Member Briefing July 12, 2022
Schumer Making Last-Ditch Bid to Pass Reconciliation Bill this Summer
Schumer and centrist Sen. Joe Manchin (D-W.Va.) have made progress on proposals to lower the cost of prescription drugs, extend Medicare’s solvency and raise taxes on some high-income earners. Manchin and Schumer have worked out a proposal to impose a 3.8 percent tax on individuals earning more than $400,000 and couples earning more than $500,000 from pass-through businesses and will give the legislative language to the Senate parliamentarian to review.
The $203 billion raised would extend the solvency of Medicare’s hospital fund from 2028 to 2031. But a Manchin aide waved off speculation that Schumer and Manchin are close to a deal on a broader reconciliation package that would include bold proposals to tackle global warming, a top priority of Sen. Sheldon Whitehouse (D-R.I.) and other Senate Democrats.
War in Ukraine Headlines
- Ukraine and Russia: the Latest News – CNN
- Oil Majors Face Output Slump, Deep Losses if Russia Stops Kazakh Pipeline – Reuters
- Ukraine Defense Chief Says US Rocket Systems Have Been ‘Game-Changer’ – The Hill
- Russian Rocket Attack on Donetsk Apartment Block Kills 24 – CNBC
- Russia Intensifies Assault Around Kharkiv – DW
- Ukraine Digs for Survivors in Rubble of Residential Attacks by Russian Missiles – WSJ
- Russia Cuts Key Interest Rate Back to Prewar Level – CNBC
- Germany Fears Russia Gas Cut May Become Permanent – BBC
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Met Life/US Chamber Index Reaches Pandemic-Era High, but Inflation Concerns Dominate
The survey—conducted between April 29-May 17, 2022—found that inflation and related concerns are dominating small business leaders’ thinking as COVID concerns start to fade. Forty-four percent of the small businesses surveyed cite inflation as the biggest challenge facing small business owners, up from 33% last quarter. This is up significantly from 19% when the question was first asked in Q3 2021. Furthermore, nearly nine in ten (88%) are concerned about the impact of inflation on their business.
In contrast, concerns about the impacts of COVID-19 are fading in comparison to those over economic headwinds. A strong majority (68%) of small businesses still report continued concern over the impact of COVID-19 on their business. However, when forced to choose the most pressing challenges facing the small business community, the virus falls to a third-tier concern, behind financial challenges like inflation, supply chain issues, and revenue.
Global Semiconductor Sales Increase 18.0% Year-to-Year, 1.8% Month-to-Month in May
he Semiconductor Industry Association (SIA) today announced global semiconductor industry sales were $51.8 billion in the month of May 2022, an increase of 18.0% over the May 2021 total of $43.9 billion and 1.8% more than the April 2022 total of $50.9 billion. Monthly sales are compiled by the World Semiconductor Trade Statistics (WSTS) organization and represent a three-month moving average.
Sales were up compared to April 2021 in the Americas (36.9%), Japan (19.8%), Europe (16.1%), Asia Pacific/All Other (15.8%), and China (9.1%). Month-to-month sales increased in Japan (3.9%), the Americas (2.9%), China (1.7%), and Asia Pacific/All Other (1.1%), but fell slightly in Europe (-0.7%).
U.S. COVID – Undercounted Covid-19 Cases Leave US With a Blind Spot as BA.5 Variant Becomes Dominant
Official Covid-19 case metrics severely undercount the true number of infections, leaving the United States with a critical blind spot as the most transmissible coronavirus variant yet takes hold. The share of cases that are officially reported is at an “all-time low,” said Dr. Michael Mina, an epidemiologist and chief science officer at telehealth company eMed. “There’s no doubt about that.”
Covid-19 cases have been undercounted to some degree throughout the pandemic for reasons including a lack of available tests at some points and asymptomatic cases that may have been missed. But as people increasingly rely on rapid at-home tests — and as attitudes toward the pandemic shift overall — the US hasn’t landed on a reliable way to track transmission levels.
Price of Copper Drops as China COVID Worries Dull Demand Outlook
Copper prices fell on Monday, as new COVID-19 restrictions in top consumer China and fears of rapid interest rate hikes leading to a global economic slowdown dent demand for metals. Copper, used in power and construction and often seen as a gauge for the global economic health, hit its lowest level since November 2020 last week.
Three-month copper on the London Metal Exchange CMCU3 dropped 2.5% to $7,614.50 a tonne by 0544 GMT.
Administration Weighs Options for Alaska Oil Drilling Project
The administration released an environmental review of the “Willow Project” that said that at its peak, the project could produce a total of 629 million barrels overall over the course of a 30-year duration. It found that the project could contribute between 278 million and nearly 287 million metric tons of carbon dioxide to climate change over the same time period. The document’s release comes after a court tossed the Trump-era approval of the project last year. A judge ruled that the analysis behind that approval was flawed for environmental reasons, including a lack of consideration of climate impacts. The judge ordered the Biden administration to redo it.
The latest analysis comes as the Biden administration is in a tight political spot. The president is seeking to both energize the environmentalist base ahead of the midterms, and deal with the optics surrounding high gasoline prices. It has similarly punted in terms of the future of offshore drilling, recently proposing between zero and 11 offshore lease sales between 2023 and 2028.
Energy and Inflation: 5 Things You Need to Know Now
According to GasBuddy.com, Americans are now spending $730 million more every day on gasoline than a year ago. But the impacts of energy prices on inflation go well beyond the price we see at the pump—higher costs for oil and natural gas ripple through the economy in countless but less obvious ways.
- High diesel prices are flowing through to countless goods and services.
- Electricity prices are also on the rise, but impacts vary significantly by region.
- High natural gas prices are impacting manufacturing, especially for energy intensive goods.
- The global energy crisis is hurting Europe even more.
- Relief may be on the horizon. There is an adage in commodity markets: the cure for high prices is high prices—meaning that price signals drive responses in both production and demand.
Soaring Energy Costs Begin to Hobble US Manufacturing
Soaring energy costs are beginning to exert a painful bite in US manufacturing, tempering the outlook for a manufacturing boom due to reshoring efforts. Aluminum and steel makers are among those suffering most due to their high energy usage, and more broadly a pullback is evident in three straight months of declining overtime hours and a drop in new orders last month.
UN Global Hunger Report Figures Are Staggering: 150 Million Added Post COVID
Ukraine, the United Nations Development Program estimates that 51.6 million more people fell into poverty in the first three months after the war in Ukraine began, living off $1.90 a day or less. This pushed the total number globally at this threshold to 9% of the world’s population. An additional 20 million people slipped to the poverty line of $3.20 a day.
In low-income countries, families spend 42% of their household incomes on food but as Western nations moved to sanction Russia, the price of fuel and staple food items like wheat, sugar and cooking oil soared. Ukraine’s blocked ports and its inability to export grains to low-income countries further drove up prices, pushing tens of millions quickly into poverty.
Flight cancellations loom large over summer travel season
Airlines endured a better-than-expected Fourth of July holiday weekend, but staffing shortages and other root causes of flight disruptions continue to loom large over the busy summer travel season. U.S. carriers canceled roughly 1,400 flights between Friday and Monday, according to data from flight analytics firm masFlight.
The data indicates that Independence Day wasn’t a total meltdown as some predicted, but U.S. airlines still canceled more than 18,000 flights over the last calendar month, or 3 percent of flights. Carriers reduced their flight schedules by about 15 percent from June to August to reduce disruptions, but they say they still don’t have enough workers to handle the summer travel boom.
Court Begins Redrawing Process for Assembly District Lines in 2024
After an appellate court invalidated legislative lines for the New York Assembly districts last month, a lower court is moving forward with drawing new ones for 2024 elections. But the judge overseeing the matter hasn’t decided on an exact process for doing so. In an order last week, Judge Laurence Love instructed the lawyers who brought the original case challenging the Assembly lines to provide briefs to the court on how to proceed with the process.
“One option available to the court is a special master like as was done in the other redistricting matter,” Aaron Foldenauer, an attorney for one of the petitioners said. In the same order, the judge cited a section of law suggesting the court may consider trying to revive the state’s Independent Redistricting Commission (IRC).
Tyson Foods Works to Fix Its Chicken Operations as Orders Pile Up
Tyson Chief Executive Donnie King said he is committed to fixing the nation’s largest chicken operation, which produces roughly one-fifth of the U.S. supply. The effort now faces a test, as profits from Tyson’s beef business are projected to decline this year from record levels, while the company has committed millions of dollars to expand its chicken production.
The Arkansas-based company has struggled for years to meet demand and turn a consistent profit in its poultry business. The problems have persisted through a succession of chief executives, with five different CEOs leading the company in as many years. Tyson’s challenges have played out across its sprawling operations, from problems hatching enough of the tens of thousands of chicks scampering inside cavernous barns that dot the Arkansas countryside near Tyson’s headquarters, to short-handed processing lines in the plants that slaughter and process the birds into chicken breasts or wings.
Riamondo: ‘I Don’t Think We Should be Talking Ourselves into a Recession,’
Commerce Secretary Gina Raimondo on Sunday said the U.S. can stave off a recession, despite concerns that the Federal Reserve’s tightening of interest rates to combat inflation could spur an economic downturn. In an interview on ABC’s “This Week,” Raimondo cast doubt on the possibility of “a serious recession,” though she predicted high economic growth from the depths of the pandemic would likely cool to “a more steady growth.”
“I do think at some point, you know, we will see a less rapid growth in the economy, but I don’t see any reason to think that we will have a serious recession,” Raimondo said. “We recovered all the jobs since the pandemic. People’s household balance sheets are strong. Companies are doing well. Companies are hiring. Companies are growing.”