Member Briefing January 7, 2025
Weak Demand For Aircraft Weighs Down US Factory Orders In November
New orders for U.S.-manufactured goods fell in November amid weakness in demand for commercial aircraft while business spending on equipment appeared to have slowed in the fourth quarter, government data showed on Monday. Factory orders dropped 0.4% after an upwardly revised 0.5% gain in October, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast factory orders slipping 0.3% after a previously reported 0.2% rise in October. Factory orders edged up 0.1% year-on-year in November.
- Orders for commercial aircraft and parts declined 7.0% in November after rebounding 16.4% in October. Boeing has struggled with a range of problems, including a strike that halted production of its best-selling 737 MAX as well as 767 and 777 wide-body planes as well as safety concerns.
- There were also decreases in orders for computers and electronic products, and fabricated metal products.
- But orders for machinery rose as did those for primary metals as well as electrical equipment, appliances and components.
- Shipments of manufactured goods nudged up 0.1%, while inventories increased 0.3%. Unfilled orders rose 0.3%.
- Non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, increased 0.4% in November.
Nippon Steel Sues Biden, Cleveland-Cliffs, Head Of USW Union
Nippon Steel and U.S. Steel filed a federal lawsuit challenging the Biden administration's decision to block a proposed nearly $15 billion deal for Nippon to acquire Pittsburgh-based U.S. Steel. The suit, filed Monday in the U.S. Court of Appeals for the District of Columbia, alleges that it was a political decision and violated the companies' due process. Biden on Friday decided to stop the Nippon takeover — after federal regulators deadlocked on whether to approve it — because “a strong domestically owned and operated steel industry represents an essential national security priority. ... Without domestic steel production and domestic steel workers, our nation is less strong and less secure," he said in a statement.
In a separate lawsuit filed in the U.S. District Court for the Western District of Pennsylvania on the same day, the companies accused steel-making rival Cleveland-Cliffs Inc. and its CEO, Lourenco Goncalves, in coordination with David McCall, the head of the U.S. Steelworkers union, of “engaging in a coordinated series of anticompetitive and racketeering activities” to block the deal. The companies allege that Goncalves, in collusion with the U.S. Steelworkers, maneuvered to prevent any party other than Cleveland-Cliffs from acquiring U.S. Steel and to damage the Pittsburgh manufacturer’s ability to compete.
Fed Officials Signal More Gradual Approach To Lowering Rates As 2025 Begins
Federal Reserve governor Lisa Cook said Monday it makes sense to lower interest rates more gradually given resilience in the job market and stickier-than-expected inflation. "I think we can afford to proceed more cautiously with further cuts," Cook said in a speech in Ann Arbor, Mich. The Fed rate cuts made since September have "notably reduced the restrictiveness of monetary policy," she added. The Fed has now lowered short-term rates by a full percentage point to a range of 4.25%-4.50%. Cook became the latest Fed official in the new year to offer cautious commentary on the path forward for the central bank.
Fed governor Adriana Kugler and San Francisco Fed president Mary Daly over the weekend both said that the Fed has more work to do to bring inflation down, but that they don’t want to weaken the job market further as they focus on that task. "We are fully aware that we are not there yet — no one is popping champagne anywhere," Kugler said at the annual American Economic Association conference in San Francisco. "And at the same time ... we want the unemployment rate to stay where it is" and not rise aggressively.
Global Headlines
Middle East
- Three Israelis Killed In Palestinian Shooting Attack In West Bank - BBC
- Biden Administration Announces $8B Arms Sale to Israel – Defense Post
- Israel And Hamas Clash Over Hostage Release Deal As Israeli Strikes In Gaza Intensify – France 24
- Hamas Ready to Free Dozens of Israeli Hostages: Reports - Newsweek
- Hamas Lists 34 Hostages It May Free Under Ceasefire - BBC
- What Religious, Sectarian Challenges Await Syria? - VOA
- Turkey Says Syrian Kurdish Fighters Will Be ‘Eliminated’ – Defense Post
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Top Russian General Betrays Putin’s Worst Fears As Ukraine Attacks Kursk Again – Yahoo
- Ukraine's Kurakhove Has Fallen, Russia Says - Newsweek
- Ukraine Renews Attack On Russia's Kursk Region - BBC
- Thousands Left Without Heat Or Gas In Moldova's Pro-Russian Separatist Region - Reuters
- Ukraine Says Russia Just Lost A Battalion. Retired US Colonel Explains What Impact That May Have - CNN
- Zelenskyy Reaches Out To Trump’s MAGA Base In A Podcast - Politico
- 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
- PM Trudeau Resigns as Voters Sour on His Vision for Canada - WSJ
- What Happens Next in Canada's Leadership Crisis? – Reuters
- Russia Will Send Advanced Space Tech To North Korea, Blinken Says - Politico
- Rwanda-Backed Rebels Seize Key Town In DR Congo - BBC
- North Korea Fires Hypersonic Missile in First Weapons Test of 2025
- UN Launches $4.2B Appeal For Sudan Crisis Relief – Barron’s
- Far-Right Herbert Kickl Gets His Chance To Form Government In Austria - Politico
- Venezuela’s Dissidents Plot Comeback After Months in Hiding, Exile or Jail – WSJ
Policy and Politics
Biden Bars Offshore Oil Drilling In US Atlantic And Pacific
President Joe Biden is indefinitely blocking offshore oil and gas development in more than 625 million acres of US coastal waters, warning that drilling there is simply “not worth the risks” and “unnecessary” to meet the nation’s energy needs. Biden’s move is enshrined in a pair of presidential memoranda issued Monday just two weeks before President-elect Donald Trump takes office. Yet unlike other actions Biden has taken to constrain fossil fuel development, this one could be harder for Trump to unwind, since it’s rooted in a 72-year-old provision of federal law that empowers presidents to withdraw US waters from oil and gas leasing without explicitly authorizing revocations.
Oil industry leaders panned the move, saying widespread restrictions — even on territory that’s of little interest for drilling now — undermine domestic energy potential. Such blanket bans “threaten our economic and national security by creating political barriers to our own resources,” said Erik Milito, president of the National Ocean Industries Association. “Even if there’s no immediate interest in some areas, it’s crucial for the federal government to maintain the flexibility to adapt its energy policy, especially in response to unexpected global changes like the Russian invasion of Ukraine.”
Biden Eases Rules for Hydrogen Tax Credits
The Biden administration loosened some stringent safeguards on a tax credit worth billions of dollars for hydrogen production, after companies argued the rules would stifle domestic manufacturing of the fuel. The tax credit created by President Joe Biden’s signature climate law now includes a carve-out, sought by companies including Constellation Energy Corp., that will benefit some existing nuclear power plants, according to final rules released by the Treasury Department on Jan. 3.
The rules, which were released in draft form in December 2023, also provide pathways for hydrogen made from natural gas with carbon capture systems, methane and renewable natural gas to receive the tax credit. National Association of Manufacturers President and CEO Jay Timmons released the following statement: “A robust and flexible hydrogen industry will also be a major boon to the production and utilization of American natural gas as well as American nuclear power.”
Governor Proposes Major Improvements To Hudson Valley Rail Service Including Poughkeepsie, West of the Hudson Upgrades
Governor Hochul is proposing a major investment in Hudson Valley rail service to increase capacity, reduce delays, improve safety and cut potential travel times by up to 15 minutes each way for certain trips, as well as shorten “super-express” Metro-North Hudson Line trips to less than 90 minutes. The proposal includes studying and designing rail infrastructure capital improvements between New York City and Poughkeepsie including capacity improvements at Poughkeepsie yard.
Improvements on the West of Hudson service will also be explored including a transit analysis with expert advisors to propose and evaluate recommendations to expand and maximize the impact of rail service and look at opportunities for other types of commuter transit for residents living west of the Hudson River and working in Orange County. The analysis will include a major employer and destination review in Orange County, exploring options like shuttle bus service times with Port Jervis Line trains to attractions like Woodbury Common, Legoland, Storm King, Renaissance Fair and New York Stewart International Airport. This announcement comes the day congestion pricing went into effort, driving up the cost for Hudson Valley commuters who drive into Manhattan for work.
Transition 2024
- Congress Certifies Trump’s Election Victory – The Hill
- Trump Reportedly Considering Important Alteration To Tariff Plans - CNBC
- Trump's Policies May Not Prove Inflationary, Bernanke, Others Say - Reuters
- Italy’s Meloni Positions Herself As Trump’s Ally In Europe - CNBC
- Gillibrand To Chair Senate Democrats' Campaign Arm For 2026 Cycle - Politico
- Amazon’s Prime Video Acquires Melania Trump Film - WSJ
- Fed's Top Banking Regulator To Step Down After Trump Takes Office - Yahoo
- Trump Pitches ‘Merged’ US, Canada After Trudeau Resignation Announcement – The Hill
- Pope Francis Appoints Trump Critic as Washington, D.C., Archbishop - WSJ
- Tracking Trump’s Cabinet Picks – Politico
Health and Wellness
Resolving To Get Fitter In 2025? Avoid These Pitfalls
We've all heard the statistics about how many people set New Year's resolutions only to fall short, yet the allure of a fresh start keeps us coming back for more. Perhaps the reason we struggle to stick with these resolutions is that we often let our ambitions get the better of us, setting the bar too high or creating rigid, unrealistic expectations. When resolutions are overly limiting or unattainable, they can quickly become unhealthy and set us up for failure.
Unhealthy resolutions often involve extreme diet changes, drastically cutting calories, or obsessing over a number on the scale. A major red flag is if your resolution feels like a complete departure from your current lifestyle. Experts agree that starting small and focusing on sustainable changes is key to creating lasting habits. Here are 8 Unhealthy New Year's Resolutions That Set You Up To Fail.
Read more at Eat This Not That
Industry News
Asia’s Manufacturing Expands Despite Export Woes, Waning Confidence
Manufacturing conditions across much of Asia expanded in December, according to the latest surveys, but weakening confidence and soft export orders continued to weigh on outlook. The headline S&P Global manufacturing PMI for Asean indicated modest growth, though it slightly declined to close out the year. The region is still generally upbeat as it records modest gains, said Maryam Baluch, economist at S&P Global Market Intelligence, noting however that the outlook waned for the Asean manufacturing sector.
Several countries in the region led the growth, including the Philippines, where output and new orders rose sharply, both marking the largest expansion since April 2022. Indonesia’s PMI returned to expansion territory for the first time since June, while Thailand’s reading hit a four-month high. Taiwan’s PMI climbed to its highest level since July, S&P Global data showed. Weak international demand continues to drag on new export orders, which have been declining for over two years, as growth remains heavily dependent on domestic demand, Baluch noted.
Boeing, DOJ Tell US Judge They Have Not Reached Agreement On Revised Plea Deal
The U.S. Justice Department and Boeing told a court on Friday they have not reached agreement on a revised plea deal after a U.S. judge in December rejected the deal, faulting a diversity and inclusion provision. Boeing and the government "continue to work in good faith toward" a new agreement, they said in a joint filing. They asked U.S. District Judge Reed O'Connor to give them until Feb. 16 to provide a new update. That timetable would give the administration of President-elect Donald Trump a chance to review the issue before moving forward.
Judge O'Connor in Fort Worth, Texas, in December rejected and earlier deal, seizing on a sentence in the plea agreement mentioning the DOJ's diversity policy regarding the selection of an independent monitor to audit the planemaker's compliance practices. Relatives of the victims of the two 737 MAX crashes, which occurred in 2018 and 2019 and killed 346 people, have called the plea agreement a "sweetheart" deal that failed to adequately hold Boeing accountable for the deaths of their loved ones.
Chrysler Sales Have Shrunk 80% In Two Decades. Here’s How Executives Plan To Bring It Back
A series of mergers has turned the once-ubiquitous Chrysler Corporation into a piece of the larger Euro-American automaker Stellantis. Once a relatively diversified brand, with sedans, SUVs, and even a convertible, Chrysler now has only two models, both of them different versions of the same minivan. The Chrysler brand sold nearly 600,000 vehicles in 2005. In 2024, it sold fewer than 125,000 — an 80% decline in two decades. That alarmed Frank Rhodes Jr., a descendent Walter P. Chrysler, who founded the company in 1925. In August, Rhodes proposed putting together an investor group to purchase the Chrysler and Dodge brands from Stellantis. But the company said none of its brands are for sale.
“Chrysler brand is here to stay,” Feuell said. “It is being well invested in. The brand is not on the table for elimination, and it has a very bright future.” This future includes a new version of its minivan, which as of January 2025 was its only vehicle, sold under two names. The Voyager is the lower-priced model, and the Pacifica is a more premium option. A refreshed Pacifica is slated for 2026, with a new exterior design and new powertrain options. Chrysler is also planning to release a large SUV and a coupe or sedan based on the Halcyon concept it unveiled in 2024.
Foxconn Posts Record Fourth-Quarter Revenue on AI Demand
Foxconn, an assembler of Apple and Nvidia products formally known as Hon Hai Precision Industry, said Sunday that quarterly revenue rose 15% on the year to 2.132 trillion New Taiwan dollars, equivalent to US$64.75 billion. That marked its highest-ever fourth-quarter revenue and beat a FactSet-compiled estimate of NT$2.07 trillion. The company also forecast “significant growth” in first-quarter sales. Its shares opened higher on Monday in Taipei, last up 2.8% at NT$186.00. Foxconn’s December sales rose 42% to NT$654.83 billion, also beating FactSet-compiled estimates, while full-year sales rose 11% to a record NT$6.860 trillion.
The Taiwan-listed company said it recorded annual sales growth in almost all of its major segments, driven by demand for AI servers. The expansion of its auto-related business, and strong demand for new computing products, also boosted sales. Annual and quarterly sales at Foxconn’s smart consumer electronics segment, which includes smartphones, TVs, game consoles and others, slipped slightly, which it attributed to a high base effect a year earlier caused by delayed orders in 2022.
U.S. New Car Sales Rose To Five-Year High In 2024, Helped By Hybrids
U.S. new-car sales in 2024 continued to rise from their pandemic lows, bolstered by replenished inventories, higher incentives and surging demand for hybrid vehicles, automakers reported on Friday. Sales of new vehicles finished at 15.9 million last year, according to Wards Intelligence, up 2.2% from the prior year, and the highest since 2019. Most automakers recorded solid sales results last year, as they adjusted to slowing demand for EVs and relied on their core business of gasoline-powered trucks and SUVs, while some capitalized on soaring consumer interest in hybrid vehicles.
- Toyota notched a 3.7% sales gain year-over-year in the U.S., boosted by steady increases of reliable smaller vehicles such as the Camry and RAV4 SUV, as well as significant gains for hybrid vehicles.
- Ford Motor also benefited from an increase in hybrid sales, which helped the automaker's total vehicle sales rise 4.2% in 2024. The company sold roughly double the number of hybrids compared with its EVs, with 187,426 hybrids sold and 97,865 EVs.
- Stellantis had a particularly rocky 2024, selling 15% fewer vehicles in the U.S. compared with 2023, and recording decreases across its popular Ram, Jeep and Dodge brands, the company reported on Friday.
- Tesla has faced slowing sales as its lineup grows stale and competition in China intensifies, eating in to an important market for the company run by Elon Musk. The EV giant reported a rare decrease in yearly deliveries on Thursday.
Analysts: Honda, Nissan Merger Would Boost Automakers’ Global Position
The potential merger of Honda Motor Co. and Nissan Motor Corp’s could catapult the two automakers into a stronger global position in the race to deploy new technology and bring electric vehicles to the market faster, experts say. News of the merger left the industry abuzz in late December, as experts analyzed the pros and cons that could result from the combination. Some questioned the time it would take to complete a deal, while others called it a lifeline for Nissan. Still, experts told Automotive Dive a merger would lead to significant upside for the automakers.
Vincent Sun, Morningstar senior analyst-Asia, believes the fiercely competitive global EV marketplace was the primary driver behind the merger, though he is skeptical whether the combination “could easily defend competition from Tesla and Chinese EV manufacturers as both companies lack compelling EV models.” But the joining of the automakers’ global manufacturing, research and development resources makes for a compelling outlook, according to Dorothy Ashford, vice president, enterprise accounts-automotive, for ITS Logistics. Honda and Nissan are familiar with each other as they are collaborating on next-generation software-defined vehicles and electric vehicles.
Archer Aviation Completes Georgia Air Taxi Factory
Archer Aviation announced last month that it received the certificate of occupancy for its approximately 400,000-square-foot manufacturing facility in Covington, Georgia. The air taxi developer said it plans to begin initial production in early 2025. Archer broke ground on the facility in March 2023. The company said in December that it is finalizing its agreement with global automaker Stellantis, which will become its exclusive contract manufacturer.
Archer worked closely with Stellantis to construct the Covington facility. It will produce Archer’s Midnight aircraft, which is optimized to fly routes of 20 to 50 miles at up to 150 mph, with a quick recharge between flights. The air taxi can carry up to four passengers and their carry-on luggage, plus the pilot. Archer aims to manufacture two aircraft per month by the end of next year. By 2030, it plans to produce 650 electric takeoff and landing aircraft annually.
Read more at Manufacturing Dive
The R&D Puzzle in U.S. Manufacturing Productivity Growth
Since firms’ investment in research and development (R&D) for new technologies constitutes a central driver of productivity growth, NY Fed researchers ask if the observed slowdown in productivity may be due to a decline in R&D. They find that “R&D intensity” has been increasing at both the firm and industry level, even as productivity growth declines. This points to a decline in the effectiveness of R&D in generating productivity growth in U.S. manufacturing.
To add to the mystery of the productivity slowdown in manufacturing, we produce evidence that R&D expenditures have not slowed since 2010 and in fact R&D investment has proceeded at a relatively higher intensity both in terms of inputs and outputs. Why is this investment not arresting the slowdown in manufacturing productivity? The authors leave this question for further work.