Member Briefing February 9, 2023
Biden Touts Manufacturing—But Omits Key Points
President Joe Biden touted what he called the rewritten script of U.S. manufacturing in his second State of the Union address on Feb. 7. The issue was one of the first topics addressed in the president’s annual speech. While President Biden “should be commended for the historic, bipartisan accomplishments of the past two years,” NAM President and CEO Jay Timmons said following the speech, he failed to give due credit to the tax reforms of 2017, which “helped lay the foundation for the recent success in creating jobs, increasing investment and raising wages.” Timmons said
“Instead of the Biden administration’s misguided suggestions for restrictions on pharmaceutical innovation and for destructive tax increases, Congress should immediately reinstate critical tax deductions for the costs of research, machinery purchases and key business investments,” Timmons said. “Restoring these tools is essential to keep up the pace of manufacturing job creation and to out-innovate and outcompete China.” President Biden also failed to discuss the need for permitting and regulation reform on key infrastructure and energy projects, Timmons said.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russia Throws Soldiers into Ukraine Firing Line to Gain Inches – The WSJ
- Biden in State of Union exhorts Congress: ‘Finish the job’ In Ukraine
- Ukraine's Zelenskiy Arrives in Britain Seeking More Arms Against Russia - Reuters
- Ukraine's Zelensky Addresses UK Parliament - BBC
- Leopard Tanks Arrive in Poland as Ukraine Prepares to Fight Back - Newsweek
- U.K. Considers Sending British Jet Fighters to Ukraine - WSJ
- Zelenskiy, in London, Wins Pledge to Train Pilots on NATO Jets - Reuters
- Top Putin Ally Says He ‘Will Not Hide’ Intention to Invade Poland Anymore – Daily Beast
- Poland to Ramp Up Defense Budget to 4% of GDP – Defense Weekly
- Svitolina Calls for Russians to be Banned from Olympics - AP
- What Russia Got Wrong – Foreign Affairs
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Biden to Tout Economic Message After Rowdy State of the Union Speech
President Biden will head to Wisconsin on Wednesday, taking the economic pitch he delivered during the State of the Union on the road. Mr. Biden sought to explain to the public in his address how they stand to benefit from the trillions of dollars in spending he helped shepherd through Congress, arguing that his policies have helped the U.S. economy recover from the Covid-19 pandemic with the unemployment rate now at a 53-year low. Republicans say he has spent far too much federal money and been an unsteady steward of the economy.
The president plans to reiterate his message during a visit to the Laborers’ International Union of North America training center in DeForest, Wis., to discuss manufacturing industry jobs. Although he pointed to possible areas of bipartisan compromise as part of his “unity agenda” during the joint address to Congress, the challenge of a divided government, was on display as the two parties look to reach agreement on spending levels and raising the debt ceiling
CEOs Say They’re Afraid of a Recession but Nearly 70% Plan to Hire More People This Year Anyway
With central banks worldwide raising interest rates to fight high inflation, CEOs are worried about the economy. But oddly enough, they’re still hiring. Some 68% of chief executives plan to increase their company’s headcount this year, according to a new Greenhouse survey. The data comes after the U.S. economy added 517,000 jobs in January—more than double economists’ forecasts—and the unemployment rate fell to a 53-year low of 3.4%.
Greenhouse commissioned Zogby Analytics to conduct an online survey of 300 US-based CEOs with a minimum of 100 employees. Based on a confidence interval of 95%, the margin of error is +/- 5.7 percentage points. This means that all other things being equal, the same survey would get results within the margin of error 95 times out of 100.
US COVID - Test Kits, Treatments and Vaccines Won't Be Free to Many Consumers Much Longer
The White House announced this month that the national public health emergency, first declared in early 2020 in response to the pandemic, is set to expire May 11. When it ends, so will many of the policies designed to combat the virus's spread. How much, if any, of the boosted costs are passed on to consumers will depend on their health coverage.
Medicare beneficiaries, those enrolled in Medicaid and people who have health plans via the Affordable Care Act exchanges will continue to get COVID-19 vaccines without charge, even when the public health emergency ends and the government-purchased vaccines run out. Many people with job-based insurance will also likely not face copayments for vaccines, unless they go out-of-network for their vaccinations. People with limited-benefit or short-term insurance policies might have to pay for all or part of their vaccinations.
Study: No new COVID variants from China since zero-COVID policy lifted
Fears that China’s lifting of its zero-COVID policy could result in fresh coronavirus variants seem to have not (yet) materialized. A study published in The Lancet on Wednesday found there had been no new COVID-19 variants in the country since it lifted its draconian policy last year, a move which triggered a surge in cases and deaths. The analysis by researchers in China of more than 400 new cases in Beijing between November 14 and December 20 shows that more than 90 percent were of the Omicron subvariants BA.5.2 and BF.7.
The EU’s disease agency, the ECDC, confirmed that its own analysis — which included sequencing cases detected through airport arrivals in several European countries and wastewater analysis of airplanes arriving in Europe from China — found that BA.5.2 and BF.7 were dominant, although they cautioned that this wastewater data is “quite limited and are still being verified.”
New York State Senator Harckham Introduces Bill to Reduce Packaging and Increase Recycling
State Senator Pete Harckham (D, Peekskill) has introduced legislation that will “revolutionize” New York’s approach to solid waste. His measure, the Packaging Reduction and Recycling Infrastructure Act, would put the onus on corporations that put packaging into the stream of commerce and relieve the burden placed on local governments.
The measure would require companies with a net annual income of over $1 million to reduce consumer packaging, improve recycling efforts of their product packaging and help update recycling infrastructure. Harckham, who is chairman of the Senate Environmental Conservation Committee, has the backing of Citizens Campaign for the Environment, the Sierra Club Atlantic Chapter, the Natural Resources Defense Council and New York League of Conservation Voters.
Here Are Five Reasons the January Jobs Report May Be Too Good to be True
Traders took heart that Fed Chair Jerome Powell, when he wasn’t being questioned by David Rubinstein on how he gets by on $190,000 per year, didn’t commit on Tuesday to having to be even more aggressive on interest rates given the huge 517,000 surge in nonfarm payrolls. Powell said rates would have to go even higher than the market currently expects “if we continue to get” strong labor market or higher inflation reports.
Economists at Morgan Stanley point out that the January number reflects three factors it believes to be temporary: unusually warm weather, the resolution of California higher-education strikes and a very strong seasonal adjustment boost.
Big Oil Companies Double Profits in Blockbuster 2022
Big Oil more than doubled its profits in 2022 to $219 billion, smashing previous records in a year of volatile energy prices where Russia's invasion of Ukraine reshaped global energy markets and, in some cases, the industry's climate ambitions. The profit surge gave the oil companies scope to increase spending on oil and gas projects, and a chance for some to rethink energy transition strategies to meet new demands for security of supply.
The top Western oil companies paid out a record $110 billion in dividends and share repurchases to investors in 2022, spurring outraged calls on governments to impose windfall taxes on the industry to help consumers with surging energy costs. Oil companies last year also pulled out of Russia, a major energy producer, leading to huge writedowns, including BP's $24 billion exit from its 19.75% stake in Kremlin-controlled oil giant Rosneft
Boeing Plans to Slash 2,000 Jobs In a Quest to Eliminate ‘Bureaucracy’. Will Hire More in Production
Boeing plans to make staffing cuts in the aerospace company’s finance and human resources departments in 2023, with a loss of around 2,000 jobs, the company said. “We expect about 2,000 reductions primarily in Finance and HR through a combination of attrition and layoffs,” Boeing said in a statement Monday. “While no one has been notified of job loss, we will continue to share information transparently to allow people to plan.”
The company, which recently relocated its headquarters to Arlington, Virginia, said it expects to “significantly grow” the overall workforce during the year. “We grew Boeing’s workforce by 15,000 last year and plan to hire another 10,000 employees this year with a focus on engineering and manufacturing,” the statement said. Boeing’s total workforce was 156,000 employees as of Dec. 31, 2022, the company said.
Maersk Warns Lower Container Volumes to Hit 2023 Profits
Shipping group A.P. Moller-Maersk warned on Wednesday lower container volumes and freight rates would drive a four-fold plunge in profits this year, even as it reported record earnings for 2022. The Copenhagen-based company, which transports goods for retailers and consumer companies such as Walmart, Nike and Unilever, raised its profit forecast twice last year as a surge in consumer demand and pandemic-related logjams at ports boosted freight rates.
But freight rates have since tumbled as recession looms and pandemic-fuelled import bubbles deflate in the United States and other major consuming countries. This year, Maersk expects global demand for shipping containers by sea to fall by as much as 2.5% as a build up in inventories is unwound.
U.S. East Coast Port Workers Begin Early Contract Talks
Union locals that represent dockworkers at 36 ports from Maine to Texas have opened contract talks with employers well ahead of the current multiyear agreement’s expiration next year. Maritime-industry officials say the early start to negotiations is a signal that both sides are eager to get a new contract amid a period of strained labor-management relations across industries, including at U.S. West Coast ports that compete for shipping trade.
The International Longshoremen’s Association, which represents East Coast and Gulf Coast dockworkers, in September asked its locals to open talks with regional employer groups, said James McNamara, an ILA spokesman. The aim is to resolve or identify local issues by the middle of February so that the ILA can move on to negotiating a master agreement with the United States Maritime Alliance, which represents ocean carriers and terminal operators across Gulf Coast and East Coast ports. The current contract expires Sept. 30, 2024.
Read more at the WSJ
Labor Secretary Marty Walsh to Step DownLabor Secretary Marty Walsh is planning to leave the Biden administration, according to people familiar with the matter, marking the first change among President Biden’s cabinet secretaries since he took office. Mr. Walsh is expected to become executive director of the National Hockey League Players’ Association, which does collective bargaining on behalf of NHL players, the people said. He has begun informing officials in the administration about his intention to leave, some of the people said.
Mr. Walsh oversaw the Labor Department during a nearly two-year period that included a rapid economic recovery, as well as roiled supply chains and surging inflation. His rule making and negotiations focused on Covid-19 and worker protections. Before entering politics, Mr. Walsh was president of a union in Boston and served as head of the region’s Building and Construction Trades Council. Mr. Walsh participated in negotiations in September between the biggest freight railroads and union leaders. He also represented the administration in labor talks involving West Coast dockworkers.
The US Auto Industry Doesn’t Have a Supply Problem. It Has a Demand Problem.
The light vehicle market has been going through a significant transformation since last June. Starting in the third quarter of 2022, the demand-supply structure of the market moved from a supply shortage into a serious demand problem that will have marketing teams scrambling to fix it. The vehicle market has been supply-constrained over the past two years. That’s not new information. What seems odd is that many CEOs are still using supply constraints as an excuse for not meeting sales targets or earnings objectives.
The demand problem started when vehicle price increases tried to keep pace with soaring inflation and dealers were looking for more than just MSRP. As the Federal Reserve took measures to slow inflation, interest rates began increasing rapidly from their dormant state of the past two years, to where the current U.S. prime rate is the highest in 16 years. To compensate, some consumers went to seven-year loans, perhaps forgetting that they were not taking out a home mortgage.
Disney to Cut 7,000 Jobs and Slash $5.5 Billion in Costs as it Unveils Vast Restructuring
Disney said Wednesday it is planning to reorganize into three segments, while also cutting thousands of jobs and slashing costs. The media and entertainment giant said it would now be made up of three divisions: Disney Entertainment, which includes most of its streaming and media operations. An ESPN division that includes the TV network and the ESPN+ streaming service. A Parks, Experiences and Products unit.
On Wednesday, during its quarterly earnings call with investors, Disney also announced it would be cutting $5.5 billion in costs, which will be made up of $3 billion from content, excluding sports, and the remaining $2.5 billion from non-content cuts. Disney executives said about $1 billion in cost cutting was already underway since last quarter. Disney also said it would be eliminating 7,000 jobs from its workforce. That would be about 3% of the roughly 220,0000 people it employed as of Oct. 1.