Skip to content

Member Briefing July 23, 2024

July 23, 2024

Posted By: Harold King in Daily Briefing,

Top Story

The Conference Board Leading Economic Index® (LEI) for the U.S. Fell Slightly in June

The Conference Board Leading Economic Index® (LEI) for the U.S. declined by 0.2 percent in June 2024 to 101.1 (2016=100), following a decline of 0.4 percent (upwardly revised) in May. Over the first half of 2024, the LEI fell by 1.9 percent, a smaller decrease than its 2.9 percent contraction over the second half of last year. The CEI’s component indicators—payroll employment, personal income less transfer payments, manufacturing and trade sales, and industrial production—are included among the data used to determine recessions in the US. All four components of the index improved in June, with industrial production making the largest positive contribution to the CEI for the second consecutive month.

“The decline continued to be fueled by gloomy consumer expectations, weak new orders, negative interest rate spread, and an increased number of initial claims for unemployment. However, due to the smaller month-on-month rate of decline, the LEI’s long-term growth has become less negative, pointing to a slow recovery. Taken together, June’s data suggest that economic activity is likely to continue to lose momentum in the months ahead. We currently forecast that cooling consumer spending will push US GDP growth down to around 1 percent (annualized) in Q3 of this year.”

Read more at The Conference Board

State Labor Markets Lost Some Momentum in June

State payrolls continued to expand in June, but at a more moderate pace than in recent months. Higher trending state unemployment rates also revealed a broad softening in state labor markets. Rising unemployment has historically been linked to heightened economic risk. The count of states registering trend unemployment rate increases ticked up from 21 in May to 24 in June, but remains below the 34-state threshold historically associated with the onset of recessions.

Thirty-four states added headcounts over the month. North Carolina's led the nation with 23.1K payrolls added in June, just surpassing California's 22.5K gain. Meanwhile, job gains softened among usual heavy hitters like Texas and Florida. New York added 13.2K. Fifteen states shed payrolls in June. Minnesota posted the largest absolute contraction, followed by Mississippi and Ohio. Jobless rates turned up in 18 states over the month, the highest share since October 2023. Ten states registered lower unemployment rates and 22 posted no change.

Read more at Wells Fargo

Global Headlines

Middle East

Ukraine

Other Headlines

Policy and Politics

Biden Administration Announces $4.3 Billion In Climate Grants

The Biden administration on Monday announced 25 projects pitched by 30 different state, local and tribal governments that applied for $4.3 billion in grants created by the president's signature climate law. The grants, which will be distributed to winners by early autumn, will support deployment of clean energy technology across sectors ranging from housing to agriculture. The U.S. Environmental Protection Agency (EPA) said it has reviewed nearly 300 applications that requested over $30 billion.

With the 2024 election looming and campaigning ramping up, the EPA and other federal agencies are scrambling to distribute grants earmarked by the 2022 Inflation Reduction Act. Former President Donald Trump and Republican lawmakers have eyed repeals of several IRA grant and loan programs. The administration has said the selected projects when combined would reduce greenhouse gas pollution by as much as 150 million metric tons of carbon dioxide equivalent (CO2e) by 2030, or roughly 2 percentage points. The U.S. has pledged to slash its CO2e emissions by 50%-52% by that year.

Read more at Reuters

IRA’s Biggest Climate Program Has ‘Decimal Dust’ For Oversight

The Environmental Protection Agency is racing to deliver a fortune in taxpayer money through its largest-ever climate grant program. The surge in spending aims to reshape impoverished areas of the U.S. by financing the installation of renewable energy and improving buildings’ energy efficiency. Congress commanded that the money go out quickly, setting a strict Sept. 30 deadline that would prevent a future Trump administration from clawing it back.

But the initiative has a shoestring operating budget, and the $27 billion program is now facing charges of empty oversight and potential waste — and the prospects of a Republican feeding frenzy over President Joe Biden’s climate law if the program stumbles. Analysts say the quick pace of handing out such a staggering amount raises an overlooked risk: the possibility of mistakes. Out of all the programs authorized in the Inflation Reduction Act, this one has the smallest amount of money allotted to hire staff and track the spending.

Read more at Politico

If at First…. Biden Forgives Another $1.2B In Student Loans For 35,000 Public Service Workers

While the Supreme Court makes a decision whether to block President Joe Biden's massive new Saving on a Valuable Education (SAVE) student loan repayment program, he announced today another round of another student loan forgiveness – roughly $1.2 billion in additional student loan relief for 35,000 borrowers across the country who work in public service, announced the Department of Education. Today's announcement brings the total loan forgiveness approved by administration to $168.5 billion for 4.76 million Americans, which includes $69.2 billion for 946,000 million borrowers through the Public Service Loan Forgiveness (PSLF) program. The Education Department said that the relief was made possible via its work to overhaul the PSLF program, which allows public employees to apply for forgiveness after making 10 years' worth of payments.

Friday's announcement comes as Pres. Biden is fighting two legal challenges. Two federal judges, in Missouri and Kansas, on June 24, halted parts of President Joe Biden's new SAVE student loan repayment plan. Then last week, three GOP-states – South Carolina, Texas and Alaska –asked the Supreme Court to block President Biden's new SAVE income-driven student loan repayment program, which was set to begin in July.

Read more at BenefitsPro

Health and Wellness

The True Extent of Long COVID Is Still Emerging – But Here's What We Know

Since 2020, the condition known as long COVID-19 has become a widespread disability affecting the health and quality of life of millions of people across the globe and costing economies billions of dollars in reduced productivity of employees and an overall drop in the work force. Long COVID is a term that describes the constellation of long-term health effects caused by infection with the SARS-CoV-2 virus.

These range from persistent respiratory symptoms, such as shortness of breath, to debilitating fatigue or brain fog that limits people's ability to work, and conditions such as heart failure and diabetes, which are known to last a lifetime. Over the first half of 2024, a flurry of reports and scientific papers on long COVID added clarity to this complex condition. These include, in particular, insights into how COVID-19 can still wreak havoc in many organs years after the initial viral infection, as well as emerging evidence on viral persistence and immune dysfunction that last for months or years after initial infection. Here is what we know.

Read more at Science Alert

The Latest on the Assassination Attempt of Former President Trump

Election 2024

Industry News

Feared in the West, China’s Manufacturers Struggle at Home

As Western companies quake at the latest onslaught of cheap Chinese goods, a similar drama is playing out in China, where manufacturers are struggling as Beijing boosts industrial capacity without stimulating new demand. With the property bubble that powered growth for years deflating, Beijing has been funneling investment into manufacturing, yet taking few significant steps to boost consumption that would soak up the resulting supply—mainly because Chinese leader Xi Jinping sees U.S.-style consumption as wasteful and contrary to his goal of making China an industrial and technological powerhouse.

With the property bubble that powered growth for years deflating, Beijing has been funneling investment into manufacturing, yet taking few significant steps to boost consumption that would soak up the resulting supply—mainly because Chinese leader Xi Jinping sees U.S.-style consumption as wasteful and contrary to his goal of making China an industrial and technological powerhouse. To compensate for weak domestic sales, Chinese companies have turned to exports, which were up 8.6% in June from a year earlier. But those exports have put pressure on jobs and industries in other countries, reminiscent of the so-called China Shock a quarter-century ago, when China’s entry into the global trading system squeezed manufacturers of toys, clothing, furniture and other labor-intensive products in the U.S. and beyond. As a result, trade barriers to China are growing.

Read more at The WSJ

Elon Musk Says Tesla to Use Humanoid Robots Next Year

Elon Musk said Tesla TSLA 5.30%increase; green up pointing triangle will have humanoid robots in production to be used within the company next year. He said Monday morning that Tesla would use the robot for internal use first and then aim to produce it for other companies in 2026. Tesla, an electric-vehicle maker, has been working on the robot for several years as part of its efforts to expand into robotics and artificial intelligence.

Elon Musk said Tesla will have humanoid robots in production to be used within the company next year. He said Monday morning that Tesla would use the robot for internal use first and then aim to produce it for other companies in 2026. Tesla, an electric-vehicle maker, has been working on the robot for several years as part of its efforts to expand into robotics and artificial intelligence. Musk, Tesla’s billionaire chief executive, said in a post on X, formerly Twitter, that he believed the humanoid robots would be “genuinely useful.” Tesla wants the robots to help produce its cars more efficiently, complete difficult chores and reduce labor shortages.

Read more at The WSJ

Boeing Has a Parking Problem. Unfinished Planes Waiting for Parts Take Up A Lot of Room.

Boeing is offering a stark and expensive example of how supply-chain shortfalls can trigger cascading problems across a company’s operations. Parts shortages and other issues have left the jet maker facing a major storage issue, with about 200 fully or mostly finished airplanes sitting in airfields, outside plants and—in one location—an employee parking lot. Supplier shortages have saddled the company with planes short of parts such as seats and emergency doors.

But a handful of 777 freighters in Everett, Wash., are awaiting engines because manufacturer GE Aerospace has struggled with shortfalls from its own suppliers. Boeing had delivered only two freighters this year through May. But the engines have started rolling in, and Boeing delivered five of the planes in June. The bigger problem is with passenger jets including some single-aisle 737 MAXs that are now several years old.

Read more at The WSJ

GE Aerospace Details $1B MRO Expansion Plan

GE Aerospace will invest more than $1 billion in its maintenance, repair and overhaul (MRO) network and component repair locations worldwide over the next five years, the engine manufacturer announced, aiming to install more engine test cells and equipment needed to service the expanding commercial aviation sector, including engines for widebody and narrowbody jets. Most of the investments will support growing demand for CFM International LEAP turbofan engines, the high-bypass turbofan engine that powers the Airbus A320neo and Boeing 737 MAX series, the worlds’ most popular narrowbody aircraft. GE Aerospace noted that over 3,300 aircraft with LEAP engines are in service now, and over 10,000 more LEAP engines are currently on order.

CFM International is a developer of commercial aircraft engines jointly owned by GE Aerospace and Safran Aircraft Engines. The partners manufacture, service, and support the CFM engines separately in their respective operations. For 2024, GE’s investments in MRO plant expansions, new machinery, tooling, and safety enhancements will total $65 million in Ohio, Texas, Indiana, and Kansas; $55 million in Brazil; $60 million in Europe and the Mid East; and $45 million in the Asia Pacific region.

Read American Machinist

EVs Are Cheaper Than Ever. Can Car Buyers Be Won Over?

Electric vehicles were a splurge purchase not long ago. Now they are among the biggest bargains on the dealership lot. Many electric models have never been cheaper, as automakers splurge on financing deals and cash incentives to sway consumers who might be hesitant to give up their gas guzzlers. The steeper discounts will serve as a test of Americans’ appetite for going electric after months of slowing demand.

Four of the five vehicle models with the biggest drop in list price over the first half of this year were electric, including the Chevrolet Blazer and Volkswagen ID.4 SUVs, according to shopping site CarGurus. On average, buyers paid about $1,500 more for nonluxury EVs than internal combustion engine vehicles, according to a July J.D. Power report. Just over a year ago, the average EV fetched $8,400 more. The steep discounts haven’t been enough to fuel a return of the torrid EV sales growth of a few years ago. Sales of fully electric models rose 6.8% through the first half of the year, according to Motor Intelligence data, a sharp deceleration from near 50% growth in 2023.

Read more at the WSJ

Next-Generation US Jet Fighter Program May Get Hit By Budget Woes

The U.S. Air Force's ambitious next-generation fighter jet program, envisioned as a revolutionary leap in technology, could become less ambitious as budget pressure, competing priorities and changing goals compel a rethink, defense officials and industry executives said. Initially conceived as a "family of systems" centered around a sixth-generation fighter jet, the Next Generation Air Dominance (NGAD) program is meant to replace the F-22 Raptor and give the United States the most powerful weaponry in the sky well into the mid-21st century.

When it was first proposed, expectations were high, including an unmatched stealth capability to keep it invisible from even the most sophisticated radar, laser weapons and onboard artificial intelligence to process masses of data coming from the latest in sensor technology. However, sources said the current development budget of $28.5 billion over five years ending in 2029 could be spread out over more time or scaled-back as the Pentagon searches for a cost-effective solution.

Read more at Reuters

P&W, Collins Make Progress On Turbogenerator Propulsion

RTX companies Collins Aerospace and Pratt & Whitney have achieved sustained operation of a turbogenerator in their STEP-Tech demonstrator, marking a key milestone on the way to running propulsors using a complete hybrid-electric powertrain. First announced in 2022, STEP-Tech—for Scalable Turboelectric Powertrain Technology—is focused on developing high-voltage distributed turboelectric propulsion concepts for future advanced air mobility vehicles in the 100-500-kW class, with potential to scale to 1 megawatt and beyond.

RTX says concepts demonstrated at the STEP-Tech site—at the RTX Research Center in East Hartford, Connecticut—could also power high-speed electric vertical-takeoff-and-landing aircraft and blended wing body aircraft. “We've been able to take power from our battery system through our high-voltage system into our turbogenerator and start the engine and do sustained operation of our engines for an extended period of time,” says Zubair Baig, senior technical fellow for Electrical Systems at Pratt.

Read more at Aviation Week

Pentagon’s New Cyber Rules Are ‘Stifling’ Foreign Suppliers, Advisors Say

Foreign suppliers are having trouble complying with new Defense Department cybersecurity requirements, and the Pentagon should try to ease their pain, an advisory board says. “We have partners like Germany and Japan that want to work with us, given what's going on in the world,” Charles Phillips, a member of the Defense Innovation Board, said Wednesday. “We make it hard to work well with the DOD.The compliance standards, things called CMMC and ITAR, export controls—even for U.S. companies sometimes take years to get approvals.”

CMMC—formally, Cybersecurity Maturity Model Certification—is the Pentagon’s years-long effort to get its contractors to improve their network defenses. Compliance is set to become a contract requirement by 2025, but some defense companies have already found the certification process to be difficult and expensive. And those sentiments extend across the pond. Speaking to reporters on Wednesday, Phillips recalled a conference call the Board held with small and medium-sized companies from Norway and other countries. The common thread, he said, was: “We're willing to get compliant if that helps us get business. The problem is we don't know how to do that.”

Read more at Defense One

Why Tesla’s Big Bet On Gigacasting Has Other EV Makers Reimagining Their Factories

In the race to make EVs cheaper and more profitable, companies are pulling just about every lever they can. But while improving battery technology often hogs the spotlight, automakers are investing heavily into changing how the rest of the car is made. One such method is megacasting, or gigacasting, as Tesla calls it. Gigacasting is a form of die-casting — pouring materials like molten aluminum into large molds to form parts. Die-casting has been around for a while, but the American automaker headed by Elon Musk has been credited with pushing the envelope, said Shea Burns, a partner at research firm AlixPartners who studies auto manufacturing.

Tesla said the process works to reduce weight and dramatically improve manufacturing efficiency. For example, the front and rear portions of the early Model 3 chassis each contained more than 70 parts, according to Tesla. The same two portions on the very similar Model Y are now just one part each. Other automakers have announced their own investments including Toyota , Ford Motor, General Motors, Hyundai, Nissan, and Volvo.

Read more at CNBC

Member Briefing July 24, 2024July 24, 2024 Member Briefing July 22, 2024July 22, 2024