Member Briefing August 13, 2024
Conference Board Survey: CEOs Losing Some Confidence in Economy
Executives have hit their lowest level of conference in the economy for 2024, according to The Conference Board Measure of CEO Confidence. The measurement fell to 52 in Q3 2024, down from 54 in the previous quarter. A total of 130 CEOs participated in the Q3 survey, which was fielded from July 15 through 29.
- CEOs’ assessment of general economic conditions turned negative in Q3: 26% said economic conditions were worse than six months ago, up from 16% in Q2. Only 20% of CEOs said economic conditions were better, down from 30% last quarter. CEOs’ assessments of conditions in their own industries also turned negative: 31% said conditions in their own industries were worse than six months ago, up from 26% in Q2.
- CEOs’ expectations about the short-term economic outlook improved slightly in Q3: 32% of CEOs expected economic conditions to improve over the next six months, up from 30% in Q2. 25% expected conditions to worsen, down from 26%. CEOs’ expectations for short-term prospects in their own industries were on balance little changed in Q3.
- 40% of CEOs expected to expand their workforce over the next 12 months, up from 33% in Q2. Meanwhile, 23% of CEOs expected a reduction in their workforce, up from 21%.
- 27% of CEOs report some problems attracting qualified workers, but only in key areas, down from 31% last quarter. Only 12% report serious and/or widespread problems attracting qualified workers, unchanged from Q2. 10% reported no problem hiring, up from 6%.
- 70% of CEOs anticipated raising wages by more than 3% over the next twelve months. Most said they plan wage increases in the 3-3.9% range, but there was a slight increase in the share of CEOs planning to increase wages by less than 3%.
- Most CEOs are not planning to revise capital spending plans (61%). 23% of CEOs expect their capital budgets to increase over the next year, up from 21% last quarter.
Read more at Material Handling & Logistics
Senior Loan Officer Opinion Survey: Caution and Tighter Lending Standards
The July Senior Loan Officer Opinion Survey highlighted a continuation of tighter lending standards across various loan categories, reflecting ongoing caution in the banking sector. For commercial and industrial loans, banks reported tightening standards, particularly for riskier loans, with significant attention to interest rate floors, collateral requirements and credit line limits. This trend was consistent across firms of all sizes, driven by concerns about economic uncertainty, industry-specific challenges and a general reduction in risk tolerance. Despite these tighter conditions, demand for C&I loans remained largely unchanged, signaling that businesses may be holding steady in their borrowing needs amid a cautious economic outlook.
In the household sector, banks also reported tighter standards for consumer loans, particularly for credit cards, while standards for auto loans remained mostly unchanged. Demand for residential real estate loans weakened across all categories, reflecting softer market conditions or perhaps higher interest rates. While lending standards have generally eased compared to the same period last year, they remain on the tighter end of the historical range since 2005, indicating a sustained cautious stance among banks as they navigate the current economic environment. The overall picture is one of continued prudence, with banks balancing risk management against the backdrop of an uncertain economic landscape.
Read more at The Federal Reserve
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Israel Keeps Up Strikes In Gaza As Fears Of Wider War Grow - Reuters
- Hamas Says It Won't Take Part In Gaza Hostage-Ceasefire Deal Talks - Axios
- Germany's Scholz Urges Israel To Conclude Hostage Release And Ceasefire - Reuters
- US Sends Nuclear Submarine, Aircraft Carrier to Middle East Amid Tensions - Newsweek
- Iran's Revolutionary Guards Hold Military Drill In Western Iran, IRNA Says - VOA
- Airlines Suspend Flights As Middle East Tensions Rise - Reuters
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Ukraine And Russia: The Latest News – The Guardian
- Russia claims it halted Ukraine incursion into Kursk region - VOA
- Ukraine's Kursk Operation Faces Three Options: Ex-General - Newsweek
- Russian Blame Game Heats Up As Ukraine’s Special Military Operation Riles Putin – Politico
- Billions In Dollar And Euro Notes Reach Russia Despite Sanctions - Reuters
- Ukraine, Russia Trade Accusations Over Fire At Occupied Nuclear Plant - VOA
- NATO Allies Follow China's Warships to and From Russia - Newsweek
- 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
- Why Beijing Won’t Give Up on a Failing Model – Foreign Affairs
- Brexit Britain Creeps Back Into Brussels’ Orbit Under Labour – Politico
- Raging Wildfires With 80-Foot Flames Force Evacuations in Athens - WSJ
- The Philippines Protest After Chinese Dropped Flares In Path Of Air Force Aircraft – Simple Flying
- Nippon Steel Pivots Away From China To Zero In On U.S., India – Nikkei Asia
- Map Reveals Path of Potential Tropical Storm Ernesto - Newsweek
- U.S. Officials To Travel To China For Economic Meetings - VOA
- Venezuela Opposition Urges Global Protest Over Poll Result - BBC
- U.S. and China Tied for Gold at the Olympics. Some in China Disagree. - WSJ
- Strikes Hit China's Property, Manufacturing Sectors As Growth Slows – Nikkei Asia
- In Syria’s Hinterlands, the U.S. Wages a Hidden Campaign Against a Resurgent Islamic State - WSJ
Policy and Politics
Block On Biden Student Loan Forgiveness SAVE Plan Extended By Federal Court
A federal appeals court issued a preliminary injunction blocking a key Biden administration program that reduces payments and fast-tracks student loan forgiveness. The SAVE plan is a new income-driven repayment program that President Joe Biden unveiled last fall. SAVE provides for lower monthly payments than other IDR options, an interest subsidy that prevents loan balances from ballooning, and student loan forgiveness in as little as 10 years for certain borrowers. But the program has faced legal challenges from Republican-led states, which contend that the program is illegal and should be struck down. More than eight million borrowers have enrolled in SAVE.
Last week, the 8th Circuit Court of Appeals issued a preliminary injunction formally blocking the SAVE plan as the litigation continues. The injunction replaces a previous temporary stay issued last month, and the court suggested that the SAVE plan may ultimately get struck down. This will also effectively extend an administrative forbearance for millions of borrowers already enrolled in the program. The administration is “enjoined from any further forgiveness of principal or interest, from not charging borrowers accrued interest, and from further implementing SAVE’s payment-threshold provisions,” ordered the court. “This injunction will remain in effect until further order of this court or the Supreme Court of the United States.”
Capacity Auction Shows AI Is About to Boost Power Bills
The AI-driven, energy-hungry data-center boom was bound to bring up uncomfortable questions: Will it raise energy bills and, if so, who will shoulder the costs? America’s largest wholesale power market is starting to see the results. Rapid data-center build-out is increasing power demand just as a wave of older power-plant retirements is reducing supply in PJM Interconnection, the independent system operator that manages the wholesale power market spanning 13 states including Virginia, Pennsylvania and Illinois.
It said two weeks ago that its latest capacity auction yielded prices of $269.92 per megawatt-day for most of its footprint, about nine times the clearing price a year ago. A contributing factor was a tweak in PJM’s modeling to better plan for extreme weather conditions. Skyrocketing capacity prices are a clear signal that the grid needs new power plants. High prices should encourage more companies to build new power plants, but they can take up to five years if built from scratch. But high prices also come with risk of political backlash and court challenges, said Steve Fleishman, equity analyst at Wolfe Research. The utilities that purchase electricity from these producers have already signaled that bills will rise: PPL Corp., whose service territory includes Pennsylvania, Kentucky and Virginia, said higher capacity prices would increase utility bills by $10 to $15 a month starting next year.
ACA Premiums Will Increase An Average Of 7% Next Year Driven By Weight Loss Drugs And Inflation
Premiums for Affordable Care Act (ACA) health plans will increase 7% on average across 324 insurers next year. This increase is on par with premium increases for 2024, according to Peterson-KFF's Health System Tracker. Proposed premium changes for 2025 range from a decrease of 14% to an increase of 51%, although most premium changes fall between 2% and 10% increases for 2025. Fifty of the 324 ACA insurers proposed decreasing premiums, while 85 insurers requested premium increases greater than 10%.
Insurers attributed the increased premiums to growth in health care prices, inflation and the increasing use of weight loss and other specialty drugs. In most years, medical inflation, the growth in cost and utilization of health care services and medication, outpaces general economic inflation, but through much of 2021 to 2023, inflation in the rest of the economy was so high that it was outpacing growth in medical prices. However, by mid-2024, general economic inflation was cooling, and medical inflation has picked up to the point it now exceeds the growth of non-medical prices.
Health and Wellness
COVID Map Update: Majority of US States Now Have 'Very High' Levels
A majority of states in the U.S. have detected "very high" levels of COVID-19 in their wastewater, according to data from the Centers for Disease Control and Prevention (CDC). As of August 8, these levels have been detected in 27 states, marking the first time that a majority of states have "very high" levels. The number of states with these levels of COVID-19 in their wastewater has surged in the last month. In the middle of July, just 7 states had "very high" levels detected.
The map shows viral activity levels of SARS-CoV-2, the virus responsible for COVID-19, measured by wastewater treatment plants nationwide. The Wastewater Viral Activity Levels are categorized as minimal, low, moderate, high or very high. Wastewater monitoring tracks levels of viruses or bacteria in sewage and is used as an early detection tool to inform communities if infection levels are rising. Several new COVID variants, including KP.3, KP.3.1.1 and KP.2.3, are in circulation and believed to be responsible for the majority of cases in the U.S. These new variants are often collectively referred to as FLiRT.
Read more and view the map at Newsweek
Election 2024
- Musk and Trump – The Interview
- Trump Revives X Account Activity Before Musk Interview - Axios
- Does China Prefer Harris or Trump? – Foreign Affairs
- High Taxes, Big Spending, Low Unemployment: Tim Walz’s Economic Record - WSJ
- Former Officials Warn Campaigns To ‘Buckle Up’ — More Hacks Are Likely - Politico
- Poll: Kamala Harris Closes Gap on Economy as Donald Trump Loses Advantage - Newsweek
- 5 Major Questions Facing Kamala Harris Now - Politico
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Back-To-School Shoppers Have Value At The Top Of Their Lists
Back-to-school shopping season is well underway, with a new school year already kicking off in parts of the country. This year, brands are tasked with coaxing more inflation-weary, and let’s say, value-oriented parents into spending. Back-to-school-shopping can be emotional, said Lupine Skelly, retail research leader at Deloitte, as no one wants to feel like they’re skimping on their kid’s education. “There’s also this sort of, like, nostalgia component, where parents want to have a good experience with their kids and send them off on a good foot,” Skelly said.
Lower- and middle-income families especially will be hunting for deals rather than allowing retailers to be dependent on brand loyalty, said Claire Tassin, an analyst with Morning Consult. “It’s just going to be enormously competitive for retailers of who’s actually earning those dollars,” Tassin said. “Consumers might say, ‘OK, I’m going to shop at a discount store when I might have previously shopped at a traditional big-box store.'”
US Court Blocks Transfer Of Spacex Lawsuit Against NLRB, For Now
SpaceX's challenge to the structure of the National Labor Relations Board will remain in Texas federal court for now, after a U.S. appeals court overturned a decision that would have transferred the rocket maker's lawsuit to California. A 5th U.S. Circuit Court of Appeals panel in a two-sentence order, opens new tab on Friday vacated a July decision by U.S. District Judge Rolando Olvera refusing to reconsider an earlier ruling transferring the case from his Brownsville, Texas, court to Los Angeles.
The lawsuit filed in January was among the first in a growing number of challenges to the NLRB's in-house enforcement proceedings, in which administrative law judges and then the five-member board appointed by the president hear unfair labor practice claims brought by the board's general counsel, who acts as a prosecutor. SpaceX says that administrative judges and board members are improperly insulated from at-will removal by the U.S. president and that NLRB proceedings violate the separation of powers and the company's right to a jury trial under the U.S. Constitution. The board is facing similar claims in cases involving Amazon.com, Starbucks, Trader Joe's, pipeline operator Energy Transfer, a Michigan hospital operator, a small Missouri bank, and a film producer, among others.
Missile Defense Agency To Pick Hypersonic Interceptor Vendor This Year
The Missile Defense Agency is planning to choose a single vendor to deliver an interceptor capable of taking out a hypersonic weapon in its glide phase of flight, Lt. Gen. Heath Collins, the agency’s director, said Aug. 8 at the Space and Missile Defense Symposium. “We will be making a down-select, resource-driven decision later this year,” Collins said. Raytheon Technologies and Northrop Grumman both won contracts to continue developing the Glide Phase Interceptor, or GPI, in June 2022. Each company was awarded a firm-fixed price modification to a previously awarded contract for rapid prototyping. Every modification is worth roughly $41.5 million, bringing the total contract value to around $61 million each.
Hypersonic weapons are difficult to counter, not because of their speed, Collins said, but because their ability to maneuver in flight. Some ballistic missiles are already able to fly at hypersonic speeds. The SM-6 missile currently in the inventory is capable of defeating hypersonic threats in the terminal phase of flight, but an interceptor capable of knocking out a hypersonic earlier in flight remains a high priority for the Defense Department.
Stellantis Laying Off 2,450 Plant Workers Due To Discontinuation Of Ram ‘Classic’ Pickup Truck
Automaker Stellantis plans to indefinitely lay off up to 2,450 U.S. factory workers later this year as it discontinues production of an older version of its Ram 1500 pickup truck in Michigan. The truck has been largely used as a low-cost pickup to sell to entry-level buyers and fleet customers since the automaker introduced a new generation of the Ram 1500 in 2018. It is produced alongside the Jeep Wagoneer and Grand Wagoneer at the Warren Truck Assembly Plant, located near Detroit.
The current Ram 1500, which was recently updated for the 2025 model year, is produced at a nearby plant. Operations at that facility will continue as planned. “With the introduction of the new Ram 1500, production of the Ram 1500 Classic at the Warren [Michigan] Truck Assembly Plant will come to an end later this year,” the company said in an emailed statement. The discontinuation of the Ram 1500 “Classic” vehicle is not unexpected, but the company has not announced a vehicle to replace the truck. That is concerning for local governments, workers and the United Auto Workers union, which represents the plant.
World’s First Chip-Based 3D Printer Is Smaller Than A Coin
Researchers from the Massachusetts Institute of Technology (MIT) and the University of Texas at Austin have teamed up to make big technological innovations on a small scale. The team has combined the fields of silicon photonics and photochemistry to create the first chip-based, non-mechanical 3D printer. This compact, portable, and inexpensive printer has the potential to change how we view the entire technology. The team outlines their latest innovation in a paper titled “Silicon-photonics-enabled chip-based 3D printer” that was published in Light: Science & Applications.
Here's how it works. The 3D printer consists of only a single millimeter-scale photonic chip. The device works by emitting reconfigurable beams of light into a well of resin. The resin then cures into a solid shape when it is hit by light. In the future, the team hopes to have a photonic chip located at the bottom of the resin well. The chip will then emit a hologram of visible light, allowing the device to rapidly cure an entire object in a single step.
GM Names New Chiefs For North America, Global Buick, GMC
General Motors Co. on Friday announced a series of leadership changes, including new heads for North America and of the Buick and GMC brands globally. Effective immediately, Rory Harvey — executive vice president and president of GM Global Markets that includes GM North America, GM International and GM China — takes over the day-to-day responsibilities of leading the automaker in North America and its global brands. He replaces Marissa West, president of North America, who is leaving the Detroit automaker after more than 20 years with the company.
On Sept. 1, Duncan Aldred, global vice president of Buick and GMC, will begin reporting to Harvey in the new role of vice president of commercial growth strategies and operations. That'll put him over a number of key areas that GM is looking to grow and that faces disruption, including sales, subscriptions, commercial vehicles and after-sale parts. Replacing Aldred will be Jaclyn McQuaid, president of GM Europe. Her successor will be announced at a later date.
Costs For Child Care, Rent And Car Insurance Are Up. Inflation Might Be Easing, But It Doesn’t Feel That Way.
Inflation is slowing. So why doesn’t it feel that way? After all, price increases for lots of items, like cable and shampoo, are indeed cooling. Prices for vehicles, gasoline, TVs and plane tickets have even dropped over the past year. And the overall pace of year-over-year inflation as measured by the Labor Department’s consumer-price index was down to 3% in its most recent reading—much, much lower than the recent high of 9.1% that it clocked two years ago.
But prices for many of the things that are hard to do without are still posting eye-watering increases. Rent and electricity bills are up 10% or more over the past two years, and car-insurance costs are up nearly 40%, according to the Labor Department’s index. Shoppers might be able to trade down from prime steak to cheaper cuts of meat at the supermarket, but they can’t really do the same thing with the water bill. Major companies say they are seeing consumers trim their spending on nonessential items. McDonald’s executives, for example, said recently that they will emphasize a $5 meal bundle and other deals, noting that inflation-weary customers were buying fewer items per visit or eating at home. Other types of spending are harder to avoid, and many of those items take up a large slice of households’ budgets.
World Elephant Day – Nat Geos 100 Years of Photos
Since the first elephant story was published in National Geographic in 1906, the magazine has taken different angles on covering the pachyderms, from hunter’s quarry to beasts of burden to species that need saving. As time went on, technology also advanced, helping photographers capture more intimate moments.
Looking back on a century of the magazine’s reporting on pachyderms, Julia Andrews, an editor for the National Geographic Image Collection, says there are “definite trends that would shift from decade to decade.”
Read more and see the photos at National Geographic
Rare, Severe Geomagnetic Storm Hits Earth
Geomagnetic storm conditions observed over the weekend strengthened Monday morning, creating a “major disturbance in Earth’s magnetic field,” the Space Weather Prediction Center said. The storm reached a G4 level in strength — the second-highest on the scale, classified as “severe” — just before 11 a.m. Eastern Time. The geomagnetic storm conditions may continue into the evening as solar flaring continues, forecasters said.
At the G4 level, impacts on our infrastructure are possible. When coronal mass ejections (which are basically explosions of plasma and magnetic material from the sun) reach Earth, they carry with them their own magnetic field, explained Robert Steenburgh, a space scientist at SWPC. “When you superimpose that over long conductors, things like pipelines, and railroad tracks and power lines, it can induce current — and that’s electrical current that’s not supposed to be there,” he said. The interference could cause issues with the power grid because of voltage control problems. There also could be issues with radio communications and satellite operations, and GPS navigation may be less accurate or spotty.