develop five vehicles in the Americas as part of a partnership that began last September. The automakers will make four automobiles for the South and Central American markets, including a compact SUV, a car and midsize pickup truck. They will also develop an electric commercial van for North America. The vehicles for Latin American markets are set to launch in 2028, and the electric van will be manufactured in the U.S. as early as 2028, the companies said in a joint statement.

The partnership between the two companies involves GM and Hyundai developing new-energy projects and investments together ranging from new vehicles, joint production, powertrain and platform production, as well as emerging battery- and hydrogen-power mobility and distribution, investments in raw materials and more. GM and Hyundai expect to sell more than 800,000 of the new vehicles each year once production is fully scaled, they say in a news release issued after the U.S. stock markets closed on Wednesday.

Read more at Automotive Dive

Rockwell Automation Will Spend $2 Billion Nationwide To Boost Manufacturing

Rockwell Automation says it will spend $2 billion over the next five years on its manufacturing plants, talent and digital infrastructure. Most of the spending will be focused on capital investments in the United States, said Blake Moret, CEO and chairman of the Milwaukee-based industrial automation company. Rockwell does much of its manufacturing in Ohio but also makes products in Wisconsin.

Worldwide, Rockwell has around 27,000 employees. The company hasn’t released a specific number of jobs that would be created from the $2 billion investment but says it’s hiring again after workforce reductions in 2024. The 10th annual State of Smart Manufacturing Report, released in June by Rockwell, noted that more than 40% of manufacturers are turning to artificial intelligence and automation to help close skills gaps and address labor shortages.

Read more at The Milwaukee Journal Sentinel

Pentagon Awards $7.8 Billion In Missile Contracts For US And Allies

The Pentagon awarded $7.8 billion in contracts to Lockheed Martin and RTX Corporation at the end of July to produce thousands of new missiles for the Air Force and Navy, as well as a host of international allies. The contracts include $3.5 billion to RTX Corporation for the AMRAAM Air-to-Air missile, reported to be the largest contract in the history of the AMRAAM missile program. The contract also includes telemetry systems and engineering support products.

The AMRAAM is a flexible, powerful and lightweight missile that can be equipped by a wide breadth of warplanes for air-to-air combat strikes. It can also be used as a ground-launch weapon for air defense. It excels at a wide variety of altitudes and can easily intercept elusive targets. The AMRAAM missiles will be supplied — not only to the U.S. Air Force and Navy — but also sold to an array of global allies in Europe, Asia and the Middle East. In another notable missile contract, Lockheed will receive $4.3 billion to produce the Joint Air-To-Surface Standoff Missile, or JASSM, and Long-Range Anti-Ship Missile, LRASM.

Read more at Defense News

NASA Is Already Prepping To Build Trump A Nuclear Reactor On The Moon

Last week NASA administrator Sean Duffy declared the Trump Administration's intention to land a working nuclear fission reactor on the moon by the end of the decade. “We're in a race to the moon, in a race with China to the moon,” Duffy said. Planting reactors is more effective than planting a flag in the lunar dust. Duffy referenced the idea of a “keep-out zone” around a reactor that effectively lays claim to a desirable area, like a craters holding frozen water.

NASA and its many contractors have been relying on atomic power for a long time. Since the 1960s, NASA has powered Apollo missions, space probes and Martian landers using radioisotopic batteries that turn the heat emitted by Plutonium-238 and other decaying isotopes into electricity. But those devices only put out 100 watts or less. The nuclear fission reactors like what Duffy is talking about are far more complicated. They generate heat by splitting apart Uranium-d238, and would put out 100 kilowatts. That’s only enough electricity for a couple dozen homes on Earth. You’d need a lot of them to power a moonbase. Do we need nuclear on the moon? A decade ago, NASA decided the answer was yes. Nighttime lasts for 14 Earth days in many lunar locations, making solar panels unreliable. And you can't burn oil, coal or gas in a vacuum even if you could get it into orbit.

Read more at Forbes

Fewer Traffic Deaths Reported In Early 2025

The number of people killed in automotive crashes declined 6.3% over the first quarter of 2025, with the estimated fatality rate the lowest it has been since 2019, according to new National Highway Traffic Safety Administration data released July 10. Between January and March 2025, 8,055 people were killed on U.S. roads, the agency said, down from the 8,595 killed in vehicle crashes during the first three months of 2024.

The number of traffic fatalities in the first quarter of the year totaled 1.05 fatalities per 100 million vehicle miles traveled — an improvement compared to the 1.13 rate during the first quarter of 2024, according to the agency. “While traffic fatalities remain far too high, we are encouraged to see such a decline and pledge to continue working to drive down these numbers even more,” NHTSA Chief Counsel Peter Simshauser, said in a statement.

Read more at Automotive Dive

Workforce Newsletter 47 - August 7, 2025August 7, 2025