Member Briefing January 30, 2024
Inside the GDP Numbers
The U.S. economy grew by 2.5% in 2023, up from 1.9% in 2022. The forecast is for 2.0% growth in 2024. Even as the probability of a “soft landing” has increased, there continues to be sizable downside risks in the economic outlook.
- Personal consumption expenditures: Consumer spending on goods rose 3.8% at the annual rate in Q4, with durable and nondurable goods spending increasing 4.6% and 3.4%, respectively. Service-sector spending increased 2.4%. Overall, personal consumption expenditures contributed 1.91 percentage points to headline growth, with 0.85 percentage points from goods and 1.06 percentage points from service-sector spending.
- Gross private fixed investment: Fixed investment slowed from 2.6% growth at the annual rate in Q3 to 1.7% in Q4. Yet, nonresidential fixed investment improved from 1.4% to 1.9% for the quarter. Equipment spending rebounded, rising 1.0% in Q4 after declining 4.4% in Q3. Spending on structures slowed to 3.2% (still a solid number), while investments in intellectual property products ticked higher to 2.1%. Residential fixed investments were positive for the second straight quarter but eased from 6.7% growth in Q3 to 1.1% in Q4. Meanwhile, residential fixed investment and business inventory spending contributed 0.04 percentage points and 0.07 percentage points to top-line growth, respectively.
- Net exports: Net exports of goods and services added 0.43 percentage points to real GDP growth in Q4. Overall, goods exports rose by an annualized 4.7% in Q4, with goods imports up just 0.8%. For services, exports and imports increased 9.5% and 6.8%, respectively.
- Government expenditures: Federal government spending rose 2.5% at the annual rate in Q4, down from 7.1% in Q3, and state and local government expenditures increased 3.7%. Overall, federal government spending contributed 0.16 percentage points to real GDP growth, with state and local governments adding 0.40 percentage points.
Read more at the Bureau of Economic Analysis
Global Headlines
Gaza
- Israel and Hamas: The Latest News – The Guardian
- Freed Israeli Hostage Fears for Resilience of Those Still Held in Gaza – Reuters
- Head Of UN Agency Denounces ‘Shocking’ Funding Cuts Amid Allegations Staffers Were Involved In Hamas’ Attack On Israel - Forbes
- Clashing Visions of Israel’s Future – Politico
- Israeli intelligence accuses 190 Gaza U.N. staff of Hamas, Islamic Jihad roles - Reuters
- Israel Potes ‘Significant Gaps’ After Cease-Fire Talks But Calls Them Constructive – Politico
- 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 and Russia: The Latest News – The Guardian
- Intelligence Reveals Details of U.N. Agency Staff’s Links to Oct. 7 Attack - WSJ
- Ukraine Says it Uncovers Mass Fraud in Weapons Procurement - Reuters
- This Ambush Shows How Ukraine Is Holding the Line - Yahoo
- Moscow, Kyiv Trade Blame Over Plane Crash - Deutsche Welle
- Putin Challenger Says ‘Miracles’ are Helping Him Upstage Russian Leader - Politico
- Ukraine's Zelenskiy Publishes Income as Part of Transparency Drive – Reuters
- 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
- Iran Denies Involvement In Drone Attack That Killed Three U.S. Soldiers In Jordan - Forbes
- What is Tower 22, US Military Base Attacked in Jordan? – Reuters
- Iran’s Connection To Hamas, Hezbollah, The Houthis—And Now 3 U.S. Soldier Deaths – Forbes
- Argentina’s President Promised a Free-Market Revolution, and Says He’s Delivering - WSJ
- Violence in Disputed Sudan-South Sudan Border Area kills 54 - Reuters
- ‘What the Hell?’ Europe Chafes at America’s Protectionist Tilt – WSJ
- Hong Kong Court Orders China’s Evergrande, Which Owes $300 Billion, to Liquidate - AP
- French Farmers Plan ‘Siege’ of Paris Despite Government Concessions – Politico
Policy and Politics
Hochul Announces University at Buffalo to Be Hub for Empire AI Consortium
Gov. Kathy Hochul continued to promote a plan she announced during her State of the State address to make New York the first state in the nation to bring together top academic institutions, the government, private sector and philanthropies to focus on the artificial intelligence industry. But the state needs a center for the massive computing power necessary to make the Empire AI Consortium a reality. Friday, she officially announced her pick for that hub.
"I need a home for this supercomputer that will power the innovation all over New York state and I'm proud to announce that the home will be right here at SUNY Buffalo," Hochul said. University at Buffalo President Satish Tripathi believes the governor is making a wise choice. On top of things like the availability of hydroelectric power for the supercomputer, he said UB already boasts a robust AI program where students and faculty are working on advancements. Hochul said, since her initial announcement earlier this month, the state has already secured $125 million in commitments from private partners. The SUNY system will kick in $25 million and another $250 million will come from the state coffers provided the state Legislature includes it in its budget.
Read more at NY State of Politics
No Rate Move Expected At January Fed Meeting But Markets See Spring Cuts
Interest rate futures view it as highly likely that the Federal Funds target rate is held at 5.25% to 5.5% at the conclusion of the U.S. Federal Reserve’s next meeting on January 31. However, markets still see a 40% chance of rate cut at the subsequent meeting in March, according to the CME’s FedWatch Tool. It’s unclear if Fed policymakers are ready to cut rates that early, even though statements from Fed officials have acknowledged that the macroeconomic outlook appears to be improving.
The Fed’s language from its last meeting in December still refers to inflation as “elevated” and mentions “the extent of any additional policy firming.” That could change with January’s statement. The likely question is how much and how fast rates decline in 2024. Markets viewed a March cut as highly likely, as recently as last month. However, given recent cautious Fed statements, now markets see rates just as likely to be held steady in March.
Health and Wellness
New Long COVID Study Uncovers High Inflammation in Patients as Senate Calls for More Research on 'Crisis'
Long COVID is a syndrome, or collection of symptoms, that continue or develop after an acute COVID-19 infection and can last weeks, months or years. There is no test to confirm if symptoms are related to long COVID. Some scientists suggest that long COVID is caused by overactive immune cells, but the exact cause remains unclear. The study followed 113 patients at four different hospitals in Switzerland with mild and severe COVID-19 and found that 40 had symptoms of long COVID at six months, 22 of whom had persistent symptoms at 12 months.
Researchers looked at blood samples from the 40 who experienced long COVID symptoms, compared them to controls who were not infected with COVID-19, and found that those who had long COVID had evidence of inflammation (increased complement activity), blood cell dysregulation (hemolysis and platelet activation) and tissue injury in their blood. The specific details from the small study may help provide "a basis for new diagnostic solutions," according to the researchers, for the condition with no known cure or FDA-approved treatments.
Election 2024
- Trump Feuds With United Auto Workers Chief After Union Endorses Biden - Forbes
- Elise Stefanik Sees Stock Rise in Trump ‘Veepstakes’ – The Hill
- Dems Make Early ad Reservations in Key Senate Races – Politico
- Trump’s Ballot Removal Cases Hinge on These Key Questions – The Hill
- Real Clear Politics Latest GOP Primary Polls – Real Clear Politics
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
US Manufacturers to Temper Investment Pace After Vibrant 2023
Captal spending by United States manufacturers will probably cool in 2024 after a banner year of investment in plants as still-elevated borrowing costs and demand concerns temper a lingering desire to upgrade operations. Purchasing and supply executives expect outlays to increase almost 12 per cent this year after rising by nearly 15 per cent in 2023, according to the Institute for Supply Management’s latest semiannual economic forecast.
Investment by manufacturers in plants and other production facilities surged almost 63 per cent in 2023, the largest annual advance since 1951, according to the government’s latest report on gross domestic product. The increase has its roots in companies taking advantage of federal incentives and making up for deferred spending during the pandemic when supply chains were in disarray. “Companies are just very cautious going into 2024,” said Bloomberg Economics’ Eliza Winger. “Companies are really worried about tightening credit conditions even further going forward.”
Read more at The Business Time
US Aims to Announce Big Grants for Chip Plants by End of March
The US is aiming to announce major chip grants by the end of March, people familiar with the plans said, paving the way to send billions of dollars to semiconductor makers in a bid to supercharge domestic production. The awards — slated to go to Intel Corp. and other chipmakers — are a central piece of the 2022 Chips and Science Act, which set aside $39 billion in direct grants to revitalize US manufacturing.
The money has been slow to trickle out so far, with only two small grants announced more than a year after Biden signed the landmark initiative into law. The effort, aimed at rebalancing what’s seen in Washington as a dangerous concentration of production in East Asia, is a key pillar of Biden’s economic message heading into the November election. It brings promises of thousands of well-paying factory jobs in new manufacturing hubs across the country. The timing suggests the awards may be unveiled before President Joe Biden’s State of the Union address on March 7. Spokespeople for the White House and Intel declined to comment.
Remembering Sister Ann Sakac, Retired President of Mount St. Mary College (Hank Gross, Founder & Managing Editor - Mid Hudson News)
The passing of Sr. Ann Sakac, the retired president of Newburgh’s Mount Saint Mary College is not only a loss to the educational facility but to the entire community. Sr. Ann was a wonderful human being, dedicating her life to God, the community, the college and the students she loved. A devoted public servant took the Mount to new heights in her 32 years of leadership.
She had an open-door policy and would gladly welcome you in and engage in conversation. She will be sorely missed by the entire Hudson Valley community, but her legacy will live on through her deeds, accomplishments and the many people whose lives she touched. Sr. Ann Sakac passed away on Wednesday, January 24, the college announced. She was 91.
Sr. Ann’s legacy will live on.
Oil Prices Pare Gains Amid Escalating Mideast Crisis
Oil futures traded modestly higher on Monday, after a drone attack that killed three U.S. service members in northern Jordan, blamed by the White House on Iran-backed militants, marked a major escalation of tensions in the Middle East. As of Monday, West Texas Intermediate crude for March delivery was up 13 cents to $78.14 a barrel on the New York Mercantile Exchange. The contract initially spiked more than $1, or 1.4% on Sunday. March Brent crude the global benchmark, rose 15 cents to $83.71 a barrel on ICE Futures Europe, after climbing as much as 1.3% on Sunday, initially.
Oil futures rallied last week to their highest since November, but with gains attributed in part to production outages in the U.S. and more upbeat expectations around economic growth. West Texas Intermediate crude the U.S. benchmark, remains around $15 below its 2023 peak in the mid-$90s set in late September. Brent crude the global benchmark, pushed back above $80 a barrel last week.
Alaska Airlines Plane Appears to Have Left Boeing Factory Without Critical Bolts
Bolts needed to secure part of an Alaska Airlines jet that blew off in midair appear to have been missing when the plane left Boeing’s BA 1.78%increase; green up pointing triangle factory. Boeing and other industry officials increasingly believe the plane maker’s employees failed to put back the bolts when they reinstalled a 737 MAX 9 plug door after opening or removing it during production, according to people familiar with the matter.
The increasingly likely scenario, according to some of these people, is based partly on an apparent absence of markings on the Alaska door plug itself that would suggest bolts were in place when it blew off the jet around 16,000 feet over Oregon on Jan. 5. They also pointed to paperwork and process lapses at Boeing’s Renton, Wash., factory related to the company’s work on the plug door.
GM Went All In on EVs. Dealers Say Buyers Want Hybrids.
Some influential dealers are pressing General Motors to introduce hybrid models, worried they risk losing customers who aren’t ready to make the switch to fully electric cars. Dealers who serve on advisory committees to the automaker have urged executives in several recent meetings to add hybrids to GM’s lineup, according to people involved in the discussions. GM has focused on fully electric cars in recent years and largely bypassed hybrids, which pair an internal combustion engine with a small battery and electric motor to boost fuel efficiency.
The dealers said they expressed concern that more customers are looking for a middle ground between conventional gas-engine cars and EVs, which are more expensive and require regular charging. GM executives have acknowledged the dealers’ views but haven’t made any commitments to future hybrid options, the people said. Automakers often solicit input from dealers on vehicle planning but still typically keep the details of future models under wraps.
Watch Ford’s Tribute to Detroit Lions Playoff Run
Narrated by Jeff Daniels, the minute long video links the team and automaker to Motor City grit after heartbreaking loss to 49ers in the NFC Championship game. We assume you have already seen the Travis Kelce – Taylor Swift Kiss from the AFC Championship game.
HII Awarded USS Harry S. Truman $913M Mid-Life Overhaul Contract
HII’s Newport News Shipbuilding was awarded a $913 million contract for the advanced procurement for the mid-life overhaul and nuclear refueling of carrier USS Harry S. Truman (CVN-75), the Pentagon announced on Thursday. Truman’s refueling and complex overhaul (RCOH) will be a down-to-the-bulkhead refit of the 25-year-old carrier and will also top off the carrier’s two nuclear reactors. “The contract, which has total potential value of $913 million, includes engineering, design, material procurement and fabrication, documentation, resource forecasting and pre-overhaul inspections,” reads a statement from HII provided to USNI News. According to the contract announcement, the advanced procurement work is set to be completed in 2026.
The announcement did not set a time frame for Truman to arrive at Newport News. RCOHs account for about a third of the Newport News’ business with the other two-thirds focused on new construction carriers and submarines. Truman returned from a nine-month-long deployment to the Atlantic and Eastern Mediterranean on Sept. 12, 2022.
Read more at The US Navy Institute News
Japan’s ‘Moon Sniper’ Wakes Upside-Down On Moon, Immediately Starts Snapping Pics
Japan’s “Moon Sniper” rover on Monday regained power and has woken up on the Moon, a surprise turnaround for the country’s historic space mission after its successful “pinpoint” landing on the lunar surface more than a week was marred by technical challenges and forced into hibernation. Japan Aerospace Exploration Agency (JAXA) confirmed it had successfully established communication with the Smart Lander for Investigating Moon (SLIM) spacecraft on the surface of the Moon.
It’s not clear for how long SLIM will be able to operate on the Moon and JAXA have not set a rigid end date for the mission. The lander was initially powered down after scientists discovered it was unable to generate power, likely due to the angle of its solar panels. JAXA has previously said the rover is not designed to survive a lunar night, a roughly two-week long period where the Moon’s surface is not exposed to light from the Sun. The next lunar night is set to begin on Thursday.