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Trade Wars
Spooked by AI and Layoffs, White-Collar Workers See Their Security Slip Away
Office workers are filled with anxiety. Tuesday’s jobs report was the latest ominous sign in an era of big corporate layoff announcements and chief executives warning that artificial intelligence will replace workers. The overall unemployment rate ticked up to 4.6%. Sectors with a lot of office workers, like information and financial activities, shed jobs in October and November. Hiring in many industries that employ white-collar workers has softened this year, according to Labor Department data, while the unemployment rate for college-educated workers has drifted higher.
College-educated workers who were once insulated from economic concerns aren’t anymore. Just a few years ago, these workers were getting promotions and raises left and right. Now they are hanging onto their jobs for dear life, spooked by high-profile layoff announcements, the rise of artificial intelligence and an unforgiving job market for the unemployed. Americans with bachelor’s degrees or higher put the average probability of losing their jobs in the next year at 15%, up from 11% three years ago, according to November data from the Federal Reserve Bank of New York. Workers in this group now think losing a job is more likely than those with less education do, a striking reversal from the past.
Read more at The WSJ
European Economies End Year Resilient But Sluggish Dragged Down by Slowing German Manfuacturing.
Europe's leading economies closed off a turbulent year on weak momentum, according to new data on Tuesday, which showed scant signs of an upswing. The 20-nation euro zone economy has held up better than feared, taking up some of the slack created as exports were hit by rising U.S. tariffs and solidifying bets that the European Central Bank has finished cutting interest rates. But resilience is not the same thing as good health. Growth remains barely above 1%, with household spending still cautious and high levels of government debt holding back spending.
That mixed bag was evident in the latest PMI data, which showed that business activity growth has slowed more than expected at the end of the year, as a contraction in manufacturing deepened, especially in Germany, while services growth slowed. The preliminary print of the euro zone composite HCOB Purchasing Managers' Index (PMI) slowed to a three-month low of 51.9 in December, falling short of expectations as a major dip in German manufacturing offset an improvement in France.
Read more at Reuters
Mortgage Rates Move Higher After The Fed Rate Cut, Causing Loan Demand To Drop
The Federal Reserve cut its benchmark interest rate last week, and just as happened the last two times, mortgage rates rose. That caused demand for home loans and refinances to drop. Total mortgage application volume fell 3.8% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, 806,500 or less, increased to 6.38% from 6.33%, with points increasing to 0.62 from 0.60, including the origination fee, for loans with a 20% down payment.
Applications to refinance a home loan fell 4% for the week and were 86% higher than the same week one year ago. Last year at this time, the rate on the 30-year fixed was 37 basis points higher. While that is not a huge difference, borrowers who may have taken out a loan two years ago, when rates were well over 7%, could now benefit from a refinance. Applications for a mortgage to purchase a home fell 3% for the week and were 13% higher year-over-year.
Read more at CNBC
Space Force Wants Advanced Tech For Space-Based Interceptors
The U.S. Space Force is looking for advanced technologies for space-based interceptors that can intercept ballistic missiles during their boost phase inside the atmosphere, according to a Small Business Innovation Research solicitation. “The desired outcome is to develop and integrate high-G propulsion systems, advanced seekers, and low-SWaP [size, weight and power] interceptors integrated into space vehicles for … SBI [space-based interceptor] architectures that support fast detection-to-intercept timelines,” stated the SBIR solicitation, which opens Jan. 7 and closes Jan. 28.
Space-based interceptors are a key component of the Trump administration’s massive Golden Dome program for missile defense of the United States. Earlier this month, the Space Force released a Request for Proposal for space-based midcourse interceptors that would target missiles as they coast in space in between launch and reentering the atmosphere. Boost-phase interceptors seek to destroy missiles during their slower, more vulnerable ascent as the rockets gathers speed after launch. The Space Force recently awarded a few small contracts for prototype space-based boost-phase interceptors. But the SBIR suggests that the service is also eager for research into advanced interceptors. The problem with existing antimissile interceptors is that they are too big and expensive, according to the SBIR.
Read more at Defense News
Korea Zinc to Build $7.43 Billion Smelter in U.S.
Korea Zinc, the world’s largest zinc smelter, plans to build a $7.43 billion U.S. plant to produce key metals and minerals, under a joint venture aimed at strengthening supply-chain ties between Seoul and Washington. The move comes as the U.S. and South Korea have been seeking a stable and independent supply of rare earths amid concerns that China, which dominates the critical minerals market, could restrict or cut off their supplies. The South Korean company said in a regulatory filing Monday that construction of the smelter will begin in 2027, with completion scheduled for the end of 2029.
The U.S. government and U.S. strategic investors will invest $1.94 billion, more than 26% of the total investment, for a sizable stake in the JV business, it said. Korea Zinc aims to produce 300,000 metric tons of zinc, 200,000 tons of lead, 35,000 tons of copper and 5,100 tons of rare minerals annually at the facilities to be built in Clarksville, Tenn. The U.S. facilities could develop into a complex smelter also producing antimony, germanium, gallium and other strategic minerals, the company said.
Read more at The WSJ
Volkswagen Announces First-Ever Production Closure at German Plant
Volkswagen will halt vehicle production at its Dresden plant this week, marking the first production shutdown at a German site in the automaker’s 88-year history. The decision comes as Europe’s largest carmaker faces mounting cash flow pressure from weak demand in China and Europe, as well as U.S. tariffs affecting American sales. The closure is part of a broader effort to reduce capacity and rein in spending as VW reassesses its €160 billion investment plan amid slower-than-expected electric-vehicle adoption and a longer runway for combustion-engine cars.
Opened in 2002, the Dresden factory produced fewer than 200,000 vehicles and most recently assembled the electric ID.3, having previously served as a showcase for VW engineering with the Phaeton luxury sedan. Company executives said the move was economically necessary and aligned with an agreement with unions that includes 35,000 job cuts in Germany. The site will now be repurposed into a research campus focused on AI, robotics, and semiconductor development in partnership with the Technical University of Dresden, with VW committing €50 million over seven years while retaining limited use of the facility for customer deliveries and tourism.
Read more at Assembly Magazine
NY Fed: Service Sector Activity Sees “Significant Decline” in December
Business activity continued to fall substantially in the New York-Northern New Jersey region, according to the December survey. The headline business activity index held steady at -20.0. The business climate index remained well below zero at -44.2, with 55 percent reporting an unfavorable business climate.
- The employment index was little changed at -7.4, its fourth consecutive negative reading, suggesting employment continued to decline.
- The wages index held steady at 23.7, pointing to ongoing modest wage increases.
- After falling several points last month, both price indexes moved higher: the prices paid index climbed ten points to 72.1, its highest level in three years, and the prices received index rose ten points to 30.5.
- The supply availability index remained negative at -7.4, indicating that supply availability continued to worsen.
- Firms expected only slight employment growth in the months ahead.
- Capital spending plans remained soft.
Read more at the NY Fed
Pentagon Issues $930M to Boeing for F/A-18 Updates
Boeing Defense was awarded $930.8 million in a new U.S. Navy contract to provide “service life modifications” for up to 60 F/A-18 E/F Super Hornet fighter jets. The goal is to extend the service life for the aircraft from 6,000 to 10,000 flight hours, and also to integrate Block III avionics capabilities. The F/A-18E and F/A-18F Super Hornets are twin-engine multi-role aircraft in service to the U.S. Navy and several allied defense forces. The F/A-18 program has been in place since 1995, but Boeing is due to end the series production this year.
F/18 Block III avionics present a significant upgrade over Block II, and include an Advanced Cockpit System with a 10x19-inch touchscreen display in place of multiple smaller screens; a distributed targeting processor network for faster data processing; and the tactical targeting network technology that boosts data sharing; and an open mission systems architecture for future upgrades. In “Top Gun: Maverick,” Tom Cruise's character flies the F/A-18E/F Super Hornet, a modern, two-seat version of the classic Hornet. In the original “Top Gun” film the character flew an F-14.
Read more at Americn Machinist
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