Member Briefing August 31, 2022

August 31, 2022

Posted By: Harold King in Daily Briefing,

OnSolve Global Risk Impact Report: “Black Swans” are Flying

Lately it seems that black swans swoop in from every direction on a regular basis—pandemic, fire, drought, social unrest, war. Resilience has replaced efficiency as the watchword of the day. But wasn’t it always this way? Well, no. A new report out Tuesday from OnSolve analyzed a database of more than 14 million events over the last two years and puts some numbers on the change.

From 2020 to mid-2022, the company calculates:

• Transportation-related risks are up 146%
• Crime risks are up 141%
• Fire risks are up 118%
• Infrastructure and technology risks are up 111%
• National security events are up 48%
• Extreme weather events are up 47%
• Civil unrest is up 9%

War in Ukraine Headlines

Job Openings Top 11.2 Million in July, Nearly Double the Available Workers

Available positions totaled 11.24 million for the month, well in excess of the 10.3 million FactSet estimate, according to the Job Openings and Labor Turnover Survey. Total separations declined slightly in July to 5.93 million, as the rate edged lower to 3.9%. Layoffs and discharges were little changed at just under 1.4 million.

Job openings increased in transportation, warehousing, and utilities (+81,000); arts, entertainment, and recreation (+53,000); federal government (+47,000); and state and local government education (+42,000), the report said. Job openings decreased in durable goods manufacturing (-47,000).

U.S. Consumer Confidence Rises More Than Expected in August

The Conference Board said on Tuesday its consumer confidence index rose to 103.2 this month from 95.3 in July. Economists polled by Reuters had forecast the index climbing to 97.7. The survey’s present situation index, based on consumers’ assessment of current business and labor market conditions, climbed to 145.4 from 139.7 in July. Its expectations index, based on consumers’ short-term outlook for income, business and labor market conditions, increased to 75.1 from 65.6 last month.

“Purchasing intentions increased after a July pullback, and vacation intentions reached an 8-month high,” said Lynn Franco, senior director of economic indicators at the Conference Board in Washington. “August’s improvement in confidence may help support spending, but inflation and additional rate hikes still pose risks to economic growth in the short term.”

U.S. COVID – Wastewater Surveillance

Wastewater surveillance is a proven method to track disease outbreaks and has provided an accurate and economical way to provide early detection of COVID-19 levels within communities—and even estimate the number of infected people in a specific area—helping to inform health authorities and policymakers throughout the pandemic. Sewage surveillance also is used to track other diseases, including monkeypox and polio, and experts say building and maintaining the infrastructure to expand wastewater-based disease surveillance should be a public health priority.

However, funding for the relatively inexpensive systems is inconsistent, leading to pauses in the disease monitoring that, if continuously and thoroughly conducted, can help communities or entire countries save millions of dollars by quickly responding to disease outbreaks. But many governments, including the US Congress, are reluctant to allocate additional money for wastewater surveillance. In some cases, venture capitalists, nonprofit organizations, or academic institutions are stepping up to fill the gaps. But more funding will be needed to grow wastewater epidemiology to help provide warning signals of future potential disease outbreaks.

mRNA COVID Vaccines Protect Against Severe Omicron for at Least Half a Year

COVID-19 mRNA booster vaccines offered protection against severe COVID-19 caused by the Omicron variant for at least 6 months, and three doses of China’s inactivated vaccines were more protective than two doses but not as protective as three doses of mRNA vaccines, finds a study from Singapore published today in JAMA Network Open.

Researchers at the National Centre for Infectious Diseases in Singapore studied the effectiveness against infection and severe illness of two or more doses of the Pfizer/BioNTech or Moderna mRNA COVID-19 vaccines or the inactivated Sinovac, CoronaVac, or Sinopharm Chinese COVID-19 vaccines in 2,441,581 residents aged 30 years or older from Dec 27, 2021, to Mar 10, 2022, during Omicron predominance. Estimated vaccine effectiveness (VE) of an mRNA booster against Omicron infection was 31.7% to 41.3% after 15 to 60 days and waned rapidly over time. Estimated mRNA booster VE against severe COVID-19 was 87.4% and didn’t wane for up to 6 months. The estimated VE of three doses of inactivated vaccine against severe illness was 69.6%.

Federal Government to Halt Free COVID-19 at-Home Tests by Early September

The federal government is set to suspend its offer of free at-home COVID-19 tests by Friday, Sept. 2, without congressional authorization for an extension. The U.S. Postal Service’s page for ordering the tests states that orders will pause by next Friday “or sooner if supplies run out.” The administration originally announced that it would offer 1 billion free at-home COVID-19 tests in January. The federal government used COVID-19 funding from the American Rescue Plan, President Biden’s $1.9 trillion economic stimulus and COVID-19 recovery package that he signed into law last year.

The seven-day rolling average of COVID-19 cases has declined in recent weeks following an increase fueled by the highly contagious BA.5 omicron subvariant. But a senior administration official told USA Today that the government needs to hold on to tests for a possible rise in the fall.

Mikhail Gorbachev: Last Soviet Leader Dies Aged 91

Mikhail Gorbachev, who ended the Cold War without bloodshed but failed to prevent the collapse of the Soviet Union, died on Tuesday at the age of 91, hospital officials in Moscow said. Gorbachev, the last Soviet president, forged arms reduction deals with the United States and partnerships with Western powers to remove the Iron Curtain that had divided Europe since World War Two and bring about the reunification of Germany.

One can debate, as historians and politicians have in the ensuing decades, how much of the change was Gorbachev’s doing and how much was forced on him by the tide of history, as well as leaders like Lech Walesa, Pope John Paul II, and President Ronald Reagan. Certainly, the events of the 1980s — including the humiliating defeat in Afghanistan — had already made it harder for any Soviet leader to continue the nation on its existing path.

Big Jump in OSHA Fines Not Coming

At present, the maximum fine OSHA can assess against an employer per alleged repeat, willful or failure-to-abate violations is $145,027. Last year, the House of Representatives passed a bill that would have boosted the maximum penalty for willful or repeat violations of OSHA workplace safety rules from that amount to $700,000 per violation, including imposition of a $50,000 minimum. Under last year’s House proposal, the serious failure-to-abate fine limit also would have increased from $13,653 to $70,000.

However, the recent passed reconciliation spending bill does not mention or incorporate any provisions for raising the cap on civil money penalties regarding citations issued by OSHA, notes Raymond Perez II, an attorney with the law firm of Jackson Lewis.

Manufacturing Robot Sales Up 25% in North America in Q2

Companies ordered a record 12,305 machines in the second quarter valued at $585 million, 25% more units than during the same period a year ago, according to data compiled by the industry group the Association for Advancing Automation. Combined with a strong first quarter, the North American robotics market notched its best first half ever, the group said.

The incentives for companies to pursue a robot-enhanced workforce are obvious in the current tight labor market. With nearly two open jobs for every unemployed worker, employers are bidding up wages: Total U.S. labor costs – covering wages and benefits – surged 5.1% year over year in the second quarter, the most since the Labor Department began tracking it in 2001.

Times Union Editorial: A Counter Productive Tax

Consider that no state lost more jobs over the course of the pandemic than New York, and only a handful of states remain further below pre-pandemic employment levels, according to federal data. Those painful realities suggest that New York’s businesses — and its economy more broadly — continue to need the state’s moral and financial support.

Instead, they’re being slapped with a new fee that businesses have dubbed the “COVID tax.” businesses statewide recently learned that they have until Sept. 30 to pay an Interest Assessment Surcharge of $27.60 per employee. The money will pay the interest on the approximately $8 billion New York still owes the federal government after the state borrowed nearly $10 billion to pay unemployment benefits at the height of the pandemic.

Atremis I Launch Delayed Until Friday

NASA’s planned lunar launch of its unmanned Orion capsule atop the Artemis I rocket will be delayed until Friday at the earliest because of problems Monday with several systems. It could be September before the test flight happens, all part of the U.S.’s goals to return astronauts to the moon by 2025 and perhaps one day send a manned mission to Mars.

One of the rocket’s engines failed Monday to settle on the correct temperature, and in the predawn darkness at the Kennedy Space Center in Florida, NASA repeatedly stopped and started the fueling of the Space Launch System rocket because of a leak of highly explosive hydrogen, eventually succeeding in reducing the seepage. The leak happened in the same place that saw seepage during a dress rehearsal in the spring.

Toyota Output Shrinks for Fourth Month on Shortages, China

Toyota Motor Corp.’s global output sank for the fourth straight month as a shortage of semiconductors and supply chain disruptions caused by COVID lockdowns in China hurt production. Output fell 8.6 percent in July from a year earlier to 706,547 vehicles, Toyota said in a statement Tuesday. Sales declined 7.2 percent to 797,179 units, extending a slump for an 11th consecutive month.

A shortage of computer chips that go into many car parts, higher raw material costs and frequent shutdowns at factories in China because of COVID-related curbs have thrown global auto assembly lines in turmoil. Toyota said domestic production fell 28 percent in July, outweighing record overseas production, up 4.5 percent that was driven by a strong recovery in Europe, China and the rest of Asia.

Honda, LG Energy Plan $4.4 Billion EV Battery Factory in U.S.

Honda Motor Co. and LG Energy Solution Ltd. said Monday they plan to build a $4.4 billion electric-vehicle battery factory in the U.S., the latest tie-up between auto makers and battery suppliers seeking to expand capacity by sharing upfront costs. The companies said they plan to begin construction of the factory early next year and start mass production by the end of 2025. The factory aims to have an annual production capacity of about 40 gigawatt-hours and will supply its output exclusively to Honda facilities in North America, they said.

The companies didn’t disclose where in the U.S. the factory would be built, but people familiar with the matter said it was planned for Ohio.

Best Buy’s Quarterly Sales Drop, as Inflation-Weary Consumers Pull Back on Spending

Best Buy on Tuesday said sales dropped by about 13% in the fiscal second quarter, as the retailer felt a pullback from inflation-weary shoppers. The company’s shares rose in early trading, as it reaffirmed its full-year guidance. Best Buy had cut the forecast in late July, saying it expects weaker demand for consumer electronics as people pay more for groceries and gas. The retailer projects same-store sales to drop by about 11% for the 12-month period ending in January.

Best Buy’s quarter reflects a sharp change in consumer spending habits. A year ago, the retailer saw sales rise nearly 20% as shoppers bought TVs, laptops and more to sustain Covid pandemic-fueled habits like working from home and streaming movies. Now, however, some of those patterns have faded as people go back to the office or go on summer vacations. Some consumers are skipping over big-ticket and discretionary items as they pay more for necessities.

EU Promises ‘Emergency Intervention’ to Rein in Energy Prices

The EU is planning an “emergency intervention” in the bloc’s power market to curb soaring prices, Commission President Ursula von der Leyen said on Monday. The remarks are a sign that the Commission has firmly broken with its earlier defense of EU power market design — and follows rising pressure in recent months from member governments arguing the system wasn’t designed to deal with the energy emergency unleashed by the price surge following Russia’s invasion of Ukraine.

Governments have rolled out measures, ranging from direct handouts for households to caps on power prices. But with spending on short-term measures in countries such as Greece now amounting to almost 4 percent of GDP, lawmakers are pushing hard for an intervention on the European level.

U.S. Business Confidence in China Falls to Record Low, Survey Says

Sentiment about operating in China among U.S. businesses has plummeted to a new low, driven largely by Beijing’s continued use of sudden Covid-19 lockdowns, an annual survey by an American business group found. Only around half of 117 companies polled said they were optimistic or somewhat optimistic about their own outlook in China, down 18 percentage points from the year before and the lowest since the survey began more than 16 years ago.

The poll of member companies by the U.S.-China Business Council found American multinationals increasingly losing confidence in the near-term prospects for their China ventures, according to results published Monday. This year, 21% of respondents said they were pessimistic or somewhat pessimistic about their five-year business outlook in the world’s second-largest economy, compared with 9% last year.