Member Briefing January 11, 2023
World Bank Cuts 2023 Global Growth Projection as Inflation Persists
The World Bank expects global growth to slow to 1.7% in 2023, down from an estimate of 3% growth in June. That would mark the third-weakest pace of global growth in nearly three decades, overshadowed only by the 2009 and 2020 downturns, according to the World Bank. A separate report showed that global inflation, while starting to cool, remains historically high.
The forecast growth rate only narrowly keeps the global economy out of recession territory. The international development organization cited a coalescence of high inflation, rising interest rates, lower investment and Russia’s invasion of Ukraine as threats to growth, along with pandemic-related disruptions in China and stress in its real-estate sector. “Global growth has slowed to the extent that the global economy is perilously close to falling into recession,” the World Bank said in its latest report on global economic prospects. A global recession, defined as a contraction in annual global per capita income, is more rare because China and emerging markets often grow faster than more developed economies. Essentially the world economy is considered to be in recession if economic growth falls behind population growth.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russian Ship’s Secretive South Africa Stop Prompts U.S. Questions - WSJ
- Russian Artillery Fire Down Nearly 75%, US Officials Say, in Latest Sign of Struggles for Moscow - CNN
- Bakhmut 'Completely Destroyed. Almost No Life Left' – Yahoo
- Russia Posts a $47 Billion Budget Deficit for 2022, its Second Highest in the Post-Soviet Era. – NY Times
- Oil Price Cap Costs Russia $170 Million a Day, Researcher Says – Bloomberg
- Russia on Verge of Biggest Gain in Ukraine Since Summer – The Hill
- Biden Invites Ukrainian Troops to U.S. for Weapons Training - Time
- 'Land Covered in Corpses' as Russia Strives for First Big Ukraine Gains in Months - Reuters
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Unpacking the House GOP's New Rules: A Guide to the Changes
The House rules plan that amounted to Speaker Kevin McCarthy’s first legislative victory on Monday night brings much bigger consequences than 55 pages suggest — it will shape the chamber’s operations and what bills can win approval over the next two years. Adoption of the rules package is a routine step in setting up any new Congress, but what is traditionally seen as a “housekeeping” issue will effectively determine how Republicans can govern the chamber.
At the heart of the rules push by rank-and-file conservatives, including many in the Freedom Caucus, is a desire to shape a more inclusive legislative process that concentrates less power with leadership. To that end, they have secured promises from leaders that aren’t formally written down in the rules, such as allowing more amendments to be considered on the floor and more widely distributing committee positions. Here’s a look at the most consequential elements of the rules package that passed Monday night.
Read more at The Financial Times
Powell: Bringing Down Inflation Requires ‘Measures That Are Not Popular’
Speaking at a panel discussion on central bank independence at an event hosted by Sweden’s central bank, the Sveriges Riksbank. Powell commented that the painful rate hikes the Fed is implementing to try to bring down inflation don’t make officials particularly popular. “Restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy,” he said, before adding that it’s important not to succumb to the need to liked.
“We should ‘stick to our knitting’ and not wander off to pursue perceived social benefits that are not tightly linked to our statutory goals and authorities,” Powell said. He was joined on the panel by the Chairs of the Bank of England and the European Central Bank who also defended the importance of independence and credibility for their institutions, which has come under fire as policymakers are accused of having let surging inflation go unchecked for too long.
U.S. COVID – XBB.1.5, The 'Kraken' Subvariant: What to Know About Quickly Rising Omicron Descendant
Available evidence suggests that XBB.1.5 is the "most transmissible" omicron descendent yet detected. First identified in October 2022, it has, in the past several weeks, steadily gained prominence in the United States. The subvariant has also been given the unofficial nickname "Kraken," after the mythical sea monster. In the U.S., XBB.1.5 is beginning to gain dominance over other circulating omicron subvariants. In early December, the Kraken made up an estimated 2% of all COVID-19 cases in the U.S., The Washington Post reported. That figure jumped to 40% in the last week of December, STAT reported.
The Centers for Disease Control and Prevention (CDC) have not yet analyzed all the data from early January 2023, but their current projections suggest that XBB.1.5 accounted for more than 27% of U.S. cases in the first week of the year. In the northeastern U.S., where XBB.1.5 was first detected and remains most common, the subvariant accounts for more than 70% of new cases, according to The Washington Post.
Moderna Plans to Follow in Pfizer’s Footsteps, Charge up to $130 for Covid-19 Vaccine in U.S.
Moderna Inc is considering pricing its COVID-19 shot at $110 to $130 per dose in the United States when it shifts from government contracting to commercial distribution of the shots, the company's Chief Executive Officer Stephane Bancel told the Wall Street Journal on Monday.
"I would think this type of pricing is consistent with the value," said Bancel, according to the WSJ report, adding the company was in discussions with hospital systems, pharmacies and pharmacy-benefit managers to line up distribution of its vaccine ahead of a potential fall booster shot campaign. Moderna had previously estimated the commercial price expectations in a range of $64 to $100 a shot.
Hochul Delivers State of the State, With Long Priority List for 2023
Gov. Kathy Hochul outlined on Tuesday broad policy proposals to improve public safety and ease the affordability crisis in the state. The thrust of her address was undeniably crime and housing, pressing themes that both Democrats and Republican in the State Legislature have already said will dominate this year’s legislative session. This being Albany, however, fault lines are expected to emerge around the exact policies needed to reach those common objectives.
In addition, Ms. Hochul outlined several new initiatives to spur economic growth and better prepare workers for jobs that employers are eager to fill at a time of labor shortages. She vowed to create new job training programs that will “up-skill” 3,000 workers a year and — building on plans by the semiconductor maker Micron Technology to invest $100 billion in central New York — Ms. Hochul is launching an Office of Semiconductor Expansion, Management and Integration to help promote the industry and its supply chain in the state.
- Read more at the NY Times
- See the Press Release and State of the State Priorities
- Read the Empire Center Reaction
Chinese Cities Aim High on 2023 GDP
Chinese cities are setting higher economic growth targets for this year, compared with the actual growth seen last year, as China’s central bank has vowed supportive financial policies to aid economic recovery. Several cities with gross domestic products (GDPs) of more than 1 trillion yuan (US$148 billion) last year, including Zhengzhou, Changsha and Guangzhou, have revealed 2023 growth targets ranging between 5.5 and 7 per cent.
Compared with their 2022 goals, several cities have slightly lowered their growth targets for 2023, but these are still higher than the actual growth witnessed last year amid the weak economic momentum and disruptive zero-Covid policy. Guangzhou, the capital of Guangdong province in southern China, released a 2023 GDP growth target of 6 per cent, anticipating a strong rebound after its growth during the first three quarters of 2022 was just 2.3 per cent, according to local media.
Read more at South China Morning Post
Hudson Valley Housing Prices Exploded in 2020. What Happens Now?
The tale is by now well-known: The mad rush to escape the petri dish of New York City resulted in bidding wars for properties, often between cash buyers, that jacked up housing prices as demand lapped supply. Hudson and Kingston's metropolitan areas (which included all of Columbia and Ulster counties, respectfully) had the biggest jump in net in-migration in the entire country, according to a New York Times analysis.
But rising interest rates have dampened the fire. Nationally, after peaking in June at $420,900, the median sales price for an existing single-family home fell almost 11 percent, to $376,700, by November, according to the National Association of Realtors. The Hudson Valley has begun to feel this slowdown, too. Adam Bosch, the executive director for Hudson Valley Pattern for Progress, expects housing prices in the region to begin to fall in the early months of 2022, but they still continued to rise, Bosch said. "All the way through September, prices were still increasing across the region," he said. "The number of closed sales did drop significantly, but that's not because of a lack of demand — there's still a huge demand for housing — but what ended up happening was we ran out of supply."
Deloitte’s 2023 Global Human Capital Trends Survey- What are the New Boundaries?
One of the striking characteristics of the business environment over the last three years has been heightened attention to employees. Their health, their values and beliefs, their preferences for when, where and how to work—all have rocketed up the list of concerns for CEOs. With reports of layoffs now a daily occurrence—Salesforce, Amazon, and Goldman Sachs are among those who’ve announced reductions recently—it’s worth asking: Will corporate concern for employees’ wishes and welfare diminish as labor market slack increases?
A new report out this morning from the folks at Deloitte offers a window into why the change may be less than market economics might suggest. The fundamental nature of work is changing, and as a result, “organizations will have to abandon illusions of complete control” as “workers assume greater influence and accountability for organizational and societal outcomes.”
Hybrid Work is Expanding Beyond White Collar Jobs to Finally Include Frontline Workers
Remote work became an unevenly distributed privilege during lockdown. While some employees were able to dodge the office and its associated pandemic risks, others risked their lives and continued to provide on-site services. Many of these frontline workers were service workers, such as grocery store cashiers, as well as some knowledge workers, such as the health care professionals working in hospitals.
2023 will see a shift: Instead of limiting flexibility to make things fair across the board, “smart organizations” will try to implement strategies that make work more flexible for frontline workers. That might look like giving them more autonomy and stability in regards to their work schedules, plus more paid leave.
Supply Chain Snags or Full Speed Ahead? What Logistics Looks Like in 2023
Now that 2022 is in the rearview mirror, it’s time to consider the top global logistics trends that will impact manufacturing businesses in 2023. Here are the issues and trends that we have in our headlights. These include Carrier Market Disruptions, Geopolitics, Sustainability, and Worker Expectations.
Shipping expert Lauren Pittelli shares her advice to manufacturers for keeping those components coming in and finished goods moving.
CNHI Strikers Reject Final Offer
For more than eight months, over 1,000 workers have been striking for “improved standard of living, retirement benefits, and a better work environment,” says a UAW statement. IInitially compared to the 2021 UAW strike of Deere & Co., the strike of the agricultural and construction equipment manufacturer is lasting longer than first expected. After a vote by Locals 180 and 807 of the UAW who work for CNH Industrial, the “last, best and final offer from the company” has been rejected.
A CNH Industrial statement provided to local news outlet CBS 58 last month says, “We are disappointed that despite our best efforts we have been unable to reach a tentative agreement for our employees. Our last, best and final offer for our Racine, Wisconsin and Burlington, Iowa plants included significant wage increases, the addition of three new and different health care plans to choose from and many other enhanced benefits.”
Oil and Gas Are Back and Booming
Thanks to a mix of events, from the Russian invasion of Ukraine to the U.S. economic recovery, fossil fuels are showing surprising resilience, despite President Biden’s push to transition to clean energy and the industry’s own history of boom-bust investing and heavy reliance on debt.
U.S. production of natural gas has hit record levels. The country’s crude oil production remains shy of the 2019 level but is otherwise at a peak. Exports of both gas and crude are hitting new highs, easily outpacing overseas sales of aircraft, pharmaceuticals, food and cars. Exxon Mobil Corp.’s shares rose 80% last year. The Biden administration has limited drilling on federal lands, but oil and gas companies have tapped the nation’s vast private shale reserves to drive production higher.
PMM: Multiple Factors Drive 2023 Machinery Investment Plans
Respondents were feeling less optimistic in Plastics Machinery & Manufacturing’s fourth annual survey of machinery buying plans. In the survey conducted in 2020, 73 percent of respondents said they expected business to improve in the upcoming year, and in 2021 that figure was 60 percent. But only 44 percent think their business will be better in 2023, according to the latest survey, conducted in October; 43 percent expect it to remain the same.
However, processors are still planning to invest in machinery: 66 percent of the 109 respondents plan to buy primary processing equipment in 2023, up slightly from 63 percent in last year’s survey. Companies say they need new equipment to expand capacity (71 percent), replace existing equipment (62 percent) and/or add new processing capabilities (19 percent). Investment in primary equipment will be larger this year than last year for half the respondents and approximately the same amount for 39 percent.