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Member Briefing August 4, 2025

Date postedAugust 4, 2025
Posted By: Harold King Daily Briefing,

Top Story

Employment Cost Index: Labor Costs Continue To Ease

The Employment Cost Index is generally considered a better barometer of labor cost growth. Unlike average hourly earnings, it controls for compositional shifts in employment, while also capturing benefit costs and public sector compensation trends. But both series suggest that the cooler picture of labor costs remains intact as the jobs market is no longer overheated, and that the labor market is not a meaningful constraint on the Fed's efforts to return inflation to its 2.0% target. Over the past year, employment costs and average hourly earning are up 3.6% and 3.8%, respectively, roughly on par with the nominal pace needed to hit the Fed's inflation target once accounting for growth in labor productivity.

Wages and salaries rose a solid 1.0% over the quarter, lifting the year-over-year rate up a tenth to 3.6%. While solid gains among incentive paid-occupations helped bolster the second quarter's outturn, strength was widespread. Meantime, benefit costs rose 0.7%, a notable moderation from the first quarter's increase of 1.2%. The increase in benefit costs over the past year (3.5%) is roughly in line with wages & salaries, suggesting some of the solid growth in total compensation is tied to sources other than disposable income.

Read more at Wells Fargo

BLS: Payrolls Rise By Scant 73,000, Unemployment Rate Ticks Higher, Previous Month Revised Lower

U.S. job growth slower much more than expected in July, and the data from the prior month was revised sharply lower, indicating the labor market could be showing signs of stalling. Nonfarm payrolls increased by 73,000 jobs in July. Hiring in May and June was much weaker than previously reported as revisions showed employers added a combined 258,000 fewer jobs in those months than previously estimated.. The unemployment rate rose to 4.2% in July from 4.1% in the previous month.

  • Healthcare added 55,000 jobs, above the average monthly gain of 42,000 over the prior 12 months. Over the month, job gains occurred in ambulatory health care services (+34,000) and hospitals (+16,000).
  • Social assistance employment continued to trend up in July (+18,000), reflecting continued job growth in individual and family services (+21,000).
  • Federal government employment continued to decline in July (-12,000) and is down by 84,000 since reaching a peak in January. (Employees on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey.)
  • Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail trade; transportation and warehousing; information; financial activities; professional and business services; leisure and hospitality; and other services.

Read more at The BLS

NFIB: Job Openings Remain a Challenge for Main Street in June

Despite the slowing labor market, many small business owners are still looking to attract applicants and hire for their open positions. Compensation pressures remain strong for those owners who are competing to retain and attract talent in their business. Overall, 58% of small business owners reported hiring or trying to hire in June, up three points from May. Fifty percent (86% of those hiring or trying to hire) of owners reported few or no qualified applicants for the positions they were trying to fill. Twenty-five percent of owners reported few qualified applicants for their open positions and 25% reported none.

Thirty percent have openings for skilled workers (unchanged) and 13% have openings for unskilled labor (unchanged for the fifth consecutive month). Job openings were the highest in the construction, manufacturing, and transportation industries, and the lowest in the finance and agriculture industries. The percent of small business owners reporting labor quality as their top operating problem remained at 16%, unchanged from May. Labor costs reported as the single most important problem for business owners rose one point from May to 10%.

Read more at The NFIB

Global Headlines

Middle East

Ukraine

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Policy and Politics

U.S. to Raise Tariffs on Scores of Nations Effective August 7th

The U.S. will raise tariffs on scores of nations, effective at 12:01 a.m. on Aug. 7, according to an executive order signed by President Trump on Thursday. Trump had pledged to raise tariffs on Aug. 1—the end of an extended pause on duties first imposed in April and then put on hold to allow for negotiations. The new effective date is needed to allow Customs and Border Protection time to update the Harmonized Tariff Schedule for the higher levies, a senior administration official told reporters.

When the action is taken, the result will be significantly higher tariffs on virtually every U.S. trading partner. Trump has set a 15% tariff with major industrialized economies including the European Union, Japan and South Korea. Other nations where the U.S. has a small trade deficit would also get 15% tariffs, the senior administration official said. Nations where the U.S. runs a trade surplus would be hit with 10% tariffs, the official added.

Read more at The WSJ

See the Order with the New Tariff Schedule

Trump’s Tariffs Get Frosty Reception At Federal Appeals Court

Federal appeals court judges on Thursday sharply questioned President Donald Trump’s authority to impose sweeping tariffs on foreign trading partners under an unprecedented use of emergency powers. Several judges of the Washington, D.C.-based Federal Circuit Court of Appeals repeatedly wondered how Trump could justify the broad tariffs using a 1977 law known as the International Emergency Economic Powers Act, or IEEPA, that presidents have used to set economic sanctions and other penalties on foreign countries — but never previously tariffs. The appeals court set a rapid-fire schedule to consider the matter in front of the court’s full 11-member bench, which is made up of eight Democratic appointees, three Republican appointees and no Trump appointees.

Trump has used IEEPA to impose two primary sets of tariffs: one aimed at pressuring China, Canada and Mexico to stop the flow of fentanyl and precursor chemicals into the United States and another aimed at reducing the large U.S. trade deficit. Trump initially imposed his “reciprocal” tariffs aimed at reducing the trade deficit in early April, but then paused the majority of them until Aug. 1. He has, however, kept in place a 10-percent “baseline” tariff on all goods since April 5.

Read more at Politico

New York’s Medicaid Spending Rate Remains the Highest of Any State

New York’s Medicaid program remained a spending outlier in 2024, with per-resident outlays that were 24 percent higher than those of any other state and 77 percent above the national average, according to a federal report released on Thursday. The report provides timely context for the current discussion about how state leaders should respond to looming cutbacks in federal health funding. Its data suggest that New York has the capacity to absorb billions of dollars in reduced federal aid while continuing to operate a generous and well-funded Medicaid program by national standards.

Medicaid is a safety-net health plan for the low-income and disabled that is jointly financed by the federal government and the states. Friday’s report from the Centers for Medicare & Medicaid Services summarizes almost $1 trillion in nationwide spending on the program for the fiscal year ending in September 2024. Although New York represents less than 6 percent of the U.S. population, its $98 billion Medicaid budget accounted for more than 10 percent of national spending on the program. New York’s Medicaid spending per resident, at $4,942, was by far the highest among the 50 states. The second-highest state was Kentucky at $3,989 per resident, and the national average was $2,791 per resident.

Read more at Medicaid.gov

Political Headlines


Health and Wellness

How AI And Mini-Organs Could Replace Testing Drugs On Animals

At Children’s Mercy Hospital in Kansas City, researchers have created something extraordinary: tiny, beating lab-grown “hearts.” Visible only under a microscope, the diminutive innards are called organoids. They can be grown in a matter of days from a patient's own stem cells, and their doctors use them to screen for the best medicine for their condition, sparing months of trial and error. They’re also core to the future of drug testing, and someday perhaps the end of the lab rat.

In 2022, a group of scientists ran an experiment with 27 known drug compounds that animal studies had shown to be safe. Some of them had turned out to have toxic side effects and had been pulled from the market after they’d killed people. The researchers tested the 27 compounds on a new technology called “organ-on-a-chip”: similar to organoids, “organ chips” have clusters of cells embedded in a diminutive electronic device that can simulate an organ’s behavior. The researchers found that liver organs-on-a-chip accurately predicted which compounds were dangerous, an advancement that might someday lead to significant cost savings in the extremely expensive drug development process. More accurate testing using organ chips could save the industry over $3 billion a year, the study’s authors calculated.

Read more at Forbes

Industry News

Trade Wars

PCE = 2.6% Fed Preferred Inflation Measure Ticks Higher in June

The Personal Consumption Expenditures, or PCE — ticked higher last month, signaling that President Trump's tariffs are pushing some prices higher. Prices rose 2.6% in June compared with a year ago, the Commerce Department said Thursday, up from an annual pace of 2.4% in May. Excluding the volatile food and energy categories, prices rose 2.8% in the past year, the same as the previous month, which was revised higher. On a monthly basis, prices ticked up 0.3% from May to June, while core prices also rose 0.3%. Both figures are higher than what would be consistent with the 2% target.

  • Gas prices jumped 0.9% from May to June
  • Grocery costs rose 0.3%.
  • Many longer-lasting goods that are heavily imported saw clear price increases, with furniture prices up 1.3% just last month, appliances up 1.9%, and computers up 1.4%.
  • The cost of some services fell dramatically last month, offsetting some of the price pressures from goods. Air fares dropped 0.7% from May to June, while the cost of hotel rooms plunged 3.6% just in one month.
  • consumer spending rose 0.3% from May to June, a modest rise that suggests Americans are still spending cautiously. Adjusted for inflation, the increase was just 0.1%, the government said.
  • Americans' incomes also saw a modest increase, rising 0.3% last month, a rebound after a 0.4% drop in May. Adjusted for inflation and taxes, however, incomes were flat in June.

Read more at Manufacturing Dive


China’s July Manufacturing Activity Contracts More Than Expected — Declines For Fourth-Straight Month

China’s official gauge for manufacturing activity on Thursday pointed to a worse-than-expected contraction in July amid slower economic growth and ongoing U.S. trade tensions. The Manufacturing Purchasing Managers’ Index for July was 49.3, missing expectations for 49.7 according to a Reuters poll. China’s official manufacturing PMI has been below the 50 mark, reflecting contraction rather than expansion, since April.

Within China’s latest manufacturing PMI, sub-indexes showed that employment, new orders and raw materials inventory also contracted in July. The index for jobs ticked up to 48, from 47.9 in June, while that for new orders fell to 49.4, down from 50.2 in June. The National Bureau of Statistics attributed the manufacturing PMI decline in July to the traditional off-season and factors such as extreme heat and torrential rain in parts of the country. In one of the latest instances of extreme weather, at least 30 people died this week on the outskirts of Beijing after the city issued the highest-level red alert for heavy rain, according to state media. In July last year, the official manufacturing PMI read was 49.4, with the new orders sub-index at 49.3.

Read more at CNBC

DoD Issues $165M More for F-35s

The U.S. Department of Defense issued two contract modifications totaling more than $165 million to Lockheed Martin Aeronautics for its work on the F-35 Lightning II Joint Strike Fighter program. Lockheed is the primary contractor on the vast F-35 program, which counts more than 1,900 suppliers in 48 states and 10 foreign countries. The first contract modification awards $92.9 million for procuring long-lead materials, parts, and components, plus related support for production of Lot 21 of the F-35 program, specifically for non-DoD partners and foreign military sales customers. This modification is comparable to one issued in March concerning Lot 20. Both Lot 20 and Lot 21 were authorized in a DoD award from late 2021, with production to begin this year.

A second contract modification awarded to Lockheed Martin Aeronautics is valued at $72,107,096, for “agile software development required to enhance the functionality of combat data systems’ common reprogramming tool minimum viable capability release, to support F-35 Lightning II air system capabilities and configurations, for the U.S. Air Force, Marine Corps, Navy, and non-DoD partners.

Read more at American Machinist

Big Tech Earnings Largely Impress

Microsoft's market capitalization topped the $4 trillion mark at the start of trading on Thursday, joining Nvidia as the only two publicly traded companies to hit the milestone. The company crossed the landmark number after reporting its fiscal fourth quarter earnings on Wednesday, beating analysts' expectations on the top and bottom lines on the strength of its cloud revenue. For the quarter, Microsoft saw adjusted earnings per share (EPS) of $3.65 on revenue of $76.4 billion. Wall Street was anticipating adjusted EPS of $3.37 and revenue of $73.89 billion, according to Bloomberg analyst consensus estimates. The company saw adjusted EPS of $2.95 and revenue of $64.72 billion in the same period last year. "Cloud and AI is the driving force of business transformation across every industry and sector," Microsoft CEO Satya Nadella said in a statement. - Yahoo

Meta's stock jumped 12% at the start of trading on Thursday after its second quarter earnings outperformed expectations and the company offered a better-than-expected outlook for Q3. The Facebook parent said Wednesday it anticipates between $47.5 billion and $50.5 billion in third quarter revenue, well ahead of the $46.2 billion Wall Street was calling for. For Q2, Meta saw earnings per share (EPS) of $7.14 on revenue of $47.5 billion. Analysts were anticipating EPS of $5.89 on revenue of $44.83 billion, according to Bloomberg consensus estimates. The company saw EPS of $5.16 and revenue of $39.07 billion in the same period last year. Yahoo

Qualcomm reported fiscal third-quarter earnings on Wednesday that beat Wall Street expectations and provided a stronger-than-expected guide for the current quarter. Qualcomm shares slid in extended trading. Earnings per share were $2.77 adjusted versus $2.71 expected and revenue was $10.37 billion versus $10.35 billion expected In the current quarter, Qualcomm said it expected $2.85 per share at the midpoint of adjusted earnings on $10.7 billion in revenue at the midpoint. Analysts polled by LSEG were expecting $2.83 in adjusted earnings per share on $10.35 billion in revenue. Net income during the quarter ending in June was $2.66 billion, or $2.43 per share, versus $2.13 billion, or $1.88 per share a year ago. - CNBC

Amazon announced its second quarter earnings after the bell on Thursday, beating on the top and bottom lines and offering better-than-anticipated Q3 revenue guidance of between $174 billion and $179.5 billion. Analysts were expecting $173.2 billion. For the quarter, Amazon reported earnings per share (EPS) of $1.68 on revenue of $167.7 billion. Wall Street was anticipating EPS of $1.33 and revenue of $162.1 billion, according to Bloomberg consensus estimates. The company saw EPS of $1.26 and revenue of $147.9 in the same quarter last year. Still, shares fell as much as 8% in premarket trading after Amazon's guidance for operating income at its AWS cloud computing unit came in at $15.5 billion to $20.5 billion for the third quarter. Wall Street was looking for $19.5 billion. Yahoo

Apple reported third-quarter earnings on Thursday that topped Wall Street expectations for profit and revenue. iPhone sales grew 13% year over year and overall revenue grew 10% — Apple’s largest quarterly revenue growth since December 2021. The company reported $1.57 in earnings per share or $24.43 billion of net income during the quarter, versus $1.40 per share or $21.45 billion in the year-ago period. Apple said it expects mid- to high-single-digit increases in overall revenue, services growth to be similar to this quarter’s 13% year-over-year growth and for gross margin to be between 46% and 47%, even including costs related to tariffs. - CNBC

CEOs Globally Brace For Tariff Turmoil With A New Game Plan

As trade rules grow more uncertain and tariffs resurface in policy discussions, business leaders say they’re rethinking everything from where factories are located to how products are priced. The old “just in time” model is giving way to something more cautious: make goods closer to the buyer, ask for exemptions where possible, and stay alert to shifting consumer habits. This earnings season has been marked by currency swings, inflation, and political uncertainty. And in that environment, tariffs are no longer background noise. They’re front and center in how companies are managing risk. For many in the C-suite, the threat isn’t just about short-term costs — it’s about staying competitive for the long haul.

“We are concerned about the competitiveness of aluminum compared to other materials,” Hydro Chief Financial Officer Trond Olaf Christophersen told CNBC earlier this week. The company is already passing U.S. tariff costs onto customers. But the deeper worry is how, “some customers in packaging are already testing steel and plastic alternatives. That’s the long game we’re watching.” Even the most proactive companies can’t prepare for everything. Some are eating the higher costs. Others are raising prices — carefully. Lindt & Sprüngli, the premium chocolate maker, raised prices by 15.8% this year to offset soaring cocoa costs, driven partly by export restrictions in West Africa. “We saw only a 4.6% decline in volume mix,” CEO Adalbert Lechner told CNBC. But he admitted that U.S. consumers are becoming more price-sensitive.

Read more a CNBC

A Jury Orders Tesla To Pay More Than $240 Million In Autopilot Crash

A Miami jury decided that Elon Musk's car company Tesla was partly responsible for a deadly crash in Florida involving its Autopilot driver assist technology and must pay the victims more than $240 million in damages. The federal jury held that Tesla bore significant responsibility because its technology failed and that not all the blame can be put on a reckless driver, even one who admitted he was distracted by his cellphone before hitting a young couple out gazing at the stars. The decision comes as Musk seeks to convince Americans his cars are safe enough to drive on their own as he plans to roll out a driverless taxi service in several cities in the coming months.

The decision ends a four-year long case remarkable not just in its outcome but that it even made it to trial. Many similar cases against Tesla have been dismissed and, when that didn't happen, settled by the company to avoid the spotlight of a trial. "This will open the floodgates," said Miguel Custodio, a car crash lawyer not involved in the Tesla case. "It will embolden a lot of people to come to court." Tesla is appealing the decision.

Read more at CNN

SpaceX Launches International Crew To Space Station On 6-Month NASA Mission

An international crew of four launched into orbit just before noon Friday from Florida on NASA's Crew-11, a six-month mission to the International Space Station. SpaceX's Falcon 9 rocket roared to life on Kennedy Space Center's Launch Complex 39-A, lofting the company's Dragon capsule and crew on a nine-minute trip from the Earth's surface into orbit. It took the crew about 15 hours to reach the ISS. They'll remain aboard the station for about six months, living and working on the orbiting lab, conducting dozens of science experiments.

The Crew-11 mission marks the 12th time SpaceX is launching NASA astronauts to the ISS. In 2020, the private company began ferrying astronauts to the station as part of the agency's Commercial Crew Program, ending a reliance on Russia for rides to the station after the retirement of the Space Shuttle program in 2011. There has been a continual human presence on the space station since its first crew arrived on October 31, 2000. But the orbiting outpost is set to retire by the end of the decade.

Read more at NPR

Aurora’s Autonomous Trucks Are Now Driving At Night. Its Next Big Challenge Is Rain.

Over the next year, Aurora Innovation CEO Chris Urmson wants to “unlock” the Sunbelt of the United States, a southern route where its self-driving trucks will carry goods for companies like Uber Freight and Hirschbach Motor Lines. TheComapny, which launched its driverless commercial self-driving truck service this spring, has already made some progress toward that goal. The company reported last week its second-quarter letter to shareholders that it now has three self-driving trucks operating commercially between Dallas and Houston, and logged more than 20,000 driverless miles by the end of June. Its commercial self-driving trucks have a human “observer” in the cab, people who are not there to operate or intervene, according to the company.

But it’s the company’s ability to operate at night that helps it push into new territory. Aurora said Wednesday it has validated the ability for its driverless trucks to navigate highways and roads at night. This allows the trucks to travel longer distances — and importantly past the federally mandated service limitation for traditional human drivers. Urmson partially credits Aurora’s proprietary, long-range lidar, which can detect objects in the dark more than 450 meters away, for its ability to operate at night. The lidar can identify pedestrians, vehicles, and debris up to 11-seconds sooner than a traditional driver, according to the company. Aurora has acquired two lidar companies since it was founded in 2017. The company bought Blackmore, a Montana-based lidar startup, in May 2019 and OURS Technology in 2021. Now, Urmson and the rest of Aurora’s engineers are working to validate the driverless trucks’ ability to operate in rain.

Read more Tech Crunch

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