Member Briefing January 30, 2023
GDP Rose 2.9% in the Fourth Quarter, More Than Expected But Recession Fears Loom
The U.S. economy finished 2022 in solid shape even as questions persist over whether growth will turn negative in the year ahead. Fourth-quarter gross domestic product, the sum of all goods and services produced for the October-to-December period, rose at a 2.9% annualized pace, the Commerce Department reported Thursday. Economists surveyed by Dow Jones had expected a reading of 2.8%. The growth rate was slightly slower than the 3.2% pace in the third quarter.
Consumer spending, which accounts for about 68% of GDP, increased 2.1% for the period, down slightly from 2.3% in the previous period but still positive.Along with the boost from consumers, increases in private inventory investment, government spending and nonresidential fixed investment helped lift the GDP number.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine Says it Repels Attack Around Blahodatne, Wagner Claims Control - Reuters
- How Tanks from Germany, US and UK Could Change the Ukraine War - BBC
- Some Western Backers of Ukraine Worry That Time Might Be on Russia’s Side - WSJ
- Is Helping Ukraine Reducing US Preparedness, Security? – The Hill
- In Ukraine, Russian Collaborators Flee or Face Justice – Christian Science Monitor
- Olympics 2024: IOC Opens Door to Russian and Belarusian Athletes Competing in Paris - BBC
- Ukraine's Zelenskiy Decries Neutrality in Sports at Time of War - Reuters
- Upstart Indian Shipper Helps Get Russian Oil to Market - WSJ
- The World Economy No Longer Needs Russia – Foreign Policy
- The Covert Polish Repair Shop Patching Up Ukrainian Arms - WSJ
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Core Capital Goods Orders, Shipments Fall in December
New orders for U.S.-made capital goods fell in December, while shipments declined for a second straight month, suggesting that higher borrowing costs were now pressuring manufacturing. Orders for non-defense capital goods excluding aircraft, a closely watched proxy for business spending plans, slipped 0.2% last month, the Commerce Department said on Thursday. These so-called core capital goods orders were unchanged in November.
Shipments of core capital goods dropped 0.4% after declining 0.2% in November. Core capital goods shipments are used to calculate equipment spending in the gross domestic product measurement. Business spending on equipment contracted in the fourth quarter. While orders for items ranging from toasters to aircraft that are meant to last three years or more rebounded 5.6% in December, that was because of a surge in the volatile civilian aircraft category. The so-called durable goods orders fell 1.7% in November.
779,000, 1.5:1, $31.44
Amid a persistent labor shortage, NAM President and CEO and Board Chair of the Manufacturing Institute Jay Timmons, and Mike Rowe of “Dirty Jobs” fame, talk about the workforce challenge in manufacturing in the United States--and some of the barriers to recruiting talent in a segment on the CBS Morning Show.
The key numbers to think about – 779,000 job openings in manufacturing nationally, 1.5:1 the ratio of manufacturing jobs to the number of manufacturing workers, and $31.44 which is the average hourly wage of a manufacturing worker.
U.S. COVID – Cases, Hospitalizations and Deaths all Post Weekly Declines
The US CDC is reporting:
- 9 million cumulative cases
- 1 million deaths
- 332,212 cases week of January 18 (down from previous week)
- 3,953 deaths week of January 18 (down from previous week)
- 7% weekly decrease in new hospital admissions
- 3% weekly decrease in current hospitalizations
The Omicron sublineages XBB.1.5 (49%), BQ.1.1 (27%), and BQ.1 (13%) account for a majority of all new sequenced specimens, with various other Omicron subvariants accounting for the remainder of cases.
NYS COVID Update
The Governor updated COVID data through January 27.
- Daily: 21
- Total Reported to CDC: 77,788
- Patients Currently in Hospital statewide: 2,780
- Patients Currently in ICU Statewide: 304
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 6.45% - 16.58 positive cases per 100,00 population
- Mid-Hudson: 8.21% - 19.44 positive cases per 100,00 population
What’s Next for COVID-19 Vaccines? Scientists and Regulators Chart a Course Amid Uncertainty
On 26 January, an FDA advisory panel voted unanimously to harmonize the makeup of all COVID-19 vaccines. In the future, the primary two-dose series—currently based on the SARS-CoV-2 strain that emerged in Wuhan, China—and booster shots, currently bivalent, will be based on the same virus variants. The panel also broadly agreed with FDA's proposal to shift to annual, fall COVID-19 boosters for most of the U.S. population.
Just over 2 years ago, the first COVID-19 vaccines arrived—and a roller coaster ride of hope and science began. It soon became clear that although the vaccines protected against severe disease, their ability to fend off infection was limited and faded fast. Meanwhile, SARS-CoV-2 began to evolve rapidly to elude immunity. By now, many people have had four or five vaccine doses, including an updated booster tailored to Omicron strains that was introduced last fall. Now, regulators and scientists are debating the near-term future. How often will we need booster doses and who should receive them? Should vaccines continue to be updated as new Omicron subvariants—or entirely new variants—emerge? Are people who have had COVID-19 along with multiple vaccine doses better protected, and for how long?
McCarthy Says He’ll Meet Biden on Wednesday to Talk Debt Ceiling
House Speaker Kevin McCarthy (R-Calif.) said he will meet with President Biden on Wednesday to discuss the debt ceiling. “We’re going to meet this Wednesday,” McCarthy told Margaret Brennan on CBS’s “Face the Nation. “I know the president said he didn’t want to have any discussions, but I think it’s very important that our whole government is designed to find compromise.”
Biden and White House officials have said they’d be willing to work in a bipartisan fashion to avoid the country defaulting on its debts but that they would not make concessions on spending cuts in order to do so. The U.S. reached its borrowing limit earlier this month and has until June to either raise or suspend the debt ceiling before defaulting.
The Jobless Rate Is at a Half-Century Low. In These States, It’s Even Lower.
The national unemployment rate fell to a seasonally adjusted 3.5% in December, matching the lowest reading in a half century. Some states had significantly lower rates. Utah had the nation’s lowest rate at 2.2% last month, according to the Labor Department. Other states’ rates were much higher, led by Nevada’s at 5.2%. There are recent signs that the national labor market is cooling as the Federal Reserve’s rapid interest-rate increases slow overall economic growth.
December saw the smallest national monthly gain in jobs in two years and several large employers have announced layoffs. “It’s been a somewhat uneven slowing,” said Adam Kamins, director of regional economics at Moody’s Analytics. “In some places, jobs are being lost while in other places the labor market is holding up pretty strong.” Here is how state job markets fared in the past year, according to the Labor Department.
Pending Home Sales Snap Six-Month Decline as Mortgage Rates Fall
Pending home sales ended their six-month streak of declines in December, according to trade group data released Friday. The increase, which comes as mortgage rates pulled back from 2022’s peak, is another early positive sign for housing. The National Association of Realtors’ seasonally-adjusted index tracking pending home sales, a measure of contract signings, gained 2.5% in December from the month prior.
To be sure, pending sales are still low. December’s index reading was about 34% lower than the same month last year, and the increase represents a slight improvement from November’s trough, when the gauge was at its lowest point since the early pandemic housing market pause in April 2020. A pending sale represents a signed contract, but a deal can fall through before a home changes hands. While December’s pending home sales gauge increased, closed sales of existing homes that month continued to slump.
Major Cybercriminal Ring Taken Down by FBI
The FBI and Justice Department today announced a victory against the cybercriminal group Hive, confirmed by the hackers themselves via a message posted by the group on the dark web. According to the announcement this morning from the FBI and Justice Department, the FBI in July 2022 infiltrated Hive's computer networks, obtained over 1,300 decryption keys used for ransomware attacks past and present and distributed them back to victims. The FBI also warned potential victims they were being targeted by Hive and prevented extortion demands that might have reached up to $130 million in payments.
According to BleepingComputer, the Hive dark web post gives credit for the seizure not only to the FBI and Justice Department but also to the U.S. Secret Service, Europol and Germany's Federal Criminal Police Office and Baden-Württemberg Police agencies. And according to comment given to NBC by Allan Liska, ransomware analyst from cybersecurity company Recorded Future, the core group of Hive's cybercriminals spoke Russian.
Gallop: People Aren't Feeling Engaged With Their Work
A new report from Gallup finds that large numbers of workers, especially Gen Zers and young millennials, are not engaged with their jobs. And that could make their climb up the career ladder harder, as well as hurt companies' overall performance. The Gallup survey of roughly 67,000 people in 2022 found only 32% of workers are engaged with their work compared with 36% in 2020.
The share of workers found to be "actively disengaged" has risen since 2020, while the share of those in the middle — those considered "not engaged" — has remained about the same. Engagement had been rising in the decade before the pandemic, following the Great Recession, but started to fall in 2021.Younger workers have seen a bigger drop in engagement than older ones. Those under 35 reported feeling less heard and less cared about at work. Fewer Gen Zers and young millennials reported having someone at work who encourages their development and fewer opportunities to learn and grow.
Jobless Claims Fall Despite Mounting Layoffs in Tech Sector
In the week ending Jan. 21, initial claims for unemployment insurance totaled 186,000 after seasonal adjustments, down 6,000 from the previous week’s total of 190,000. Roughly 197,500 Americans filed to begin new cycles of jobless benefits each week over the past month, still well below pre-pandemic averages.
New weekly jobless claims are not necessarily a perfect reflection of layoffs, as some Americans who have lost their jobs may not have applied yet for unemployment benefits. The thousands of layoffs announced by companies such as Microsoft, Alphabet and Amazon are also relatively small in proportion to the natural churn of millions of layoffs and new hirings each year.
Strained Supply Chain Workforces are Increasingly Turning to Technology
One way to address the inflation-fueled drive to control spending is through technology. Automation and artificial intelligence will be key drivers for procurement teams in 2023, given many organizations are operating with reduced manpower, a report from Keelvar finds. Research on the workforce found that:
- 86% of procurement and sourcing teams saw an increase in their workload last year despite headcount remaining mostly stagnant.
- 72% said overcoming a declining or flat workforce remains a top priority.
- 55% reported higher levels of stress and/or burnout from doing more with less.
- 89% are banking on automation to reduce time spent on manual tasks.
The combination of heavy workloads and fewer resources is leading to an increase in risky behavior: 24% of procurement teams are cutting corners to ensure supply, and 22% are purchasing outside of approved supplier lists.
Change at the Top for Toyota
The world’s No. 1 automaker has a new CEO, and the transition of power could not have come at a more pivotal time. Toyota Motor Corp. on Thursday surprised the market when it announced that Lexus President Koji Sato will take over from Akio Toyoda, the grandson of the venerable Japanese carmaker’s founder, effective April 1. While Toyoda will remain as chairman, Sato, a Toyota lifer who joined the company more than 30 years ago, will be tasked with guiding the automaker through what could be the most challenging period in its 86-year history. That’s because as consumers embrace electric cars in ever greater numbers, Toyota is falling behind, according to some critics and analysts.
Although the Japanese carmaker leads when it comes to the sheer volume of cars it produces — expected to come in at 9.2 million units for the fiscal year that ends in March — it lags in the shift to electrification, a pivot spearheaded by Tesla Inc. Under Toyoda’s stewardship, Toyota has taken a more nuanced approach, believing vehicles powered entirely by batteries are only one path toward a cleaner transport future. Gas-electric hybrids and hydrogen-powered cars also will also play a part, Toyoda has long argued.
Are the Latest GDP Numbers Good News? It Depends on How You Look at Them.
This economy is really hard to read right now. The latest evidence for that came Thursday morning in the form of the Commerce Department’s quarterly report on the country’s gross domestic product. At first blush, the news looks pretty good: The economy grew by 2.9% in the last three months of 2022, which was more than most economists were expecting.
But it’s also less growth than we saw in the third quarter of last year, and there are signs that at least parts of the economy are slowing down. Just look at construction and home sales. Plus, retail sales have been falling for a couple months now. So, while recognizing the fundamental axiom of economics — that there’s always “another hand” — Marketplace asked two reporters to interview the same economists and show both sides of the same GDP coin.
Zinc8 Energy Solutions, a Long-Term Energy Storage Leader, Will Locate its First Commercial Manufacturing Facility US Headquarters in Ulster County
Zinc8 Energy Solutions, USA, a leader in the long-duration energy storage industry, will relocate its $68 million manufacturing facility and U.S. headquarters to Kingston, Ulster County at the former Tech City, IBM Ulster campus, now known as iPark 87 business park. Zinc8 Energy Solutions develops innovative battery technology that uses zinc and air as fuel. Zinc8 has committed to creating up to 500 jobs.
Zinc8 Energy Solutions (Zinc8) has submitted a Letter of Intent to be the anchor tenant and lease approximately 237,000 square feet of warehouse and outdoor space at iPark 87, which is owned by National Resources. Zinc8 will invest approximately $68 million over 5 years to automate and build out the site, making the region Zinc8's U.S. headquarters and a major hub of manufacturing operations, research and development. Empire State Development (ESD) has agreed to provide up to $9 million in performance-based Excelsior Jobs Program tax credits to encourage and support the creation of 500 jobs.