Member Briefing August 28, 2023
July Durables Data Weak Even Looking Past Headline Plunge
New orders for manufactured durable goods in July decreased $15.5 billion or 5.2% to $285.9 billion, the U.S. Census Bureau announced last week. This followed a 4.4% June increase.
- Excluding transportation new orders increased 0.5%.
- Excluding defense, new orders decreased 5.4%.
- Transportation equipment, also down following four consecutive monthly increases, drove the decrease, $16.4 billion or 14.3% to $98.7 billion.
- Shipments of manufactured durable goods in July, up four of the last five months, increased $0.1 billion or virtually unchanged to $283.6 billion.
- Machinery, up six of the last seven months, drove the increase, $0.1 billion or 0.3% to $37.9 billion.
- Unfilled orders for manufactured durable goods in July, up seven of the last eight months, increased $7.3 billion or 0.5% to $1,332.2 billion.
- Inventories of manufactured durable goods in July were virtually unchanged at $522.2 billion.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- U.S., Ukraine Clash Over Counteroffensive Strategy - WSJ
- For Ukraine, it’s ‘Crimea or Bust’ – The Hill
- Pentagon Plans to Begin Training Ukrainian Pilots on F-16s in U.S. – Seeking Alpha
- Russia Confirms Wagner Head's Death Through ‘Genetic Testing’ - CNN
- Prigozhin’s Plane Was Targeted By Russia’s Intelligence Agency, Report Says - Forbes
- Russian Court Extends Pretrial Detention of Jailed WSJ Reporter - WSJ
- Begun, the Drone Wars Have – Society of Manufacturing Engineers
- Ukraine Fighter Ace “Juice,” and Two Other Pilots Killed in Mid-Air Crash - BBC
- What Does Yevgeny Prigozhin’s Death Mean for Vladimir Putin? - Reuters
- 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
In Jackson Hole Powel Says Inflation Fight is Not Over
Federal Reserve Chair Jerome Powell on Friday called for more vigilance in the fight against inflation, warning that additional interest rate increases could be yet to come. While acknowledging that progress has been made and saying the Fed will be careful in where it goes from here, the central bank leader said inflation is still above where policymakers feel comfortable. He noted that the Fed will remain flexible as it contemplates further moves, but gave little indication that it’s ready to start easing anytime soon.
“We are prepared to raise rates further if appropriate, and intend to hold policy at a restrictive level until we are confident that inflation is moving sustainably down toward our objective.” Powell said in prepared remarks for his keynote address at the Kansas City Fed’s annual retreat in Jackson Hole, Wyoming. Powell indicated it’s too soon to declare victory, even with data this summer running largely in the Fed’s favor. June and July both saw easing in the pace of price increases, with core inflation up 0.2% for each month, according to the Bureau of Labor Statistics. Powell acknowledged that risks are two-sided, with dangers of doing both too much and too little.
United Auto Workers Members Vote to Authorize Potential Strike
Workers at the Detroit automakers voted overwhelmingly in favor of a measure that authorizes the United Auto Workers leadership to call for a strike as talks between the union and companies continue. The union said the current combined average across the Big Three automakers was 97% in favor of strike authorization. The strike-authorization vote is a procedural step that enables union leadership to initiate a work stoppage. It doesn’t guarantee a strike will be called.
The UAW is negotiating new four-year labor agreements for about 146,000 U.S. hourly workers at General Motors, Ford Motor and Jeep-maker Stellantis. The existing contracts expire on Sept. 14. The union is seeking to regain benefits lost in previous rounds of talks and increase wages by at least 40% during the life of the next contract, a boost that would be the largest in recent memory. The negotiations have turned contentious, with UAW leadership calling out slow progress. Earlier this month, Fain criticized Stellantis for demanding concessions at the bargaining table that he described as a “slap in the face” to workers.
COVID Update - As COVID Cases Flare, Some Schools and Businesses Reinstate Mask Mandates
A familiar pandemic-era safety measure is making a comeback as new COVID-19 variants surface and cases of the disease flare in some parts of the U.S.: Mask mandates. The number of COVID-19 cases has climbed for several weeks, with health authorities saying they're tracking the spread of three new variants. As a result, some businesses and other institutions are again requiring people to wear masks, which have proved an effective tool for slowing the spread of the virus.
Like vaccine requirements, cities and states have widely dropped mask mandates as COVID rates have dropped since peaking in 2022. In February, for example, New York state dropped a requirement that face coverings be worn even in health care settings, in line with guidance from the Centers for Disease Control and Prevention, after most other local businesses had already nixed mandates voluntarily.
NYS COVID Update
The Governor updated COVID data for the week ending August 25th.
- Weekly: 51
- Total Reported to CDC: 80,036
- Average Daily Patients in Hospital statewide: 1,052
- Average Daily Patients in ICU Statewide: 112
7 Day Average Cases per 100K population
- 5.9 positive cases per 100,00 population, Statewide
- 6.9 positive cases per 100,00 population, Mid-Hudson
In Public Address Hochul Calls for Work Authorization, Financial Assistance for Migrants
In a public address to New Yorkers, Gov. Kathy Hochul once again reiterated her calls for federal action to address the migrant crisis today. In a letter to the president, Hochul called for work authorization for new arrivals, more financial assistance to address the crisis and federal facilities for temporary shelters. “Let them work,” she said repeatedly. Last week, Siena College found that 82% of New Yorkers believe the influx of migrants is a “serious problem.”
The roughly eight-minute speech outlining her requests was atypical for Hochul, and largely repeated calls she has made to President Joe Biden in the past months, while seeking to assure New Yorkers that her administration is doing all it can to handle the influx of asylum-seekers. The address came on the heels of new public polling that found the vast majority of New Yorkers consider the migrant crisis a serious concern, with the majority disapproving of Hochul’s handling of the asylum-seekers and her job approval hitting new lows. Read more here.
Mid-Hudson Regional Economic Development Council Seeking Input on Regional Economic Development Priorities
The Mid-Hudson Regional Economic Development Council (MHREDC) is updating the strategic plan that sets priorities for state funding through the CFA process and other programs. Our region has received more than $600 million from these programs since 2011. The state and the MHREDC want your input on the next strategic plan that will drive investments in economic development, job growth and community revitalization. A series of roundtables to seek public input on the plan will be held across the region between September 6th and 19th.
Pattern for Progress is leading the strategic planning process for the MHREDC and, in addition to the above public meetings, will be hosting a series of focus groups. The Council of Industry will be helping arrange the Advanced Manufacturing focus group. If you are interested in participating in the focus group reach out to Harold King at the Council of Industry.
New York Has Big Hopes for Renewable Energy. Get Ready to Pay for it.
A generational push to tackle climate change in New York is quickly becoming a pocketbook issue headed into 2024. Some upstate New York electric customers are already paying 10 percent of their utility bill to support the state’s effort to move off fossil fuels and into renewable energy. In the coming years, people across the state can expect to give up even bigger chunks of their income to the programs — $48 billion in projects is set to be funded by consumers over the next two decades.
New York has statutory mandates calling for 70 percent renewable electricity by 2030 and a fully “zero emissions” grid by 2040, among the most aggressive targets in the country. The grid needs to be greened, while demand for electricity is expected to more than double by 2050 — the same year when state law requires emissions to be cut by 85 percent from 1990 levels. Proponents say the switch will ultimately lower energy bills by harnessing the sun and wind, result in significant health benefits and — critically — help stave off the most devastating climate change scenarios. And they hope federal money from the Inflation Reduction Act, celebrating its one-year anniversary, can limit costs to consumers. But some lawmakers in New York, particularly upstate Democrats, and similar moderates across the nation are worried about moving too quickly and sparking a backlash against higher costs.
Nvidia Earnings Tops Estimates, Says Sales will jump 170% this Quarter, Driven by Demand for AI chips
Nvidia shares climbed 6% in extended trading on Wednesday after the chipmaker beat estimates for its fiscal second quarter and issued optimistic guidance for the current period. Earnings $2.70 per share, adjusted, versus $2.09 per share expected by Refinitiv. Revenue was $13.51 billion versus $11.22 billion expected. Nvidia said it expects fiscal third-quarter revenue of about $16 billion, higher than $12.61 billion forecast by Refinitiv. Revenue in the second quarter doubled from $6.7 billion a year earlier and increased 88% from the prior period. Nvidia’s guidance suggests sales in the current quarter will grow 170% from the year-earlier period.
Net income jumped to $6.19 billion, or $2.48 a share, from $656 million, or 26 cents, a year earlier. Nvidia’s strong sales and forecast underscore how central the company’s graphics processing units (GPUs) have become to the generative AI boom. Nvidia’s A100 and H100 AI chips are needed to build and run AI applications like OpenAI’s ChatGPT and other services that take simple text queries and respond with conversational answers or images.
BRICS: Bloc Invites New Members, Plans Two-Tier System
BRICS leaders invited top oil exporter Saudi Arabia and five other countries including Iran to join their bloc in a push to expand its global influence. Saudi Arabia, Argentina, Egypt, Ethiopia, Iran and United Arab Emirates will become full members on Jan. 1, said South Africa’s President Cyril Ramaphosa in a joint press conference of the BRICS leaders on Thursday at their annual summit in Johannesburg. The enlisting of new members was agreed by the leaders of Brazil, Russia, India, China and South Africa. It will be the first expansion since 2010.
China’s President Xi Jinping called the bloc’s expansion “historic,” reflecting its determination to “unite and cooperate with developing countries.” “[It will] inject new impetus into the BRICS cooperation mechanism and further strengthen the power of world peace and development,” Jinping said. Saudi Foreign Minister Prince Faisal bin Farhan said that “the special, strategic relations with the BRICS nations promotes common principles, most importantly the firm belief in the principle of respect for sovereignty, independence and non-interference in internal affairs.” The kingdom will continue to be a “secure and reliable energy provider,” he told a BRICS conference Thursday.
EIA Reports a Big Draw in Oil Stocks as Refinery Runs Pick Up
The federal government’s EIA report revealed that crude inventories fell 6.1 million barrels compared to expectations of 4.24 million barrels decrease per the analysts surveyed by S&P Global Commodity Insights. The stockpile draw with the world’s biggest oil consumer was largely thanks to rising U.S. refinery runs that reached 16.78 million barrels per day last week, the highest in more than three and a half years. This more than offset the spike in domestic production, which, at 12.8 million barrels per day, was the most since March 2020.
Total domestic stock now stands at 433.5 million barrels — 2.8% more than the year-ago figure but 2% lower than the five-year average. The latest report also showed that supplies at the Cushing terminal (the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange) dropped 3.1 million barrels — the biggest in nearly two years — to 30.7 million barrels. Meanwhile, the crude supply cover decreased from 26.5 days in the previous week to 26 days. In the year-ago period, the supply cover was 25.9 days.
Ford Confronts Strange, Ear-Piercing Static in F-150 Trucks
Ford is confronting a problem with some newer pickup trucks and large SUVs: drivers reporting cases in which the speakers in their vehicles sound a loud and abnormal noise—often frightening the occupants. On online forums, F-150 owners have been airing similar accounts of an odd sound, which some describe as a “sonic boom” or “ear-piercing static.” Drivers, in some cases, were able to turn it off right away. Others say it lasted for 15 minutes or more, persisting even after the car was shut off.
Several dozen Ford customers have filed complaints with federal regulators, saying the noise was so distracting they either had to pull over and stop driving, or if parked, didn’t feel it was safe to get on the road. The automaker issued a technical service bulletin to dealers this summer to try to address the audio issue, which it said is related to the amplifier in the vehicle’s sound system. Ford’s F-Series pickup truck has been America’s bestselling vehicle for decades. The car company has received about 100 complaints related to the problem, primarily involving the 2022 F-150 truck, a spokeswoman said.
How the Aerospace Industry is Soaring to New Heights in the US Midwest
The US aviation market is strongly positioned for sustained growth. Evidence of this is in the fact that A&D industry exports in the US rose by 11.2% between 2020 and 2021, generating $391bn in economic value, according to Aerospace Industries Association. Companies looking to thrive in the rapidly evolving A&D sector in the US must evaluate the availability of a specialized workforce, minimizing supply chain disruptions and optimizing cost efficiencies.
With a rich legacy in manufacturing and military aviation, emerging advanced manufacturing hubs such as the one in Missouri are pivotal for companies to further A&D innovation and thrive in a competitive global market. More than 100 aerospace manufacturing companies have established bases in Missouri, including LMI Aerospace, PAS Technologies, and Westar Aerospace & Defense Group. While the country’s second-largest defense contractor, Boeing, employs more than 16,000 highly trained personnel at their Defence, Space and Security facilities in the state. The talent pool is one of the state’s biggest assets with a growing population and over 40 educational institutions offering aerospace and defence degrees. A
China’s Crisis of Confidence in Six Charts
What ails China? There are plenty of answers, from demographics to geopolitics to trade. But the key problem might boil down to household finances and, just as important, everyday citizens’ deeply shaken confidence that their lives will keep improving following China’s Covid-19 emergency. Why look at households specifically? China has a serious debt and productivity problem, especially in the state-owned and local-government sectors, but that has been true for years. Exports are falling, but China has weathered trade downturns before. Moreover, private manufacturing and infrastructure investment are actually holding up relatively well.
What is really new and notable about the current slowdown is a combination of exceptionally weak consumer prices, consumption, services-sector investment and property investment. All of that points firmly at households. Reduced willingness to spend and take risks by families also undermines other parts of the economy in pernicious and self-reinforcing ways: consumption directly, and investment indirectly because household borrowing, mainly through mortgages, has long helped keep cash-strapped property developers and local governments above water.
This Scientist-Entrepreneur Is Brewing Prescription Drug Ingredients Like They Were Beer
Every year, thousands of people around the globe use a bioengineering process where they take sugar, feed it to a carefully-selected strain of yeast and a few days later extract a product that’s then sold and enjoyed by millions. Most people call this brewing beer. That’s basically all Christina Smolke’s company, Antheia, does. Except instead of making beer, her company is using the same process to grow key ingredients for prescription drugs. And instead of the yeast you might buy over at your local homebrewing store, hers are the product of over a decade of research, bioengineered with genes from multiple species to produce specialty chemicals at scale and faster than conventional methods.
Last week, the company announced it has completed its first commercial-scale fermentation run, which resulted in the production of 116,000 liters of thebaine, a key ingredient for several essential drugs. And rather than a turnaround time of a few months, Antheia made the chemical in about five days. With this milestone in place, the company aims to go to market next year with its first products: key ingredients for drugs that currently face significant shortages.