Member Briefing July 31, 2024
JOLTS: Job Openings Decline to 8.18 million in June vs. 8.03 Million Expected
New data from the Bureau of Labor Statistics released Tuesday showed that 8.18 million jobs were open at the end of June, a decrease from the 8.23 million job openings in May. May's figure was revised higher from the 8.14 million open jobs initially reported. Economists surveyed by Bloomberg had expected the report to show 8 million openings in June. The Job Openings and Labor Turnover Survey (JOLTS) also showed 5.3 million hires were made during the month, a slight decrease from May's revised figure of 5.7 million. The hiring rate declined to 3.4% from 3.6% in May. Also, in Tuesday's report, the quits rate, a sign of confidence among workers, sat at 2.1% for the second straight month. In June, there were 3.28 million quits, down from 3.4 million in May and the lowest number of quits in a month since November 2020.
In manufacturing there were 486,000 job openings, down from 586,000 in May and 578,000 in June 2023. 345,000 people were hired in manufacturing compared to 354,000 in May and 383,000 in June of 2023. The sector saw 358,00 separations in June, up from 352,000 in May but down from 379,000 in June 2023.
US Home Prices Unchanged In May; Annual Gain Smallest In 10 Months
U.S. single-family home prices were unchanged in May and the annual increase was the smallest in 10 months as higher mortgage rates stifled demand, boosting housing supply. The unchanged reading in house prices followed a 0.3% month-on-month rise in April, the Federal Housing Finance Agency said on Tuesday. In the 12 months through May, house prices increased 5.7%. That was the smallest year-on-year advance since July 2023 and followed a 6.5% gain in April.
A surge in mortgage rates in spring depressed sales, pushing existing homes inventory to the highest level in nearly four years in June. New single-family housing supply jumped to the highest level since February 2008. The average rate on the popular 30-year fixed mortgage has since pulled back from a six-month high of 7.22% in early May and averaged 6.78% last week, data from mortgage finance agency Freddie Mac showed. Residential investment, which includes homebuilding and sales, contracted in the second quarter after notching double-digit growth in the January-March quarter.
Eurozone Economy Keeps Pace Despite German Weakness
Eurozone growth maintained its pace in the second quarter, shrugging off unexpected contraction in powerhouse member Germany, but fears of a slowdown persist. Nevertheless, still sluggish growth adds to the likelihood that policymakers will move to boost the economy in the months ahead. Gross domestic product increased by 0.3% between April and June, slowing slightly from the first quarter of the year, when the currency union emerged from the stagnation it suffered throughout last year.
Most of the 20-member union’s larger economies booked better growth than expected, including France and, with a major 0.8% leap, Spain. The Iberian kingdom is riding a wave of tourist euros, with income skyrocketing by more than 20% in the first five months of the year on the back of soaring international demand for vacations to the country’s beaches and cities. In stark contrast, the eurozone’s most important economy, Germany, shrank slightly from the previous quarter, confounding economists’ forecasts for moderate expansion. Hopes for an industrial-led rebound at the start of 2024 have faded as demand remains weak and geopolitical issues pressure the key manufacturing sector.
Global Headlines
Middle East
- Hamas Leader Ismail Haniyeh Is Killed In Iran By An Alleged Israeli Strike - AP
- Israel and Hamas: The Latest News – The Guardian
- Israel Says It Killed Hezbollah Commander in Beirut, in Response to Golan Heights Attack - WSJ
- Iran Using Covert Influence Campaign To Undermine Trump Candidacy, US Intelligence Says - CNN
- Israeli Forces Detain Reservists Amid Probe Into Abuse of Palestinian Prisoner - WSJ
- The Israel-Hezbollah War That No One Wants Could Finally Blow Up - CNN
- European Capitals Scramble To Avoid Middle East Escalation - Politico
- Hezbollah-Israel Conflict Not Inevitable, U.S. Defense Secretary Says - Reuters
- What Is The Golan Heights And Who Are The Druze? - CNN
- 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
- U.S. to Arm Ukraine’s F-16 Jets With Advanced Weapons - WSJ
- Americans Divided On Whether US Should Keep Funding Ukraine: Pew – The Hill
- Ukrainian Fencer Dedicates Medal to Countrymen Killed in the War - NYT
- Russian Navy Starts Major Drills Involving Most Of Its Fleet - Reuters
- Crimea Satellite Images Reveal Aftermath of Strike on Russian Air Base - Newsweek
- Macron Warns Iran Against Support Of Russia's Ukraine War - VOA
- Dual German-Russian Citizen Latest Political Prisoner To Mysteriously Go Missing – 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
- Venezuelans Protest Government’s Claim of Election Victory - WSJ
- Key Opposition Figure Arrested In Venezuela After Disputed Election, Party Says – France 24
- Vietnam Veers Into Unknown As Career Cop Makes Communist Party Power Play – Nikkei Asia
- China Responds to Quad Group as U.S. Hails 'Strategic Alignment' – Newsweek
- China’s Politburo Pledges Support, Sending Stronger-Than-Expected Signal To Boost Economy – SCMP
- Investors Stick To Bets On Japan Banks Amid Rate Hike Hopes - Reuters
- Moscow's Protection Now 'More Difficult to Sell' after Mali Disaster—Expert - Newsweek
- US Announces $500 Million In Military Financing For Philippines - VOA
- South Africa’s ANC Kicks Former President Jacob Zuma Out Of Party He Once Led - CNN
- Airbus Second-Quarter Profit Falls On Jetliner Ramp-Up Costs And Space Charge - Reuters
Policy and Politics
July Fed Meeting - Businesses Look for Signals of September Rate Cut
The big question going into the Federal Reserve’s meeting today comes down to how strongly officials signal their desire to cut rates. The central bank is widely expected to hold its benchmark short-term interest rate steady—in a range between 5.25% and 5.5%, a two-decade high—while setting the table to begin a series of reductions at the next meeting in mid-September. The Fed releases its policy statement at 2 p.m. Eastern time on Wednesday. Fed Chair Jerome Powell speaks at a news conference at 2:30 p.m.
Language that acknowledges recent improvement in inflation and a more equal balance of risks, together with any changes to the forward guidance, will set the stage for Powell’s press conference. There, he can elaborate on how officials are approaching the question of rate cuts. Some analysts think Powell will open the door wider to a September cut without explicitly committing to any course of action. “If the inflation news is OK between now and September, then they can say, OK, now we’re confident that we’re on track, and we’re going to start cutting rates,” said William English, a former senior Fed adviser.
New Secret Service Leader ‘Ashamed’ Over Trump Shooting
Not long after becoming the new leader of the Secret Service, Ronald Rowe traveled to Butler, Pa., to visit the rally site where a 20-year-old gunman tried to assassinate former President Donald Trump. On the same roof where the gunman took aim, Rowe lay in a prone position to see the line of sight for himself. “What I saw made me ashamed,” Rowe told lawmakers Tuesday, recalling his visceral reaction to realizing how easy it was for the gunman to lob shots at the former president. “As a career law-enforcement officer, and a 25-year veteran with the Secret Service, I cannot defend why that roof was not better secured.”
Appearing before two Senate committees, Rowe said the Secret Service has taken steps to enhance security for its protectees, including by expanding the use of unmanned drones to help detect threats on roofs and other elevated areas. Rowe said he has also ordered the maximum use of Secret Service special agents to “address this heightened security environment” and has taken steps to improve communication between agents and local law enforcement. His testimony came a week after his predecessor, Kimberly Cheatle, resigned under pressure from lawmakers.
Pattern Report Highlights Repurposing Closed Schools
Public school districts in the Hudson Valley have closed more than 40 school buildings over the past 25 years, as district leaders respond to sharp declines in student enrollment, along with political and economic pressure to reduce the burden on local taxpayers. In this report – Closed Schools, Open Minds – Hudson Valley Pattern for Progress documents the school buildings that have closed throughout our region, the demographic and economic factors that led to these closures, and examples of adaptive re-use projects that brought new life to old schools in our region and across the United States. Among the Highlights:
At least 46 school buildings have closed in the region since 1999. The vast majority – 39 of them – have closed since the Great Recession of 2008. About 75% of closed school buildings in the Hudson Valley have been reutilized as housing, event spaces, municipal government centers, or for other types of public or private education. Pattern found that 11 closed school buildings were sitting empty, demolished, or had been sold to new owners without a clear plan for their re-use. School district superintendents said they saved at least $1 million on their annual budgets by closing a school building. Those savings come mostly from the associated reduction in staff, but also from lower costs related to building operation and maintenance.
Read more at Patten for Progress
Health and Wellness
The Listeria Outbreaks: Everything To Know—Including What To Avoid And Who Is Most At Risk
A listeria outbreak in deli meats was first reported last week, with the Food and Drug Administration confirming that 34 people were sickened across more than a dozen states, with all but one hospitalized and two deaths, one in Illinois and the other in New Jersey. During the investigation into the outbreak, the Boar's Head brand recalled a number of deli meats and the United States Department of Agriculture said it was conducting testing to determine if those products were connected to the outbreak.
The same week, the Department of Agriculture announced that more than a dozen pre-packaged and bulk summer vegetables were being recalled due to possible listeria contamination, though no illnesses have been reported associated with that recall—the two do not appear to be related. Listeria is a foodborne illness most often contracted by eating improperly processed deli meats (Listeria spreads easily among deli equipment, surfaces, hands and food, the CDC says) and unpasteurized milk products, and the hearty bacteria can survive refrigeration and even freezing. Most healthy people rarely become ill from listeria infection, but it does disproportionately impact people older than 65, newborns and pregnant women, who may themselves experience only mild symptoms but babies in utero can die from listeria.
Election 2024
- Trump-Harris Swing State Polls: Michigan, Pennsylvania Tied In Latest Survey - Forbes
- How Gen Z’s Worldview Is Shifting – Morning Consult
- Trump Says He Wants To Debate Harris—But Adds He Has ‘Case For Not Doing It’ - Forbes
- Harris Gains With Black Voters, Makes a Play for Georgia - WSJ
- Trump, Harris Launch Dueling Ad Wars - Politico
- Kamala Harris Vice President Race Narrows With Cooper, Whitmer Out - Reuters
- 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
Small Businesses Are Wobbling Under The Weight Of High Rates
Julia Pollak, chief economist with ZipRecruiter, suspects that after years of pandemic regulations, lockdown, rising prices and rising labor costs, interest rates might be the straw breaking small businesses’ backs. “This is small businesses going to refinance, as one does, and suddenly getting quotes that would more than double their monthly payments,” she said. “It’s turning their profitable businesses into bankrupt enterprises within two, three months.” She pointed out that unemployment has been rising in sectors where there are a lot of small businesses, like leisure and hospitality.
This is the Federal Reserve’s plan, Pollak said: Raise interest rates, make loans more expensive so people borrow less and spend less. That means companies sell less and eventually cut their prices to try to boost sales. That is how prices fall. That is how inflation comes down. “The problem is how many businesses will we lose until that happens?” said Pollak. “So far, everyone’s been saying, ‘Wow! It’s been a huge miracle! We have cooled inflation without massive job losses!’ Right? The question is, how long will this miracle continue? Will there be a point where the labor market deteriorates too much and we lose too many businesses and too many jobs?”
Boeing Guilty Plea Highlights How Corporate Convictions Rarely Have Consequences That Threaten The Business
The taint of a corporate criminal conviction isn’t what it used to be. The accounting firm Arthur Andersen collapsed in 2002 after prosecutors indicted the company for shredding evidence related to its audits of failed energy conglomerate Enron. For years after Andersen’s demise, prosecutors held back from indicting major corporations, fearing they would kill the firm in the process.
Boeing’s agreement this month to plead guilty over two employees’ misconduct in the run-up to two fatal crashes of 737 MAX planes shows how times have changed. A criminal conviction now matters less for big companies, which have proven able to mitigate the negative consequences and survive bad publicity. Banks, commodity trading firms and automakers have pleaded to crimes in the past decade—and emerged without permanent scars. “Simply being branded a ‘felon’—pursuant to a plea, without a trial—does very little to the company,” said Mihailis Diamantis, a law professor at the University of Iowa whose research focuses on corporate criminal justice. “Boeing has already done a spectacular job of trashing its own reputation over the last three years. That may be why the company was willing to take the conviction—from rock bottom, you can only move sideways or up.”
The U.S. Wanted to Knock Down Huawei. It’s Only Getting Stronger.
Five years ago, Washington sanctioned Huawei, cutting off the Chinese company’s access to advanced U.S. technologies because it feared the telecommunications giant would spy on Americans and their allies. Many in the industry thought it would ring the death knell for one of China’s most vital tech players. Huawei struggled at first—but now it’s come roaring back.
Bolstered by billions of dollars in state support, Huawei has expanded into new businesses, boosted its profitability and found fresh ways to curb its dependence on U.S. suppliers. It has held on to its leading position in the global telecom-equipment market, despite American efforts to squeeze Huawei out of its allies’ networks. And it’s making a big comeback in high-end smartphones, using sophisticated new chips developed in-house to take buyers from Apple. Along the way, a company that portrayed itself as independent from Beijing has morphed into something more like a national champion, helping China wean itself off foreign suppliers—part of a broader campaign to eliminate U.S. technology in China, dubbed “Delete A,” for Delete America. Its resurgence shows why it’s so hard for America to contain China’s technological ambitions.
Pfizer Lifts Annual Profit Forecast On Strong Sales Of Cancer, Heart Drugs
Pfizer, which is dealing with a sharp revenue drop from COVID products, raised its annual profit forecast on Tuesday, helped by new cancer treatments acquired through its $43 billion deal for Seagen and strong sales of its heart disease drug. The market for pharmaceutical products used in managing COVID-19 has shrunk by billions of dollars a year, including for Pfizer's vaccines and treatments.
Pfizer's quarterly sales grew 3% to $13.3 billion, marking its first quarter of sales growth since COVID revenue peaked in late 2022. The quarter was helped by sales of its heart disease drug, sold under brand names Vyndaqel or Vyndamax, cancer therapy Padcev and COVID treatment Paxlovid. New Jersey-based Pfizer now expects annual profit to be in the range of $2.45 to $2.65 per share, compared with its prior profit forecast of $2.15 to $2.35 per share. Pfizer also raised its full-year sales forecast for its antiviral drug, Paxlovid, which is used in high-risk COVID cases, by $500 million to $3.5 billion.
Kobold Metals Is Betting Artificial Intelligence Can Change How Miners Find The Metals Needed To Power The Energy Transition
KoBold is betting it can modernize the mining industry by using artificial intelligence to scour the earth for copper, lithium, nickel and cobalt. It says machine-learning techniques allow it to collect and analyze more sophisticated data about deposits than conventional exploration methods. Some in the mining industry say KoBold overstates AI’s impact on mineral exploration, and previous attempts at revolutionizing the industry in such ways haven’t always panned out.
Still, the company is emerging as a player in the global rush to secure the metals needed to power the transition to green energy. It has also become a partner for the U.S. in assessing mineral projects in Africa. KoBold’s position at the confluence of the green transition and AI hasn’t gone unnoticed by investors. The company attained a valuation of more than $1 billion in 2023 in a fundraising backed by Bill Gates’s Breakthrough Energy, Standard Industries and venture-capital firm Andreessen Horowitz. Other investors include Mitsubishi and BHP.
Altana, An AI Platform For Supply Chain Data, Hits Unicorn Status After $200 Million Raise
Evan Smith, CEO of the AI logistics platform Altana, calls the corporate supply chain one of the “dirtiest industries on Earth” — rife with shady vendors, schedules troubled by natural disasters, and ethical concerns over forced labor. With his startup Altana, he wants to clean it up. The software platform helps companies manage their supply chains, with a geographical map and dashboard that displays data about vendors (and vendor’s vendors), shipping routes, potential disruptions, factories and compliance requirements.
The idea is to bring more visibility to the supply chain in a globalized world where so many of its parts are outsourced. Altana’s map of the supply chain is built on public data — information from maps, the web, data brokers — and nonpublic data that clients plug into the system. Proprietary data stays proprietary, but the insights Altana’s AI derives from it are shared to create what Smith describes as “a living, breathing network view of the supply chain.” He calls this “federated learning,” a method similar to what Google and Apple do to preserve user privacy on phones, while still using the data to improve their products.
Air Force's Uncrewed Collaborative Combat Aircraft Program Continues
The Air Force has chosen five companies to build the autonomy system that will underpin the first batch of its uncrewed Collaborative Combat Aircraft fleet, according to a service official. The service discretely awarded contracts to the firms a few months ago, according to Brig. Gen. Jason Voorheis, who spoke to reporters Monday at the Air Force’s Life Cycle Industry Day in Dayton, Ohio. He would not identify the selected companies due to security concerns.
Voorheis, program executive officer for fighters and advanced aircraft, described the autonomy package as the “brains” of the Air Force’s future Collaborative Combat Aircraft, or CCA, fleet. The systems are being designed as drone wingmen that will fly alongside crewed fighter aircraft like the F-35 Joint Strike Fighter and perform a range of missions, including strike, reconnaissance and electronic warfare. The service plans to field at least 1,000 CCAs by the late 2030s. It will do so in increments, with each batch bringing a different capability to the mix.
"Improved" Confidence in July Due to Downward Revision to June
The Conference Board Consumer Confidence Index® rose in July to 100.3 (1985=100), from a downwardly revised 97.8 in June. The Present Situation Index—based on consumers' assessment of current business and labor market conditions—declined to 133.6 from 135.3 last month. Meanwhile, the Expectations Index—based on consumers' short-term outlook for income, business, and labor market conditions—improved in July to 78.2. That's up from 72.8 in June but still below 80 (the threshold which usually signals a recession ahead). The cutoff date for the preliminary results was July 22, 2024.
Average 12-month inflation expectations remained stable at 5.4 percent in July, compared to a peak of 7.9 percent reported in 2022. The share of consumers expecting higher interest rates over the next 12 months dropped for the second month in a row to 50.3 percent—the lowest since February 2024. Meanwhile, consumers were positive about the stock market, with 49.1 percent expecting stock prices to increase over the year ahead (the highest share since March), 23.5 percent expecting a decrease, and 27.4 percent expecting no change.
Boeing's Starliner Tests Thrusters At ISS As NASA Reviews Options For Astronauts' Return To Earth
The first Boeing Starliner to fly astronauts to space performed a crucial in-space test Saturday (July 27) as the next mission faces a months-long delay. Engineers tested Starliner's reaction control system (RCS) thrusters to prepare for a wider agency review that will evaluate the spacecraft's readiness for landing NASA astronauts Butch Wilmore and Suni Williams sometime in August, if all goes to plan. "Teams will evaluate the results of the test firings over the next few days as they work through overall studies, ahead of an agency readiness review," NASA officials wrote in a statement on X, formerly Twitter, on Saturday.
Figuring out what happened is key to the readiness of the next mission, Starliner-1, which is supposed to spend six months on the ISS in 2025. On Friday (July 28), NASA announced a delay of that mission to August 2025, past an initial expectation of early winter. Starliner's current space mission, known as Crew Flight Test (CFT), was at first expected to last 10 days. It is now at nearly 55 days in space, with the astronauts living off a reserve of supplies on ISS already there for the unexpected. The mission is developmental and as such, there was uncertainty with the timeline, NASA and Boeing both stressed before the mission.