Member Briefing August 15, 2024
CPI = 2.9%. Inflation Fell More Than Expected. Core Climbed to 3.2%
The consumer-price index rose 2.9% from a year earlier, the Labor Department said Wednesday. Core prices, which exclude volatile food and energy items, climbed 3.2% over the previous 12 months and 0.2% since June. The report likely seals the case for the Federal Reserve to begin cutting interest rates at its next meeting, Sept. 17-18. The Fed’s favored inflation gauge, which is released later each month, has been running closer to the central bank’s 2% target, and Fed Chair Jerome Powell has already signaled that a rate cut is probable in September.
Housing is the one major impediment keeping inflation elevated above the Fed’s target right now. Shelter is largest component of the CPI, and therefore has an outsized effect on inflation readings. The shelter index has risen 5.1% since July 2023, accounting for more than 70% of the annual increase in the “core” CPI, the BLS said Wednesday. Motor vehicle insurance, medical care, personal care and recreation are some other indexes with “notable” increases over the last year, according to the BLS. Prices in those categories are up 18.6%, 3.2%, 3.4% and 1.4%, respectively. Overall annual grocery inflation was 1.1% in July, down from an average 11.4% in 2022, which was the highest since 1979.
Eurozone Growth Unchanged. Ireland Grows, But Germany Still Weak
The second estimate for the quarter-on-quarter Eurozone gross domestic product (GDP) growth rate for the second quarter of 2024 came in at 0.3%. The figure was the same as the previous quarter, as well as in line with forecasts.
- France grew at 0.3% this quarter, the same as the previous quarter. Although the country could potentially see an economic boost from the Olympics in the third quarter of the year, this is likely to be capped somewhat by ongoing political uncertainty.
- Spain's GDP growth also came in at 0.8% for the second quarter of the year, which was the same as the previous quarter. Lithuania also grew at the same pace as Q1 2024 this quarter, at 0.9%.
- Italy saw a slight dip in growth, at 0.2% in Q2 2024, down from 0.3% in the previous quarter. ING estimated that this weakness is likely caused by a decrease in net exports and industrial weakness.
- Ireland saw a considerable bump in growth this quarter, with GDP coming in at 1.2%, up from 0.7% in the first quarter of the year. Finland also recorded a small hike at 0.4% versus 0.2%
- However, the eurozone's largest economy, Germany, saw a surprise contraction of 0.1%. This was compared to a 0.2% growth in the first quarter of the year.
- Belgium's GDP dropped slightly to 0.2%, down from 0.3%, whereas Portugal saw a more marked fall to 0.1% this quarter, from 0.8% in the previous quarter. Other countries which saw a small drop in growth this quarter included Cyprus, which recorded a GDP growth rate of 0.7%, down from 1% and Slovakia, coming in at 0.4%, down from 0.6%.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Hamas To Stay Out Of Gaza Truce Talks, Iran Considers Israel Attack - Reuters
- US, Israeli Officials To Attend Qatar Peace Talks Without Hamas – France 24
- U.S. Plans To Sell $20 Billion In Weapons To Israel Over Several Years – Washington Post
- In Israel, Support Grows for Offensive Against Hezbollah - WSJ
- High-Wire Diplomacy On Possible Iran Retaliation In The Israel-Hamas War Draws In World - VOA
- Trafigura Says Red Sea Tanker Diversions Will Cause 4.5% Rise In Emissions This Year – Trade Winds News
- Palestinian Authority Leader’s Visit Highlights Turkey’s Unique Role in Gaza Conflict - NYT
- 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
- Ukraine Pounds Russia With Drones And Says It Is Advancing Deeper - Reuters
- Russia Withdraws Some Forces From Ukraine in Response to Kursk Invasion - WSJ
- Ukraine Hammers Russian Airbases As Kyiv’s Incursion Triggers Panic - Politico
- Russia’s Belgorod Region Declares State Of Emergency - VOA
- Russia Has Mothballed Peace Talks With Ukraine Over Kursk Incursion, Moscow Says – Euro News
- Ukraine In Maps: Tracking The War With Russia - BBC
- Vladimir Putin Spends Big—And Sends Russia’s Economy Soaring – The Economist
- 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
- Taliban Celebrates Three Years Since Returning To Power In Afghanistan – France 24
- Japan's Prime Minister Kishida To Resign, Paving Way For New Leader - Reuters
- Japan's LDP Heavyweights Set To Spar For PM Post As Kishida Steps Aside – Nikkei Asia
- Shipping Operations In Bangladesh Are Slowly Recovering From The Violent Upheaval In The Country. - WSJ
- West Hits Pause On Fresh Measures Against Venezuela's Maduro - Reuters
- UN Slams Venezuela Repression And Lack Of Transparency - BBC
- U.K. Services Inflation Eases, Keeping Door Open for More Rate Cuts - WSJ
- Hurricane Ernesto Could Form Tonight: Where Forecasters Say Next Hurricane Will Hit - Forbes
- Who's To Blame For Britain's Far-Right Riots? - VOA
- Thai Constitutional Court Removes PM Srettha From Office – Nikkei Asia
Policy and Politics
Biden Admin To Spend Billions To Blunt Spike In Medicare Drug Premiums
One of President Joe Biden’s signature domestic policies is set to cause a significant spike in Medicare premiums for millions of Americans just ahead of the November election. Now, his administration is preparing to dole out billions of dollars to private insurance companies to blunt the impact of the increase. The jump in premiums is a consequence of efforts to reduce what older Americans pay for prescription drugs, part of the 2022 Inflation Reduction Act. Insurance companies are on the hook for what patients used to pay and are raising drug plan premiums to make up the difference.
The new premiums will be released in mid-to-late September. Efforts to alleviate the increase — by giving health insurers an extra $15 per member a month — have Republicans accusing the administration of attempting to buy a reprieve for a reliable voting bloc. Though the Centers for Medicare and Medicaid Services has the authority to test changes to Medicare payments and reimbursements, and noted it has done similar projects in the past, Republicans argue that this latest effort has no clear statutory basis or credible research goals. Top Republicans in Congress have asked the Government Accountability Office to investigate the program.
Kids Online Safety Bill That Had Broad Senate Support Hits Roadblock In House
A bill intended to boost privacy and safety for children online that got broad bipartisan support in the Senate is stalling in the House amid resistance from leadership, putting a spotlight on Republican divisions on tech policy. Supporters of the legislation are outwardly optimistic about advancing it before the end of the year, hoping the momentum from the Senate passage will prove the House resistance to be a speed bump rather than a brick wall.
But the path forward is murky. A House leadership aide told The Hill that concerns from across the House GOP about the Kids Online Safety Act (KOSA) suggest it cannot be brought in its current form. “It could lead to censorship of conservative speech, such as pro-life views, is almost certainly unconstitutional, and grants sweeping new authority to unelected bureaucrats at the [Federal Trade Commission],” the aide said. “It is a little bit of a pleasant surprise that the questions about how the bill actually works have penetrated the narrative of needing to get something done,” said Josh Withrow, resident fellow of technology and innovation at the free-market R Street Institute, which has been critical of the legislation.
New Yorks ‘Freelance Isn’t Free’ Act Goes into Effect 8/28/2024
New Yorkers utilizing freelance workers or independent contractors for work totaling $800 or more will soon need to comply with New York’s Freelance Isn’t Free Act (“FIFA”). The Act, which was signed into law by Governor Hochul in November 2023, is set to take effect on August 28, 2024. The statute provides new protections and remedies for “freelance workers” (i.e., “independent contractors,” or those whose compensation is typically reported on an IRS Form 1099). FIFA applies to any service arrangement worth $800 or more, whether under a single contract or multiple contracts over a 120-day period. The law expands and builds upon a similar local law New York City enacted in 2016.
The statute provides specific requirements regarding contracts, payment, record-keeping and anti-discrimination. Given the breadth of the law and the increasing frequency with which businesses are utilizing freelancers, the implications for compliance are significant. FIFA defines a “freelance worker” as “any natural person or organization composed of no more than one natural person, whether or not incorporated or employing a trade name, that is hired or retained as an independent contractor by a hiring party to provide services” in exchange for compensation. The law does provide exceptions for attorneys, licensed medical professionals, sales representatives, and construction contractors.
Health and Wellness
Many U.S. Workers Avoid Critical, Preventative Health Screenings Due To Logistics
A new survey by Aflac reminds Americans of the need to prioritize personal health care all 12 months of the year. The survey, which questioned 2,000 employed U.S. adults, found that three out of five Americans admitted to avoiding an important health screening over the last year – up 20% from 2023. The rate was even higher for millennials, 84% of whom said they had delayed a health or wellness screening in the past year. According to the survey, millennials avoided tests such as pap smears, STD screenings, full body skin cancer exams and blood tests at much higher rates than other generations. Logistics was the top reason cited for skipping appointments – including conflicts with work hours and difficulty taking time off – according to 50% of all Americans, 58% of millennials and 53% of Gen Z.
With all the barriers to accessing preventative health care, many U.S. employees end up taking a reactive, rather than proactive, approach to their health. The survey found that one in two Americans – including 70% of Gen Z and 66% of millennials – say they use urgent or emergency care as their primary source for health care.
Election 2024
- Most Are Self Made - Here Are Trump’s Top Billionaire Donors - Forbes
- Kamala Harris’s Economic Team and Agenda Start to Take Shape - WSJ
- Democrats Warn Harris Must Get Ready For Trump Onslaught – The Hill
- Ilhan Omar Fends Off Challengers To Win Primary After AIPAC Stays Out Of The Race - Politico
- What To Know About The Democratic National Convention: Obama, Clintons, Biden Will Speak - Forbes
- RFK Jr. Campaign Plans To Appeal N.Y. Supreme Court Judge's Ruling Disqualifying Him From The State Ballot – Spectrum
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
Boeing Production Shows Continued Improvement
Boeing delivered 43 airplanes in July, a second straight relatively solid month for the jet maker as it works to ramp up production amid supply-chain glitches and in the wake of January's Alaska Airlines door-plug blowout. That total included 32 737 jets, three fewer than Boeing delivered in June but higher than earlier in the year when it was delivering between 15 and 25 narrowbody planes a month. Deliveries included six 787s, four 767s and one 777 freighter. Boeing's backlog is now 5,477, down from 5,506 at the end of June.
Meanwhile Boeing analysts at rating agencies Moody's and S&P told Reuters Boeing will likely miss a key 737 MAX jet production target in 2024,, saying that the company faces challenges as it ramps up its strongest-selling plane. The U.S. aerospace giant's goal is to produce 38 MAX jets a month by the end of 2024, up from 25 jets a month in July. But Moody's and S&P said that goal may not be reached until 2025 due to risks like possible labor disruptions at the planemaker's facilities in the Seattle area. Boeing, however, faces no immediate risk of a credit downgrade that would drop its rating to junk levels, the two rating agencies said on Friday.
Mars To Buy Cheez-It, Pringles Maker Kellanova In Mega $36 Billion Deal
Family-owned candy giant Mars, whose brands include M&M's and Snickers, said on Wednesday it would buy Cheez-It and Pringles maker Kellanova in a nearly $36 billion deal, making it the biggest buyout in the packaged food industry. Mars will pay $83.50 per share in an all-cash deal for Kellanova, representing about 33% premium to its closing price on Aug. 2 before Reuters first reported that Mars was exploring a deal for the Pringles maker.
The deal comes as sales growth at U.S. packaged food companies, including Kraft Heinz , Mondelez and Hershey, slows due to budget-strapped customers opting cheaper, private-labels instead of pricier branded items. The deal dwarfs Mars' $23 billion takeover of Wrigley in 2008 and would bring under one roof popular consumer brands, including Mars' Twix, Bounty and Milky Way chocolates as well as Kellanova's snacks portfolio of Pop-Tarts, Rice Krispies Treats and Eggo frozen waffles.
Canadian National Starts Phased Shutdown of Rail Network in Canada as Labor Talks Stall
Canadian National Railway has taken the first step in a phased shutdown of its rail network in Canada with a halt to the movement of hazardous cargo, based on what it says is a lack of movement in talks with unionized workers. The rail operator said it would have no choice but to push ahead with a lockout of employees as of one minute past midnight Aug. 22 if there were no meaningful progress in negotiations with Teamsters Canada Rail Conference or arbitration. Canadian National said it started an embargo of certain hazardous goods, including chlorine used in household cleaners and to purify drinking water, and ammonia used as fertilizer. Such goods are carried daily but can’t be left unsupervised out on the railroad in the event of a work stoppage.
Canada’s labor-relations board late last week opened the door to a strike or lockout after it determined work stoppages at Canadian National and Canadian Pacific Kansas City wouldn’t pose an immediate or serious danger to safety or public health. This effectively put the rail companies and the union back to where they were in early May, when the federal government averted disruption by calling on the board to rule on whether certain goods must be transported during a strike or lockout.
Citrin Cooperman’s Releases Manufacturing And Distribution Survey Report
Peter Katz of Westfair Communications talks with Anthony Harrypersad, a partner at Council of Industry Associate member Citrin Cooperman who provides audit and business consulting service to many manufacturing clients. They dive into Citrin Cooperman’s 2024 Manufacturing and Distribution Survey Report, which gathered information from key business executives on various operational issues and keys to success. Among the report’s key findings:
- 48% identify the high cost of capital and interest rates as the biggest challenge for 2024.
- 35% note stabilizing their supply chain is the key to future growth.
- 68% denote supply chain transparency from their ERP platform is needed to be competitive.
- 36% report needing to upgrade equipment and fixed assets.
Get a copy of the report at Citrin Cooperman
Dockworkers Along The East Coast Are Threatening To Strike In October
A labor strike that would halt cargo-handling operations at ports from Houston to Boston just weeks before the US presidential election is looking increasingly likely. Dueling statements from the United States Maritime Alliance, known as USMX, and the International Longshoremen’s Association on Friday indicate the two sides are still pretty far apart. USMX, which represents terminal operators and ocean carriers, said it remains ready to continue bargaining, and that the latest offer to dockworkers includes “industry-leading wage increases” and retains the current contract’s language on automation.
Also on Friday, the ILA’s Executive Vice President Dennis Daggett, accused shipping CEOs of “taking home bonuses in the billions” and ocean carriers of raking in profits by “raising rates on their customers due to global conflicts or natural disruptions. The ILA called off high-level wage talks in June over truck gate technology in use at a Port of Mobile terminal that the union said was in violation of the automation agreement. The union is also demanding significant wage increases to make up for inflation and a share of the extraordinary profits won by ocean liners during the pandemic.
UAW Files Federal Labor Charges Against Trump, Musk for Threatening Workers
The United Auto Workers filed federal labor charges against former President Donald Trump and Tesla TSLA 5.13%increase; green up pointing triangle CEO Elon Musk, alleging they attempted to intimidate workers during their conversation on Musk’s social-media platform X. The UAW, one of the country’s largest unions, seized on remarks Trump made Monday night in an interview with Musk, in which the Republican presidential nominee commented on how an employer should handle striking workers. The UAW, which has endorsed Kamala Harris, the presidential nominee for the Democrats, has been eager to blunt the former president’s appeal to working-class voters by painting him as a friend of the wealthy.
The charges filed Tuesday by the UAW allege both men threatened workers who participate in protected labor activity, including walkouts. The UAW highlighted Trump’s comment in a press release describing the charges but didn’t reference any statements made by Musk during the interview. Under federal law, employees conducting lawful strikes for economic reasons, such as higher wages, can’t be discharged by their employers. They can be replaced under certain circumstances, according to the National Labor Relations Board. The union’s charges against Trump and Musk are “amorphous” and it isn’t clear what kind of practical impact they might have on the two men, said Michael Duff, a former NLRB investigator who teaches labor law at St. Louis University. “Its principal value is political,” Duff said.
The Tech Job Paying Six Figures, No College Degree Required
To get one of the hottest jobs in tech, Deborah Martinez Castellanos didn’t need a bachelor’s degree. She needed a flair with a screwdriver—and a high tolerance for artificial lighting. The 24-year-old works the night shift at a giant, mostly windowless data center in Ashburn, Va., part of a fast-growing legion of workers who keep the nation’s internet running. From 6 p.m. to 6 a.m., she monitors screens that track the temperature and humidity of halls storing thousands of servers.
Demand for data-center technicians like Martinez Castellanos is booming, as companies such as Microsoft and Google pour billions into data centers to power everything from AI chatbots to the trillions of photos and emails stored in the cloud. They embody the rise of a class of careers that defy traditional blue- and white-collar distinctions: They are deeply tech-infused, often requiring fluency with programming and computerized systems, plus manual dexterity. Since January 2020, job ads seeking such workers have risen 18%, while overall tech job postings have fallen by more than half.
U.S. Dept. of Energy Highlights 'Major Gaps' in Hydropower Supply Chain
The U.S. Department of Energy (DOE) has identified five "major gaps" in the country's push for a domestic hydropower supply chain. The DOE's report found that because hydropower systems tend to last 30-50 years, it can be difficult to plan for replacement parts over the course of decades. It also said that for some system components, there are only one or two domestic suppliers, while in some cases, there aren't any. Other obstacles include procurement limits from existing federal regulations, foreign competitors undercutting the domestic market, and a shortage of skilled hydropower workers in manufacturing.
To address those gaps, the DOE proposes a database to track and identify domestic hydropower suppliers, in addition to tools that highlight power unit specifications such as size and turbine type. To help expand the availability of components, the agency recommended that the hydropower industry work with stakeholders in other sectors such as wind power, ship building and defense to identify common materials and parts they each use, and develop a "steady and predictable" demand signal so that suppliers know when certain components are needed across industries.
Read more at Supply Chain Brain
Blue Origin’s New Glenn Maiden Flight Approaches As Hardware Undergoes Testing
With flight hardware being tested, recovery rehearsals underway, and production facilities growing, Blue Origin is becoming a hive of more visible activity as the company rapidly approaches the first flight of its orbital class rocket, New Glenn. Over the past few months, Blue Origin has performed many important tests of New Glenn hardware at Launch Complex 36 (LC-36). These are all important for gathering data before the rocket’s first flight.
The maiden launch of New Glenn will not only be a test flight for the rocket, but it will also be carrying NASA’s ESCAPADE mission to Mars. Awarded to Blue Origin in February 2023, ESCAPADE is a Class D mission where twin spacecraft will study solar wind energy transfer through Mars’ magnetosphere. The spacecraft built by Rocket Lab is expected to arrive at the Space Coast soon, with the launch currently planned for no earlier than late September.
Read more at NASA Space Flight