Member Briefing June 1, 2022
When Your Only Tool is a Hammer … Biden Lays Out Plan to Fight Inflation in Wall Street Journal Op-Ed
The Wall Street Journal published an op-ed by President Biden on Monday with the headline “My Plan for Fighting Inflation.” Biden began by acknowledging that “Americans are anxious” about inflation, which he said had been “exacerbated” by the war in Ukraine. The president also touted his achievements, which he said include a reduced federal deficit, rapid declines in unemployment, and strong economic growth relative to other developed countries.
“With the right policies, the U.S. can transition from recovery to stable, steady growth and bring down inflation without giving up all these historic gains,” Biden wrote. To achieve this goal he proposed passing clean energy tax credits to bring down gas prices, improving infrastructure, cracking down on greedy corporations, ramping up housing construction, reducing the cost of child care, and empowering Medicare to negotiate with pharmaceutical companies.
Invasion of Ukraine Headlines
- Ukraine and Russia: the Latest News – Reuters
- Cracks Show in Western Front Against Russia’s War in Ukraine – WSJ
- U.N. Had ‘Constructive’ Talks in Moscow on Russian Grain, Fertilizer Exports – Reuters
- EU Sets Harshest Russian Sanctions, Targeting Oil and Insurance – WSJ
- Ukraine Joins its First NATO Cyber Defense Center Meeting – The Hill
- Sievierodonetsk Mayor Says Russian Forces Seize Half of City – Military Times
- To Win Approval of New Sanctions, EU Leaders Give Budapest a Pass. – Politico
- Russia Expands Europe Gas Supply Cutoffs – The Hill
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Oil Prices Rise After EU Announces Partial Ban On Russian Imports
Global crude oil prices rose on Tuesday after the European Union unveiled its latest set of sanctions against Russia, which include an immediate ban on two-thirds of all Russian oil imports by the bloc’s member nations, in response to its invasion of neighbor Ukraine.
Oil prices are further likely being buoyed by China’s decision to reopen its financial capital Shanghai after a two-month-long Covid-19 lockdown, Reuters adds.
Euro Zone Inflation Hits Yet Another Record High as Food and Energy Prices Soar
Prices in the euro zone continued their march higher in May, hitting a record high for the seventh month in a row. Inflation came in at 8.1% for the month, according to preliminary figures Tuesday from Europe’s statistics office, up from April’s record high of 7.4% and above expectations of 7.8%.
It comes after inflation prints from several major European economies surprised to the upside in recent days. German inflation (harmonized to be comparable with other EU nations) came in at an annual 8.7% in May, preliminary figures showed Monday — significantly outstripping analyst expectations of 8% and marking a sharp incline from the 7.8% seen in April.
US COVID – Omicron Sublineages Prevalant
The US recently began averaging more than 100,000 new daily COVID-19 cases for the first time since February. As of the end of last week, 58% of new US cases are caused by the Omicron subvariant known as BA.2.12.1. This variant—as well as the other Omicron sublineages BA.4 and BA.5, which the European Centre for Disease Control and Prevention (ECDC) have deemed variants of concern and are currently circulating at low levels in the US—are even more transmissible than the BA.1 version of Omicron that caused high caseloads in early 2022.
The 3 sublineages also likely are capable of escaping some of the immunity produced by infection with BA.1 and BA.2. The consistent resurgence of viral variants creates challenges to maintaining long-lasting defense against COVID-19, but the best defense against severe disease and death remains staying up-to-date on vaccinations.
Kaiser Poll: Most Pregnant Women Believe or Are Unsure About COVID-19 Vaccine Misinformation
Seven in ten women who are pregnant or planning to become pregnant believe or are unsure about false claims related to COVID-19 vaccines, a Kaiser Family Foundation (KFF) poll found.
Pollsters presented three false statements to respondents: Pregnant women should not get the COVID-19 vaccine, it is unsafe for breastfeeding women to get a COVID-19 vaccine and the COVID-19 vaccines have been shown to cause infertility. Twenty-nine percent of respondents in the demographic believed at least one of three false statements.
NY Lawmakers Rush to Address Important Issues in Last Days of Legislative Session
State lawmakers have returned to Albany for the final three scheduled days of this year’s legislative session. As per tradition, that time will be filled with last-minute dealmaking as lawmakers scramble to approve hundreds of bills – many high-profile or contentious – before heading back to their districts for campaign season. Nearly 200 bills have been introduced or amended over the Memorial Day weekend, not a guarantee that the Legislature will act on them this week but an indication that they are likely part of the end-of-session agenda.
As last year’s negotiations made clear, nothing is final until votes are cast – meaning that much can still change before Thursday evening. And an end-of-session Big Ugly always remains a possibility to get everything outstanding wrapped up into a single bill. Here are where things stand right now.
President Biden, Fed Chairman Jerome Powell Meet With Inflation at Its Highest in 40 Years
President Biden met at the White House Tuesday afternoon with Federal Reserve Chairman Jerome Powell as his administration takes more steps to signal urgency to fight high inflation. The meeting also highlights how much the White House is relying on outside forces to help combat rising prices. Administration officials had earlier repeatedly played down worries about inflation while promoting their $1.9 trillion Covid-19 relief package in March 2021 and in seeking additional spending on social programs and climate change last year.
Senior White House advisers have expressed frustration in recent weeks with their messaging around inflation, according to people familiar with the matter. Some officials have said they should publicly accept that the administration’s stimulus contributed to higher prices while arguing that such steps were worthwhile, while others have been opposed to making such concessions.
Summer Worker Shortage Means Things Will Be Closed. Again.
The scarcity of available workers first emerged a year ago as Covid-19 vaccinations became available, businesses reopened and the economy rebounded. Many economists said more workers would join the labor force and fill open roles as Covid-19 fears eased and pandemic-related government stimulus faded. Now, shortages are not only persisting, in some cases they are deepening, at a crucial time for many businesses that depend on a summer boom.
Two key factors are at play. First, employer demand for workers remains red-hot, with job openings double the number of unemployed individuals looking for work. Second, workers continue to switch jobs and quit lower-wage industries including restaurants at high rates, leaving businesses scrambling to fill vacant positions, economists say.
Shanghai Will Exit Two Months of COVID Lockdowns on Today
Shanghai residents, now in their ninth week of lockdown, are starting to see light at the end of the tunnel. Officials have set June 1 as the date to scrap the city’s strictest COVID controls, which have cratered the city’s economy and kept people in their homes for almost two months. The city is exiting its COVID lockdown, but now faces a new challenge: starting its economic recovery.
But, for the local government, hard times remain ahead. Eight weeks of economic inactivity has slashed the city’s economic activity by around 50%, while extended emergency measures—such as routinely testing millions of residents—has strained government coffers.
German Inflation Beat Firms Case for Bigger ECB Rate Hike
German inflation rose to its highest level in nearly half a century in May on the back of soaring energy and food prices, strengthening the case for a big, half a percentage point European Central Bank interest rate hike in July. Inflation was last time this high in the winter of 1973/1974, when the first oil crisis led to a new and difficult-to-tame inflationary cycle.
German consumer prices, harmonised to make them comparable with inflation data across the European Union, increased to 8.7% from 7.8% a month earlier, well ahead of expectations for 8%, data from the Federal Statistics Office showed on Monday.
New York State Gas Tax Holiday to Take Effect June 1
The Gas Tax Holiday Act of 2022, which was included in the state budget announced by Gov. Kathy Hochul in April, is set to take effect today, June 1, 2022 and last for 6 months. Once this goes in to effect, gas prices will drop 16 cents a gallon.
This comes at a time where gas prices in New York are 33 cents higher than the national average, according to AAA.
NY Fed President Williams on Monetary Policy
At a conference in Germany, President Williams said the challenge for monetary policy today is to bring down inflation while maintaining a strong economy. He reiterated the Fed’s commitment to fulfilling its dual mandate of price stability and maximum employment, noting that “maximum employment has been achieved.” However, he said the Fed is far from its longer-run goal of two percent inflation.
He concluded by highlighting the uncertainty brought about by the ongoing pandemic and war in Ukraine, but reiterated that “we have the right tools, and we will use them to meet this challenge.”
US Merchandise-Trade Deficit Down 15.9% in April
The US merchandise-trade deficit shrank in April by the most since 2009 as imports fell amid lockdowns in China while exports increased to a record. The shortfall narrowed by 15.9% to $105.9 billion last month, following a record level in March, Commerce Department data showed Friday. The figures, which aren’t adjusted for inflation, compared with a median estimate for a gap of $114.9 billion in a Bloomberg survey of economists.
US merchandise imports decreased 5% from the prior month to $279.9 billion, reflecting declines in industrial supplies and capital goods. Inbound shipments of consumer goods fell 7.9%—the most since March 2016—to $76.2 billion. Exports rose 3.1% to a record $173.9 billion in April, driven by foods, capital goods and industrial supplies.