Member Briefing February 24, 2025
U.S. PMI Composite Slips In February To A 17-Month Despite Manufacturing Component Edging Higher
The S&P Global Flash U.S. PMI composite dipped to 51.6 from January's 52.7 prior final print, a 17-month low, according to data release on Friday. U.S. business activity came close to stalling in February as a drop in services output offset manufacturing growth. The services index slipped to a 25-month low of 49.7 from 52.9 in the prior month, missing the 53.0 consensus. However, the manufacturing index rose to 51.6 from January's final print of 51.2 and outpacing the 51.3 consensus. February's gain marked an eight-month high, S&P said.
The upbeat mood at the start of the year has soured among heightened uncertainty. "Companies report widespread concerns about the impact of federal government policies, ranging from spending cuts to tariffs and geopolitical developments," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Consumer Sentiment Drops and Inflation Fears Surge in Latest U Michigan Survey
The latest University of Michigan consumer sentiment survey released Friday showed headline sentiment extended its early-month decline, sliding nearly 10% from January to a reading of 64.7. Pessimism over the inflation outlook drove February's final read lower as one-year inflation expectations jumped to 4.3% from 3.3% last month. While this was on par with February's preliminary read, it marked the highest reading for inflation expectations since November 2023. It also marked two consecutive months of "unusually large" increases, according to the release.
Long-run inflation expectations, which track expectations over the next five to 10 years, climbed from 3.2% in January to 3.5% in February, the highest since April 1995 and the largest month-over-month increase since May 2021. Expectations for personal finances and the short-run economic outlook both declined almost 10% in February, while the long-run economic outlook fell back about 6%, its lowest reading since November 2023.
Existing-Home Sales Decreased 4.9% in January, But Increased Year-Over-Year
Home sales decreased 4.9% last month to a seasonally adjusted annual rate of 4.08 million units, the National Association of Realtors said on Friday. Sales likely reflected contracts signed in November and December. The average rate on the popular 30-year fixed mortgage increased from 6.72% at the end of October to 6.85% in the final week of December, data from mortgage finance agency Freddie Mac showed.
The inventory of existing homes increased 3.5% to 1.18 million units in January. Supply rose 16.8% from a year ago. The median existing home price increased 4.8% from a year earlier to $396,900 in January. At January's sales pace, it would take 3.5 months to exhaust the current inventory of existing homes, up from 3.0 months a year ago. Properties typically stayed on the market for 41 days last month, the most since January 2020, compared to 36 days a year ago. First-time buyers accounted for 28% of sales, unchanged from a year ago. All-cash sales constituted 29% of transactions, down from 32% a year ago. Distressed sales, including foreclosures, made up 3% of transactions, creeping up after hovering around 2% in recent years.
Global Headlines
Middle East
- Israeli Army To Remain In Some West Bank Refugee Camps For 'Coming Year', Says Defence Minister – France 24
- Three Buses Explode In Israel In 'Suspected Terror Attack', Police Say - BBC
- U.S. and Netanyahu Say Ceasefire Violated After Hamas Returns Wrong Body: 'Horrific' - Newsweek
- Tens Of Thousands Mourn Hezbollah's Slain Leader Nasrallah In Mass Funeral - Reuters
- Israel Halts Release Of Palestinian Prisoners Over ‘Humiliating’ Hostage Handovers - Times of Israel
- Israel Confirms Body Returned by Hamas Is That of Shiri Bibas - NYT
- Hamas Says Israel Delaying Prisoner Release Is ‘Blatant Violation’ Of Truce – France 24
- Rubio Highlights Emerging Terror Threat In Afghanistan - 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
- Russia Launches War's Largest Drone Attack On Ukraine, Kyiv Says – Reuters
- Zelensky Offers to Step Down, if Ukraine Can Join NATO - NYT
- Ukraine To Start Work On Finalising US Minerals Deal On Monday – Euro News
- European Leaders Draft Peacekeeping Plan for Ukraine With U.S. Forces as ‘Backstop’ – WSJ
- Four Scenarios For Securing Peace In Ukraine - VOA
- Trump’s Attack on Zelensky Signals New World Order Taking Shape - WSJ
- Europe Must Secure Ukraine's Future If US Won't, Ex-Army Head Says - BBC
- EU Leaders Plan €20B Ukraine Aid Package As Trump Turns Against Zelenskyy - Politico
- Trump Ukraine Envoy Calls Zelenskyy ‘Courageous,’ Breaking From Recent Administration Criticism - 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
- German Election 2025 Live: Conservative CDU Wins And Far-Right AfD in Second Place, Exit Polls Show – Reuters
- How Germany Found Itself Holding An Italian Election - Politico
- Macron Says Deadly Knife Attack In Eastern France An 'Islamist Terror Act' – France 24
- US Sends 20 Armored Personnel Carriers To Haiti - VOA
- China Conducts Rare Military Drill Near Australia - BBC
- Brussels Considers Major U-Turn On Green Reporting Rules - Politico
- Foxconn Goes After Nissan EV Business By Proposing Honda Tie-Up- Nikkei Asia
- UN Security Council Demands Rwanda Withdraw Troops From Eastern DR Congo – France 24
- Pope Francis Is In Critical Condition But Alert, Vatican Says - Reuters
- France Leaves Last Remaining Military Base In Ivory Coast – France 24
- South Korea's Impeachment Trial In Final Stages: 5 Things To Know – Nikkei Asia
Policy and Politics
Senate Adopts Budget Resolution After Marathon Overnight Vote-A-Rama
The Senate adopted a budget resolution Friday intended to serve as a blueprint to deliver the first part of President Trump’s agenda. Senators voted 52-48, mostly along party lines, on the resolution after a marathon overnight voting session. The “vote-a-rama” lasted about 10 hours, as Democrats sought to dial up the heat on Republicans with dozens of amendments needling the party on taxes and Medicaid.
The resolution helps pave the way for Republicans to pass roughly $340 billion in funding, including $175 billion in for border operations and immigration enforcement and to carry out Trump’s ambitious deportation plans, as well as $150 billion in defense spending. The vote serves as a marker for Senate Republicans in their ongoing battle with the House GOP over the best way to deliver on Trump’s top priorities. The House Budget Committee advanced its budget resolution last week, and the full chamber is expected to vote on it in the coming days.
On Again: Court Lifts Injunction on the Corporate Transparency Act
the U.S. District Court for the Eastern District of Texas lifted the nationwide injunction issued in Smith v. United States Department of the Treasury, which had been blocking the enforcement of the Corporate Transparency Act (CTA). As a result, the CTA’s reporting obligations are back in effect, as of today and pending any new court rulings. This ruling reinstates the requirement of certain U.S. businesses to disclose their beneficial ownership information to the Financial Crimes Enforcement Network (FinCEN).
In response to the court's ruling, FinCEN announced a 30-day extension for filing these reports, giving businesses additional time to comply with the reporting requirements. FinCEN Notice FIN-2025-CTA1 provides: “the vast majority of reporting companies, the new deadline to file an initial, updated, and/or corrected BOI report is now March 21, 2025.” The FinCEN notice also states that it “will provide an update before then of any further modification of this deadline, recognizing that reporting companies may need additional time to comply with their BOI reporting obligations once this update is provided.” Businesses are advised to promptly assess their reporting obligations under the reinstated CTA and ensure timely submission of the required beneficial ownership information to FinCEN by the March 21 deadline.
Fed Minutes: More Gains on Inflation Needed Before Cutting Rates Again
The Federal Reserve wants to see “further progress on inflation” before deciding to cut interest rates again, according to the minutes from a two-day meeting of its rate-setting committee that concluded on Jan. 29. Some officials even suggested that the Fed may not need to lower rates that much further. The Fed, citing elevated inflation pressures, held short-term interest rates steady at a range of 4.25% to 4.5% at that meeting.
According to the minutes, committee members agreed the bank “was well positioned to take time to assess the evolving outlook for economic activity, the labor market, and inflation.” Potential policy changes from President Donald Trump and the Republican Congress may have an impact on future rate decisions as well, the minutes indicated. The minutes cited “elevated uncertainty regarding the scope, timing, and potential economic effects of possible changes to trade, immigration, fiscal, and regulatory policies.” The central bank also indicated in the minutes that the risks to achieving its so-called dual mandate of price stability and maximum employment were “roughly in balance.”
Trump’s First 100 Days
- DOGE Is Searching for Wasteful Spending. It Isn’t Hard to Find. – WSJ
- List Weekly Accomplishments Or Resign, Musk Tells US Federal Workers - BBC
- Some Agencies Urge Staff Not to Comply With Elon Musk’s Performance Email - NYT
- Trump Orders Use Of CFIUS To Restrict Chinese Investments In Strategic Areas – Reuters
- Trump Gets Middling Grades On Americans' Top Issues, Reuters/Ipsos Poll Finds - Reuters
- Trump Fires Top Pentagon Officers in Sweeping Overhaul - WSJ
- Trump Suggests He’s Considering ‘DOGE Dividend’ Checks For Americans - Forbes
- California Asks US Government For Billions In Fire Relief Funds - BBC
- Trump Administration to Replace Acting ICE Director - WSJ
- Kash Patel Sworn In As FBI Director – C-SPAN
- Mitch McConnell Won’t Seek Another Term in Senate - Politico
- President Bans Undocumented Immigrants From Public Benefits - Forbes
- The Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
- Tracking Trump’s Cabinet Confirmations - NYT
Health and Wellness
Airborne Transmission Of Highly Pathogenic Bird Flu
In just the past thirty days, no fewer than 23.3 million birds have been affected in the US including 102 commercial flocks and 49 backyard flocks. H5N1 is showing itself to be a highly persistent and costly threat. A key question for both farmers and government officials is how the virus gets onto farms in the first place. Some transmission routes—such as direct contact with wild birds, contaminated feed or drinking water, and movement by people through contaminated clothing or equipment—are well-documented, and biosecurity measures are taken at many farms to minimize exposure.
Now, new research sheds light on an often-overlooked mechanism: windborne transmission. The study, conducted after an outbreak of H5N1 in the Czech Republic in February 2024, presents compelling genetic and meteorological evidence that H5N1 can travel significant distances via wind, challenging the conventional wisdom and highlighting the need to reconsider outbreak mitigation strategies. One of the most significant insights from the study is the role of tunnel ventilation systems in facilitating windborne spread. These ventilation systems function like high-volume air samplers, creating negative pressure inside poultry houses that draws in huge quantities of ambient air effectively concentrating whatever particulates may be in that air, in this case infectious virions of H5N1.
Industry News
Tariff Changes Are Coming Fast – 6 Tips On How Manufacturers Can Prepare
The first three weeks of President Donald Trump’s new term have proven that rapid-fire executive orders can force every business to adapt at the same lightning speed. The current administration isn’t treading lightly; many signals points to a swift and forceful pivot in U.S. trade policy. For decades, the manufacturing world thrived under a stable globalization framework. Now, Trump is determined to reverse that trend. Having long observed China’s mastery of tariffs, trade barriers and industrial policy—even praising their industrial dealmaking back in 2011—he’s set his sights on replicating those tactics at home.
Even If there’s a 20% chance that some of these tariffs could stick around for more than a year, the financial impact could be enormous. Ambrose Conroy, Founder and CEO of Seraph says that manufacturing and supply chain leaders, the key is preparation, not paralysis. He suggests six“no-regrets” moves you can and should consider today. The are: (1) Assemble a response team. (2) Analyze your profitability (3) Map out your supply chain. (4) Review your contracts. (5) Develop a tariff sensitivity model. (6) Document operational knowledge.
Corning Invests $315M To Upgrade Semiconductor Glass Manufacturing Facility In New York
Corning Incorporated has announced plans to upgrade its facility in Canton, New York. The company, which specializes in glass and ceramics, will invest $315 million into the project, creating 130 new jobs in the process. The investment will be used to increase production of Corning’s High Purity Fused Silica (HPFS) and EXTREME Ultra Low Expansion (ULE) glass, and scale a novel technology manufacturing process at the site.
According to the company, the project will help to create a reliable domestic supply of vital semiconductor manufacturing components and help advance U.S. technology leadership in the lithography supply chain. To help support the project, Empire State Development will provide Corning with up to $7 million in performance-based Excelsior Jobs Program tax credits. Corning Incorporated Chairman and CEO Wendell Weeks said, "This strategic investment will enable our Canton, N.Y. facility's continued growth and the expansion of next-generation manufacturing capabilities necessary for producing critical materials for lithography tools that create the world’s most advanced microchips.”
Chip Makers Push Supply Diversification and Tariffs Loom
Chipmakers GlobalFoundries and Analog Devices are pushing to further diversify their supply chains ahead of the Trump administration’s wide-ranging tariff policies. The comments came days before President Donald Trump announced plans to put a 25% tariff on semiconductor imports as soon as April 12, adding further potential upheaval to the global semiconductor supply chain.
During GlobalFoundries’ Q4 earnings call earlier this month, President and CEO Thomas Caulfield said that as customers weigh the impact of tariffs, diversification is key to limiting their exposure. “We need to have the ability to source from different regions,” Caulfield said. “And I think it’s just raising the height of importance of diversification and supply chain with customers.” The CEO said that customers are asking for multi-sourced product options from across geographic regions, leveraging the chipmaker’s broad manufacturing network across the U.S., Europe and Asia. GlobalFoundries is increasingly looking to its Malta, New York, and Burlington, Vermont, facilities to supply U.S.-based customers, especially automakers.
Read more at Manufacturing Dive
GE, Pratt Clear Key Design Milestone, Begin Building Next-Gen Fighter Engine Prototype
Engine makers GE Aerospace and RTX subsidiary Pratt & Whitney have both formally passed a key design milestone for the Air Force’s Next Generation Adaptive Propulsion (NGAP) program, paving the way for the two companies to begin building their respective prototypes. GE Aerospace said in a statement Wednesday that its prototype design, dubbed the XA102, cleared what’s known as Detailed Design Review (DDR), the final step before work to construct the engine can commence. In a statement Friday, Pratt similarly announced that its NGAP offering, called the XA103, has also cleared the DDR milestone.
The announcements follow a new round of contracts issued by the Air Force in January for the NGAP program, which raised the total award ceiling for each vendor to $3.5 billion each. The Air Force is expected to assess the performance of each prototype once they begin testing later this decade, and make a down-select decision from there. The “adaptive” engine technologies underpinning the NGAP program could herald a leap in military propulsion, Air Force officials have said, because they can change the characteristics of a jet engine in flight to enable features like more fuel-efficient cruising or increased thrust.
Logistics Manager's Index Sees Fastest Expansion Since June Of 2022
The January Logistics Manager’s Index reads 62.0, up +4.7 points from December’s reading. This is the fastest reading of expansion in the overall index since June of 2022. Movements in eight of the seven sub-metrics of this index contributed to this increasing velocity of positive change. After registering in at 50.0 (no change) in December, inventory levels are back up (+8.5) to 58.5 – spurred on by a 22.2-point bump in downstream inventory levels as retailers went from contraction at 33.9 to expansion at 56.1.
This led to notable cost/price increases as inventory costs (+8.5 to 70.2), warehousing prices (+5.1 to 73.1), and transportation prices (+3.5 to 70.4) are all over 70.0 since April of 2022 when transportation started its two-year slide. Expansion for both capacity metrics slowed in January with both warehousing capacity (-5.2 to 51.7) and transportation capacity (-0.5 to 52.6) reading in at only very mild rates of expansion, suggesting that prices are up due to demand and not other factors like inflation. This notion is cemented by the continued strong expansion in warehousing utilization (68.3) and transportation utilization (60.1).
Read More at Material Handling & Logistics
DOD Reviewing ‘Non-Essential’ Consultancy Contracts For Termination
The Defense Department has ordered all acquisition shops to review consulting service contracts to determine whether they are essential to Trump administration priorities, and terminate those deemed not to fit that bill. “To ensure we are accountable for every dollar we spend and that we are aligned with the President of the United States’ America First priorities and Secretary of Defense [Pete] Hegseth’s direction, Component heads will conduct a comprehensive review and validation of existing contracts for consulting services,” states the Feb. 18 memo signed by Steven Morani, who is performing the duties of DoD’s undersecretary for acquisition and sustainment.
The memo mandates an assessment of “the essentiality of contracts … for the purpose of terminating or descoping contracts for activities that are not essential for the Department to fulfill its statutory purposes.” The DoD review is taking place in two parts: first looking at contracts let under the General Services Administration vehicle, then other types of contracts. Component heads have until March 19 to submit to the results of the first review and until April 19 for the second. The memo doesn’t define “consulting services,” so it is unclear what exactly will fall under the review and how much money is currently being spent on these types of contracts.
DoD Awards $186M for Pratt’s F135 Engine Depots
The U.S. Dept. of Defense issued a new, $186-million contract to Pratt & Whitney engines in support of the F135 engine program. The award is defined to cover material and support equipment for depot maintenance, program administration, supplies, services, and planning for depot start-ups, and equipment for sustaining the F135 engines. According to the Pentagon announcement, the new Pratt contract will be completed by February 2028. Funding for the three-year project will be allocated from the budgets for the U.S. Air Force, U.S. Marine Corps, U.S. Navy, and the DoD’s non-US partner funds.
The F135 is the afterburning turbofan power source for the F-35 single-engine, Joint Strike Fighter jets in service with the U.S. Air Force, U.S. Navy, U.S. Marine Corps, and more than a dozen allied defense forces. Currently, Pratt is carrying out an Engine Core Upgrade (ECU) project to improve the propulsion system capabilities for all three variants of the F135 turbofan engine, in anticipation of the Department’s plan to upgrade the three different F-35 aircraft models.
Read more at American Machinist
Amazon Surpasses Walmart In Revenue For The First Time
Amazon has dethroned Walmart in quarterly revenue for the first time ever. Amazon said earlier this month that it brought in $187.8 billion in revenue during the fourth quarter. That beat Walmart’s sales for the period, which came in at $180.5 billion, the company reported on Thursday. Since 2012, Walmart has held the distinction of being the top revenue generator each quarter, a title it gained after overtaking oil giant Exxon Mobil.
Walmart still leads the way in annual sales, though Amazon is gaining ground. Walmart is projected to reel in $708.7 billion in the fiscal year ahead while Amazon’s full-year revenue for 2025 is expected to reach $700.8 billion, according to FactSet. Amazon’s core retail unit remains its biggest revenue generator, but its top line is also being fueled by its massive cloud computing, advertising and seller services businesses. Third-party seller services, which includes commissions and fees collected by Amazon on fulfillment and shipping, advertising and customer support, accounted for 24.5% of the company’s total sales last year. Amazon Web Services was responsible for nearly 17%.