Member Briefing August 20, 2024
U.S. Import Prices Rose In July
U.S. import prices rose 0.1% in July, following a flat reading in June and a slight 0.1% drop in May. This is the first time since April that import prices have seen a change greater than 0.1%. Over the past year, import prices have climbed 1.6%, marking the largest annual increase since December 2022.
- Fuel import prices increased 0.5% in July, bouncing back from a 1.7% decline in June, driven by higher petroleum and natural gas prices. Over the last year, fuel import prices have risen 6.5%, with petroleum prices up 8.2%. In contrast, natural gas prices, despite a 4.7% rise in July, have dropped 40.6% over the past 12 months.
- Nonfuel import prices also inched up 0.1% in July, supported by higher costs for foods, feeds, beverages, automotive vehicles and capital goods. However, lower prices for consumer goods and nonfuel industrial supplies and materials partially offset this increase. Notably, the price index for import foods, feeds and beverages grew 1.4% in July, driven by a significant rise in vegetable prices. In contrast, nonfuel industrial supplies and materials saw a slight decrease of 0.1%, primarily due to a drop in chemical prices.
- U.S. export prices rose 0.7% in July, bouncing back from declines of 0.3% in June and 0.7% in May. This increase was mainly due to higher nonagricultural export prices, which outweighed a drop in agricultural export prices. Over the past year, export prices saw a 1.4% rise, the largest annual gain since January 2023.
- Prices for nonagricultural industrial supplies and materials rose 2.3% in July, led by a 4.5% increase in fuel prices. Finished goods export prices mostly increased, with automotive vehicle prices up 0.3% and consumer goods prices rising 0.1%, while capital goods prices remained unchanged for the second month in a row.
Read more at The Bureau of Labor Statistics
Cutting Tool Demand Growing Weaker
Cutting tool purchases fell -2.9% in value from May to June 2024, totaling $208.1 million in the latest Cutting Tool Market Report issued by AMT - the Assn. for Manufacturing Technology and the U.S. Cutting Tool Institute. The June figure is also -4.2% lower than the June 2023 result, and it brings the January-June 2024 value for cutting tool purchases to $1.27 billion – which is still 2.6% higher than last year’s six-month total. Manufacturers’ demand for cutting tools closely matches U.S. durable goods shipments as a measure of overall industrial activity, and according to an analyst cited by AMT the remainder of 2024 does not appear to result in increased manufacturing activity.
“Cutting tool demand is likely to show further softness in the second half of 2024, driven by widespread inventory liquidation in many industries,” explained Eli Lustgarten, president of ESL Consultants. “While there are pockets of strength in markets such as government-financed infrastructure and data centers, the farm equipment sector will show dramatically lower production in the second half of 2024. Energy, construction, and mining sector output will decline. “Heightened uncertainty also exists in automotive and commercial aerospace markets,” the expert noted.
Read more at American Machinist
U.S. Consumer Sentiment Increases Slightly in August
Consumer sentiment was essentially unchanged for the fourth consecutive month, inching up 1.4 index points. With election developments dominating headlines this month, sentiment for Democrats climbed 6% in the wake of Harris replacing Biden as the Democratic nominee for president. For Republicans, sentiment moved in the opposite direction, falling 5% this month. Sentiment of Independents, who remain in the middle, rose 3%. The survey shows that 41% of consumers believe that Harris is the better candidate for the economy, while 38% chose Trump. Overall, expectations strengthened for both personal finances and the five-year economic outlook, which reached its highest reading in four months.
Year-ahead inflation expectations came in at 2.9% for the second straight month. These expectations ranged between 2.3 to 3.0% in the two years prior to the pandemic. Long-run inflation expectations came in at 3.0%, unchanged from that last five months. These expectations remain somewhat elevated relative to the 2.2-2.6% range seen in the two years pre-pandemic.
Read more at The University of Michigan
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Hamas, Islamic Jihad Claim Responsibility For Bomb Blast In Tel Aviv - Reuters
- Israeli Airstrike Kills Two Hamas Militants Amid Rising Conflict - Newsweek
- Blinken Says Israel Accepts U.S.-Backed Ceasefire - AP
- Hamas Says Netanyahu Wants an Even Bigger War, Not a Ceasefire - Newsweek
- The Way to Fix the Middle East Conflict Looks Obvious—Except to Israelis and Palestinians - WSJ
- Lufthansa Extends Middle East Flight Suspensions Through Aug. 26 - Reuters
- Ukraine’s Foothold In Kursk ‘Getting Stronger,’ Aims To Create Buffer Zone There: Zelensky – The Hill
- 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’s Air Defenses Repel Attack On Kyiv - VOA
- Russia Issues Stark Warning to Ukraine's NATO Ally Poland – Newsweek
- Russia Struggles To Respond To Ukraine’s Incursion - CNBC
- Ukraine Orders Evacuation Of City As Russia Gains - BBC
- Russian Forces Capture Town Of Zalizne In Ukraine's East, Defence Ministry Says - Reuters
- Kursk Map Shows Swathes of Kursk Under Threat of Kyiv's Advances - Newsweek
- An Economic Catastrophe Is Lurking Beneath Russia’s GDP Growth As Putin ‘Throws Everything Into The Fireplace’ - Fortune
- 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
- Collisions Tear Holes in U.S. Ally’s Ships as Tensions Flare in South China Sea – WSJ
- Bangladesh Interim Leader Yunus' Tough Road Ahead – Nikkei Asia
- Japan Ruling LDP To Hold Leadership Election On Sept 27 - Reuters
- U.S., China Sign Agreement To Cooperate On Financial Stability - CNBC
- “The Chainsaw Never Stops.” Milei’s Support Survives His Economic Experiment - Bloomberg
- Kenya To Bring Back Some Scrapped Tax Plans, Risking More Unrest - Reuters
- Venezuelans Mourn Loved Ones Killed in Protests, and Last Shreds of Democracy - NYT
- New Zealanders Emigrating In Record Numbers As Economy Stagnates – Nikkei Asia
- UK Tech Tycoon Among Six Missing After Yacht Sinks - BBC
Policy and Politics
Supreme Court Blocks Enforcement Of Sex Discrimination Rule Protecting Some States’ Transgender Students
The Supreme Court blocked new sex discrimination regulations from taking effect in multiple states in a narrow vote Friday, according to multiple outlets, denying a request from the Biden administration that sought to expand protections for transgender students at the federal level. The Supreme Court voted 5-4, as conservative Justice Neil Gorsuch voted alongside justices Sonia Sotomayor, Elena Kagan and Ketanji Brown Jackson in dissent, arguing the Education Department should be allowed to enforce portions of the sex discrimination rule in 10 states, Bloomberg reported.
The decision allowed rulings in lower courts blocking the new rules to remain in effect across a broader number of states, effectively keeping in place a hold on federal rules expanding protections to transgender students in those states. The Biden administration requested the Supreme Court reinstate a provision protecting gender identity under a federal anti-discrimination law and providing bolstered legal protections for pregnant students. All members of the court said parts of the new rule should not become effective until legal challenges at lower level courts are sorted.
ACA For DACA Recipients Challenged In Court By 15 Republican Attorneys General
Attorneys general from 15 red-leaning states have filed a lawsuit challenging a Centers for Medicare & Medicaid Services rule that extends health insurance to children of undocumented immigrants under the Deferred Action for Childhood Arrivals (DACA) program. The lawsuit asks the court to postpone implementation of the rule, which is set to take place in November.
CMS projects that the rule, which it released in May, would provide health insurance to more than 100,000 DACA recipients, a number that the lawsuit said could approach 200,000. States that filed the lawsuit argue that these recipients are not "legally present" under the Administrative Procedure Act and are not eligible for coverage under the Affordable Care Act. "They shouldn't receive taxpayer benefits when they arrive, and the Biden-Harris administration shouldn't get a free pass to violate federal law," Kansas Attorney General Kris Kobach said.
FAA Lays Out 'Roadmap' For AI Safety In Aircraft
The Federal Aviation Administration (FAA) has released a document it says will help assure safety in the use of artificial intelligence (AI) in airborne and ground systems. The roadmap was developed following two years of meetings with industry stakeholders. In 2022 and 2023, the FAA held a series of meetings to gauge industry priorities and hear opinions. The agency notes that the aircraft and avionics industry has its eyes on AI image processing tasks, among others, but because artificial intelligence falls outside normal operations - i.e. a designer who can readily explain every aspect of system design - it must take a new approach.
The FAA established seven guiding principles to provide safety assurance in AI systems in aircraft and ground operations, including the need to use existing civil aviation processes and methods. The agency noted the focus of AI technology needs to be on safety assurances and what safety enhancements can be made. In addition, the FAA cautions against anthropomorphizing the technology.
Read more at Military and Aerospace Electronics
Health and Wellness
COVID Cases Continue to Spike In The U.S.
The U.S. is in the midst of what’s become an annual summer surge in COVID cases. In fact, the nation is experiencing its biggest spike in summer infections yet, according to test positivity records from the Centers for Disease Control and Prevention (CDC). Over the past four summers, peak test positivity has volleyed between July and August. This year, cases have consistently increased since May, with test positivity projected to reach 18.1% the week ended Aug. 10. Provided the CDC confirms this preliminary statistic, it would mark the first time in more than 2 ½ years that test positivity has exceeded 16%. Even that may be an underestimate; with at-home COVID tests widely available, not everyone who tests positive reports their infection to their state health department.
This latest COVID surge may lose steam in the fall when the 2024–25 vaccines, manufactured by Pfizer, Moderna, and Novavax, become available. The CDC recommends vaccination for everyone 6 months and older; if you’re 65 or older or have a compromised immune system, ask your doctor if you’re eligible for additional vaccine doses.
Election 2024
- Did Biden Or Trump Create More Jobs? Here Are The Facts. - Forbes
- House Outlook Murky With Harris Atop Ticket – The Hill
- Medical Care And Prescription Costs Among Top 10 Worries Of Older Adults Before 2024 Election - Fortune
- Favorable Views Of Harris Rising Before Convention: Polling – The Hill
- Inside Kamala Harris’s Enormous Fundraising Drive - WSJ
- Protesters Plan Large Marches And Rallies As Democratic National Convention Kicks Off In Chicago - AP
- Election 2024 Swing State Polls: Harris Closes Gap In 4 New States—Arizona, Georgia, Nevada, N. Carolina - Forbes
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
New York Bucks July's Downtrend in Hiring
Payroll growth took a step back at the state level. In July, 28 states added payrolls, the lowest share in a year. Meanwhile, the number of states with higher-moving unemployment rates picked up from 18 in June to 28 in July. Not all states exhibited the same labor market deterioration, however. New York's 41K payroll gain in July was the strongest in the nation and the best outcome for the state since January 2023. The next two highest gainers, California and Florida, also saw payroll growth accelerate above 20K. Twenty-two states shed payrolls over the month. Missouri lost the greatest number of jobs, 22.4K. Texas and New Jersey followed closely behind with more than 10K jobs lost each.
Unemployment rate increases this cycle have been driven more heavily by labor force entrants than in cycles past. The count of states experiencing a trend rise in the unemployment rate increased for the second consecutive month in July to 26, but remained below the 34-state threshold historically associated with the onset of recessions. With a jobless rate at 5.4%, Nevada surpassed California's to become the state with the highest unemployment rate in the nation. That said, it remained a tick below Washington, D.C.'s 5.5% unemployment rate. Connecticut, Louisiana, Alabama and Mississippi were the only four states to experience unemployment rate dips over the month of July.
US to Award Chipmaker Texas Instruments Up to $1.6 Billion
The U.S. government said Friday it has signed a preliminary agreement with semiconductor manufacturer Texas Instruments to give the company up to $1.6 billion to help fund new facilities in the country.The proposed direct funding comes under the CHIPS and Science Act, a package of incentives passed by Congress in 2022 to boost research and U.S. semiconductor production.
The money would give a boost to TI's planned investment of more than $18 billion through the end of the decade to build three new facilities, the Commerce Department said in a statement. Two of them will be in Texas and one in Utah, and they are expected to generate more than 2,000 manufacturing jobs, the department added. The three new facilities are set to significantly boost the firm's domestic production capacity of foundational chips. Texas Instruments Chief Executive Haviv Ilan said the company plans to grow its in-house production to more than 95% by 2030, saying it is "building geopolitically dependable" capacity at scale.
AMD Buys AI Equipment Maker for Nearly $5 Billion, Escalating Battle With Nvidia
Advanced Micro Devices AMD 0.81%increase; green up pointing triangle agreed to pay nearly $5 billion to buy ZT Systems, a designer of data-center equipment for cloud computing and artificial intelligence, bolstering the chip maker’s attack on Nvidia’s NVDA 1.40%increase; green up pointing triangle dominance in AI computation. The deal, among AMD’s largest, is part of a push to offer a broader menu of chips, software and system designs to big data-center customers such as Microsoft and Facebook owner Meta Platforms, promising better performance through tight linkages between those products.
Secaucus, N.J.-based ZT Systems, which isn’t publicly traded, was founded in 1994. It designs and makes servers, server racks and other infrastructure that house and connect chips in the giant data centers that power artificial-intelligence systems such as ChatGPT. ZT has more than $10 billion of annual sales, AMD Chief Executive Lisa Su said in an interview—nearly half the $22.7 billion in revenue her company reported last year. However, AMD plans to sell ZT’s manufacturing business after the acquisition is complete, keeping its system-design business. Su said ZT’s main value for her company is in offering customers more hands-on assistance in setting up huge data centers where clusters of chips train up AI systems.
GM Lays Off More Than 1,000 Salaried Software And Services Employees
General Motors is laying off more than 1,000 salaried employees globally in its software and services division following a review to streamline the unit’s operations, CNBC has learned. The layoffs, including roughly 600 jobs at GM’s tech campus near Detroit, come less than six months after leadership changes overseeing the operations, including former Apple executive Mike Abbott leaving the automaker due to health reasons.
GM declined to disclose the entire number of layoffs, but a source familiar with the action confirmed more than 1,000 salaried employees would be laid off, including 600 in Warren, Michigan. Impacted employees were notified Monday morning. The layoffs represent about 1.3% of the company’s global salaried workforce of 76,000 as of the end of last year. That included about 53,000 U.S. salaried employees. The cuts come as automakers attempt to reduce costs and, in many instances, employee headcount amid fears of an industry downturn, and as they’re spending billions of dollars on emerging markets such as all-electric vehicles and so-called “software-defined vehicles.”
Estee Lauder Forecasts Bleak Annual Results; CEO Freda To Depart
Estee Lauder forecast annual profit and sales below estimates as the global beauty market struggles with slowing demand mainly in the China market and said CEO Fabrizio Freda was retiring after nearly 16 years at the helm. Freda, 66, who is retiring on June 30, 2025, was named the CEO in 2009 and was responsible for expanding the company’s skincare portfolio with the addition of brands such as Dr. Jart and The Ordinary owner Deciem. He also steered the company through pandemic-induced supply chain snags when Estee was forced to raise prices to offset rising costs and laid out a turnaround plan last year that included job cuts.
For fiscal 2025, Estee expects sales to either fall as much as 1% or rise 2%. That compares with analysts’ estimates of a 6.4% rise, according to LSEG data. The La Mer maker expects annual adjusted profit per share between $2.75 and $2.95, compared with analysts’ expectations of $3.96. The bleak forecast shows demand for even “affordable luxuries” such as lipsticks and perfumes, widely considered recession-proof, are seeing a hit, with the company expecting continued declines in the prestige beauty segment in China. European peer L’Oreal also flagged that the global beauty market was growing slower than expected highlighting a lack of a rebound in the China market.
Venture Capital firm General Catalyst Invests $120 Million Into Startup Focused on U.S. Manufacturing
Venture-capital funds are flowing into efforts to bolster U.S. manufacturing supply chains. Massachusetts-based General Catalyst is putting $120 million behind startup Re:Build Manufacturing, a kind of one-stop-shop aimed at helping new businesses make products on American soil. Re:Build counts 13 U.S. industrial and engineering businesses under its umbrella, effectively making it a single ecosystem for the needs of prospective manufacturers.
General Catalyst’s Hemant Taneja says the investment is based on the idea that interconnected supply chains pose risks to certain industries, leaving them increasingly prone to shocks such as cybersecurity threats and geopolitical instability. So far this year, venture investors globally have pumped roughly $2.3 billion into startups that are developing engineering and manufacturing equipment. Re:Build co-founder Miles Arnone says the company offers a domestic alternative to U.S. manufacturing startups that typically turn to China and its sprawling industrial centers.
Orange/Ulster BOCES Students Build Tiny in Port Jervis
Tiny homes for veterans, built by Orange/Ulster BOCES students, will be delivered to Port Jervis in the near future. The houses, like a typical house but smaller in size, will feature every component a formerly homeless veteran needs in his/her home, along with support services to help them settle in. Ten tiny homes will comprise a small veteran village in Tri-States, constructed along a clear bubbling brook at the East Main Street entrance to the city.
BOCES carpentry teacher Corey Moore and some of his students expressed pride in being part of this experience. It was Moore who reached out to Whetsel to offer BOCES’ services. With full support from administrators, and BOCES overall, the students admitted it was tough getting started in creating a building area in cold winter months. Sixteen of the 40 carpentry students who started the project were seniors who have since graduated. Twenty-four were juniors who will return to continue the project with incoming juniors. Their feelings were diverse, but also similar, about being part of the veteran tiny home project.
NASA’s Webb Telescope Finds Evidence For An Ocean World Around Uranus
New observations by the James Webb Space Telescope suggest that an icy moon around Uranus may have an underground liquid ocean. Ariel is one of 27 moons around Uranus, the seventh planet from the sun and the third largest planet in the solar system. It's one of four moons that scientists have long been interested in as part of a search for water across the solar system, the others being Umbriel, Titania and Oberon. Ariel is named after a character in William Shakespeare’s “The Tempest,” while Titania and Oberon are from his “A Midsummer Night’s Dream.”
As part of a planned “Moons of Uranus” project, scientists used JWST to observe the four moons for 21 hours, searching for traces of ammonia, organic molecules, water and carbon dioxide ice. Carbon dioxide ice is thought to be unlikely at Uranus because at that distance from the sun—20 times farther than Earth—it turns to gas. However, Ariel’s surface—which has canyons, grooves and smooth regions—was found to contain carbon dioxide ice, particularly on the side of the moon that faces away from the direction it orbits.
Big Order Anchors Big Plan for Archer’s eVTOL
Archer Aviation Inc. – the new aircraft developer now building a manufacturing site in Georgia – has a complex business deal in development involving a high-volume order for its electric vertical take-off and landing (eVTOL) air taxis, plus a partnership with the buyer to establish air-mobility services globally. “This new agreement both grows our prospective order book to nearly $6 billion and opens up Archer’s global reach to premium international markets,” stated Andrew Cummins, director of Business Development.
Future Flight Global and Archer have a memo of understanding for that start-up to purchase up to 116 Archer Midnight aircraft, which could be worth up to $580 million to the supplier. FFG is a company formed by executives at Titan Aviation (a business-jet operator), with which FFG has a joint venture to operate “advanced air mobility assets globally.” The plan is for FFG to operate selected routes within Archer’s planned air-taxi service, and to provide service in other high-demand locations, including Southeast Asia, Europe, and the Middle East. Together, Archer and FFG would collaborate in other areas to mature the eVTOL commercial market, such as ecosystem development, infrastructure, regulatory engagement, and demand generation.
Read more at American Machinist