Member Briefing December 11, 2024
NFIB: Small Business Optimism Surges in November. Inflation, Talent Still Top Concerns
The NFIB Small Business Optimism Index rose by eight points in November to 101.7, after 34 months of remaining below the 50-year average of 98. This is the highest reading since June 2021. Of the 10 Optimism Index components, nine increased, none decreased, and one was unchanged. Twenty percent of owners reported that inflation was their single most important problem in operating their business (higher input and labor costs), down three points from October and surpassing labor quality as the top issue by one point. Thirty-six percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, up one point from October.
Other key findings include:
The net percentage of owners expecting the economy to improve rose 41 points from October to a net 36%, the highest since June 2020. This component had the greatest impact on the overall increase in the Optimism Index.
The net percentage of owners expecting higher real sales volumes rose 18 points to a net 14% (seasonally adjusted), the highest reading since February 2020.
A net 5% of owners reported paying a higher rate on their most recent loan, unchanged from October’s lowest reading since January 2022.
Twenty-eight percent (seasonally adjusted) plan capital outlays in the next six months, up six points from October. This is the highest reading since January 2022.
The frequency of reports of positive profit trends was a net negative 26% (seasonally adjusted), up seven points from October and the highest reading of this year.
‘More Optimistic’ - NY Fed Survey of Consumer Expectations
Monday we got a reading on where people think inflation will be with the release of the November survey of consumer expectations from the New York Fed. It found that consumers believe inflation will be about 3% a year from now, and even lower, around 2.6% in three years. That’s very similar to the way they looked before the pandemic. Ahead of today’s CPI report here are the key findings.
Year-ahead expectations about households’ financial situations improved considerably in November. The share of households expecting a better financial situation one year from now rose to its highest levels since February 2020, while the share expecting a worse financial situation fell to its lowest level since May 2021.
Median inflation expectations increased by 0.1 percentage point (ppt) at all three horizons in November: one-year-ahead inflation expectations increased to 3.0 percent; three-year-ahead inflation expectations increased to 2.6 percent; and five-year-ahead inflation expectations increased to 2.9 percent.
Mean unemployment expectations—or the mean probability that the U.S. unemployment rate will be higher one year from now—ticked up by 0.5 ppt to 35.0 percent.
Steep Drop in Machine Tool Orders in October
U.S. manufacturers’ orders for new machine tools and other metalworking units fell -14.5% from a very strong September showing to finish October at $385 million. That new total also falls -5.5% lower than the October 2023 new-order total, and it means that the year-to-date total for 2024 new orders is $3.74 billion, -7.5% lower than the January-October total for 2023. The data is provided by AMT - the Assn. for Manufacturing Technology. USMTO data also serves as an indicator of future manufacturing activity because it quantifies machining operations’ investments in preparation for new production programs.
AMT noted warily that the Federal Reserve Bank’s September decision to lower interest rates has not improved the average order value, compared to the previous expansionary period. This may indicate the hoped for “soft landing” has not developed, meaning the possibility of an economic recession remains – as the order volumes suggest the U.S. economy has not demonstrated a transition from ‘growth’ to slow or no growth, which the Fed has tried to maneuver over recent quarters.
Read more at American Machinist
Global Headlines
Middle East
- Iran Suffers Blow of ‘Historic Proportions’ With Assad’s Fall- WSJ
- Rebel-Backed Mohammed Al-Bashir Takes Charge As Syria's Interim Prime Minister - Reuters
- A US Navy Destroyer Has Come Under Missile Fire 3 Times In 3 Months As The Houthis Try To Score A Hit On A Warship - Insider
- Syria Map Shows Buffer Zone Amid Israel's Advances - Newsweek
- Israeli Strikes Hit Syria’s Navy, Military Arsenals - WSJ
- Pope, Growing Critical Of Israel, To Meet Palestinian President On Thursday – Reuters
- After Ousting Assad, Syrian Rebels Rush to Impose Order in Damascus - WSJ
- The Road To Damascus: Syrian Exiles Return Home To Celebrate The Fall Of Assad -France 24
- The Middle East’s Dangerous New Normal - Iran, Israel, and the Delicate Balance of Disorder – Foreign Affairs
- 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 To Raise NATO Invite, Security Guarantees At Meeting With European Allies - Reuters
- Poland Warns About NATO Troops in Ukraine - Newsweek
- Russia's 'Meat-Grinder' Tactics Bring Battlefield Success - But At Horrendous Cost - BBC
- Putin's Closest Ally Says More Than Dozen Nuclear Weapons In Belarus - Newsweek
- Zelensky Salutes Trump's 'Strong Resolve' To End War In Ukraine – France 24
- Ukraine’s Sea Baby Drone Boats Shoot Back Now - Forbes
- Syria Could Be the Beginning of the End of Russia’s Imperial Ambitions - Time
- Flying Over Russia: Chinese Airlines Win And Europeans Lose - Politico
- 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
- Brazilian President Lula Recovering In Hospital After Emergency Brain Surgery - Reuters
- French Party Leaders Meet With Macron, Who Aims To Name Next PM 'In 48 Hours' – France 24
- China’s Politburo Revives Crisis-Era Language In Pledge To Bolster Economy - SCMP
- Beijing To Impose Visa Curbs On US Officials As Counter Sanctions On Hong Kong - SCMP
- Romanian Police Foil Armed Mercenaries In Jan. 6-Style Plot - Politico
- France Returns Fighter Jets From Chad, Marking Start Of Military Withdrawal – France 24
- Europe Asks: Is It Time for Syria’s Refugees to Go Home? - WSJ
- Victorious John Mahama Promises New Beginning For Ghana – BBC
Policy and Politics
Siena Poll: Hochul's Job Approval, Favorability Up Slightly While Cost Of Living Remains Top Issue For Voters
Governor Kathy Hochul has a negative 39-49% favorability rating, up a little from 36-51% in October (then among likely voters), and her job approval rating also got a bump to 46-49%, up from 41-51%, according to a Siena College poll of New York State registered voters released today. When asked if they would vote to re-elect Hochul or would prefer ‘someone else,’ 33% said re-elect Hochul and 57% wanted someone else. Voters say Albany’s top 2025 priority should be cost of living, 43%, followed by affordable housing and the recent influx of migrants, each with 19%, and crime, 15%. Cost of living is identified by 71% of voters as one of two top priorities.
President-elect Trump has a negative 37-59% favorability rating, little changed from 38-60% among likely voters in October. By a 50-39% margin, voters say the second Trump presidency will be bad for New York. Currently, Trump is viewed favorably by 85% of Republicans, and unfavorably by 83% of Democrats and 53% of independents, Not surprisingly 83% of Republicans think Trump’s second presidency will be good for New York, while 73% of Democrats say bad. Independents ever so barely tilt toward good, 43-42%.”
Pattern Releases Q3 2024 Hudson Valley Housing Update
Mid-Hudson Pattern for Progress’ latest housing report includes third-quarter data for 2019-2024. These data show the trajectory of the housing market before, during, and after the coronavirus pandemic. “It is clear that our regional housing market is still feeling the effects of migratory trends that drove record demand and record prices during the pandemic. The preponderance of second homes, short-term rentals, and remote-work residents is also affecting the market,” the report states.
There are nearly 9,000 fewer homes on the market in the Hudson Valley now compared to the year before the pandemic. Inventory continues to shrink as sales outnumber new listings. The median price of a home increased in every county and the Hudson Valley crossed a noteworthy threshold: the median cost of a home was greater than $300,000 in every county for the first time. The region is not adding much new supply. According to discussions with regional developers, planners, and banks, the vast majority of new residential construction in the Hudson Valley is for rental apartments.
Read more at Pattern for Progress
From Ivy League Student to Accuses CEO Murderer
Police announced on Monday they had arrested Luigi Mangione after he was recognised at a McDonald's in Altoona, Pennsylvania. The Baltimore, Maryland, native was found in possession of a so-called ghost gun, a largely untraceable firearm, and a three-page handwritten document that indicated "motivation and mindset", officials said.
He is from a prominent Baltimore family, and attended a private, all-boys high school in Baltimore, called the Gilman School, according to school officials. Mr. Mangione was named as the valedictorian. Mr. Mangione went on to graduate from the University of Pennsylvania, where he received a bachelor's and master's degree in computer science, according to the school, and founded a video game development club. A person matching his name and photo had an account on Goodreads, a user-generated book review site, gave four stars to a text called Industrial Society and Its Future by Theodore Kaczynski – also known as the Unabomber manifesto. Starting in 1978, Kaczynski carried out a bombing campaign that killed three people and injured dozens of others, until he was arrested in 1996.
Health and Wellness
‘FluView’ Map Reveals US States Where Flu Rates Are Spiking
The deeper we head into flu season, the higher rates of infection grow, as a map produced by Newsweek shows the most at-risk states and cities in the United States. Rates of flu in the U.S. are highest in the District of Columbia, according to data from the Centers for Disease Control and Prevention (CDC). As the colder months bring influenza, a weekly CDC report called FluView has indicated which states have been hit hardest by flu season, with high levels in Louisiana, Georgia and Arizona.
Overall, the data suggest that nationwide rates of flu are on the rise; 3.2 percent of all visits to a healthcare provider were due to respiratory illnesses during that week, compared to 3 percent the previous week and 2.7 percent the week before.
Transition 2024
- Trump Allies Adopt New Strategy For Nominees: Make The Doubters Pay - Politico
- Pete Hegseth Gets Boost From Trump Allies’ Pressure Campaign - WSJ
- RFK Jr. Cabinet Nomination: Dozens Of Nobel Winners Urge Senate To Reject Trump’s HHS Pick - Forbes
- White House Outlines Priorities For Last 42 Days – The Hill
- The Most Significant Ambassador Jobs In Trump’s Second Term - Politico
- China Will Cooperate With Trump Over Mass Deportations - Newsweek
- Harmeet Dhillon, Mark Paoletta, Alina Habba Tapped For Legal Roles - Forbes
- Canada’s Trudeau Vows to Retaliate if Trump Imposes 25% Import Tariff - WSJ
- NY AG Won’t Toss Multimillion-Dollar Trump Civil Fraud Judgment – The Hill
- Trump Wants To End Birthright Citizenship. Can That Really Happen? - Politico
- Kari Lake Being Considered for Mexico Ambassador: Reports - Newsweek
- Tracking Trump’s Cabinet Picks – Politico
Industry News
U.S. Finalizes More Than $6.1 Billion Chips Subsidy For Micron Technology
The U.S. Department of Commerce has finalized a subsidy of more than $6.1 billion for memory chip maker Micron Technology to support the construction of several domestic semiconductor facilities, according to a White House statement on Tuesday. The investment, unchanged from the amount originally announced in April, marks one of the largest government awards to chip companies under the U.S. CHIPS and Science Act. The Biden administration has doubled down on fueling domestic semiconductor production, seeking to reduce reliance on China and Taiwan. The U.S. has finalized a series of subsidies, including a $7.86 billion award for Intel and $6.6 billion for Taiwan Semiconductor Manufacturing’s U.S. unit. The final awards come just weeks before President-elect Donald Trump, who has criticized the program, takes office.
It will fund factory projects in New York and Idaho and is expected to create at least 20,000 jobs by the end of the decade. The commerce department and Micron have also agreed to preliminary terms for an additional investment of $275 million to expand the chipmaker’s facility in Manassas, Virginia, which primarily manufactures chips sold in the automotive, networking and industrial markets.
TSMC Revenue Jumps 34% in November in Sign of AI Demand
Taiwan Semiconductor Manufacturing Co.’s sales rose 34% in November, reflecting sustained growth from AI demand despite concerns that data center building will slow. The go-to chipmaker for Apple Inc. and Nvidia Corp. reported monthly sales of $8.5 billion. The combined sales in October and November rose 31.4%, based on Bloomberg’s calculations, while analysts project sales to grow 36.3% in the current quarter. The company is seen as a bellwether for the build-out of artificial intelligence data centers. Since ChatGPT was first launched in late 2022, TSMC and other AI hardware suppliers have enjoyed a boost from the massive spending on servers and data centers from big tech firms including Microsoft Corp. and Amazon.com Inc.
TSMC’s 34% year-over-year growth in November sales suggest it’s still on track to hit the upper end of guidance despite halts in supplies to Chinese AI-chip designers amid US export controls. Robust demand for AI and high-end smartphone chips drives growth, with momentum likely extending into 2025. If the two-month average run rate holds at 68.5%, as in the previous three years, TSMC’s 4Q sales could hit NT$861.5 billion.
Coffee Rises to Record After Trader Cuts Brazil Crop Outlook
Coffee hit a record high in New York on mounting worries over a global supply crunch that have made it one of the year’s hottest commodities. Major trader Volcafe Ltd. cut its outlook for production at world’s top supplier Brazil after a crop tour revealed the severity of an extended drought. The country is seen producing just 34.4 million bags of arabica, the variety that’s favored in specialty brews. That’s down by about 11 million bags from a September estimate, according to a presentation seen by Bloomberg News.
Global coffee production is on track to fall short of demand by 8.5 million bags in the 2025-26 season, marking an unprecedented fifth year of deficits, Volcafe said. Futures for the arabica variety have surged more than 80% this year amid crop setbacks in key growers, threatening to further pinch consumers’ pockets. They rose as much as 5.5% on Tuesday, touching the highest in data going back to 1972 and eclipsing a peak set that decade when a disastrous so-called Black Frost decimated Brazilian trees. Fears have now grown about future supplies in top grower Brazil after a lengthy dry spell earlier this year. That’s in addition to worries about output in Vietnam — the largest producer of the cheaper robusta bean — after its key coffee belt suffered from dryness during the growing period and heavy rains arrived at the start of harvest.
Boeing Restarts 737 Max Production A Month After Strike Ended
Boeing restarted production of its best-selling 737 Max jetliner last week, about a month after the end of a seven-week strike by 33,000 factory workers, according to three sources familiar with the matter. Getting the 737 Max production line moving again is essential to the heavily debt-burdened planemaker’s recovery, and Boeing has about 4,200 orders for the jetliner from airlines eager to meet growing global demand for air travel. Production resumed on Friday, said one of the sources, who all spoke on condition of anonymity because they were not authorized to speak with media. Boeing declined to comment.
The company’s plans to increase 737 Max production to a targeted 56 airplanes a month have been stymied by a series of setbacks, including two fatal crashes, the Covid-19 pandemic, supply chain problems, production safety concerns, and increased regulatory scrutiny, along with the recent strike.
U.S. Battery Electric Vehicle, Hybrid Sales Rise
Sales of hybrid and electric vehicles rose to a record high in the third quarter of this year, according to new data from the U.S. Energy Information Administration. “Combined sales of hybrid vehicles, plug-in hybrid electric vehicles and battery electric vehicles increased from 19.1% of total new light-duty vehicle sales in the United States in 2Q24 to 21.2% in 3Q24, according to estimates from Wards Intelligence.”
BEV and hybrid vehicle sales accounted for most of the increase. The former grew to 8.9% of the U.S. LDV market in the third quarter of 2024, from 7.4% the previous quarter. Hybrid sales also rose, with hybrid vehicles accounting for a record 10.6% of the U.S. LDV market in the latest reading. EV manufacturers are producing vehicles both domestically and globally. According to estimates from Wards Intelligence, 78.9% of total BEVs sold in the United States in 3Q24 were produced in North America, 7.3% were produced in South Korea, and 5.3% were produced in Germany.
Read more at The US Energy Information Administration
U.S. Sanctions Chinese Firm Over Potentially Deadly Ransomware Attack
The United States sanctioned a Chinese cybersecurity company over an ambitious cyberattack that U.S. Treasury officials say could have killed people. The Treasury said in a statement, opens new tab on Tuesday that the Chengdu-based Sichuan Silence Information Technology Company and one of its employees, Guan Tianfeng, deployed malicious software to more than 80,000 firewalls run by thousands of companies worldwide in April 2020.
The malicious software not only stole data, it was used to deploy ransomware, which paralyzes corporate networks by encrypting data. The statement said three dozen firewalls were protecting the systems of critical infrastructure companies and that, had the hacking not been thwarted or mitigated, the potential impact "could have resulted in serious injury or loss of human life." In particular, the statement said that an energy company targeted in Sichuan Silence's hacking campaign was "actively involved in drilling" during the attack. Had it not been thwarted, the statement said, "it could have caused oil rigs to malfunction."
Nestlé USA Names Martin Thompson As CEO
Nestlé USA appointed Martin Thompson as CEO starting in January. He will report to Steve Presley who will oversee Latin America and North America for Nestlé. Thompson joined Nestlé as a part of the company’s acquisition of the Starbucks consumer packaged goods and foodservice products business in 2018. He was appointed president of Nestlé Coffee Partners two years later, putting him in charge of brands such as Nescafé, Starbucks at Home and Seattle’s Best.
Nestlé has been hit hard as consumers cut back on spending, slicing into demand for many of its products, such as frozen foods like pizza. It cut its sales guidance in October for the full year to 2%, which would be the lowest annual rate since at least the turn of the century. In North America, which accounts for more than a quarter of its sales, Nestlé noted that organic growth declined 0.3% for the nine-month period to $21.4 billion. A common theme for its recent executive changes is that Nestlé has promoted from within, with Thompson’s appointment following that pattern.
Read more at Manufacturing Dive
New Defense Civilian Workforce Pipeline In The Works, Starting With 4 Universities
Congress first mandated the new Defense Civilian Training Corps DCTC program as part of the 2020 Defense authorization bill, and DoD formally launched it a year ago at four universities: Virginia Tech, Purdue, the University of Arizona, and North Carolina Agricultural and Technical State University. But the department still considers it a pilot program for training and attracting future civilian employees and is looking for ways to expand it beyond the 89 students who participated in the first year.
DoD structured DCTC as a scholarship-for-service program. Each student gets a full academic scholarship plus a monthly stipend. In return, they’re obligated to work for DoD for at least two years after they graduate. The in-class portion of DCTC, for now, includes four 300-and-400 level classes, including an introduction to the fundamentals of civilian government service and the DoD acquisition system. But that junior-and-senior level academic coursework is only part of the program. Between those two years, during the summer, students do project-based internships based on actual problems various DoD components are trying to solve.
Read more at Federal News Network
Google Claims Quantum Computing Milestone
Google on Monday announced Willow, its latest quantum chip, that it says marks a major breakthrough in the field of quantum computing, an area seen as the next frontier for many tech companies. However, while Google’s achievements have been noted for advancing the field, experts say that quantum computing still has no real-world uses — yet.
“Typically the more qubits you use, the more errors will occur, and the system becomes classical,” Hartmut Neven, founder of Google Quantum AI, wrote in a blog post. Willow can reduce errors “exponentially” as the number of qubits is scaled up, the U.S. tech giant said, which “cracks a key challenge in quantum error correction that the field has pursued for almost 30 years.” Google measured Willow’s performance using the so-called random circuit sampling (RCS) benchmark, which presents a computational task that’s difficult for classical computers to solve. Willow performed a computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion years — or 10,000,000,000,000,000,000,000,000 years — Google said.
Read about Quantum in the Hudson Valley at HV Mfg