Member Briefing July 10, 2024
NFIB: Modest Improvement in Small Business Optimism – But Still Sour
The NFIB Small Business Optimism Index reached the highest reading of the year in June at 91.5, a one-point increase from last month. The last time the index was higher was in December of 2023 when it reached 91.9. Even so, this marks the 30th month below the historical average of 98. Inflation is still the top small business issue, with 21% of owners reporting it as their single most important problem in operating their business, down one point from May. Key findings include:
- Seasonally adjusted, a net 22% plan to raise compensation in the next three months, up four points from May.
- A net negative 2% (seasonally adjusted) of owners viewed current inventory stocks as “too low” in June, up six points from May’s lowest reading since October 1981.
- A net negative 2% (seasonally adjusted) plan inventory investment in the coming months, up four points from May.
- Fifty-two percent reported capital outlays in the last six months, down six points from May and the lowest reading since August 2022.
- Four percent of owners reported that all their borrowing needs were not satisfied, up one point from May and the highest reading since August 2022.
- Thirty-seven percent of all small business owners reported jobs openings they could not fill in their current period, down five points from May.
- Of the 60% of owners hiring or trying to hire in June, 85% reported few or no qualified applicants for the positions they were trying to fill.
OECD Expects Cooling Jobs Markets, But Continued Recovery In Real Wages
Unemployment rates are set to pick up only slightly across the world’s rich countries in the short term, while real wages will continue to rise as profit growth cools, the Organization for Economic Cooperation and Development said Tuesday. In its annual report on the jobs market, the Paris-based policy advisory body said wages have been rising faster than prices over the past year. On average, real wages were 3.5% higher than a year earlier, a development that should support consumer spending and economic growth. However, real wages were still below their 2019 levels in 16 countries, including the U.S., where the shortfall stood at 0.8%.
In the U.S., the OECD expects employment to increase by less than 1% in both 2024 and 2025, with the unemployment rate remaining around 4%. That is broadly in line with the outlook across the OECD’s 38 members, which are mostly rich countries. The OECD forecast that employment will grow by 0.7% this year and next, having increased by 1.7% in 2023. Workers suffered a decline in their real wages during the surge in consumer prices that began in early 2021. The OECD said that over the year through the first quarter of 2024, real wages were rising again as inflation cooled. Out of the 35 countries for which data was available, 29 recorded a rise in real wage. Among those that didn’t were France and Japan.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Iran's President-Elect Reaffirms Policy Toward Israel’s Destruction - VOA
- Maps Show Israel's Growing War with Iran's Allies - Newsweek
- Gaza Hostage-Ceasefire Deal Faces New Hurdles as Israel Sets Conditions - CNN
- Hamas Says Israel's Gaza Actions Jeopardise Ceasefire Talks - BBC
- Statements From Netanyahu and Hamas Narrow Hopes for a Truce in Gaza - NYT
- How Hezbollah is Trying to Counter Israel's High-Tech Surveillance - Reuters
- Video Shows EU Warship Shooting Down Houthi Drone - 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
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine’s Path to NATO Membership ‘Irreversible,’ Allies Expected to Declare – Politico
- Ukraine Builds a NATO-Lite While it Waits for the Real Thing – Politico
- North Korean Soldiers Head to Russia for Training - Newsweek
- NATO Doubles Down on its Containment-Plus Russia Policy – The Hill
- Biden Condemns 'Russian Brutality' After Deadly Ukraine Strikes - BBC
- Russian Missiles Hit Kyiv Children’s Hospital in Deadly Attacks Across Ukraine - WSJ
- China Stops Paying Russia for Cargo Train Shipments - Newsweek
- 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
- More Than Half of China’s Firms Downsized Last Year - SCMP
- 5 Things to Know About France’s Messy Election – Politico
- An Unknown Retiree Is Challenging Venezuela’s Strongman—and Leading Big in Polls - WSJ
- 2024 Could be World's Hottest Year as June Breaks Records - Reuters
- Russia and China's Navies Show United Front Against NATO - Newsweek
- NATO’s 75th Anniversary Summit in Washington Clouded by Political Chaos – Washington Post
- How This Year of Elections is Set to Reshape Global Politics – Reuters
- Crushing Debts Await Europe’s New Leaders - WSJ
- Five Indian Soldiers Killed in Kashmir Ambush - BBC
Policy and Politics
Hochul Warns of COVID Uptick
On Saturday, New York Gov. Kathy Hochul sent out updated COVID statistics and guidance. Compared to this time last year, she said hospitalizations are up, though still below 2022 levels. “While we are well below the figures seen during the pandemic, we are closely monitoring activity regarding the latest variants,” Hochul said in a written statement. New York’s Wadsworth Lab mostly relies on wastewater testing to figure out COVID infections and find variants. Hochul said that federal and local wastewater surveillance shows new variants increasing statewide and nationally.
The most prominent variants today—including KP.2 and KP.1.1, dubbed “FLiRT,” and the very similar JN.1—branched off from omicron, which was first identified in late 2021. “Our current data suggest that a JN.1 or KP.2 new variant vaccine will protect against JN.1, KP.2, KP.3 and other JN.1 sub-variants that are now co-circulating,” a Moderna spokesperson said in June.
US Economy No Longer Overheated, Fed's Powell Tells Congress
The U.S. is "no longer an overheated economy" with a job market that has "cooled considerably" from its pandemic-era extremes and in many ways is back where it was before the health crisis, Fed Chair Jerome Powell said in remarks to Congress that suggested the case for interest rate cuts is becoming stronger. "We are well aware that we now face two-sided risks," and can no longer focus solely on inflation, Powell told the Senate Banking Committee on Tuesday. "The labor market appears to be fully back in balance."
Powell told lawmakers bluntly that "today I’m not going to be sending any signals about the timing of any future actions" on interest rates, as he was quizzed by Democrats about the risks to the job market and by Republicans about the pain to households of inflation that remains above the central bank's 2% target. But analysts still saw Powell at least edging the door open to a rate cut as soon as September.
America’s NATO Partners Anticipate U.S. LNG Supplies To Europe
America’s abundant energy resources pair perfectly with Europe’s scarcity of oil and gas to create a win-win partnership, enabling Europe to avoid total energy dependence on authoritarian suppliers in Russia and the Middle East. This partnership between American energy and European industry was placed in jeopardy after a January 2024 decision by the Biden administration placed a controversial pause on future LNG export permits. It put Europe’s ability to purchase cheap and reliable American LNG in question when it was needed to replace sanctioned Russian piped natural gas and eventually not-yet-sanctioned Russian LNG. By placing the flow of US LNG to Europe at risk, Biden, who claims to bolster NATO, shook the energy security pillar of the alliance and may have jeopardized Ukraine, according to many observers.
The pause ended in early July after 16 states successfully sued the Biden administration, arguing that the export restrictions were unconstitutional. This came as a relief to European and East Asian allies, who were otherwise being torn between the necessity to decouple from Russian energy and the Administration’s domestic political play. Coincidentally, energy giant Shell signed a 10-year agreement to sell U.S. LNG to the Swiss-based energy company MET Group.
Health and Wellness
Can’t Get a Good Night’s Rest? Watch Out for These 8 Ways You May be Sabotaging Your Sleep
proper rest offers myriad short- and long-term benefits for both your physical and mental health, from reducing stress and improving memory to lowering risk of heart disease and stroke, according to the Centers for Disease Control and Prevention (CDC). Getting sufficient sleep may even save others’ lives, the agency points out, as rested drivers are less likely to cause motor vehicle crashes resulting in injury and death.
Chances are you know what you should be doing to get a good night’s sleep—such as turning down the thermostat to cool your bedroom—even if putting these habits into practice is easier said than done. What’s more, you may be inadvertently engaging in behaviors that sabotage your sleep. From caffeine, workouts, alcohol and mealtimes, here are eight ways you may be making it harder to sleep.
Election 2024
- 2024 New York Congressional Races to Watch – City & State
- Democrats Voice Support for Biden at Closed-Door Meeting – The Hill
- NATO Summit Puts Biden’s Fitness Under a Microscope - WSJ
- New Trump-Backed GOP Platform Drops 40-Year-Old Call For National Abortion Restrictions - Forbes
- Letter from Biden’s Doctor Seeks to Dispel Questions About Parkinson’s Specialist Visits – The Hill
- What Happens To Biden’s Campaign Cash If He Drops Out? - Forbes
- Biden Narrows Gap With Trump in Swing States Despite Debate Loss - Bloomberg
- 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
NAM Says CISA Should Revise Draft Cyber Rule
In April, the Cybersecurity and Infrastructure Security Agency (CISA) published draft rulemaking under the Cyber Incident Reporting for Critical Infrastructure Act of 2022—scheduled to go into effect next year—that would require “covered entities” in “critical infrastructure sector[s]” to report major cyber incidents to CISA within 72 hours. It also mandated that any ransomware payments be reported within just 24 hours. The NAM told the Biden administration last week the rules are overbroad and would prove burdensome to manufacturers.
The proposed rulemaking could affect more than 300,000 entities, according to CISA’s own estimate. Many of these organizations are either not truly “critical infrastructure” or too small to have the resources to undertake the outlined actions in the specified time, the NAM told CISA. Furthermore, the regulations themselves are too expansive, mandating the reporting of incidents that do not even affect the operation of critical infrastructure. They also require huge amounts of information in a short period—from companies in the throes of recovery from devastating cyberattacks. “The NAM respectfully encourages the agency to drastically reduce the number of entities required to report, and the number of incidents they have to report,” NAM Vice President of Domestic Policy Charles Crain told the agency during the public comment period on the proposed regulation, which ended last week.
GM to Retire 50 Million Metric Tons of Greenhouse Gas Credits After Flawed Emissions Claims
General Motors (GM) has agreed to retire nearly 50 million metric tons of greenhouse gas credits worth approximately $146 million. This decision comes after the U.S. Environmental Protection Agency (EPA) utilized its light-duty vehicle in-use testing program and discovered that about 5.9 million GM vehicles that are currently in use are emitting excess CO2 emissions. The vehicles in question have a 2012-2018 model year and include approximately 4.6 million full-size pickups and SUVs and 1.3 million midsize SUVs. According to the agency, tests conducted by both the EPA and GM showed that the vehicles were emitting more than 10% higher CO2 levels than GM’s initial GHG compliance reports claimed.
EPA Administrator Michael S. Regan said, “EPA’s vehicle standards depend on strong oversight in order to deliver public health benefits in the real world. Our investigation has achieved accountability and upholds an important program that’s reducing air pollution and protecting communities across the country.” GM said in a statement that it complied with all regulations in pollution and mileage certification of its vehicles. The company said it is not admitting to any wrongdoing nor that it failed to comply with the Clean Air Act.
Michigan Slashes Ford Incentives by Hundreds of Millions After EV Projects Shrink
The Michigan Economic Development Corp. on Tuesday reduced incentives to Ford Motor Co. after slower-than-expected electric vehicle sales resulted in the Dearborn automaker pulling back on plans in Michigan, including at its rising battery plant in Marshall.
The revised project for the BlueOval Battery Park Michigan in the south-central part of the state calls for a maximum investment of $3 billion and a minimum investment of $2.5 billion, according to a briefing memo considered by the MEDC's governing body, the Michigan Strategic Fund board. That's down from $3.5 billion from before Ford announced in November it was shrinking the project by 43% and its job creation by 32%. The revised incentive package now is valued between approximately $384 million and $409 million, down from almost $1.035 billion.
U.S. Allies Issue Rare Warning on Chinese Hacking Group
Seven U.S. allies warned that a Chinese state-sponsored hacking group poses a threat to their networks, in an unusual coordinated move by Western governments to call out a global hacking operation they say is directed by Beijing’s intelligence services. Tuesday’s advisory was a rare instance of Washington’s major allies in the Pacific and elsewhere joining to sound the alarm on China’s cyber activity. Australia led and published the advisory. It was joined by the U.S., U.K., Canada and New Zealand, which along with Australia are part of an intelligence-sharing group of countries known as the Five Eyes. Germany, Japan and South Korea also signed on. T
The technical advisory detailed a group known in cybersecurity circles as Advanced Persistent Threat 40, or APT40, which conducts cybersecurity operations for China’s Ministry of State Security and has been based in the southern island province of Hainan. The advisory detailed how the group targeted two networks in 2022—though it didn’t identify the organizations—and said the threat is continuing. APT40 carefully carries out reconnaissance, can look like a legitimate user and is very effective at stealing valuable data. APT40 rapidly exploits new, and sometimes old, public vulnerabilities in widely used software and uses compromised small home office devices. That enables the group to launch attacks and blend in with traffic.
Craftsmanship Revolution: GE Appliances Redefines Appliance Product Development
The transformational craftsmanship movement at GE Appliances is as much a revolution in how to think about new product development and manufacturing as it is a revolution in the use of digital technologies. Traditionally GE’s product design focused on reliability, performance, and quality but craftsmanship opened a whole new way of thinking about developing products that naturally made sense to their team. GE Appliances’ products are used in half the homes across the country and play an essential role in how people live on a daily basis.
They define craftsmanship as how customers perceive the quality of products based on all the things they can see, feel, and hear on a retail store showroom floor as well as how they work at home. It means not just delivering products that work well but ones that consumers love because of how color, finish, and form harmonize; how buttons and controls operate, how drawers and shelves move, or how a range or refrigerator door sounds when it closes.
Read more at The Lean Enterprise Institute
Zepbound Sheds More Weight Than Wegovy, Study Finds
Eli Lilly’s popular obesity injection Zepbound trounces Novo Nordisk’s Wegovy when it comes to shedding weight, according to new research published Monday, intensifying competition between the two pharma giants as they compete for the lucrative drug market and dig in to defend their dominant positions against an array of hopeful rivals rushing to market. While most overweight or obese adults experience weight loss when treated with tirzepatide and semaglutide, tirzepatide was “associated with significantly greater weight loss,” the researchers said.
The findings come from an analysis of the electronic health records of more than 18,000 U.S. adults who were receiving either drug between May 2022 and September 2023 and had their weight loss monitored over the course of a year, with subjects “matched” to reduce the chance of variables like other health conditions influencing the outcome. The findings come from an analysis of the electronic health records of more than 18,000 U.S. adults who were receiving either drug between May 2022 and September 2023 and had their weight loss monitored over the course of a year, with subjects “matched” to reduce the chance of variables like other health conditions influencing the outcome.
Shipping’s Changing Rates Outlook – Red Sea Disruption’s Impact Continues
Shares of Chinese shipping companies fell sharply on expectations of falling freight rates after Hamas reportedly signaled approval for a cease-fire in Gaza. The declines came after media reports over the weekend that Hamas had given its initial approval to a U.S.-backed phased cease-fire deal in Gaza and dropped a demand for Israel’s commitment to end the war.
The possibility of the Middle East situation improving has fueled expectations that freight rates will begin dropping to preconflict levels, pressuring shipping stocks, Daiwa analyst Kelvin Lau said. Analysts don’t expect freight rates to return to predisruption levels immediately, but investors may be considering taking profits. The SCFIS (Europe) Futures Contract, a shipping-index-based futures, dropped 5.5%, with some major contracts falling by their daily limit, according to Wind data.
UAW President Faces Allegations of Demanding Benefits for Domestic Partner
A federal watchdog appointed to monitor the United Auto Workers’ internal operations is probing new allegations against President Shawn Fain, including that he made demands to benefit his domestic partner and her sister, according to a court filing Monday. The filing by a lawyer for monitor Neil Barofsky is the latest escalation in a dispute with the union over access to the UAW’s internal documents, which the court-appointed watchdog argues he needs to ensure that officials are complying with a 2020 settlement.
The civil settlement was reached to end a multiyear criminal investigation into corruption in the union’s top ranks that sent more than a dozen top union officials to prison, including two former presidents. The filing states that Barofsky is investigating whether Fain’s decision in May to remove UAW Vice President Rich Boyer from his role as the union’s top negotiator with Chrysler parent Stellantis was in retaliation for Boyer’s alleged “refusal to accede to demands” to take actions that “would have benefitted [the president’s] domestic partner and her sister.” Those actions would have amounted to “financial misconduct” Boyer later claimed, according to a separate document Barofsky’s office filed Monday.