Member Briefing December 13, 2022
Lawmakers Struggle to Reach Consensus on Business Tax Breaks, Child Tax Credit
Lawmakers are struggling to reach bipartisan agreement on a year-end tax deal, and businesses and antipoverty advocates both look unlikely to get what they want. Republicans and many companies want to reverse, prevent or delay some tax increases on businesses that were scheduled in a GOP-backed 2017 tax law and that began taking effect this year. Democrats, who control the House and Senate, have expressed openness to some changes, but they want to expand the child tax credit at the same time. With just a few weeks remaining before the new Congress starts Jan. 3, key members of Congress haven’t agreed to any such deal, lawmakers and aides said. And even if they do reach an agreement, it would likely need to be included in a broad federal-spending package—which also is stalled.
Barring a last-minute breakthrough, many businesses will face higher taxes because of changes to how they can deduct research costs and interest expenses. For families, the child tax credit would remain at its current levels, without reinstating temporary expansions that Democrats implemented in 2021. Those changes expired at the end of last year.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russian Drone Strikes Leave Most of Ukraine’s Odessa Region Without Power - WSJ
- France’s Macron Engineers New Diplomatic Push for Ukraine – The Hill
- How the US has Helped Counter Destructive Russian Cyberattacks Amid Ukraine War – The Hill
- Zelensky and Biden Discuss Ukraine’s Grid as Country Scrambles to Restore Power - WSJ
- Europe Agrees Extra Military Aid to Ukraine - Reuters
- Europe Cold Snap Tests Gas Reserves After Russian Supply Cut - WSJ
- The Russians Locked Up for Refusing to Fight - BBC
- Russia Is Shipping More Than 3 Million Bpd Of Crude To Asia – Oil Price
- Heavy Losses Reported Among Russian Mercenaries; Kherson Comes Under ‘Massive Fire’ - CNBC
- Putin to Skip Marathon Annual News Conference Amid Ukraine War Setbacks – The Hill
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Wholesale Prices Rose 0.3% in November, More Than Expected
Wholesale prices rose more than expected in November as food prices surged, dampening hopes that inflation could be headed lower, the Labor Department reported Friday. The producer price index, a measure of what companies get for their products in the pipeline, increased 0.3% for the month and 7.4% from a year ago, which was the slowest 12-month pace since May 2021. Economists surveyed by Dow Jones had been looking for a 0.2% gain.
Excluding food and energy, core PPI was up 0.4%, also against a 0.2% estimate. Core PPI was up 6.2% from a year ago, compared with 6.6% in October. The hot inflation data keeps the Fed on track for another rate increase, likely a 0.5% hike that would push benchmark borrowing rates to a target range of 4.25%-4.5%. Policymakers have been pushing rates higher in an effort to quell stubborn inflation that has emerged over the past 18 months after being mostly dormant for more than a decade.
Today’s CPI Inflation Report Will Be Sketchy - So, View Media And Market Reactions Skeptically
The December 13 CPI report (8:30 AM ET) for November 2022 should show a further inflation decline. That's the good news. The problem is that the one number reading will sit atop a mixed bag of movements. Therefore, putting together a coherent explanation will take thought and time. Nevertheless, the media and markets will charge out of the gate, riding presumptive simplicity.
There are two primary moving parts that make understanding the November report challenging... First, price drops Certain areas of the economy had unusually large price run-ups based on special circumstances. Some have now entered reversal periods, with declines moving trends back to “normal.” Second, seasonal adjustments for November 2021, seasonal-adjustment increases occurred in key areas (energy, in particular). That means the beneficial effect of this November’s drop in oil/gas prices will likely be diminished.
U.S. COVID – Nearly 30,000 People Currently in the Hospital Have Tested Positive for Covid-19 Nationally, Up 30 Percent Since Thanksgiving.
While public health experts say this winter’s Covid-19 surge may be more mild, they worry whether hospitals — already dealing with staffing shortages — can handle the increased caseload from Covid on top of the strain they’re experiencing with RSV and the flu. Nearly 30,000 people currently in the hospital have tested positive for Covid-19, according to the CDC, up 30 percent since Thanksgiving — with New York, Arizona and New Mexico among the hardest hit.
A little more than 13 percent of Americans over the age of 5 have gotten their updated booster vaccine since it was released in September — including about a third of seniors, the group most susceptible to hospitalization, according to the CDC. Case counts in nursing homes are also up more than 30 percent since Thanksgiving.
China Finally Approves an mRNA COVID Vaccine—but Only for Some Foreigners
On Friday, China confirmed in a press briefing that it would let German nationals receive the BioNTech COVID vaccine, which uses mRNA technology, in exchange for German health authorities on Wednesday approving China’s Sinovac jab for Chinese nationals living in Germany.
The statement from China’s foreign ministry clarifies an earlier announcement by German Chancellor Olaf Scholz during his trip to Beijing that BioNTech would be made available to foreign nationals in China. But Beijing’s decision to approve the Pfizer/BioNTech jab for a sliver of China’s population highlights the country’s uneasy relationship with mRNA vaccines and shots developed overseas as Beijing embarks on an exit from its tough COVID-zero policy, which will likely cause a massive outbreak.
As Holiday Season Nears Finish Line Imports Wind Down
December cargo should be significantly below records set earlier this year as most holiday merchandise is already on retailers’ shelves or in their warehouses, according to the monthly Global Port Tracker report released on Dec. 67 by the National Retail Federation and Hackett Associates. U.S. ports covered by Global Port Tracker handled 2 million TEU in October, the latest month for which final numbers are available. That was down 1.3% from September and down 9.3% from October 2021.
Ports have not yet reported November’s numbers, but Global Port Tracker projected the month at 1.85 million TEU, down 12.3% year over year. That would be the lowest since 1.87 million TEU in February 2021. December is forecast at 1.94 million TEU, down 7.2% year over year. Those numbers would bring 2022 to 25.81 million TEU, down just 0.1% from last year’s annual record of 25.84 million TEU.
Read more at Material Handling & Logistics
Manufacturing Often Frets About the Aging of its Workforce. Some Nimble Companies Revel in It
The past decade has featured a long march of news about manufacturing’s labor shortage. Less well-known, but just as dire, is the underemployment of older workers. Did you know, for instance, that only half of Americans in their 50s are steadily employed? Between ages 50 and 60, the employment rate drops 20%, according to AARP. More than half of retirees of any age say they were forced or partly forced to retire.
And half of workers over 50 will experience an involuntary layoff and go back to work at a lower level of pay. “Manufacturing is one of the industries that very clearly sees the value of older workers,” says Heather Tinsley-Fix, a senior advisor on employer engagement at AARP who has worked closely with Manufacturing Institute researchers. “The goal for them is to keep them upskilled and then figure out how to retain them long enough to make sure that all their wisdom and experience gets imparted to the rest of the workforce.”
Mexico, Canada Win Trade Dispute With U.S. Over Car-Content Rules
Mexico and Canada won a trade dispute with the U.S. over cars shipped across regional borders, potentially giving manufacturers more incentive to make auto parts in those nations. The dispute-resolution panel set up under the 2020 US-Mexico-Canada Agreement made a preliminary ruling on Nov. 14, according to people familiar with the decision who declined to be identified because the report hasn't yet been made public. The nations have an opportunity to give feedback on the report before a final version is issued within 30 days.
Mexico first sought the panel's help in resolving the conflict in January. The dispute focuses on the nations' differences over how to calculate the percentage of a vehicle that comes collectively from the three countries under the USMCA, which replaced the North American Free Trade Agreement, also known as Nafta.
World Cup: Semi-Finals Begin Today
Four teams - Argentina, Croatia, France and Morocco - remain in Qatar, each still hoping to lift the trophy in a week's time. It is a semi-final line-up few could have predicted, but one with plenty of intriguing storylines which could play out over the coming days. The most obvious semi-final subplot surrounds Lionel Messi and whether the Argentina superstar can win the World Cup for the first time. Morocco have already made history. They are the first African team, and the first Arab side from a country with a Muslim majority, to reach a semi-final of a World Cup.
But standing in Morocco's way are another of Europe's best sides, France. Les Bleus are trying to do what no-one has managed since Brazil 60 years ago in 1962 - successfully defend the men's World Cup. Croatia are back in the last four after another incredible show of resilience. They beat Denmark and Russia on penalties en route to the final four years ago, and this year have come through shootouts against Japan and Brazil.
UK Economy Rebounds from Royal Funeral Hit, Outlook Remains Bleak
Britain's economy rebounded in October a little more strongly than expected from September when output was affected by a one-off public holiday to mark the funeral of Queen Elizabeth, but a recession remained on the cards, official data showed on Monday. Gross domestic product grew by 0.5% after September's 0.6% contraction, the Office for National Statistics said. In the three months to October, Britain's economy shrank by 0.3%, a smaller fall than a median forecast for a 0.4% contraction in the Reuters poll but the biggest drop since early 2021 when the country was under tight coronavirus restrictions.
The Bank of England - which looks set to raise interest rates for a ninth meeting in a row on Thursday to contain the risks from an inflation rate above 11% - said last month that Britain's economy looked set for a two-year recession if interest rates rose as much as investors had been pricing.
University of Michigan Consumer Confidence Index Improves to 59.1 in December vs. 53.3 Expected
Consumer sentiment improved in the US in early December with the University of Michigan's (UoM) Consumer Confidence Index rising to 59.1 from 56.8 in November. This reading came in better than the market expectation of 53.3.
"Year-ahead inflation expectations improved considerably but remained relatively high, falling from 4.9% to 4.6% in December, the lowest reading in 15 months but still well above 2 years ago," the UoM further noted in its publication. "At 3.0%, long run inflation expectations has stayed within the narrow (albeit elevated) 2.9-3.1% range for 16 of the last 17 months."
Mid-Hudson Clean Energy Hub Established
Cornell Cooperative Extension of Dutchess County has been named as one of 12 regional Clean Energy Hubs to serve as centers of outreach, awareness, and education. The Mid-Hudson hub will receive just over $4 million is also designed to help foster residents’ participation, especially those in underserved or otherwise disadvantaged communities, in New York’s clean energy transition.
The New York State Energy Research and Development Authority partnered with Cornell Cooperative Extension to provide a holistic, multidisciplinary approach to ensure that area residents have equitable access to the benefits of the state’s economic development region to be responsible for establishing and fostering partnerships over the next four years.
Biden Announces $36 Billion in Relief for Ailing Teamsters’ Pension Fund
A collective sigh of relief was heard yesterday from 350,000 retired union workers of the Central States Pension Fund. President Joe Biden on Thursday announced an infusion of nearly $36 billion to shore up the financially troubled union pension plan, preventing severe cuts to the retirement incomes of Teamster workers and retirees across the United States. The money for the Central States Pension Fund is the largest amount of federal aid provided for a pension plan, the Biden administration said, and comes from the American Rescue Plan, a $1.9 trillion coronavirus relief package that he signed into law in 2021.
About 1,400 multi-employer plans nationwide cover 11.2 million workers and retirees in industries ranging from trucking to construction to other union jobs. Central States is one of the largest multi-employer pension plans in the nation.
Toyota Might Delay Some EV Programs
Toyota is expected to outline adjustments to its electric-vehicle strategy to key suppliers early next year, as it races to narrow the gap on price and performance with industry leaders Tesla and BYD, two people with knowledge of the work said. Elon Musk's Tesla made almost eight times the profit per vehicle as Toyota for the third quarter, partly because of its ability to simplify EV production and reduce cost, analysts have said.
Toyota has been looking at ways to improve the competitiveness of EVs being planned for this decade, in part by speeding up the adoption of performance-boosting technologies for planned EVs, from electric drive systems - including motors - to the electronics that convert power from the grid to energy stored in batteries and more integrated heating and cooling systems, the people said.
Robots Set Their Sights on a New Job: Sewing Blue Jeans
There is a quiet automation effort underway — involving clothing and technology companies, including Germany’s Siemens AG and Levi Strauss & Co.. Finding a way to cut out handwork in China and Bangladesh would allow more clothing manufacturing to move back to Western consumer markets, including the United States. But many apparel makers are hesitant to talk about the quest for automation — since that sparks worries that workers in developing countries will suffer.
Siemens worked with the Advanced Robotics for Manufacturing Institute in Pittsburgh, created in 2017 and funded by the Department of Defense to help old-line manufacturers find ways to use the new technology. They identified a San Francisco startup with a promising approach to the floppy fabric problem. Rather than teach robots how to handle cloth, the startup, Sewbo Inc., stiffens the fabric with chemicals so it can be handled more like a car bumper during production. Once complete, the finished garment is washed to remove the stiffening agent.
Nuclear Fusion: Has There Been a Breakthrough and What Will it Mean?
A nuclear fusion reactor has reportedly created more energy than was put into it, for the first time ever. If the experimental results are confirmed, it will prove that fusion is a viable way to meet the planet’s growing energy demands by replicating the reaction that has been occurring at the heart of our sun for billions of years – with some caveats. Fusion has long promised abundant, clean energy, but until recently has been a far-off dream. In the past few years, experiments around the world have been increasingly promising, but crucially have all also required more energy input than they have generated.
Now, a report in the Financial Times suggests that researchers at the Lawrence Livermore National Laboratory (LLNL) in California have overcome this major hurdle. The lab’s National Ignition Facility (NIF) fusion reactor uses lasers to create heat and pressure that turns deuterium and tritium into a plasma in which fusion can occur, and the FT reports that an experiment in which the lasers output 2.1 megajoules of energy resulted in the production of about 2.5 megajoules, roughly a 20 per cent increase.