Member Briefing January 14, 2025
New York Fed Survey Finds Mixed Inflation Expectations In December
U.S. consumers' outlook on the expected path of inflation was mixed in December amid rising worries about households' ability to make debt payments, a survey by the New York Federal Reserve showed on Monday. The regional Fed bank said in its latest Survey of Consumer Expectations that respondents see inflation a year from now steady at 3%, while the forecast for price pressures in three years ticked up to 3% from 2.6% in November and ebbed to 2.7% on a five-year timeframe from the prior month's 2.9% reading. Key findings include:
- Uncertainty over the inflation outlook increased at the one- and three-year-ahead horizons but fell at the five-year perspective.
- The expected price of food rose, but other key categories showed declines, notably with gasoline hitting the lowest reading since September 2022.
- Expected gains for home prices were also largely stable at 3.1.
- The survey also found that while more respondents were upbeat about their personal financial situations, they also said they expected smaller future gains in income and earnings,
- The survey showed households bumping up the probability of missing a debt payment to the highest level since last September, matching a reading last seen in April 2020, during the tumult of the initial phase of the COVID-19 pandemic.
- The report said this fear was broad-based across income and education groups.
China Trade Surplus Reaches Record High With Surge Of Pre-Trump Exports
China's exports gained momentum in December, with imports also showing recovery, though strength at the year-end was in part fueled by factories rushing inventory overseas as they braced for heightened trade risks under a Trump presidency. Exports have been a vital growth engine for the $18 trillion economy, which is still burdened by a prolonged property crisis and shaky consumer confidence. While policymakers can find solace in recent policy measures keeping the economy on track for an "around 5%" growth target, challenges such as potential U.S. tariff hikes cloud the outlook for 2025.
Outbound shipments in December rose 10.7% year-on-year, customs data showed on Monday, beating 7.3% growth forecast in a Reuters poll of economists, and improving from November's 6.7% increase. China's trade surplus grew to $104.8 billion last month, up from $97.4 billion in November. Its trade surplus with the U.S. widened to $33.5 billion over the same period from $29.81 billion a month prior. "Trade front-loading became more visible in December as a result of both Chinese New Year effects and Donald Trump's inauguration," said Xu Tianchen, senior economist at the Economist Intelligence Unit. China's biggest festival runs from Jan. 28 to Feb. 4.
More People Are Working Multiple Jobs Again. They Have Multiple Reasons.
As of November, 5.4% of working people had more than one job, according to the Bureau of Labor Statistics. That number has been ticking up and is now higher than it was before the pandemic. “I think some of it is just that the labor market has taken a while to fully recover from the pandemic,” said Emma Harrington, an assistant professor of economics at the University of Virginia. Before COVID, the percentage of people working multiple jobs had been on an upward trajectory for years, she said, “then really took a nosedive during the pandemic, and then has been sort of ticking up towards the pre-pandemic trend for a while now.”
“When we ask people, ‘Why are you holding multiple jobs?’ about half say they just want to make some additional money,” said Lonnie Golden, a professor of economics and labor human resources at Penn State University, Abington. “But there’s a significant minority that say they can’t find a suitable full-time job, or they’re not able to make ends meet with just their one job.” There are others who do it because they’re just interested in the work or want something else to do, according to Golden’s surveys. These days, technology and the rise of remote work have also made it easier to find and juggle multiple opportunities,
Global Headlines
Middle East
- Final Draft Of Gaza Truce Deal Presented After 'Breakthrough.’ Talks Attended By Envoys Of Both Joe Biden and Donald Trump. – Reuters
- Hamas Has Another Sinwar. And He’s Rebuilding. - WSJ
- Three Things That Could Make A Gaza Hostage Deal More Likely - BBC
- Iran Gets Major Drone Boost Amid Growing Tensions With Israel - Newsweek
- Syria’s Forced Disappearances: No Relief For Grieving Families – France 24
- Lebanon To Name A Prime Minister As New Phase Begins - Reuters
- Greek Tanker Attacked by Houthis in August Successfully Salvaged Averting Environmental Disaster - Newsweek
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Zelensky Offers To Return Captured North Korean Troops In Exchange For Ukrainian Pows – France 24
- Ukraine Map Shows Russian Push to Encircle Heavily Fortified Linchpin Town - Newsweek
- Ukraine Halts Production At Pokrovsk Coal Mine As Russian Troops Near - Reuters
- Seoul Says 300 North Korean Soldiers Killed, Thousands Wounded In Ukraine – France 24
- Putin Shadow Fleet's Sanctions-Hit Tankers 'Stranded' off China Coast - Newsweek
- The Cubans Caught In Moscow’s Endless War - Politico
- For The First Time Since 2022, Ukraine May Have A Tank Advantage Over Russia - Forbes
- 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: At Least 24 Killed As Returning Winds Threaten To Undo Progress - CNN
- Approval Of US Leadership Under Biden Among NATO Members Sinks: Gallup
- Don’t Freak Out: Austria Tries To Reassure Brussels Amid Far Right’s Bid For Power - Politico
- Nationwide Strike In Belgium Hits Air And Train Traffic - Reuters
- 4 Things To Watch For As French PM Bayrou Faces First Big Test In Parliament - Politico
- India Kicks Off World's Largest Hindu Festival For 400 Million Pilgrims – France 24
- Forget Elon Musk — Here’s What’s Really Terrifying The UK Government - Politico
- Celebrations In Sudan's Wad Madani As Army Takes Over Strategic City - Reuters
Policy and Politics
Here's What We'll Be Watching During Hochul's 2025 State Of The State
Governor Hochul will deliver her State of the State Address this morning in Albany. Here is a look at what might be in it
Education: The biggest question around education in New York this year: What is going to happen to Foundation Aid? The formula New York uses to distribute the bulk of state school funding has been in use since 2007, and just about everyone agrees that it’s very out of date. At Hochul’s State of the State on Tuesday, I’ll be watching to see which of those suggestions she will try to implement. The governor is also expected to push for a state-funded universal school meal program.
Climate: There are three big climate items we’ll be looking out for in this year’s State of the State: 1. Will we finally see a detailed plan for “cap and invest,” as expected, and what will it contain? What price is Hochul willing to put on carbon? Will the program be stringent enough to win support from climate advocates? Hochul will need a robust coalition on her side for the program to overcome pushback from business groups. 2. Will Hochul once again offer a plan for the state to transition off of gas? She included legislation to this effect in her budget proposal last year, but her support wasn’t enough to overcome objections in the state Assembly. 3. Will New York make any major reforms to how it procures renewable energy? This summer, the state published an official review of the factors holding up its wind and solar buildout, but the recommendations in that report haven’t been finalized. Hochul could take this opportunity to announce changes.
Affordability: Hochul has already previewed new proposals to tackle the state’s high cost of living: an expanded child tax credit, “inflation refund” checks of up to $500, money to build child care centers, and support for homebuyers. look for more details on her plans for child care in particular.
Housing: Hochul has been clear that she sees building more housing as the best way to bring down costs — a position supported by reams of research. But since vociferous suburban opposition killed her 2023 plan for statewide housing growth, she’s trod cautiously on the topic. On Tuesday, she’ll propose a legislative package meant to make buying a home more affordable by offering tax breaks and grants to individuals and discouraging corporations from buying single-family homes. Other potential proposals include a state loan fund to lower development costs and plans to build housing on state-owned land.
Read More and watch the address here
US Announces New Restrictions on AI Chip Exports
The United States unveiled new export rules Monday on chips used for artificial intelligence, furthering efforts to make it tough for China and other rivals to access the advanced technology in Joe Biden's final days as president. The restrictions build on curbs announced in 2023 on exporting certain AI chips to China, which the United States sees as a strategic competitor, drawing fiery pushback from Beijing. The new rules update controls on chips, requiring authorizations for exports, re-exports and in-country transfers -- while also including a series of exceptions for countries considered friendly to the United States. AI data centers meanwhile will need to comply with enhanced security parameters to be able to import chips.
China's Commerce Ministry called the announcement "a flagrant violation" of international trade rules, vowing that Beijing would "firmly safeguard" its interests. The latest move also drew industry criticism and warnings that it would hurt U.S. competitiveness. Semiconductor Industry Association Chief Executive John Neuffer said: "We're deeply disappointed that a policy shift of this magnitude and impact is being rushed out the door days before a presidential transition and without any meaningful input from industry."
Trump Tells House Republicans To Find A ‘Fair Number’ on SALT
New York Republicans came out of a Mar-a-Lago meeting with Donald Trump on Saturday confident that the incoming president is on board with increasing a key deduction for state and local taxes. And they have marching orders from Trump: Go back to Congress and negotiate a “fair number.” “[Trump] said, look, come back with a number,” echoed Rep. Michael Lawler (R-N.Y.). “This is all negotiation to build consensus, so that’s obviously what our job is as members of Congress, and that’s what we’re going to do.”
The deduction, known as SALT, has been a constant headache for lawmakers of both parties who represent states with high property taxes, such as New York, California and New Jersey. Republicans’ 2017 tax law put a $10,000 cap on the deduction, amounting to a tax increase for many voters, and both Democratic and GOP members from those states have been pushing for a fix ever since.
Dollar Strengthens on Jobs Report, Bond Yields
The dollar was rising, hovering close to its highest in more than two years against a basket of currencies, after stronger-than-expected U.S. jobs data Friday. The euro and the pound hit their lowest since November 2022 against the U.S. currency. Evidence of a strengthening U.S. economy dents expectations for U.S. interest-rate cuts by the Federal Reserve, with U.S. money markets now only pricing in one reduction in 2025. The DXY dollar index rose 0.2% to 109.818. The euro fell to a low of $1.0208 and the pound to $1.2123, according to FactSet.
A strong dollar holds advantages for some and disadvantages for others. A strengthening dollar means U.S. consumers benefit from cheaper imports and less expensive foreign travel. U.S. companies that export or rely on global markets for the bulk of their sales, however, are financially hurt when the dollar strengthens. A strong dollar also bolsters the dollar's status as a world reserve currency. While some countries, including Russia, Iran, and China, have questioned the status of the U.S. dollar as the de facto world reserve currency, a strong dollar helps keep its demand as a reserve high.
Transition 2024
- Trump Border Czar Tom Homan Works to ‘Right Size’ Deportations - WSJ
- Trump frustrated with GOP lawmakers over debt-limit quandary – The Hill
- Pete Hegseth, Trump’s Pentagon Pick, Faces Tough Confirmation Test – Washington Post
- Democrats Want To Slow Gabbard Confirmation Path – The Hill
- Trump’s Cabinet And Key Jobs: Katherine MacGregor, Steven Bradbury Among Latest Staff Picks - Forbes
- Congressman Lawler Meets With The President-Elect – Mid-Hudson News
- Trump’s Inauguration Weekend Features Fireworks, MAGA Rally, Inaugural Balls - Politico
- Will Jack Smith’s Final Trump Report Be Released This Week? Here’s What We Know About It. - Forbes
- Tracking Trump’s Cabinet Picks – Politico
Health and Wellness
FDA Shifts Toward Importance Of Obesity Medications in Draft Guidance
For years now, companies behind weight loss drugs like Wegovy and Zepbound have been trying to convince the medical community and the public that obesity is a disease and medications are the answer. It seems the Food and Drug Administration has now shifted its perspective, too. This week, amid a slew of new recommendations that the FDA released ahead of President-elect Trump’s inauguration, the agency posted draft guidance on obesity clinical trials, the first time it has done so since 2007. Draft guidance documents issued by the FDA are not binding, but revisions, even subtle, provide a look into the agency’s stances; they also have real-world implications for how experimental drugs and devices are assessed and approved.
The new draft calls obesity “a chronic disease,” whereas the previous guidance called it “a chronic, relapsing health risk.” It mentions the importance of lifestyle interventions less than the previous guidance, omitting a reference to lifestyle modification being seen as “the cornerstone of overweight and obesity management.” It also takes a less conservative view of how companies should test drugs in the pediatric population, removing recommendations that drugmakers should first conduct studies in higher-risk adolescents than other children.
Industry News
Cleveland-Cliffs Partnering With Nucor On Potential Bid For U.S. Steel, Sources Say
Cleveland Cliffs is partnering with rival Nucor in a potential bid for U.S. Steel, whose takeover by Japan’s Nippon Steel was blocked by the White House earlier this month, sources tell CNBC’s David Faber. Cleveland-Cliffs would purchase all of U.S. Steel for all cash and then sell off the Big River Steel subsidiary to Nucor, the sources said. U.S. Steel’s headquarters would remain in Pittsburgh under the deal. The offer would be in the high $30s a share. Nippon had planned to buy U.S. Steel for $55 per share in a deal valued at more than $14 billion.
U.S. Steel and Nippon have also filed a separate lawsuit against Cleveland-Cliffs, its CEO Lourenco Goncalves, and United Steelworkers President David McCall, alleging they colluded to block the deal. U.S. Steel CEO David Burritt has called President-elect Donald Trump to reverse Biden’s decision to block the sale when he takes office later this month. Trump has also opposed Nippon’s acquisition of U.S. Steel.
OpenAI Urges The U.S. To Prioritize AI Funding And Regulation To Stay Ahead Of China
OpenAI on Monday laid out its vision for artificial intelligence development in the U.S., saying the country needs outside investment and supportive regulation to stay ahead of China in the race for the nascent technology. “Chips, data and energy are the keys to winning AI” and the U.S. needs to act now to craft nationwide rules that can help secure its advantage, the AI startup said in a 15-page document called its “Economic Blueprint”.
The move comes just days before President-elect Donald Trump takes office, bringing with him an administration that is widely expected to be more friendly to the tech industry with former PayPal executive David Sacks as its AI and crypto czar. “There’s an estimated $175 billion sitting in global funds awaiting investment in AI projects, and if the U.S. doesn’t attract those funds, they will flow to China-backed projects — strengthening the Chinese Communist Party’s global influence,” OpenAI said in the document. It also outlined proposals for export controls on AI models, which it said should be out of the reach of adversary nations that may be more likely to misuse the technology.
Retail Federation Says Import Cargo to Remain Elevated in January
While potential strikes at East Coast and Gulf Coast ports have been averted due to a tentative labor agreement, major container ports have already seen a surge in imports that is expected to continue because of potential increases in tariffs, according to the Global Port Tracker report released on January 10 by the National Retail Federation and Hackett Associates. U.S. ports covered by Global Port Tracker handled 2.17 million TEU in November, although the Ports of New York and New Jersey have yet to report final data. That was down 3.2% from October but up 14.7% year over year.
Ports have not yet reported December’s numbers, but Global Port Tracker projected the month at 2.24 million TEU, up 19.2% year over year. That would bring 2024 to 25.6 million TEU, up 15.2% from 2023. Forecasts include:
- January is forecast at 2.16 million TEU, up 10% year over year
- February at 1.87 million TEU, down 4.5% because of Lunar New Year factory shutdowns in China
- March at 2.13 million TEU, up 10.6%
Read more at Material Handling & Logistics
Boeing Production In 2024 Expected To Be Less Than Half Of Rival Airbus
Boeing is expected to confirm it made less than half of the aircraft of its rival Airbus in 2024, with analysts questioning whether the troubled US planemaker will be able to increase its rate of production as planned. The company is expected to report that it delivered only 340 aircraft to customers, when it publishes numbers on Today, according to forecasts by Flight Plan. That is far below the 766 delivered by Airbus, Europe’s planemaking champion.
Boeing is hoping to ramp up deliveries of its bestselling 737 Max jet under the leadership of the new chief executive, Kelly Ortberg, who was appointed in July to lead the latest turnaround of the giant manufacturer. Boeing is now seeking to increase production, with a reported target of producing 38 737 Max planes a month by May 2025, according to the Air Current, an industry publication. However, aerospace experts have raised doubts over whether the company will be able to hit its targeted schedule, as the planemaker races to coordinate its huge supply chain to try to accelerate while satisfying regulators that it will not sacrifice safety.
Next Generation Air Dominance: The 6th Generation Fighter Jet the U.S. Air Force Can’t Do Without
The U.S. Air Force’s Next Generation Air Dominance (NGAD) program seeks a sixth-generation stealth aircraft to succeed the F-22 Raptor. Originally projected at up to $300 million each, Secretary Frank Kendall has since hinted the final unit cost could be closer to the F-35. Still, even that lower threshold is tough to achieve without exports that the United States almost certainly won’t allow. Meanwhile, defense industry players have invested heavily in new facilities, awaiting an NGAD contract.
This aircraft is supposed to be a “6th-generation fighter” – initially proposed in an analytical study over a decade ago in 2014. It is planned for introduction into service in the 2030s, dovetailing with what has been called the beginning of the “sunset years” for the F-22A Raptor. The program to date has been discussed as a single, manned aircraft supplanted by one or more uncrewed collaborative combat aircraft (CCA) air vehicles, often referred to as “loyal wingman.” Measurable progress has been made on that second vehicle, but the future direction of the crewed aircraft has been paused pending a further re-think of the requirement.
Blackrock Departs Climate Investment Group
Asset management firm BlackRock is leaving a climate-focused investing group, the group confirmed. “We are disappointed to see any investor withdraw, but as a voluntary initiative, we respect any individual decisions signatories take,” said a spokesperson for the Net Zero Asset Managers initiative in an emailed statement to The Hill. The asset management giant’s decision comes as a wave of other firms also depart their climate or Environment Social and Government (ESG) commitments.
BlackRock’s exit is particularly notable because of its prominence and its leading rhetoric on climate change. CEO Larry Fink declared in 2020 that climate change “has become a defining factor in companies’ long-term prospects.” Bloomberg obtained a client letter from the investor, which said that its membership in the net-zero group “caused confusion regarding BlackRock’s practices and subjected us to legal inquiries from various public officials.”
Maryland Sues Gore-Tex Maker Over Alleged PFAS Contamination
Maryland Attorney General Anthony Brown filed a lawsuit last month against material science conglomerate W.L. Gore and Associates, accusing the company’s 13 facilities in Elkton, Maryland, of contaminating the state with PFAS, according to a Dec. 18 press release. The state is asking for monetary relief, including funds to investigate, clean up and remediate contaminated water and land, as well as compensation for damages that harmed state-owned land or resources. A monetary amount was not disclosed.
The complaint also stated the company, which makes the waterproof material Gore-Tex, allegedly knew about the dangers of the forever chemicals due to its decades-long business relationship with DuPont de Nemours, which invented the forever chemical PTFE. The state claims Gore concealed the harmful effects of the chemicals. Gore denies the allegations in the complaint and is “surprised” by the attorney general’s decision to initiate legal action, Gore spokesperson Amy Calhoun said in an emailed statement to Manufacturing Dive.
Read More at Manufacturing Dive
Northrop Fast-Tracking Missile Interceptor Project
Northrop Grumman Corp. has a go-ahead from the U.S. Missile Defense Agency to produce five Modified Ballistic Re-Entry Vehicles (MBRV-11) for testing the Next Generation Interceptor (NGI) being developed by MDA for domestic defense against hypersonic missile attacks. The U.S. Dept. of Defense (DOD) has set 2028 as the date for MDA to begin fielding the interceptors. The company has previously said it was using digital engineering capabilities to accelerate the design and development of the interceptor. Working with the MDA, it proceeded from contract award through Critical Design Review in less than 16 months.
Northrop’s assignment is to develop the technology for intercepting missiles in their glide phase. The MBRV-11 consists of a baseline vehicle design with four optional enhancement kits representing different capabilities, to provide mission flexibility. Testing of the MBRV-11 will involve integrating it with intermediate-range and intercontinental ballistic missile (ICBM) targets, to simulate the actual missile threats it is intended to intercept.
Read more at American Machinist