Member Briefing February 28, 2023
U.S. Core Capital Goods Orders Rebound in January but Durable-Goods Orders Sink
New orders for key U.S.-manufactured capital goods increased more than expected in January while shipments of those so-called core goods rebounded, suggesting that business spending on equipment picked up at the start of the first quarter. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, rose 0.8% last month, the Commerce Department said on Monday. These core capital goods orders dropped 0.3% in December.
But orders for items ranging from toasters to aircraft that are meant to last three years or more tumbled 4.5% in January. These so-called durable goods orders increased 5.1% in December. Orders last month were weighed down by a 54.6% plunged in the volatile civilian aircraft category, which followed a 105.6% surge in December. Boeing reported on its website that it had received 55 aircraft orders in January, a fraction of the 250 booked in December. Core Orders for transportation equipment dropped 13.3% after increasing 15.8% in December. Motor vehicle orders gained 0.2%.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Photo Gallery: Donbas is Ground Zero of Russia’s War in Ukraine - Politico
- Russia Launches New Wave of Iranian-Made Drones Against Ukraine - WSJ
- Kyiv Denies Russia's Claims it Has Captured Settlement North of Bakhmut – Euronews
- Russia's Medvedev Says Arms Supplies to Kyiv Threaten Global Nuclear Catastrophe - Reuters
- UN chief: Russia Unleashed ‘Widespread Death, Destruction and Displacement’ with Ukraine Invasion – The Hill
- Kremlin says China's Ukraine Peace Plan Should be Studied in Detail - Reuters
- Sanctions Net Widens to Catch Russia’s Middle East Shipping Company - WSJ
- Sending F-16s 'a Question for a Later Time,' National Security Adviser Says - Politico
- China Lethal Aid to Russia Would Come at Real Cost, U.S. says - Reuters
- China Accuses US of ‘Outright Bullying’ with Russia-Linked Sanctions – The Hill
- 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
Yellen Says She Will Talk Deficit-Reduction with Republicans, Not Debt Limit
U.S. Treasury Secretary Janet Yellen said on Saturday she was willing to negotiate with Republicans in Congress over the Biden administration's budget proposal to be unveiled next month - but not as a condition of raising the debt ceiling. Yellen told Reuters in an interview that the Biden budget for fiscal 2024 would contain "substantial deficit reduction over the next decade.
Yellen said the United States "can't bargain over whether or not we're going to pay our bills. It's simply a fundamental responsibility a government has." Yellen said that tax receipts collected around the April 15 filing deadline could allow for some adjustments in the department's estimate of when it would no longer be able to pay all of the government's bills without an increase in the $31.4 trillion debt limit.
US Secretary of Commerce: How We'll Spend $50 Billion to Dominate Semiconductors
Last year's CHIPs Act created a $50 billion pool of cash to invest in boosting America's semiconductor industry. Last Thursday U.S. Secretary of Commerce Gina Raimondo, speaking at Georgetown University’s School of Foreign Service explained how the government plans to spend that money. $39 billion has been allocated for incentives to encourage domestic semiconductor manufacturing; $11 billion has been invested in semiconductor R&D.
The first application for commercial manufacturing building and expansion with CHIPS funding will launch next week. Looking forward, further funding opportunities for supply chain companies and R&D will become available in the coming months. To create the workforce needed for these goals, Raimondo issues a call for colleges and universities to triple graduates in semiconductor-related fields. She also implores high schools and community colleges to train 100,000 technicians in the next 10 years.
US COVID – First at-Home Combination Test for COVID and Flu Authorized by FDA
Now that we've all been trained on doing nose swabs for COVID-19 tests, we will soon have the option to test for the flu at the same time, too. The Food and Drug Administration has authorized the first over-the-counter at-home test that can detect and differentiate between a test result for flu and a test result for COVID-19. The Lucira COVID-19 and Flu Home Test is a single-use test, which can be purchased without a prescription. A nasal swab is used as with an at-home COVID test; in 30 minutes or less, the test displays the results – positive or negative for influenza A, Influenza B and COVID-19.
Lucira Health will announce a U.S. price tag and release date at a later date, company president and CEO Erik Engelson told USA TODAY. "This is a major milestone for Lucira Health and at-home diagnostics, and I can’t thank our employees and partners enough for seeing this through, and of course, for the FDA’s recognition," he said.
NYS COVID Update
The Governor updated COVID data through February 24.
- Daily: 10
- Total Reported to CDC: 78,557
- Patients Currently in Hospital statewide: 1,945
- Patients Currently in ICU Statewide: 217
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 3.91% - 8.89 positive cases per 100,00 population
- Mid-Hudson: 2.62% - 9.00 positive cases per 100,00 population
China Dismisses Reported Energy Department Conclusion Lab Leak Sparked COVID Pandemic
China is dismissing new reporting that the Department of Energy has concluded a lab leak was most likely behind the COVID-19 pandemic, with a foreign ministry spokesperson saying the issue should not be politicized. “Certain parties should stop rehashing the ‘lab leak’ narrative, stop smearing China and stop politicizing origins-tracing,” Mao Ning said at a regular press conference on Monday.
Mao said the tracing of the virus’s origin “is about science and should not be politicized” and cited a 2021 World Health Organization-China joint study that concluded “a laboratory origin of the pandemic was considered to be extremely unlikely.” The foreign ministry spokesperson stressed that the “science-based, authoritative conclusion” was “accurately recorded in the mission’s report and has received extensive recognition from the international community.”
Study: Long COVID Cases More Likely from “Pre-Delta” Infections
Long COVID is a broad term describing complication that can last weeks, months or even years. Some people have shortness of breath, while others have damage to their senses of smell and taste. Some who suffer from long COVID experience debilitating fatigue and brain fog. However, as time goes on, the chance of getting long COVID seems to be diminishing, new research suggests.
“The odds of having long COVID, we do see that rate is going down,” said Michael Gottlieb with Rush University Medical Center, who co-led a recent study on persistent COVID symptoms. The study found people were more likely to suffer prolonged symptoms if they caught COVID in the “pre-delta period,” compared to the delta and omicron waves of 2021 and 2022. However, the difference has nothing to do with the variants. It has everything to do with vaccination and repeat infections.
U.K., EU Reach Deal to Resolve Northern Ireland Trade Issue
British Prime Minister Rishi Sunak has struck a new deal on post-Brexit trade rules for Northern Ireland, gambling that the reward of better ties with the European Union is worth any discord it might cause within his own party. A government source said Sunak had agreed the terms with European Commission President Ursula von der Leyen as they met at a hotel west of London. They will hold a joint news conference at 1530 GMT.
The deal seeks to resolve tensions caused by the 2020 post-Brexit arrangements governing Northern Ireland, a British province, and its open border with EU member Ireland. The new agreement is expected to ease physical checks on goods flowing from Britain to Northern Ireland, and give the province's lawmakers a say over the EU rules it has to implement under the complicated terms of Britain's exit from the bloc. London could also set some tax and state aid rules.
Siena Poll: Crime, Cost of Living, Affordable Housing Top Voter Priorities
Governor Kathy Hochul’s favorability and job approval ratings both ticked down this month. Hochul has a 46-43% favorability rating, from 48-42% last month, and her job approval rating stands at 56-40%, from 56-36%, according to a Siena College poll of registered New York State voters released today.
Crime should be Albany’s top priority, say 36% of voters, followed by cost of living, 27%, and affordable housing, 13%, with public health, environment and racial justice in single digits. When combining voters’ top two priorities, cost of living (62%) tops the list, followed by crime (55%), and the other issues far behind. Ninety-two percent of New Yorkers say crime continues to be a serious problem across the state and two-thirds continue to say it’s a serious problem in their community.
Tesla Takes Customer Loyalty Title From Ford, Ending Dearborn Automaker's 12-Year Streak
Ford Motor Company often touts its customer loyalty but Tesla just stole the crown for "Overall Loyalty to Make" from the Dearborn automaker after 12 years of Ford domination, according to the S&P Global Mobility annual Automotive Loyalty Awards announced Monday. Meanwhile, General Motors retained the titleholder for "Overall Loyalty to Manufacturer" for the eighth year in a row, and 19th win during the past 27 years. Rising inventory levels met demand for sport utility vehicles and pickups built by GM, and led to strong loyalty gains, S&P Global Mobility said in its news release.
GM's manufacturer loyalty rate was 65.4% in 2022 while Tesla's make loyalty rate was 67.2%, confirmed S&P Global Mobility to the Detroit Free Press. Ford placed second in "loyalty to make." Data was unavailable for Ford and others who did not win overall categories.
Asia-US Container Rates Steady to Lower
Rates for shipping containers from east Asia and China to both US coasts were mixed this week, according to data from online freight shipping marketplace and platform provider Freightos. Rates to the East Coast rose by 1% despite the onset of the typical ocean freight lull season that follows the Lunar New Year, Judah Levine, head of research at Freightos, said. The slight increase could be because of lingering congestion at East Coast ports after many shippers shifted their deliveries from West Coast ports last year because of the huge backlogs seen as a result of US consumers buying goods with stimulus money at the onset of COVID-19 lockdown measures.
But the demand appetite from American consumers has shifted back towards services, leading to a decrease in transpacific import volumes. According to the Drewry World Container Index, the average cost for a 40-foot container fell by 3% this week to just below $1,900/FEU (40-foot equivalent unit).
As India Shakes Off Shackles, It Emerges as Global Economic Power
2023 could be the year India finally emerges as a global economic heavyweight. For that, thank the cumulative effect of solid economic growth, microeconomic reform and a changed geopolitical environment that has the West more eager than ever to draw India into its orbit. The bullish case on India always starts with demographics. This year, it is expected to officially surpass China as the world’s most populous country, and one that is much younger than China and most of the West.
The economic clout that comes with population has been muted in India’s case because it is so poor—but it is steadily getting less poor. The International Monetary Fund says India’s annual economic growth will average 6.5% this year and next, the fastest among 30 major economies, resuming a two-decade trend of solid growth. Last year, India displaced the U.K. as the world’s fifth-largest economy in current dollar terms and could tie Germany for fourth place by 2025.
ITIF: Recent U.S. Manufacturing Employment Growth Hides the Sector’s Abysmal Productivity Performance
Productivity (measured in real output per hour of labor) in the manufacturing sector is lower today than two years ago. Between Q4 of 2020 and Q4 of 2022, manufacturing productivity declined by 0.4 percent, meaning more labor is required to maintain the same level of output. In contrast, productivity increased by 0.5 percent for the non-manufacturing, non-farm business sector. More generally, U.S. manufacturing productivity has been in a secular decline. Between 2011 and 2021, it fell by 2.8 percent after increasing significantly between 2001 and 2011.
If the nation does not turn around this manufacturing productivity “recession,” wages will grow more slowly, and U.S. manufacturing competitiveness will continue to decline. The result will ultimately be fewer jobs, a larger trade deficit, and a weakened U.S. advanced industrial base.
War in Ukraine Drives New Surge of U.S. Oil Exports to Europe
As the West has shunned most Russian energy, unleashing a pressure campaign against the Kremlin’s petroleum revenues, record U.S. crude exports have helped fill the gap in Europe with the oil needed to produce gasoline, diesel and jet fuel. Since February 2022, when Russia invaded Ukraine, average monthly seaborne cargoes to the continent jumped 38% compared with the previous 12-month period, according to ship-tracking firm Kpler. A fleet of skyscraper-size tankers carried more crude to Germany, France and Italy—the European Union’s largest economies—as well as Spain, which alone boosted purchases by about 88% over the period.
The pull of oil shipments from the Gulf Coast to Europe, which Kpler pegged at 1.53 million barrels a day in January, has in recent months made the continent a larger destination for U.S. crude than Asia.
'We Can’t Find People to Work': The Newest Threat to Biden's Climate Policies
More than 100,000 clean-energy job openings have sprung up across the U.S. since Biden signed the climate law six months ago, according to Climate Power, a coalition of environmental groups. But another report cast a more ominous outlook: The U.S. construction industry was short 413,000 workers as of December, while 764,000 manufacturing sector jobs remained open, according to the Bureau of Labor Statistics. And the consulting firm McKinsey & Co, expects 550,000 new energy transition jobs will become available by 2030.
“Having the technicians and the engineers and skilled mechanics, that is going to be a challenge in the United States,” Washington Gov. Jay Inslee, a prominent Democratic clean energy proponent whose own 2020 presidential platform helped shape some of Biden’s policies, said in an interview.
New York’s New Drug Problem: What to Do With a Billion Dollar Weed Mountain?
“No smoking in the plazas” is the message that has been placed around Times Square following newly liberalised cannabis laws that have turned New York, some say, into a pot-smoking free for all. The legislation has also set off an upstate cultivation boom that produced 300,000 pounds of weed, valued at three-quarters of a billion dollars, in its first harvest. So far just a handful of state-licensed dispensaries have opened, a complement to hundreds of weed-selling vape stores, more traditional home delivery services and those calling out their wares in parks and street corners across the city.
New York’s Office of Cannabis Management favours growers and dispensaries run by members of communities disproportionally affected by decades of prohibition, a century-long period that the American Civil Liberties Union describes as a “racist war”. But New York has licensed far more farms than dispensaries, creating a glut of unsold product.