Member Briefing August 22, 2022

August 22, 2022

Posted By: Harold King in Daily Briefing,

PwC Survey: 50% of Companies Want to Cut Headcount

A new survey from consultancy PwC released this month showed 50% of companies are planning to reduce overall headcount. Additionally, 46% of companies said they are dropping or reducing signing bonuses, while 44% are rescinding offers. Reducing overall headcount doesn’t mean all of the respondents to PwC’s survey are planning layoffs, but at least indicates plans similar to what we’ve seen in the tech industry, where backfills are paused, or previously allocated heads are cut from a department’s budget.

As the report says: “Respondents are also taking proactive steps to streamline the workforce and establish the appropriate mix of worker skills for the future. This comes as no surprise. After a frenzy of hiring and a tight labor market over the past few years, executives see the distinction between having people and having people with the right skills.”

War in Ukraine Headlines

Tomorrow’s NY 19 Special Election Seen as National Bellwether

A special election here next week could offer Democrats a preview of the pain coming their way in November. Or it could provide powerful evidence that a Republican wave election is not in the offing. The matchup in the 19th district, which Biden carried by less than 2 points in 2020, is between Ryan, the Ulster County executive who has campaigned aggressively on abortion rights, and Marc Molinaro, the Dutchess County executive who has framed his bid as a referendum on the Biden administration’s economic failures.

Both parties are dumping money into this Hudson Valley district to notch a short-lived but symbolic victory in the last competitive race before the midterms. The winner will succeed Democrat Antonio Delgado for just a few months. But the messaging, turnout and margin of the contest will offer tea leaves into what lies ahead this fall in the battle for control of the House.

CDC Announces Sweeping Reorganization Aimed at Restoring Public Trust

CDC director Dr. Rochelle Walensky met with senior leadership at the agency last week to lay out her plans for overhauling how the agency works. She plans to remake the culture to help the agency move faster when it responds to a public health crisis. She also wants to make it easier for other parts of the government to work with the CDC, and wants to simplify and streamline the website to get rid of overlapping and contradictory public health guidance. The changes will be aimed at improving the culture and restoring public trust after the agency’s acknowledged missteps in its response to the Covid-19 pandemic.

The new marching orders come after significant stumbles at the agency in response to the Covid-19 pandemic. The US had little capacity to test for infection during the early months of the pandemic, largely because the agency released a flawed test to public health laboratories. That kept the nation blind, for months, to the extent of the virus’s spread.
The agency has also been criticized throughout the pandemic for issuing public health guidance that some saw as confusing and ineffective. Many also felt it wasn’t moving fast enough to respond.

U.S. COVID – Daily Cases Drop Below 100,000

The US CDC is reporting 93 million cumulative cases of COVID-19 and 1,033,332 deaths. The current 7-day moving average of new daily cases is down over last week, dropping to 98,940 on August 16 from 107,899 on August 9. The average daily mortality remains relatively stable, at 398 on August 16. Daily mortality has remained above or around 400 since July 12. Both new hospital admissions (-3.5% over the past week) and current hospitalizations (-5.3%) decreased over the previous week, potentially reflecting a downward trend to the latest surge driven by the Omicron BA.5 subvariant.

BA.5 is now projected to account for 88.8% of sequenced specimens in the US. The BA.4 sublineage accounts for about 5.3% of cases, while the BA.4.6 sublineage accounts for 5.1% of cases. Together, BA.2.12.1 accounts for only about 0.8% of cases. According to the estimate, Omicron variants represent all new cases in the US.

NYS COVID Update

The Governor updated COVID data through August 19.

Deaths:

Daily: 13
Total Reported to CDC: 73,360

Hospitalizations:

Patients Currently in Hospital statewide: 2,427
Patients Currently in ICU Statewide: 236

7 Day Average Positivity Rate – Cases per 100K population

Statewide 5.82% – 23.31 positive cases per 100,00 population
Mid-Hudson: 3.84% – 22.35 positive cases per 100,00 population

Useful Websites:

U.S. Plans to Shift Bill for COVID Shots and Treatments to Insurers, Patients

The Biden administration is planning for an end to its practice of paying for Covid-19 shots and treatments, shifting more control of pricing and coverage to the healthcare industry in ways that could generate sales for companies—and costs for consumers—for years to come. Both the Trump and Biden administrations always planned to shift the bill for Covid-19 shots and treatments from the federal government to individuals eventually. With Covid-19 cases dropping, more activities resuming and funding for the pandemic response running short, officials are now working to map out that transition.

Shifting payments for Covid-19 drugs and vaccines to the commercial market is expected to take months, an HHS spokesman said. At the meeting this month, officials and company representatives are expected to discuss reimbursement and coverage, regulatory issues and access to vaccines and treatment for the uninsured.

The Federal Reserve’s Jackson Hole meeting Could Shake up Markets in the Week Ahead

The Federal Reserve’s Jackson Hole Symposium could make headlines with investors looking for clues on the pace of rate hikes. The annual retreat by central bankers to the Tetons is getting more attention than normal. Fed Chairman Jerome Powell is expected to dig in a bit and establish his hawkish credentials. The tone from Powell could shift investor sentiment if he reiterates that the risks of inflation are more significant than the risk of a hard landing for the U.S. economy.

The Fed is still anticipated to raise the target range for the federal funds rate by 50 or 75 points in September and follow with 25 or 50 points hikes in November and December. Fed watchers are also looking for more details on the Fed’s balance sheet reduction strategy.

MacKenzie Scott gives $39 Million to Junior Achievement USA

Billionaire philanthropist MacKenzie Scott donated $38.8 million to Junior Achievement USA and 26 local operations—the largest single gift in its 103-year history—the national education nonprofit announced Tuesday. Like all of Scott’s nearly $12 billion in donations since 2019, her gift to Junior Achievement USA is unrestricted, meaning the Colorado-based nonprofit, which prepares students for adulthood by teaching them financial literacy, career skills and business ownership training, can use the funds for any project it wants.

Jack E. Kosakowski, Junior Achievement USA’s president and CEO, said he is thrilled by Scott’s unrestricted gift because it can be used to modernize the group’s technology infrastructure, a need that is rarely high on most donors’ priority lists. The $10 million will also help expand the nonprofit’s digital educational offerings and add volunteers in currently underserved areas.

Mortgage Rates Slip to 5.13% –

Mortgage rates inched down this week but remained near multiyear highs. The 30-year fixed mortgage rate averaged 5.13%, down from 5.22% last week and 5.81% in June, which was the highest rate since 2008, according to a survey by Freddie Mac. A year ago, the rate was 2.86%.

Elevated mortgage rates, along with fast-rising home prices, have cast a chill over the U.S. housing market because they are forcing prospective buyers to budget hundreds of extra dollars, or more, in monthly costs. The rise in rates also has choked off refinancing business, putting some mortgage companies in dire straits.

NYS Unemployment Rate Held Constant at 4.4% in July 2022

According to preliminary seasonally adjusted figures released last week by the New York State Department of Labor, the number of private sector jobs in New York State increased over the month by 38,900, or 0.5%, to 8,030,300 in July 2022. New York State’s seasonally adjusted unemployment rate held constant at 4.4% in July 2022. From July 2021 to July 2022, the unemployment rate (not seasonally adjusted) fell from 7.1% to 4.8%. The number of unemployed New Yorkers decreased over the month by 800, from 416,400 in June to 415,600 in July 2022. The labor force increased to 9.52 million, still below the 9.9 million in February 2020.

Over the past 12 months private sector employment in the Hudson Valley rose to 803,300 in July 2022. The largest gains were in leisure and hospitality (+8,800), professional and business services (+8,200.) manufacturing added 700)

iPhone 14 Unveiling Expected September 7

Apple is looking at holding its annual fall product event, including the announcement of its iPhone 14 product line, on Sept. 7, according to a Bloomberg report. The iPhone 14 lineup may include four models, including a Pro and Pro Max, which some analysts expect will both receive a $100 price increase over last year’s iPhone 13 Pro and Pro Max models. The event is likely to see the unveiling of three Apple Watch models and perhaps new Macs and iPads as well. Bloomberg also reported that the new Apple products could reach stores on Sept. 16.

Separately on Wednesday, investment firm Wedbush Securities said Apple was seeing a “further slight improvement” in its supply chain. Analyst Dan Ives noted that the initial order of 90M iPhone 14 units has “stayed firm”, and despite the weakening economic conditions, strong demand is still there for Apple products.

Gubernatorial Candidate Zeldin Seeks Reversal of New York’s Ban on Natural Gas Drilling

Republican candidate for governor Lee Zeldin is pressing for a reversal of New York’s ban on a controversial natural gas extraction process, one that supporters have argued would bring much-needed jobs and people to parts of upstate, but critics have decried for environmental degradation.

Ending a ban on hydrofracking — put in place administratively in 2014 by then-Gov. Andrew Cuomo and in law by the Democratic-controlled Legislature last year — would also be a heavy lift and conflict with a separate law requiring the state to transition to more renewable forms of energy in order to combat climate change. “Jobs can be created, we can generate revenue, we can drive down taxes,” Zeldin told reporters in July during a virtual news conference. “There’s a huge benefit for the state to reverse that safe extraction of natural gas ban that we have.”

US Jobless Claims Dip for First Time in Three Weeks

Applications for US unemployment insurance fell for the first time in three weeks, suggesting demand for labor remains healthy. Initial unemployment claims decreased by 2,000 to 250,000 in the week ended Aug. 13, Labor Department data showed Thursday. The date is particularly scrutinized because it corresponds with the reference period for the government’s August employment report, which will be released early next month.

The median estimate in a Bloomberg survey of economists called for 264,000 applications. Continuing claims for state benefits climbed to 1.44 million in the week ended Aug. 6, the highest since early April. The drop in jobless claims points to still-healthy labor demand as companies try to attract and retain employees amid lingering worker shortages. However, several employers have been laying off staff or freezing hiring amid economic uncertainty, which could continue as the Federal Reserve pursues an aggressive path of interest-rate hikes.

Skills-Based Hiring Gains Momentum

An interesting finding of the recent survey of 1,688 HR professionals is the use of skills assessments in hiring, including a willingness on the part of employers to consider candidates who do not have a college degree or the minimum years of experience.

The survey found that 79% of HR professionals say that scores on skills assessments are just as or more important than traditional criteria in hiring decisions, and 36% say a job candidate who scores high on an assessment but doesn’t meet the minimum years of experience is very likely to make it onto the list of final candidates. 23% of HR professionals said the diversity of their hires has improved using these assessments. Of organizations that utilize pre-employment assessments, 1 in 4 plan to expand their use of these assessments in the next five years.

Albany NanoTech Complex Set for Expansion from CHIPS Act

The Albany NanoTech Complex, slated for a 300,000-square-foot expansion within the next two years, is prepared to build upon its work innovating and designing microchip prototypes and accelerate their commercial manufacturing as the next big technological advancements develop.

Officials hope the recent signing of federal and state legislation to promote semiconductor manufacturing will turn Albany NanoTech, a research and development site for the critical technology, into a hub for the future. The recently signed CHIPS Act will invest $52 billion over the next five years to increase U.S. semiconductor manufacturing and invest in related research and workforce development.