Member Briefing August 15, 2022

Posted By: Harold King Daily Briefing ,

House Passes Inflation Reduction Act, Sends it to Biden

The House on Friday passed the Inflation Reduction Act along party lines, rounding out a series of recent wins for President Joe Biden.  The House voted 220-207, with no Republicans joining Democrats in supporting the act. It now heads to Biden, who is expected to sign it into law next week after months of negotiations between moderate and progressive Democrats, who ultimately reached an agreement late last month.

“This legislation is historic, it’s transformative and really a cause for celebration,” House Speaker Nancy Pelosi, D-Calif., said in a news conference ahead of the vote.  House Republicans criticized the Inflation Reduction Act as overreaching and said the billions of dollars in spending wouldn’t solve inflation. “Today the majority jams through another spending spree,” House Minority leader Kevin McCarthy said in his nearly 50-minute speech on the floor ahead of the vote. “I believe the largest tone-deaf bill we’ve seen in this chamber in 230 years.


War in Ukraine Headlines


Manufacturing Labor Productivity Rose in Q2

Manufacturing labor productivity rose 5.5% at the annual rate in Q2, coming back strongly after three straight months of decline, according to the U.S. Bureau of Labor Statistics. Sector output increased 4.3%, building on the 3.9% gain in Q1,  while the number of hours worked declined 1.1%, but hourly compensation increased 4.9%. This quarter’s data reflect “resilient growth in demand for goods despite ongoing challenges with supply chain, workforce, inflationary and geopolitical issues,” said NAM Chief Economist Chad Moutray.

In Durable Goods:

  • labor productivity for durable goods increased 6.1% in Q2, and output rose 6.0%.
  • The number of hours worked declined 0.1%, but hourly compensation rose 5.3%.
  • Unit labor costs decreased 0.7%.

In nondurable goods:

  • Labor productivity for nondurable goods increased 5.4%, and output increased 2.6%.
  • The number of hours worked dipped 2.6%, and hourly compensation increased 4.0%.
  • Unit labor costs decreased 1.3%.

Read more at the BLS


U.S. Chamber Endorses Marc Molinaro for New York’s 19th Congressional District – Special Election is August 23rd.

The U.S. Chamber of Commerce yesterday announced its endorsement of Marc Molinaro (R) to represent New York’s Nineteenth Congressional District. The Chamber endorses pro-business candidates for federal office who will vigorously support public policy that will advance economic growth, support jobs, and promote fiscal responsibility.

“Marc Molinaro has a proven record of leading and delivering for residents of the Hudson Valley,” said U.S. Chamber of Commerce Eastern Region Director Nick Vaugh. “Marc has demonstrated a commitment to supporting free enterprise and the American business community to improve New York and our nation. He will lead the charge for pro-growth solutions in Congress, and that has earned him the support of the U.S. Chamber. We are proud to endorse Marc Molinaro and look forward to partnering with him in the next Congress.”  

Read more at the US Chamber of Commerce


U.S. COVID – CDC Ends Recommendations for Social Distancing and Quarantine for Covid-19 Control, no Longer Recommends Test-to-Stay in Schools

The US Centers for Disease Control and Prevention says the nation should move away from restrictive measures such as quarantines and social distancing and focus on reducing severe disease from Covid-19. In new guidelines released Thursday, the agency no longer recommends staying at least 6 feet away from other people to reduce the risk of exposure — a shift from guidance that had been in place since the early days of the pandemic. The new guidance also does not advise quarantining people who’ve been exposed to Covid-19 but are not infected.

The shift is a sign of how much has changed since the beginning of the pandemic more than two years ago. Nearly the entire US population has at least some immunity through vaccination, previous infection or, in some cases, both. “The current conditions of this pandemic are very different from those of the last two years,” Greta Massetti, who leads the Field Epidemiology and Prevention Branch at the CDC, said Thursday.

Read more at CNN


NYS COVID Update 

The Governor updated COVID data through August 12. 

Deaths:

  • Daily: 20
  • Total Reported to CDC: 73,214

Hospitalizations:

  • Patients Currently in Hospital statewide: 2,447
  • Patients Currently in ICU Statewide: 239

7 Day Average Positivity Rate  – Cases per 100K population

  • Statewide 7.08%    –   27.54 positive cases per 100,00 population
  • Mid-Hudson: 5.71%   –   26.88 positive cases per 100,00 population

Useful Websites:


COVID Cases Drop 9% Globally Last Week, Deaths Stable

New coronavirus cases fell 9% globally last week while deaths remained stable, according to the latest weekly assessment of the pandemic released Wednesday by the World Health Organization. The U.N. health agency said there were 6.5 million cases reported last week with more than 14,000 deaths. WHO said the number of new cases fell 35% in Europe but increased about 20% in the Western Pacific and 5% in Africa. Deaths rose 44% in the Western Pacific and 26% in the Middle East, while falling about a quarter in Europe.

WHO has previously warned that recent surveillance of COVID-19 has been severely compromised by countries reducing their testing, reporting and other coronavirus alert systems. The agency has said COVID-19 figures are likely being significantly underestimated, which could make it more difficult to spot any worrisome new variants.

Read more at the AP


U.S. Jobless Claims Rise Slightly to New 2022 High

Initial jobless claims, a proxy for layoffs, increased to a seasonally adjusted 262,000 last week from a revised 248,000 the previous week, the Labor Department said Thursday. The weekly number has been on an upward trend since reaching a 50-year low in March.

Last week’s total was slightly above the prior 2022 peak set in July of 261,000 and was above the 2019 weekly average of 218,000. The four-week moving average for initial claims, which smooths out weekly volatility, rose by 4,500 to 252,000.  Continuing claims, a proxy for the number of people receiving government unemployment payments, increased by 8,000 to 1.43 million in the week ended July 30. Continuing claims are reported with a one-week lag.

Read more at the WSJ


New York’s Climate and Energy Goals Would Get Jolt With Federal “Inflation Reduction Act”

Senate Majority Leader Chuck Schumer told THE CITY in an interview that the legislation could be a boon for New York’s Climate Leadership and Community Protection Act, which was signed into law three years ago. The state calls the CLCPA one of “the most ambitious climate laws in the world.” It sets a goal for a carbon neutral economy across the state by 2050, mainly through the expanded use of clean energy sources and extensive electrification. Reaching the CLCPA’s target will cost roughly $300 billion, according to estimates by the New York State Energy Research and Development Authority, or NYSERDA, though other estimates put that cost at more than twice that amount. 

The IRA includes a slew of tax credits, grants, rebates and financing opportunities to encourage individuals, businesses and local governments to transition to greener energy and greater efficiency. “States that are prepared, that are well positioned, are going to be able to take advantage of this bill better than others,” said Justin Gundlach, a senior attorney at NYU School of Law’s Institute for Policy Integrity. “New York is very, very well positioned to do that.”


Yellen Says IRS Will Not to Use New Funding to Increase Middle-Class Audits 

Treasury Secretary Janet Yellen directed IRS officials not to use new funding secured for the agency in Democrats’ Inflation Reduction Act to increase audits on households making under $400,000 annually. In a letter to IRS Commissioner Charles Rettig, Yellen reaffirmed a commitment “that audit rates will not rise relative to recent years for households making under $400,000 annually,” which she described as a “guiding precept of the planning” for the agency. 

  • Democrats set their sights  last week on approving roughly $80 billion in funding to strengthen the office, which has seen its funding and staffing decline for roughly a decade.
  • The message is in response to warnings from GOP lawmakers that the agency would hire tens of thousands more IRS agents and increase audits that would impact those below the $400,000 threshold.
  • In her letter, Yellen specifically directed that no additional resources, including any new personnel or auditors that are hired as part of the proposed funding, should be “used to increase the share of small business or households below the $400,000 threshold that are audited relative to historical levels.”
  • Yellen also stressed the IRS’s “enforcement resources will focus on high-end noncompliance,” as Democrats say the proposed funding is aimed at going after wealthy tax cheats.

Read more at The Hill


UK Economy Shrinks as Outlook on Recession Darkens

The economy contracted by 0.1% in the second quarter of the year, the Office for National Statistics (ONS) said.
This was partly due to Covid schemes like Test and Trace ending, retail sales falling and the Queen’s Platinum Jubilee bank holiday in June, it said. The Bank of England has forecast the UK will fall into recession towards the end of the year as energy costs soar.

Despite shrinking between April and June, the UK economy avoided recession because gross domestic product (GDP) grew by 0.8% in the first three months of this year. Up until now most economists – and the Bank of England – did not expect a recession to begin until the final three months of 2022. Many expected a small rebound in economic growth between July and September. But the latest figures from the ONS have prompted some experts to warn that recession could come sooner than they had initially thought.

Read more at the BBC


Crisis on the Rhine

Weeks of dry weather have weighed on Europe’s major waterway, with shallow depths preventing barges from loading their full volumes. The effects could ripple through the continent for months, just as the region is on the brink of recession from the war in Ukraine and untamed inflation. Economists estimate the Rhine disruption could knock half a percentage point off Germany’s growth this year, adding to the significant price pressures seen across many Western European countries.

“We’re expecting this situation to continue towards the end of the year,” noted Toril Bosoni, head of the IEA’s oil market division, adding that conditions could be more precarious for landlocked countries in central and eastern Europe that normally get energy deliveries via the Rhine.   Chemical maker BASF hasn’t ruled out production cuts as it placed orders for shallow-water barges and uses more rail to transport goods. Crisis teams at Thyssenkrupp are also meeting daily as the steelmaker uses ships with lower drafts to keep up supplies.

Read more at Seeking Alpha


At Ford, Quality Is Now Problem 1

Josh Halliburton  joined Ford F Motor Co. in January to help improve its shaky quality record. Within months it was clear how big a challenge he faced. The 46-year-old executive comes from auto research firm J.D. Power, where he advised companies on production quality, and his strategy at Ford is to improve how the company identifies problems. He is installing video cameras to catch flaws while products are being built, adding more monitoring of social media to find complaints flagged by customers and pressing workers to raise their hands early about design and production challenges.

The task of this new quality czar is central to the company’s larger ambition to challenge Tesla Inc. and other rivals for electric-vehicle superiority in the years ahead. The billions of dollars Ford spends each year on warranty repairs and recalls make it more difficult to reach its goal of shaving $3 billion in annual costs by 2026 and free up spending for new electric-vehicle models, battery plants and manufacturing plants. Last year Ford set aside more than $4 billion for warranty costs, up 76% from five years earlier. Its total warranty expenses increased about 17% from 2016 to 2021.

Read more at the WSJ


Filling Manufacturing Jobs with Workers Who are Autistic

With the right training, those on the autism spectrum can find jobs in manufacturing. With that in mind, the Uniquely Abled Academy is offering free training in Meadville, Pennsylvania. The program is being offered to those in the community who are level 1 autism disorder (often called Asperger’s syndrome). “This is a population that is underserved,” said Robert Zaruta, Erie-based Northwest Industrial Resource Center. “And the population is greater than the number of academy positions available this fall — that’s why we want to run multiple classes each year and expand the program.”

In the free, 16-week program participants will receive 405 hours of training as computer-numerical control operators. To ensure success students will also be taught soft skills around the areas of communication and workplace culture. And they are paired with a job coach who helps them transition to their new career. Upon graduation students will be placed in precision machining jobs.

Read more at the Uniquely Abled Project


U.S. Housing Affordability in June Was the Worst Since 1989

The National Association of Realtors’ housing-affordability index, which factors in family incomes, mortgage rates and the sales price for existing single-family homes, fell to 98.5 in June, the association said Friday. That marked the lowest level since June 1989, when the index stood at 98.3. Conditions have eased a bit in recent weeks. Mortgage rates hit a 13-year high in June but have ticked lower since. Some sidelined buyers re-entered the market in July and August, according to real-estate agents.

Existing-home sales have declined for five straight months. Worsening affordability has been a big factor, pricing more buyers out of the market. But even with fewer transactions, prices continue to rise strongly from a year ago because the number of homes for sale around the U.S. remains below historical levels.

Read more at the WSJ


Boeing Delivers First Dreamliner 787 in More Than a Year

Boeing Co’s (BA.N) 787 Dreamliner has returned to the world market for newly delivered aircraft at a time when demand for wide-body jetliners is finally stirring to life after a prolonged slump. The U.S. planemaker delivered its first Dreamliner since May 2021 on Wednesday, in a significant milestone for the manufacturer after production problems with its wide-body jet. read more

Boeing must now wade through painstaking regulatory checks to get further 787s delivered while chipping away at a backlog of about 120 stored planes outside its plants. International traffic has accelerated since the start of the year, though the International Air Transport Association says it has a long way to run before regaining pre-pandemic levels.

Read more at Reuters


Outgoing Whole Foods CEO Says Young People ‘Don’t Seem Like They Want to Work’ and Thinks ‘Socialists are Taking Over’

If you ask Whole Foods’ outgoing CEO about socialism and young workers, he says there’s a revolution happening, and it’s not with pitchforks but with words. Whole Foods cofounder John Mackey has a history of complex views that he’s shared over time. What Mackey likes: a vegan diet and free-market and libertarian ideals. What he doesn’t like as much: processed and frozen foods, unions, and being silenced. 

An Ayn Rand lover who once cut his own salary to $1, Mackey’s dichotomy earned him the title of a “right-wing hippie” in a 2010 New Yorker profile. As a longtime fan of capitalism, he continued his crusade against socialism in the latest podcast from Reason, the long-running libertarian magazine. “Socialists are taking over,” he said on the podcast. “They’re marching through the institutions. They’re taking everything over. They’re taking over education. It looks like they’ve taken over a lot of corporations. It looks like they’ve taken over the military, and it’s just continuing.” 

Read more at Fortune