Member Briefing January 13, 2025
U.S. Payrolls Grew By 256,000 In December, Unemployment Rate Falls To 4.1%
Nonfarm payrolls surged by 256,000 for the month, up from 212,000 in November and above the 155,000 forecast from the Dow Jones consensus, the Bureau of Labor Statistics reported Friday. The unemployment rate edged down to 4.1%, one-tenth of a point below expectations. Friday’s job report likely shuts the door on a rate cut at the Federal Reserve’s next meeting, which is Jan. 28-29, and reduces the chances of a cut at its subsequent meeting in March. Here are some of the key data:
- Discouraged workers and those holding part-time positions for economic reasons moved down to 7.5%, a decrease of 0.2 percentage point and the lowest since June 2024.
- Average hourly earnings increased 0.3% on the month, which was in line with forecasts, but the 12-month gain of 3.9% was slightly below the outlook and indicative that wage inflation at least is becoming less of a factor.
- The average workweek again held steady at 34.3 hours. Job growth came from the familiar sources of health care (up 46,000), leisure and hospitality (43,000), and government (33,000).
- the labor force grew by 243,000 and the share of working age people either holding jobs or looking for employment held steady at 62.5%.
- Full-time employment increased by 87,000, while part-time workers surged by 247,000.
- The level of unemployed workers fell by 235,000.
- The duration of unemployment edged higher to 23.7 weeks, the highest level since April 2022.
- However, those reporting out of work for 27 weeks or more declined to 1.55 million, down 103,000.
NFIB: Labor Costs Ease
NFIB’s December jobs report found that 35% (seasonally adjusted) of small business owners reported job openings they could not fill in December, down one point from November. A net 29% of small business owners reported raising compensation in December, down three points from November and the lowest reading since March 2021. Some key findings:
- Labor costs reported as the single most important problem for business owners was unchanged from November at 11%, only two points below the highest reading of 13% reached in December 2021.
- A net 24% plan to raise compensation in the next three months, down four points from November’s highest reading of this year.
- Labor costs reported as the single most important problem for business owners was unchanged from November at 11%, only two points below the highest reading of 13% reached in December 2021.
- The percent of small business owners reporting labor quality as their top operating problem was unchanged from November at 19%.
- A seasonally adjusted net 19% of owners plan to create new jobs in the next three months, up one point from November.
- Overall, 55% of small business owners reported hiring or trying to hire in December, unchanged from November.
- Forty-nine percent (89% of those hiring or trying to hire) of owners reported few or no qualified applicants for the positions they were trying to fill.
- Twenty-nine percent have openings for skilled workers (down one point) and 13% have openings for unskilled labor (unchanged).
- Job openings were the highest in the transportation, construction, and manufacturing sectors, and the lowest in the agriculture and finance sectors.
Consumer Sentiment Slips. Inflation Expectations Climb to Highest Since May '24.
The University of Michigan’s consumer sentiment index ticked down to a reading of 73.2 in the first few weeks of January, according to preliminary results released Friday. Economists were projecting the index to fall to 73.3 from December’s 74 reading. Inflation expectations for the year ahead jumped to 3.3% in January from 2.8% in December. This is the highest reading since May 2024, said Joanne Hsu, director of consumer surveys at the University of Michigan. Inflation expectations for the year ahead jumped to 3.3% in January from 2.8% in December. This is the highest reading since May 2024.
Long-run inflation expectations also rose to 3.3% from 3% in December. Inflationary expectations tend to beget actual rises in prices, a fact that is often stressed by Fed policymakers. The thought here is that buying-in-advance to avoid future price increases actually creates more demand which in turn stokes the fire of inflation. That's why it may be concerning that consumer long-term inflation expectations (5-10 years ahead) broke out of its narrow range rising to the highest level since 2008 in early January. This “buy it before the price goes up” mindset is detrimental to the gradual progress that has been achieved in bringing prices down, an improvement that is also evident to today's report.
Global Headlines
Middle East
- Netanyahu Sends Mossad Director To Gaza Cease-Fire Talks In Qatar In Sign Of Progress – Politico
- Israel’s Defense Industry Booms on Foreign Demand and War at Home - WSJ
- Israel Launches New Strikes On Yemen’s Houthi Rebels – The Hill
- Houthis Issue Ominous Warning to Israel After New Strikes - Newsweek
- Arab, EU diplomats in Saudi Arabia for talks on support for Syria - VOA
- Syria’s Alawites, Sect of the Assads, Fear for Their Future - WSJ
- With UNRWA Fate Unclear, UN And Israel Argue Over Who's Responsible For Palestinians - Reuters
- Lebanon Elects New President in Sign of Hezbollah’s Waning Influence - WSJ
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Ukraine Says It Captured Two Injured North Korean Soldiers In Russia – BBC
- Diary of a Dead North Korean Soldier Reveals Grisly Battlefield Tactics - WSJ
- Zelenskyy Calls On Allies To Honor Promises On Arms Supplies To Ukraine - VOA
- Tougher U.S. sanctions to curb Russian oil supply to China and India - Reuters
- Trump Says Putin Meeting Being Set Up To End 'Bloody Mess' Of Ukraine War - NBC
- Strategic Russian Oil Depot Used by Nuclear Bombers Ablaze for Fifth Day - Newsweek
- US Hits Russian Oil With Toughest Sanctions Yet In Bid To Give Ukraine, Trump Leverage - Reuters
- Ukraine Ambushes Russian Troops in Fatal Sniper Attack - Newsweek
- 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
- California Fires Live Updates: Death Toll at 16, Crews Report Progress, But Wind Warnings Remain - CNN
- U.S. Declares Genocide in Sudan. Critics Say Biden Acted Too Late. - WSJ
- US And Allies Slap Sanctions On Venezuela Officials As Maduro Inaugurated - Reuters
- Venezuelan Opposition Leader Is Temporarily Detained as Regime Tightens Crackdown - WSJ
- Afghan Taliban Skip Pakistan-Hosted Summit On Girls Education - VOA
- Croatians Vote For President, With Incumbent Ahead In Opinion Polls - Reuters
- Trump’s Talk of Buying Greenland Energizes Island’s Independence Movement - WSJ
- Suspended South Korean President Yoon To Skip First Day Of Impeachment Trial Over Safety Concerns – The Hill
- 2024 Confirmed As First Year To Breach 1.5°C Warming Limit - AP
Policy and Politics
A Bond Selloff Is Rocking the World – Especially the UK
On Friday, a jobs report that blew past expectations pushed yields on 10-year Treasurys to 4.772%, the highest close since Nov. 1, 2023, and those on 30-year paper to 4.962%. What is spooking markets, however, is that much of the recent rise in yields doesn’t appear to reflect expectations of stronger economic growth. Rather, it might be the result of investors applying a higher discount or “term premium” to hold long-term bonds, estimates by the Federal Reserve suggest.
Movements in term premiums are usually strongly correlated across the globe, and the consequences are being felt more starkly in weaker economies overseas, especially in Britain. There, 30-year yields are trading around 5.4%, a 27-year high. U.K. Treasury chief Rachel Reeves, who has made a public pledge to appease bond markets while also attempting to set out some moderate growth ambitions in her latest budget, is under strong pressure. France is also in the hot seat: The government is shackled by a parliamentary deadlock, and now has borrowing costs firmly above those of Greece. In a further sign of trouble, the pound and the euro are falling, with the latter sliding close to parity with the U.S. dollar.
Supreme Court Signals It Could Uphold TikTok Ban
The Supreme Court heard oral arguments Friday over whether the federal law—which requires TikTok to separate from parent company ByteDance or else be banned—is in violation of the First Amendment. TikTok and content creators on the app argued the ban violates their First Amendment rights by cutting off all speech on the platform, while the federal government argued the ban is necessary for national security, given ByteDance’s Chinese ownership.
Justices on both sides of the aisle appeared skeptical of TikTok’s arguments on Friday, with Justices Elena Kagan and Amy Coney Barrett questioning how TikTok’s First Amendment rights are implicated when the law is specifically targeting ByteDance—a foreign-owned company—and its algorithm. Justice Ketanji Brown Jackson suggested TikTok was “wrong” that the case violates its First Amendment rights, and said she thought the case was more about TikTok wanting to associate with ByteDance than its speech being silenced. Chief Justice John Roberts said the federal law was “not a burden on” TikTok and its users’ “expression at all,” arguing Congress was fine with users’ speech on the app but just not a “foreign adversary” gathering information about the app’s users.
NYS Cannabis Store Operators Call for Loan Forgiveness
A group of cannabis dispensary operators called on Gov. Kathy Hochul Thursday to forgive tens of millions of dollars of high-cost loans that they say threaten the viability of their businesses. The loans were made by a social equity loan fund created by the Hochul administration to provide capital to dispensary owners, but that has instead “perpetuated many of the economic inequities it was designed to combat,” according to a letter to her from the group, which includes operators whose lives were affected by the state’s former, racially discriminatory drug laws.
The letter is from a collective of borrowers who participated in what is known as the conditional adult-use retail dispensary program, or CAURD, and it took aim at the $200-million fund proposed by Hochul in early 2022 as a way to finance the first 150 cannabis dispensaries in the state. Roland Conner, operator of the first cannabis dispensary backed by the fund, which opened in early 2023. Conner signed a $1.9 million loan with a 13% interest rate and had trouble making the monthly payments within a year. The public-private fund failed to attract the private investors who had been counted on to provide $150 million to its financing and it helped open only a fraction of its planned number of stores. All the while, it loaded store licensees’ with steep costs and high-interest loans that many owners say are sinking them.
Transition 2024
- Trump’s New Economist Makes the Case for 20% Tariffs - WSJ
- Zeldin's EPA Confirmation Hearing Scheduled, As Climate Advocates Raise Concerns About His Record – NY State Of Politics
- Survey: More Than Two-Thirds of Leaders Aim to Pass On Tariff Impacts – IndustryWeek
- Reps. Lawler, Lalota, Other NY Republicans Press Trump On State And Local Tax Deduction – The Hill
- Greenland PM ‘Ready’ To Talk With Trump – The Hill
- The CEOs Who Are Tearing Up the Policies Trump Hates – WSJ
- Battle To Succeed U.S. Rep. Elise Stefanik Intensifies As Her Exit Nears – Times Union
- Americans Have Dimmer View Of Biden Than They Did Of Trump Or Obama As Term Ends, AP-NORC Poll Finds - AP
- Trump's Potential Boost For South Korea's Shipbuilders – Nikkei Asia
- Jack Smith Resigns From Justice Department - BBC
- Tracking Trump’s Cabinet Picks – Politico
Health and Wellness
Are Some Ultra-Processed Foods OK? New Study Has Answers
A new study is helping to answer a pressing nutrition question: Which ultra-processed foods are harming our health—and which might not be so bad? The problem is the way many packaged foods are made, researchers believe. Products such as many frozen pizzas, cereals and chips pack more calories per gram than less-processed foods do. And most ultra-processed foods have combinations of salt, fat, sugar and carbohydrates that aren’t generally found in nature, which can make us crave them. Diets high in packaged foods without those traits—such as canned peaches or refried beans—don’t seem to lead people to overeat and gain weight, at least not as much.
Those are the findings so far of a continuing study investigating how ultra-processed food affects our bodies. Scientists presented their interim data at a workshop put on by the National Institutes of Health and the U.S. Food and Drug Administration in December. “There might be a way to create the quote, unquote healthy ultra-processed food that’s still convenient,” said Kevin D. Hall, the principal investigator of the study and a scientist at the NIH, giving an example of a frozen meal with brown rice, beans and a lot of vegetables.
Industry News
Union Dockworkers, Port Employers Announce Tentative Deal At East Coast And Gulf Ports
the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) on Wednesday announced a tentative deal on a new six-year master contract. The deadline to reach an agreement was Jan. 15. The tentative agreement is on all items for a new six-year master contract. The two sides agreed to continue to operate under the current contract until both sides schedule a ratification vote.
Sources familiar with the contract told CNBC the compromise on automation and semi-automation was key to the tentative agreement. According to the sources, full automation was off the table but essentially USMX has the ability to implement the technology its members feel would modernize the ports. The ILA has the guarantee of specific jobs that would be associated to specific equipment being added, the sources said. In a separate release, ILA President Harold Daggett credited President-elect Donald Trump’s support as “key” to securing the tentative contract. Daggett said Trump had called USMX officials in mid-December “to express his support for the ILA” on the same day he had met with the president-elect. He called Trump a “hero.”
EPA Finalizes Rule Banning TCE, PCE Chemicals
The Environmental Protection Agency finalized two rules last month that ban degreasing chemical trichloroethylene and dry-cleaning solvent perchloroethylene, according to an agency press release. The ban on TCE, which is used in processes such as battery and polymer manufacturing, will take effect on Jan. 16. Manufacturing with the chemical for consumer use is banned beginning March 17, according to the EPA handout.
The ban on PCE, intended for consumer uses such as brake cleaners and commercial applications such as dry cleaning, takes effect on Jan. 17. The 10-year phase-out begins June 2026, according to the EPA. A major example of TCE and PCE contamination in the U.S. is Marine Corps Base Camp Lejeune in Jacksonville, North Carolina, which the military branch discovered contained the chemicals in the 1980s.
Read more at Manufacturing Dive
Airbus Deliveries Rose Again in 2024
Airbus reported its 2024 commercial aircraft deliveries totaled 766 jets to 86 customers (airlines, leasing agencies, and holding companies) worldwide, across its four aircraft series. The total represents roughly a 4.0% increase versus the 735 aircraft it delivered during 2023, suggesting a slowing in activity since the revival of the commercial aircraft sector following the global pandemic of 2020-21. The OEM also announced its 2024 net new aircraft orders totaled 878 across all four series, raising its total order backlog to at 8,658 aircraft.
The narrow-body A320neo series continues to be the most in-demand Airbus model, with 602 deliveries last year. Among the larger, long-range aircraft series, Airbus delivered 57 A350s and 32 A330s during 2024. Also delivered were 75 of the smaller, mid-range A220 series. Rival Boeing Corp. is due to report its totals for deliveries and new orders later this month. Those results will almost certainly confer an edge in the annual competition to Airbus, in light of Boeing’s production difficulties and work stoppage during the past year.
Read more at American Machinist
US Extends Deadline For Nippon Steel To End US Steel Bid To June
he Committee on Foreign Investment in the United States approved an extension of the deadline for Nippon Steel Corp. to abandon its $14.1 billion takeover of United States Steel Corp., according to a statement by US Steel. The deadline will be extended to June 18 from Feb. 2 originally, following President Joe Biden’s order to halt the deal earlier this month. A Nippon Steel spokesperson confirmed the extension to Bloomberg News. The new deadline is also the date the two companies had set for completing the merger.
The decision comes after the two companies filed a petition with the federal appeals court in Washington, arguing that the CFIUS failed to consider the deal on national security grounds, and that Biden’s order to block it was made for “purely political reasons.” Japan’s Prime Minister Shigeru Ishiba is making final arrangements to visit the US in the first half of February to meet Donald Trump, Ishiba may discuss the Nippon Steel bid with the new president. The ruling Liberal Democratic Party in Japan earlier issued a resolution calling on the reversal of the decision and a specific explanation of the security concerns behind the US decision.
Bosch Receives $225M To Manufacture Silicon Carbide Power Semiconductors At Its California Facility
Bosch has signed a non-binding preliminary memorandum of terms (PMT) with the U.S. Department of Commerce. As part of the agreement, the department will provide up to $225 million in proposed direct funding under the CHIPS and Science Act. The funding will be used to support Bosch’s planned investment of $1.9 billion to upgrade its manufacturing facility in Roseville, California, for the production of silicon carbide (SiC) power semiconductors. The project is expected to increase the company’s production capacity and create 700 new jobs for the surrounding area.
According to Bosch, the project has the potential to produce the majority of Bosch’s total capacity of SiC semiconductors and could comprise more than 40% of all U.S.-based SiC device manufacturing capacity. To help aid the project, Bosch plans to claim the Department of the Treasury’s Advanced Manufacturing Investment Credit (CHIPS ITC), which is 25% of qualified capital expenditures. Additionally, the CHIPS Program Office would make approximately $350 million in proposed loans available to the company.
Toyota Invests $922M To Build Advanced Paint Facility In Kentucky
Toyota Kentucky has announced plans to build a new advanced paint facility in Kentucky. The automotive company will invest $922 million into the project, which is designed to improve operational efficiencies, reduce environmental impacts, and enhance the quality of vehicle finishes. According to Toyota Kentucky, the new plant will add 1 million square-feet of capacity while simultaneously helping the company cut carbon emissions by 30% and water usage by 1.5 million gallons per year.
The facility, which is expected to be operational in 2027, will help Toyota Kentucky increase flexibility for future vehicle production, reduce production lead time, improve process accuracy, and offer more diverse color options.
Deere Lays Off 75 Workers At Iowa Tractor Plant
Deere & Co. is laying off dozens of workers at a production plant in Ottumwa, Iowa, after struggling with tractor and equipment sales in recent months. Approximately 75 workers, or 13% of the plant’s workforce, will lose their jobs effective Feb. 7, according to a recent WARN notice. The Ottumwa plant just reopened after closing for the month of December due to sluggish demand for hay and forage equipment, the Des Moines Register reported. Currently, 575 people work at Deere’s Ottumwa Works plant, according to a spokesperson.
“To remain globally competitive, we must continue making workforce adjustments as needed to our manufacturing footprint,” a Deere spokesperson told sister publication Agriculture Dive via email. The Moline, Illinois-based tractor giant recently lowered its 2025 earnings projections to $5 billion, citing challenging market conditions. For comparison, company earnings were $10.1 billion in 2023.
Read More at Manufacturing Dive
Study: Using AI Tools Might Hamper Your Critical Thinking
New AI tools are slowly becoming ubiquitous, being added to the software and hardware we use every day (sometimes whether we like it or not). But if we’re using artificial intelligence to perform tasks, search for information and solve problems, what does that mean for the intelligence we’re born with? To figure this out, a team of researchers conducted a study involving 666 individuals ages 17 and up, representing a diverse population. It first evaluated the extent to which each of them made use of AI tools, then tested their critical thinking skills. The results of the study, which were published in the journal Societies, found that those who used AI tools a lot showed worse critical thinking abilities than those who didn’t use them often or at all. Whether someone used AI tools was a bigger predictor of a person’s thinking skills than any other factor, including educational attainment.
The reason for this is a phenomenon called “cognitive offloading” – where people’s thinking and problem-solving are essentially delegated to the AI tools. Frequent cognitive offloading reduces a person’s ability to independently think and solve problems. “This relationship underscores the dual-edged nature of AI technology,” the study authors wrote. “While it enhances efficiency and convenience, it inadvertently fosters dependence, which can compromise critical thinking skills over time.”
Read more at The Journal Societies