Member Briefing December 19, 2024
Manufacturers More Optimistic About Their Business Outlook on Potential Action to Address Tax and Regulatory Policy
The National Association of Manufacturers released its Manufacturers’ Outlook Survey for Q4 2024, which illustrates that even with ongoing economic challenges, manufacturers are more optimistic post-election about potential action on expiring tax provisions and efforts to curb the regulatory onslaught. According to the latest reading, 70.9% of respondents are positive about their company’s outlook, up from 62.9% in Q3. Key Survey Findings include:
- In Q4, the top business challenge was rising health care/insurance costs (63.2%).
- The top concern in Q3 2024, a weaker domestic economy and sales for our products to U.S. customers, was the second highest concern in Q4 (58.0%).
- Trade uncertainty was the third biggest challenge in Q4 at 56.1%, soaring from the level of concern expressed in Q3 at 36.8%, and was the top challenge for large manufacturers at 68.7%.
- Attracting and retaining a quality workforce now ranks as the fourth highest concern (55.8%) after topping the list from Q4 2020 to Q2 2024.
- Next year, key provisions of tax reform are set to expire, driving up costs for businesses throughout the manufacturing supply chain. When asked how important it was that Congress and the new administration prevent these tax increases, 79% of respondents answered extremely important.
Fed Cuts Rates Again but Expects Only 2 Further Reductions in 2025
The Federal Reserve agreed to cut interest rates by a quarter-point Wednesday but signaled greater doubt over how much and how fast it would reduce them going forward. The latest reduction, which was approved by 11 of 12 Fed voters, will lower the Fed’s benchmark federal-funds rate to a range between 4.25% and 4.5%, a two-year low. In the run-up to this week’s meeting, several officials had suggested they had less conviction in the need to steadily reduce rates. New projections released Wednesday show officials expect to make fewer rate reductions next year, with most penciling in two cuts for 2025 if the economy grows steadily and inflation continues to decline. In September, officials had penciled in around four cuts next year.
Inflation has declined notably since the middle of 2023, but the slowdown in price growth has been uneven at times, including in the past two months. Using the Fed’s preferred inflation gauge, prices excluding volatile food and energy items rose 2.8% for the year ended October. Officials have been trying to pull off a balancing act. They want to prevent the aggressive rate increases of the past two years from unnecessarily cooling down economic activity now that price and wage growth has cooled. Stock markets reacted negatively to the news with the S&P falling nearly 3%.
Housing Starts Declined in November, Building Permits Up
Total housing starts declined 1.8% during November. The unexpected drop was mostly owed to a sharp fall in multifamily starts. Meanwhile, single-family starts rose 6%, bouncing back from October’s hurricane-related fall. In terms of permits, single-family edged up slightly while multifamily jumped to the highest level since February. Through the monthly volatility, the trend in overall residential construction remains lackluster as high interest rates discourage new projects and home builders contend with elevated inventory levels.
Single-family permits edged up 0.1% to 972K units in November, portending a slow pace of construction moving forward. This relatively sluggish pace is likely the result of persistently high mortgage rates challenging the affordability environment. According to Mortgage News Daily, the average 30-year fixed rate has crept back up near 7.0% amid higher interest rate expectations. The NAHB Housing Market Index held steady at 46 in December amid no change in current sales conditions. Although a majority of builders are still uneasy about the housing market outlook, ongoing rate cuts from the Federal Reserve and the added prospect of regulatory relief appear to be boosting sentiment. December brought a three-point jump in the sales expectations component to 66—the highest level since April 2022.
Global Headlines
Middle East
- Syrian Mass Graves Expose "Machinery Of Death" Under Assad, Top Prosecutor Says – Reuters
- Iran's Currency Plummets to Record Low Amid Energy Crisis - Newsweek
- Hamas Expresses Optimism For Gaza Deal Even As Obstacles Remain - CNN
- Israel Orders Gaza Evacuation Amid Ceasefire Talks with Hamas - Newsweek
- U.S. Officials Worry About ISIS Jailbreak In Syria: ‘Ticking Time Bomb’ - Politico
- Israel Signals Plans to Control Security in Syria Buffer Zone and Gaza - WSJ
- Russia Moves Air-Defense Systems, Other Advanced Weaponry From Syria to Libya - WSJ
- Satellite Images Show Russian Air Base in Syria 'Vacated' - Newsweek
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Zelenskyy To Meet With NATO, European Leaders In Push To Bolster Defenses – VOA
- North Korea Faces Grim Reality on Ukraine Battlefield - Newsweek
- Russia Detains Suspect Over Murder Of Chemical Weapons Chief Igor Kirillov - Reuters
- World War III Is Already Underway. In Ukraine. - Politico
- Killing of Top Russian General Is a Message From Ukraine: You Aren’t Safe—Even at Home - WSJ
- Why Europe's Emphasis on ESG Investments Could Inadvertently Support Russia, China - Newsweek
- 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
- Canada Reveals Border-Security Plan to Avert Trump’s Tariff Pledge – WSJ
- New French Prime Minister François Bayrou off to a nightmarish start - Politico
- China’s Corruption Problem Has Blunted Military Modernization Efforts, US Says – The Hill
- Chinese Astronauts Complete World Record-Breaking Spacewalk At 9 Hours - SCMP
- Justin Trudeau Is Facing A Political Crisis Made Worse By Donald Trump. Can He Survive As Canada’s Leader? - CNN
- Germany’s Merz Rips Into His Rivals — But Might Have To Work With Them Soon - Politico
- South Korean Martial Law Fallout Includes Top Defense Officials – Nikkei Asia
- Sewage-polluted lake water kills rhinos, other wildlife in Zimbabwe - VOA
- Milei Says Trump Backs Argentina’s Free-Market Makeover – WSJ
Policy and Politics
Deal to Avert Government Shutdown Collapses As Trump Voices Opposition
President-elect Donald Trump abruptly rejected a bipartisan plan Wednesday to prevent a Christmastime government shutdown, instead telling House Speaker Mike Johnson and Republicans to essentially renegotiate — days before a deadline when federal funding runs out. Trump’s sudden entrance into the debate and new demands sent Congress spiraling as lawmakers are trying to wrap up work and head home for the holidays. It leaves Johnson scrambling to engineer a new plan before Friday’s deadline to keep the government open. The president-elect made a proposal that combined some continuation of government funds along with a much more controversial provision to raise the nation’s debt limit.
Democrats decried the GOP revolt over the stopgap measure, which would have also provided some $100.4 billion in disaster aid to states hammered by Hurricanes Helene and Milton and other natural disasters. Already, the massive 1,500-page bill was on the verge of collapse, as hard right conservatives rejected the increased spending. Rank-and-file lawmakers complained about the extras. The nation’s debt limit expires 2025 and Trump appears to want the issue off the table before he returns to the White House, a reasonable idea but one that typically is tough to negotiate.
Defense Bill Passes Congress Heads to Biden
The U.S. Senate voted overwhelmingly for an $895 billion bill setting policy for the Pentagon on Wednesday, despite the inclusion of a controversial provision on transgender medical care for minors. The Senate backed the National Defense Authorization Act, or NDAA, by 85 to 14. Since it passed the House of Representatives last week, approval sends it to the White House, where the bill's congressional supporters say President Joe Biden is expected to sign it into law.
This year's NDAA authorizes a record $895 billion in annual military spending, covering purchases of ships, aircraft and weapons, and including provisions intended to boost competitiveness with geopolitical rivals like China and Russia.The 1,800-page bill also focuses on improving the quality of life for the U.S. military. It authorizes a 14.5% pay increase for the lowest-ranking troops, and 4.5% for the rest of the force, higher than usual. It also authorizes billions of dollars for military housing, schools and childcare centers.
Hochul Backs Abolishing The Electoral College
New York Governor Kathy Hochul and other New York Democratic power players gathered in the state Capitol to officially cast the state’s 28 Electoral College votes for Vice President Kamala Harris. The governor led the process, expressing a sense of pride for participating in the historic practice that dates back to the nation’s founding. “But for some like me, there’s also a questioning,” Hochul said. She said that in many ways, people today “honor the genius, the talent and the wisdom of our founding fathers,” but there are still “shortcomings” from their work. “The Electoral College does not contribute to the overriding objectives set forth in our Constitution,” Hochul said.
The governor called for amending the U.S. Constitution to eliminate the Electoral College in favor of a national popular vote system. “As governor of the Empire State and president of this Electoral College, I’m ready to do my part,” Hochul said. A spokesperson did not immediately return a request for comment on what that would look like. The governor said that the current practice of the Electoral College “unfairly” benefits less populous states by giving them an “outsized influence” in the election process, both through the distribution of electors and by diminishing campaigning to a handful of swing states. It’s a common refrain among big state politicians and those who represent highly partisan states like New York.
Health and Wellness
12 New Breakthroughs In The Fight Against Cancer
Cancer kills around 10 million people a year and is a leading cause of death globally, according to the World Health Organization. Breast, lung and colon cancer are among the most common. Death rates from cancer were falling before the pandemic. But COVID-19 caused a big backlog in diagnosis and treatment. Scientists working to improve the treatment and diagnosis of cancer are beginning to use AI, DNA sequencing and precision oncology among other techniques.
There is some good news, however. A new trial giving cervical cancer patients a short course of chemotherapy before starting the standard treatment, for example, has cut the risk of death by 40%. Medical advances are accelerating the battle against cancer. Here are 12 recent developments.
Read more at The World Economic Forum
Transition 2024
- The Contortions GOP Senators Are Making For RFK Jr. – Politico
- Trump Picks Herschel Walker to Be Ambassador to the Bahamas - NYT
- Musk And Trump Are Viewed Roughly The Same By Americans, An AP-NORC Poll Finds - AP
- Speaker Johnson Speaks To Musk After He Suggests Torpedoing Spending Bill – The Hill
- Trump Pledged to Cut Taxes for Expats. This Republican Wants to Make It a Reality. - WSJ
- Trump Must Maintain Vital Fentanyl Progress With China, White House Says - Reuters
- Trump Warns Senate GOP Not To Fast-Track Biden Nominees – The Hill
- Conservatives Back Border First, Taxes Later Strategy In Major Party-Line Bills Next Year - Politico
- Tracking Trump’s Cabinet Picks – Politico
Industry News
U.S. Weighs Ban On Chinese-Made TP-Link Router In Millions Of American Homes Linked To Chinese Cyberattacks
U.S. authorities are investigating whether a Chinese company whose popular home-internet routers have been linked to cyberattacks poses a national-security risk and are considering banning the devices. The router-manufacturer TP-Link, established in China, has roughly 65% of the U.S. market for routers for homes and small businesses. It is also the top choice on Amazon.com, and powers internet communications for the Defense Department and other federal government agencies.
An analysis from Microsoft published in October found that a Chinese hacking entity maintains a large network of compromised network devices mostly comprising thousands of TP-Link routers. The network has been used by numerous Chinese actors to launch cyberattacks. These actors have gone after Western targets including think tanks, government organizations, nongovernment organizations and Defense Department suppliers. TP-Link routers are routinely shipped to customers with security flaws, which the company often fails to address, according to people familiar with the matter. While routers often have bugs, regardless of their manufacturer, TP-Link doesn’t engage with security researchers concerned about them, the people said.
The Last-Ditch Efforts to Win Over Critics of the Nippon-U.S. Steel Deal
Nippon Steel’s roughly yearlong effort to take a bigger share of a crucial industrial supply chain isn’t aging well. The company has won state and local support for its effort to buy U.S. Steel, but the bid for the iconic but foundering American steel producer hasn’t gained traction in Washington, where political leaders control the deal’s fate. The $14.1 billion bid to take over U.S. Steel has run into opposition from politicians and union leaders as well as skepticism from investors. Critics of the acquisition effort have held firm despite Nippon Steel’s pledge to invest nearly $950 million in U.S. Steel’s largest mill and an offer of bonuses totaling millions of dollars to all U.S. Steel employees.
A panel of federal agencies has been evaluating the deal’s risks to U.S. national security and has a Dec. 23 deadline to complete its work. The committee’s report could give President Biden justification for blocking the sale. If the deal collapses, U.S. Steel will likely have a tough time in the near term boosting sales and profit on its own. Steel prices are down nearly 40% from a year ago. Buyers have repeatedly rejected price increases from steelmakers since the spring with plenty of cheaper steel still available.
Honda Explores Nissan Rescue With Foxconn Also in Hunt for Stake
Honda Motor Co. is in talks to come to the aid of Nissan Motor Co. by potentially forming the world’s third-largest carmaker in order to better withstand escalating challenges for the global auto industry. The two Japanese manufacturers have engaged in merger discussions that appear to have accelerated after Hon Hai Precision Industry Co., the Taiwan-based producer of iPhones known as Foxconn, approached Nissan about acquiring a stake in the company, a person familiar with the matter said. Foxconn has been investing heavily in factories to build EVs.
Nissan’s years of simmering issues boiled over in early November, when the company slashed earnings forecasts and said it would have to cull 9,000 jobs globally. The automaker also announced a 20% cut to global output as consumers turn their backs on its lackluster lineup, leaving its models to gather dust at dealerships. Various entities have circled Nissan since then, including several activist investors that have built positions in the stock. It’s unclear whether Nissan is also in talks with Foxconn or already rebuffed its overture. A spokesperson for Nissan declined to comment. A representative for Foxconn wasn’t immediately available for comment. Honda Executive Vice President Shinji Aoyama said the carmaker is considering several options that may also involve a capital tie-up or establishment of a holding company under which the combined businesses would operate.
From the 4 Day Work Week to Generative AI Here Is a Look Back at 2024’s Manufacturing Labor Trends
Manufacturers this year continued their efforts to attract the next generation of workers to the industry. The industry remains at risk of a 1.9 million-worker gap in coming years, and companies spent the year experimenting with new approaches to working hours, locations and flexibility in a bid to make roles more appealing to potential talent. As the incoming Trump administration pushes hard on the importance of growing the domestic U.S. manufacturing industry, companies are sprinting to match that growth potential with the talent needed to power it.
At the same time, artificial intelligence and automation offer companies innovative ways to boost efficiency and lessen reliance on manual labor. As manufacturers integrate new technologies into production, they’re also trying to ease workers’ anxieties over fears of job replacement by offering upskilling programs. Read on for a look at some of the top labor trends that drove the manufacturing industry this year and how manufacturers are innovating to recruit and retain top talent.
Read more at Manufacturing Dive
Nvidia's Blackwell Chip Pushes The Company Forward As The AI Revolution Continues
Nvidia stock is on pace for a comfortable triple-digit percentage gain again in 2024, after a nearly 240% surge in 2023. This year's rise is due in no small part to a product that wasn’t even shipped until the last quarter of the year — Blackwell. It’s the largest GPU (graphics processing unit) ever built, created by connecting two dies via a high bandwidth interface (HBI). In layperson’s terms, that translates to a lot of power at high efficiency, which is why it's been in such demand from the so-called hyperscalers — companies like Alphabet and Microsoft that are building out huge data centers to power large language models (LLMs).
First announced in March, Blackwell is in the right place at the right time. Data centers that power generative AI or LLMs are currently occupied with inputting data and training those models. Blackwell and its predecessor, Hopper, are well-suited for that work. Blackwell represents an enormous advancement in power. It contains 208 billion transistors. Its GB200 NVL72 server, which combines 72 Blackwell GPUs with 36 Grace CPUs, clocks up to a 30x performance increase compared to the same number of Hopper GPUs for LLM inference workloads. It also uses up to 25x less energy.
IBM Brings the Speed of Light to the Generative AI Era with Optics Breakthrough
IBM has unveiled breakthrough research in optics technology that could dramatically improve how data centers train and run generative AI models. Researchers have pioneered a new process for co-packaged optics (CPO), the next generation of optics technology, to enable connectivity within data centers at the speed of light through optics to complement existing short reach electrical wires. IBM researchers have shown how CPO will redefine the way the computing industry transmits high-bandwidth data between chips, circuit boards, and servers.
Today, fiber optic technology carries data at high speeds across long distances, managing nearly all the world's commerce and communications traffic with light instead of electricity. Although data centers use fiber optics for their external communications networks, racks in data centers still predominantly run communications on copper-based electrical wires. These wires connect GPU accelerators that may spend more than half of their time idle, waiting for data from other devices in a large, distributed training process which can incur significant expense and energy. IBM researchers have demonstrated a way to bring optics’ speed and capacity inside data centers.
Stellantis Further Delays Electric Ram Pickup To Prioritize Plug-In ‘EREV’ Model
Stellantis said Wednesday it will further delay an all-electric Ram pickup from 2025 until 2026, as the automaker confronts slower-than-expected adoption of EVs and competitors struggle to make profits on electric trucks. The decision to delay the full battery-electric model, which had already been postponed from this year, will help in prioritizing an electric range-extended version of the truck called the Ramcharger that features a gas engine combined with EV technologies, the company said.
The Ramcharger is known as an “extended-range electric vehicle,” or EREV. It can operate as a zero-emissions EV until its battery dies and an electric onboard generator — powered by a 27-gallon, 3.6-liter V6 engine — kicks on to power the vehicle. Ramcharger will be open for customer orders in the first half of 2025, followed by the Ram 1500 REV launch in 2026, Stellantis said. The change in priorities is the first major announced shift since Ram CEO Tim Kuniskis returned earlier this month, following a management shakeup that included Stellantis CEO Carlos Tavares leaving the company.
Amazon Disputes Senate Report that it Ignored Warnings About Speed Quotas Causing Worker Injuries
An investigation by a Bernie Sanders-led Senate committee found Amazon manipulated its warehouses’ injury data to make them appear safer than they are and ignored internal reports linking worker injuries to speed and productivity quotas—which the online retail giant has insisted it does not enforce—according to a report published Sunday. The majority staff report from the Senate Committee on Health, Education, Labor and Pensions (HELP), said Amazon’s claims about its warehouses being nearly as safe as the industry average was the result of “cherry-picking data.”
The report said an analysis of the company’s data showed that Amazon’s warehouses recorded 30% more injuries than the industry average in 2023 and workers at Amazon’s warehouses were “nearly twice as likely to be injured” than other warehouse workers. Amazon disputes the findings saying “…What’s actually happened over the past five years is exactly the opposite – we’ve increased our delivery speeds, while decreasing the injury rates across our network. How is that possible? Because speedy delivery doesn’t come from pushing people harder – it comes from getting products closer to customers and reducing the number of steps involved in going from a supplier to a customer. We’ve spent years re-designing our network to do just that.”
‘Splitting the G’ - Pubs in the UK Introduce Guinness Ration Cards As Stocks Run Dry
Pubs across the UK are beginning to introduce “Guinness ration cards” amid a national shortage of the iconic Irish stout ahead of Christmas. Establishments have been panic buying the beverage in the hope they don’t run dry over the festive period, as some say they have already run out of stock completely. Pubs such as the Old Ivy House, in Clerkenwell, London, introduced rationing rules last week to preserve their stock - but still found themselves short of supply.
The strain on supply has been brought on by a surge in demand which has seen the brand boom in popularity among young people and women. Brand director Joyce He said the viral “splitting the G” trend - which has seen young drinkers attempt to swig enough of their pint on the first gulp that it settles in the centre of the “G” on their glass - has also boosted sales. Last week, a pub in Sheffield said they had stocked up after catching wind of the shortage but have still found themselves floundering,