Member Briefing January 24, 2023
Labor Department: Biggest Pay Raises Went to Black Workers, Young People and Low-Wage Earners
Black workers, young workers and people on the bottom of the income scale were among those who saw the largest pay increases last year, when employers were readily handing out raises in a tight labor market and high inflation environment. Median weekly earnings for all workers were 7.4% higher, year over year, at the end of 2022, according to an analysis of newly released Labor Department data. That outpaced the consumer inflation rate of 7.1% in the fourth quarter, from a year earlier.
For some workers, the gains were even larger. The median raise for Black Americans employed full time was 11.3%, compared with the prior year. Weekly pay for workers between 16- and 24-years old rose more than 10%. The bottom 10th of wage earners—those that make about $570 a week—saw their pay increase by nearly 10%.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Zelenskiy Ally Threatens Jailings After High-Profile Corruption Claims - Reuters
- Ukraine’s Tragic Week Shows There’s No Safe Place in War - AP
- Zelensky: Blockades Still Hindering Grain Exports From Black Sea – OilPrice.com
- Former Top FBI Official Charged With Violating Russia Sanctions – The Hill
- Germany Ready to Let Poland Send Leopard Tanks to Ukraine: Foreign Minister - Politico
- A Look at Leopard 2 Tanks That Could Soon be Sent to Ukraine – The AP
- What Western Armour Gives Ukraine in the Next Round of the War – The Economist
- NATO's Baltic States, Russia Remove Ambassadors as Diplomatic Relations Downgraded - Reuters
- Ukraine’s ‘Decision-Centric’ Military Needs More Than Armor to Win – The Hill
- How Russia’s New Commander in Ukraine Could Change the War – The New Yorker
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Treasury's Yellen Says IRS Needs to be 'Completely Redone'
U.S. Treasury Secretary Janet Yellen on Sunday said rebuilding the Internal Revenue Service would be one of her top priorities in coming years, putting her squarely at odds with Republicans who have taken control of the House of Representatives. Yellen told Reuters she was thrilled that Congress had approved $80 billion in new funding to help the agency reduce a huge backlog of tax returns and better hunt down $600 billion in unpaid tax bills.
She said she decided to stay on as Treasury secretary in large part to oversee implementation of legislation like the Inflation Reduction Act, which included the IRS funding and passed on party lines last year. "I’m excited about legislation that’s passed and I want to make sure that it makes the difference it should make, and that includes the IRS," she said. "That agency needs to be completely redone, and it’s a big task."
Markets Betting on Quick Drop in Inflation
Hopes for a quick return to 2% inflation have encouraged bets that the Federal Reserve will pause and even reverse its interest-rate increases this year. Rate increases pummeled stocks and bonds in 2022, and a possible respite has sent both higher in January. The rally has extended to some of the riskier assets that had stung investors hardest last year, such as bitcoin and the ARK Innovation exchange-traded fund, known for its focus on fast-growing tech companies.
Many Wall Street strategists, however, are warning that a painless end to elevated inflation will be difficult to achieve. Previous episodes of inflation suggest that it rarely falls as fast as markets are now forecasting that it will in the absence of a serious recession. Economic data released last week showed signs of weakening consumer demand. Wagers on contracts known as CPI swaps, another way of betting on future inflation rates, show traders forecasting inflation of roughly 2.1% in the next year. Those figures, if realized, would represent a historically rapid decline.
U.S. COVID – The Fast-Spreading New COVID-19 Subvariant XBB Is Part of a ‘New Class’ of Omicron
XBB is a hybrid version of two strains of the BA.2 form of Omicron,” explains Amesh A. Adalja, M.D., a senior scholar at the Johns Hopkins Center for Health Security. It’s currently “spreading efficiently in Singapore,” he adds. XBB is thought to have the best ability to evade antibody protections of these newly emerged COVID variants, according to a pre-print study from researchers in China.
That study said that the new strains of Omicron, and XBB in particular, “are the most antibody-evasive strain tested, far exceeding BA.5 and approaching SARS-CoV-1 level.” Meaning, the vaccine and having previously had COVID-19 are not thought to offer the same level of protection against XBB as they have with previous strains of COVID-19. Antibody drugs like Evusheld and bebtelovimab may also not be very effective against XBB, the pre-print study says.
Siena Poll: Governor Hochul Starts 2023 with Best Ever Job Approval (56-36%)
Voters approve of the job Kathy Hochul is doing as Governor 56-36%, up from 49-44% last month, and the best it’s ever been. Her favorability rating is 48-42%. Six of Hochul’s State of the State proposals have strong to overwhelming support – four of them bipartisan – while her proposal to allow SUNY to increase tuition is strongly opposed. “More than three-quarters of Democrats approve of the job she’s doing, while more than three-quarters of Republicans disapprove. A small plurality of independents, 47-43%, approve, after a majority disapproved last month,” Siena College pollster Steven Greenberg said.
While a majority of voters think Hochul will make progress this year on her goal of creating more jobs and opportunities, a larger majority think she will not make progress on making New York more affordable, and pluralities think she will not be successful making the state safer or fixing its mental health system.
Read more at Siena College Research
Bi-Partisan Group of Lawmakers Preparing Plan to Avert Debt-Ceiling Crisis
A bipartisan group of U.S. lawmakers is preparing a plan to defuse a looming crisis over the nation's debt ceiling by changing it from a fixed dollar amount a percentage of national economic output, the group's top Republican said on Sunday. The proposal would replace Washington's current federal debt ceiling - currently set at $31.4 trillion - with a rule that would instead limit debt to a share of national economic output, said U.S. Representative Brian Fitzpatrick, the Republican co-chair of the moderate Problem Solvers Caucus.
Congress's rules on the debt ceiling are intended to limit growth of the nation's debt. The measure has not had that effect, as, in practice, Congress has treated the annual budget process -- deciding how much money to spend -- separately from the debt ceiling, in essence, agreeing to cover the costs of previously approved spending.
FDA Panel to Consider Annual COVID-19 Vaccine Shots
The Food and Drug Administration’s (FDA) advisory panel on vaccines is set to consider an annual schedule for the coronavirus vaccine, akin to how flu vaccines are administered, when it meets this week. The rapid evolution of the SARS-CoV-2 virus, resulting in variants with an improved ability to escape immune protection, means that “periodically updating the composition of COVID-19 vaccines as needed,” as was done with the updated bivalent booster, requires consideration, according to panel documents posted Monday.
The panel said it anticipates evaluating the composition of the COVID-19 vaccine annually in June and making a recommendation for the following year — though it acknowledged the difficulties of mounting a globally coordinated vaccine recommendation. While acknowledging that COVID-19 and the flu are not identical, VRBPAC said the deployment of the bivalent COVID-19 boosters, created to target both the ancestral strain of the virus as well as the BA.4 and BA.5 omicron subvariants, was “analogous” to annual flu vaccinations.
New York Health Officials Move to Expand Wastewater Monitoring
Public health officials in New York are planning an expansion of infectious disease monitoring in wastewater in order to detect more illnesses that may be otherwise quietly spreading through a community. The state Department of Health on Monday announced its plan through $21.6 million in funding, including a $6.6 million grant from the U.S. Centers for Disease Control and Prevention.
Under a series of pilot programs, health officials will begin testing for Influenza A, RSV, Hepatitis A, Norovirus, and antimicrobial-resistant genes. The initial monitoring programs will begin in Erie, Onondaga, Jefferson and Westchester counties. The expansion is a sign of how COVID-19 and later the spread of polio in the Hudson Valley and New York City area have potentially changed how diseases and community spread can be monitored. The monitoring of public wastewater for traces of COVID-19 as well as the poliovirus are considered successes.
Read more at NY State of Politics
Here are the Layoff Severance Packages Google, Microsoft, Amazon and Other Tech Giants Have Promised
Tech companies have laid off tens of thousands of workers in recent months as the industry grapples with a reduced risk appetite from investors and increases in borrowing costs. Laid-off employees across the tech sector enter an uncertain job market, with head count reductions taking place across all experience levels and teams. Few companies, with the possible exception of Apple, have been immune.
Laid-off workers will receive severance packages of varying size and duration, depending on where they work. Google for example says laid-off U.S. employees will receive pay through the notification period and receive a 16-week base severance package with an additional two weeks for every year of employment. Here’s what some of the biggest tech names have promised their employees.
Germany’s Scholz, France’s Macron Upbeat About Trade Truce With US in ‘First Quarter of This Year’
German Chancellor Olaf Scholz raised optimism on Sunday that the EU and the U.S. can reach a trade truce in the coming months to prevent discrimination against European companies due to American subsidies. Scholz said he was "confident" that the EU and the U.S. could reach an agreement “within the first quarter of this year” to address measures under the U.S. Inflation Reduction Act that Europe fears would siphon investments in key technologies away the Continent.
"My impression is that there is a great understanding in the U.S. [of the concerns raised in the EU]," the chancellor said. French President Emmanuel Macron told reporters that he and Scholz supported attempts by the European Commission to negotiate exemptions from the U.S. law to avoid discrimination against EU companies. The fresh optimism came as both leaders adopted a joint statement in which they called for loosening EU state aid rules to boost home-grown green industries — in a response to the U.S. law.
ITIF: China Is Overtaking the United States in Innovation Capacity
The last decade was marked by dramatic evolution in China’s innovation capabilities and strategies, much of which was driven by the transition of Chinese Communist Party (CCP) and state leadership from Hu Jintao and Xi Jinping and the introduction of China’s latest major innovation policy framework: Made in China 2025 (MIC). This report from ITIF applies more recent data to assess the progress China made during the previous decade with respect to the United States across a series of innovation indicators.1
China’s capacity for new-to-the-world or frontier innovation is one of the most important unknowns in the global economy. Many countries have tried and failed to make the transition from “imitator” to “innovator,” and China’s ability or inability to fully make that transition will largely define global geopolitical development in the decades to come. If China can surpass the United States in innovation—both catch-up and frontier—the global value chain (GVC) for the highest-value-added products stands to undergo a tremendous change. This would represent a serious economic and geopolitical challenge to the United States and its allies, particularly because of China’s predatory trade and innovation policy practices.
France, Germany Renew 60 Year Alliance Strained Amid War in Ukraine
France and Germany committed Sunday to giving Ukraine “unwavering support” and to strengthening the European Union as they sought to overcome differences over defense, energy and economic issues on the 60th anniversary of their post-World War II friendship treaty. The German government’s entire Cabinet was in Paris for joint meetings with their French counterparts, and about 300 lawmakers from the two countries came together at the Sorbonne University during the day of ceremonies and talks.
The war in Ukraine has exposed differences in strategy between the two countries, notably in European talks on how to deal with the resulting energy crisis and punishing inflation, as well as over future military investments. Both countries have contributed significant weaponry to Ukraine, but Ukraine is asking for tanks and more powerful arms as Russia’s war drags on. Germany is under pressure to approve the transfer of Leopard 2 battle tanks, which are made in the country.
Diesel Markets Brace For A Chaotic February
This season will see twice as many refineries shut down for repairs to compensate for delays in maintenance during the pandemic. Less gasoline and diesel fuel will be produced and, consequently, less will be exported to Europe. At the same time the European Union declared an embargo on Russian fuel imports from February 5th. Russia is currently the EU’s biggest supplier of fuels, especially diesel.
Ahead of the embargo, traders are on a buying spree of Russian diesel, with flows into storage tanks hitting the highest in a year, according to Reuters. The United States will not be able to step in and help the way it helped with LNG deliveries as a replacement for Russian pipeline gas. The reason that the United States will not be able to help is that its own supply situation with diesel fuel is pretty dire. It’s so dire, in fact, that Bloomberg reported that diesel fuel cargos are being diverted from their original destinations in Europe to new ones in the U.S. The report noted the cold spell in December, which caused the temporary shutdown of a third of refining capacity on the Gulf Coast and the recent shutdown of a fuel pipe in New York Harbor.