Member Briefing February 12, 2025
NFIB Survey: Small Businesses Remain Optimistic, But Uncertainty is on the Rise
The NFIB Small Business Optimism Index fell by 2.3 points in January to 102.8. This is the third consecutive month above the 51-year average of 98. The Uncertainty Index rose 14 points to 100 – the third highest recorded reading – after two months of decline. “Overall, small business owners remain optimistic regarding future business conditions, but uncertainty is on the rise,” said NFIB Chief Economist Bill Dunkelberg. Key findings include:
- The net percent of owners expecting the economy to improve fell five points from December to a net 47%).
- Eighteen percent of owners reported that inflation was their single most important problem in operating their business, down two points from December and matching labor quality as the top issue. The last time it was this low was in November 2021.
- The net percent of owners raising average selling prices fell two points from December to a net 22%.
- A net 26% plan price hikes in January, down two points from December.
- Thirty-five percent of all owners reported job openings they could not fill in the current period, unchanged from December.
- Twenty percent plan capital outlays in the next six months, down seven points from December.
- A net 3% of owners reported that their last loan was harder to get than in previous attempts (down one point). The last time it was this low was June 2022.
Powell: Central Bank Doesn’t ‘Need To Be In A Hurry’ To Lower Interest Rates Further
Machine shops and other U.S. manufacturers ordered $513.8 million worth of capital equipment for metal cutting, forming, and fabricating during December 2024, a +15.0% rise from November, and +5.3% more than the previous December’s order total. According to AMT - the Assn. for Manufacturing Technology, the December result represented the highest monthly order total for manufacturing technology orders since March 2023. Despite the improvement in December, the total value for 2024 new orders was $4.7 billion – which represents a -3.8% decrease in order values from 2023. The USMTO report has not recorded an annual increase in orders for three consecutive years, since 2021.
The weakness in USMTO activity during much of the past year may be attributable to low demand from “contract machine shops,” the so-called job shops that are the largest cohort of the industry. Their order total was down -3.7% year over year, nearly even with overall orders. Also reducing their manufacturing technology orders were the automotive manufacturers, from whom demand fell significantly last year as vehicle demand declined. But, more positively, job shop demand improved during the last quarter of 2024, outperforming the market overall. And bookings from the aerospace segment rose markedly, reaching a three-year high in December 2024.
Machine Tool Demand Rising
The European Union plans to retaliate against the United States for new steel and aluminum tariffs, adding another element to rising global trade tensions. “Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures,” European Commission President Ursula von der Leyen said in a statement late Monday. The statement comes after U.S. President Donald Trump signed an executive order to impose 25% tariffs on steel and aluminum. Shares of American steelmakers rallied sharply on Monday following the order.
The latest tariffs could raise the price of foreign steel, and thereby help to support U.S. steel producers at the expense of international competitors. Von der Leyen called tariffs “bad for business, worse for consumers.” The rising trade tensions come at a time when inflation, both in the U.S. and globally, has yet to completely return to pre-pandemic levels. Some economists warn that tariffs could be passed on to consumers in the form of higher prices, which would push up inflation.
Read more at American Machinist
Global Headlines
Middle East
- King Of Jordan Urges Patience As Trump Presses Gaza Takeover – BBC
- Jordan To Take 2,000 Sick Gaza Kids As Trump Pushes Gaza Plan – France 24
- Israel’s Netanyahu Warns Hamas Must Free Hostages by Saturday - WSJ
- Israel and Hamas Prepare for Return to War - Newsweek
- WFP Says Worker Died In Detention In Houthi-Controlled Yemen - BBC
- UN Says Gaza Aid Flows Have Risen During Ceasefire; Witnesses Report Hold-Ups - Reuters
- With No New Nuclear Deal, Iran To Remain Under Maximum Pressure, US Says - VOA
- 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 Proposes Land Trade With Putin, Offers To Return Kursk – Politico
- As Trump-Linked Private Jet Lands in Moscow: Reports - Newsweek
- Russia Plays Hardball On Ukraine Peace Discussions After Trump Talks Of Putin Contact - Reuters
- Vance To Meet With Zelenskyy Friday - Politico
- Drone Warfare: US Army Looks To Learn Lessons From Ukraine – France 24
- Russia Releases American Marc Fogel As Trump Administration Pushes For End To Ukraine War - Forbes
- US Defense Chief Headed To Europe For NATO, Ukraine Meetings – VOA
- Russia Lashes Out At EU Plans To Seize Its ‘Shadow Fleet’ In The Baltic Sea - 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
- Rushdie Tells Court About Stabbing: 'I Thought He Had Punched Me'. - BBC
- Japan PM Ishiba's Approval Rate Rises 5 Points To 44%, NHK Poll Shows - Reuters
- Modi To Meet Trump With Focus On Trade, Immigration And Strategic Ties - VOA
- Eastern And Southern African Leaders Call For Ceasefire In DR Congo – France 24
- Many Argentines Back Milei On Economy. His War On Diversity Is More Divisive. - Reuters
- Rebels Attack DR Congo Army Ending Lull In Fighting - BBC
- Germany's Trade Surplus With US Reaches New Record - Reuters
- UK And US Refuse To Sign International AI Declaration - BBC
- European Carmakers In Crossfire Of US-EU Trade War - Politico
Policy and Politics
House Leaders Bullish On Budget Markup
GOP leaders struck an optimistic note Tuesday morning about their latest budget plan following a series of delays amid internal fighting — indicating it could get taken up in committee as soon as Thursday. Speaker Mike Johnson said in a brief interview that he had “very productive” conversations Monday night about the new fiscal blueprint he has been circulating among key GOP factions. That plan — which would tee up a massive GOP-only tax, border and energy bill — would increase spending cuts but also leave less room for President Donald Trump’s sweeping tax policies.
Johnson and GOP leaders are still waiting for final Budget Committee feedback, and inside the meeting, panel Chair Jodey Arrington told members “we’re so close” on a final budget blueprint.
Trump’s Steel Tariffs Could Trigger Broader Trade War As EU Threatens ‘Proportionate Countermeasures’
The European Union plans to retaliate against the United States for new steel and aluminum tariffs, adding another element to rising global trade tensions. “Unjustified tariffs on the EU will not go unanswered — they will trigger firm and proportionate countermeasures,” European Commission President Ursula von der Leyen said in a statement late Monday. The statement comes after U.S. President Donald Trump signed an executive order to impose 25% tariffs on steel and aluminum. Shares of American steelmakers rallied sharply on Monday following the order.
The latest tariffs could raise the price of foreign steel, and thereby help to support U.S. steel producers at the expense of international competitors. Von der Leyen called tariffs “bad for business, worse for consumers.” The rising trade tensions come at a time when inflation, both in the U.S. and globally, has yet to completely return to pre-pandemic levels. Some economists warn that tariffs could be passed on to consumers in the form of higher prices, which would push up inflation.
Green Lawmakers Pressure Hochul to Speed up Action on Climate Act
Delays in moving forward with New York State’s sweeping climate action law are stirring up concerns among its supporters that Gov. Kathy Hochul is seeking to avoid a perceived political price. As part of her State of the State agenda last month, Hochul said state agencies have until the end of 2025 to propose just one element of required regulations. That misses the Climate Leadership and Community Protection Act’s deadline by nearly two years and with no sign of when the rest might follow.
That law, enacted in 2019, requires the state to drive down planet-warming emissions and shift away from fossil fuels, touching on nearly every sector of the economy and costing a projected $300 billion. However, the political and economic environment have changed. Hochul has had other priorities and expressed a willingness to “rethink” where climate fits into her agenda. Her current main theme is “Making New York State More Affordable,” and the governor has been sensitive to anything that might hit New Yorkers’ wallets. That includes measures that would advance aspects of the climate law — but could also raise household costs.
Trump’s First 100 Days
- Elon Musk Defends Cost-Cutting Efforts in Oval Office Appearance – WSJ
- Trump Administration Ordered To Restore Removed CDC And FDA Websites - Reuters
- Senate Dem Alleges Trump’s FBI Pick ‘May Have Perjured Himself’ - Forbes
- Judge Adjusts Ruling Blocking Musk, DOGE From Treasury Department Payment Systems – The Hill
- New York Democrats Shelve Bill Allowing Governor To Delay Special Elections – NY State Of Politics
- DOGE Announces it's Slashing $881M from Education Department Contracts - Newsweek
- DHS Seeks to Deputize IRS Officers to Help With Deportation Effort - WSJ
- Hegseth Calls On Senate To Confirm Trump Nominees – Defense Scoop
- Obama Has Highest Favorability Rating Of Living Presidents — And Biden The Lowest, Poll Shows - Politico
- Tracking Trump’s Cabinet Confirmations - NYT
Health and Wellness
Flu Season In The US Is The Most Intense It’s Been In At Least 15 Years
One indicator of flu activity is the percentage of doctor’s office visits driven by flu-like symptoms. Last week, that number was clearly higher than the peak of any winter flu season since 2009-2010, when a swine flu pandemic hit the nation, according to data posted Friday morning by the Centers for Disease Control and Prevention. So far this season, the CDC estimates, there have been at least 24 million flu illnesses, 310,000 hospitalizations and 13,000 deaths — including at least 57 children. Traditionally, flu season peaks around February.
Late Friday afternoon, a CDC spokesperson acknowledged that the new data shows “the highest absolute value” of flu-like illness when compared with other seasons, but added that the statistic is complicated: That value references a baseline estimate for doctor’s office visits, but the baseline is recalculated every year. In late January, the CDC was describing the season as “moderate” in severity. U.S. health officials recommends that everyone 6 months and older get an annual flu vaccination. About 44% of adults got flu shots this winter, the same as last winter. But coverage of children is way down, at about 45% this winter. It’s usually around 50%, according to CDC data
Industry News
Ford CEO Says Trump’s Tariffs Are Causing ‘Chaos’ In Auto Industry
President Donald Trump’s tariffs, both implemented and just threatened, are causing “chaos” for the U.S. automotive industry, according to Ford Motor CEO Jim Farley. The chief executive of America’s second largest automaker described 25% tariffs on steel and aluminum, as well as threatened levies of the same amount on Mexico and Canada as adding “a lot of cost and a lot of chaos” to the industry.
Farley said a majority of the company’s steel and aluminum are domestically sourced; however, there are suppliers to the automaker that source such materials from outside of the country, which could have an impact on costs. Farley seemed most concerned about potential duties on goods from Mexico and the U.S., saying a 25% tariff that could go into effect as soon as March 1 would be “devastating” and “blow a hole in the U.S. industry that we’ve never seen.”
Chinese Economy Facing Quadruple Threat Despite Spending Boom
China's Consumer Price Index (CPI) rose 0.5 percent in January compared to the same month last year, according to the country's National Bureau of Statistics, up from 0.1 percent a month prior and marking the fastest growth rate since August. January's household spending was lifted by an earlier-than-usual Lunar New Year holiday, and came as a much-needed boon for Beijing's economy. However, the country's deflationary crisis persists, and when compounded by sluggish domestic consumption, an out-of-character production slump, and the recent imposition of tariffs from the United States, creates a fourfold challenge for the economic giant.
If China remains trapped in its deflationary spiral, an influx of cut-price Chinese goods into global markets could create intense competitive pressures for global manufacturers. As the world's second-largest importer, a weakened Chinese economy could slash demand for foreign products and deprive exporters of a critical marketplace. According to the National Bureau of Statistics data, core CPI—excluding the more volatile food and energy sectors—climbed to a 0.6 percent annual increase, accelerating from December's 0.4 percent gain.
Coca-Cola Beat Earnings Expectations
Coca-Cola posted another strong quarter as it gains ground on rival PepsiCo. In its fourth quarter earnings report, which came out before the market opened on Tuesday, the company bested the Street's estimates across the board. Revenue came in at $11.5 billion, compared to expectations of $10.67 billion. Earnings per share came in at $0.55, compared to expectations of $0.52. That was largely driven by higher price/mix, which grew 9%, while unit case volume increased 2%.
For the full year, organic revenue grew 12%, as higher prices helped counter headwinds like more cautious consumers, less favorable commodity costs, and more challenging trends in international markets. In 2025, the company expects to deliver organic revenue growth of 5% to 6%, as well as adjusted earnings growth of 2% to 3%.
Honda Invests $1B To Retool Ohio Facilities To Produce ICE, Hybrid, And EV Models On The Same Production Line
Honda has announced plans to retool its Marysville Auto Plant (MAP), East Liberty Auto Plant (ELP) and Anna Engine Plant (AEP). The company will invest over $1 billion into the project to allow Honda to build internal combustion engine (ICE), hybrid-electric, and battery electric vehicles (EVs) on the same production lines. Honda claims that the new manufacturing environment will be more human-friendly and environmentally responsible, while still allowing the company to achieve high levels of quality, efficiency and value.
The three facilities, which are part of the Honda EV Hub in Ohio, will begin EV production in late 2025. The Hub will start producing the new Acura RSX EV followed by Honda EV models based on the Honda 0 SUV and Honda 0 Saloon prototype. Bob Schwyn, senior vice president, Honda Development & Manufacturing of America, LLC, said, "The Honda EV Hub provides Honda with the flexibility to produce ICE, hybrid-electric and EV models on the same production lines so we can quickly respond to shifting customer needs and market conditions. Beyond adding the capability to produce EVs, we completely reimagined our approach to manufacturing, transforming the Honda production environment with more human-friendly processes and sustainable manufacturing practices."
U.S., France Urge Light AI Regulation
In his Tuesday talk at this week's “AI Action Summit” in Paris—his first major speech since taking office last month—Vice President JD Vance said the U.S. is winning the AI race and regulation should be light to allow that victory to continue. “We believe that excessive regulation of the AI sector could kill a transformative industry just as it’s taking off,” said Vance, who then cited the European regulations he believes are burdensome to U.S. businesses. “We need our European friends in particular to look to this new frontier with optimism rather than trepidation.”
French President Emanuel Macron seemed to be on the same page. Macron acknowledged the need to regulate AI (e.g., to safeguard intellectual property)—but he also called it “a technological and scientific revolution like few we’ve seen before” and said it represents a “moment of opportunity for mankind. … If we regulate before we innovate, we won’t have any innovation of our own,” according to the New York Times. France hopes to use the summit to position Europe as a top contender—not just a leading regulator—in a global competition where the United States and China are so far the biggest players. Because France gets about 70% of its power from nuclear energy, it has the capability to build out its data center capacity without worrying about carbon emissions, Macron added.
Con Edison Proposes Double-Digit Rate Increase For Electricity And Natural Gas
More than 3 million homes and businesses in New York City and the suburbs could face a double-digit increase in natural gas and electric bills. Con Edison says it needs to raise rates to build and maintain the power grid of the future. Con Ed says it understands economic challenges facing customers and wants to expand assistance to the most needy, but it sees a pressing need to upgrade infrastructure to better protect from weather-related outages and meet ever-increasing demand for reliable electricity.
If approved by the New York State Public Service Commission, the average electric bill will go up 11.4%, and an average gas bill up 13.3%. Con Ed says these increases will be used to fund projects, like MTA bus depots, as well as ensure that the company adheres to state climate laws, including New York State's Climate Leadership and Community Protection Act (CLCPA). The CLCPA is a law that requires New York to reduce greenhouse gas emissions and transition to a zero-emission electric grid. Con Edison's Clean Energy Commitment outlines how they plan to help achieve these goals.
Goodyear To Cut 850 Jobs At Virginia Plant
The Goodyear Tire & Rubber Co. plans to reduce production capacity and cost per tire in its Americas region by cutting approximately 850 workers at its manufacturing facility in Danville, Virginia, according to a Jan. 30 securities filing. The company made the decision after it announced plans to refocus the Danville plant on producing rubber mixing and aviation tires, Goodyear said in an email to Manufacturing Dive. The company expects to complete the plan by year’s end and spend between $130 million to $140 million implementing the job cuts and plant transformation, per the filing.
Goodyear has been working on streamlining its portfolio and production to reduce costs since 2023 as part of a corporate transformation plan. The company aims to cut $1.5 billion in costs by the end of the year by optimizing manufacturing plants, supply chain and research and development efforts, CEO and President Mark Stewart said on a November earnings call.
Read more at Manufacturing Dive
Trump’s Arctic Goals Demand Icebreakers, but U.S. Struggles to Build Them
In the intensifying global race to access the Arctic, icebreakers are the essential tool to open trade routes, allow resource extraction and project military power. The U.S. and its allies have fallen far behind Russia, and China is rapidly gaining ground with the help of the world’s largest shipbuilding industry. President Trump has signaled that he wants to put the Arctic back at the top of the U.S.’s priority list. He has said the U.S. needs to take ownership of Greenland for national security and that the Coast Guard will expand its fleet of icebreakers.
“We’re going to order about 40 Coast Guard big icebreakers. Big ones,” Trump said last month. That will be a tall order to fill. The U.S. has been struggling for years to build a single icebreaker—vessels that clear a path through the ice for other ships. Even if Trump is able to marshal the political will and money to build more, the U.S. will have to breathe life back into its ailing shipbuilding industry, which has been in decline for decades.
Wolfspeed Nears Completion Of Its $5B North Carolina Factory
Wolfspeed, the Durham semiconductor maker, hopes to take full occupancy of its under-construction factory in Chatham County in March and begin production in June, the company told Axios. The facility will produce 200-millimeter silicon carbide crystals, a larger and more efficient structure than it currently produces. Some testing of its crystal production is already underway at the facility — but once the site is completed the factory will be able to produce silicon carbide crystals and ultimately refine them into wafers. These silicon carbide semiconductors are more energy-efficient and durable than traditional silicon chips.
The company remains in negotiations with the incoming Trump Administration to finalize a $750 million CHIPS Act grant for boosting semiconductor manufacturing in the U.S., according to a company spokesperson. The funding will support the Siler City plant's expansion. Wolfspeed opened a facility in Marcy, New York in 20222 that helps finish the manufacturing of computer chips made in North Carolina.