Member Briefing June 10, 2025
May CPI Preview: Test of Tariffs
May's CPI report will be an important test of the speed and magnitude to which higher tariff rates are being passed along to the consumer. Wells Fargo economists expect to see only a moderate advance in headline CPI (0.15%) in May as gasoline prices fell on a seasonally adjusted basis and food inflation appeared tame. But excluding food and energy, inflation looks to have firmed on the back of higher goods prices. They estimate the core CPI rose 0.27% in May.
Front-loading of inventories and efforts to avoid alienating customers—especially as it remains to be seen where tariff rates eventually land—are mitigating the early effects of higher import duties on consumer prices. That said, the eocnomists expect to see the inflationary effects ramp up more in the coming months as the higher tariff environment persists. They estimate core CPI will advance at an average monthly pace of 0.30% in the second half of the year, which would push the year-over-year rate back up to 3.3% in Q4 from April's year-over-year rate of 2.8%.
Manufacturing Payrolls Fall and Other Key Takeaways From Friday’s Jobs Report
Here are five key takeaways from the US employment report for May, released Friday:
- Job growth moderated and prior months’ numbers were revised lower; nonfarm payrolls increased 139,000 in May after a combined 95,000 in downward revisions to the two previous months. Unemployment held at 4.2%, while wage growth accelerated.
- The participation rate fell to a three-month low of 62.4%; the rate for those between the ages of 25 and 54, known as prime-age workers, also declined.
- The health-care sector added 62,000 workers, more than the average monthly gain of 44,000 over the prior year. Leisure and hospitality added 48,000 jobs, well above the average of 20,000 a month over the previous year.
- Manufacturing payrolls dropped 8,000 last month, the most this year.
- The federal government shed 22,000 jobs in May, the most since 2020.
Global Manufacturing Output Falls Back Into Contraction, But Confidence Lifts From April Low
The J.P.Morgan Global Manufacturing PMI® fell to a five-month low of 49.6 in May, down from 49.8 in April, to signal a deterioration in overall operating performance for the second successive month. Manufacturing production contracted for the first time in five months during May. The downturn reflected weaknesses in the intermediate and investment goods sectors, both of which saw production volumes decline following modest gains in the prior survey month. In contrast, consumer goods output rose for the twenty-second successive month.
Although indicators of current performance (such as new orders, output and employment) were downbeat in May, there were signs of global manufacturers' outlooks strengthening. Business optimism rose from April's two-and a-half year low, improving across the consumer, intermediate and investment goods industries. May saw rates of increase in input costs and selling prices ease to seven- and four-month lows respectively. Supply chains remained stretched, despite reduced volumes of input purchasing, leading to a further lengthening of average vendor lead times. Delivery times increased to the greatest extent in six months.
Global Headlines
Middle East
- Iran To Present Counter-Proposal To US In Nuclear Talks - Reuters
- Iran Threatens to Reveal Secret Israel Nuclear Data – WSJ
- Israeli Army Says Lacks Over 10,000 Soldiers Amid Intensifying Campaign In Gaza – France 24
- Greta Thunberg Says She Has Been Kidnapped by Israeli Forces-What We Know - Newsweek
- Israel Reveals Tunnel Under Gaza Hospital, Says Body Of Sinwar's Brother Found There - Reuters
- Five Signs Israel and Iran Could Be Headed Toward Open War - 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
- Russia Won't End Ukraine War Until NATO 'Pulls Out' of Baltics: Moscow - Newsweek
- Putin Promised To Make Ukraine Pay For Its Airbase Attacks. What Does He Have Left? - CNN
- Russia Launches Biggest Drone Attack On Ukraine, Targets Military Airfield - Reuters
- Poland’s Sikorski: Nationalist Election Win Won’t Derail Fight Against Russia - Politico
- Most Russians No Longer See US as Enemy Nation: Poll - Newsweek
- Russia And Ukraine Exchange Group Of Younger Prisoners Of War, Moscow Says - Reuters
- 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
- Colombia's Senator Uribe Shows Little Response To Treatment After Shooting – Reuters
- NATO’s Rutte: ‘We’re All On The Eastern Flank Now’ - Politico
- Italy Holds Two-Day Referendum On Citizenship, Workers' Rights – France 24
- World Leaders Arrive In France For UN Summit On Ocean Threats - rfi
- China's Car Sales Rise In May, But Price Wars Cloud Outlook - Reuters
- India Ready To Strike ‘Deep Into Pakistan’ If Provoked, New Delhi Warns Amid Shaky Ceasefire - Politico
- Wagner Gets Replaced In Mali By Africa Corp, Another Russian Military Group – France 24
- Chinese Satellites Capture Latest Position of North Korea's Damaged Warship - Newsweek
- Trump’s Foreign Policy Frustrations Are Piling Up – CNN
Policy and Politics
Senate Republicans Plan to Release Major Revisions to Trump’s Tax Bill
Senate Republicans intend to propose revised tax and health-care provisions to President Donald Trump’s $3 trillion signature economic package this week, shrugging off condemnations of the legislation by Elon Musk as they rush to enact it before July 4. The Senate Finance Committee is widely expected to propose extending three business tax breaks that expire after 2029 in the House version to order to make them permanent. They are the research and development deduction, the ability to use depreciation and amortization as the basis for interest expensing and 100% bonus depreciation of certain property, including most machinery and factories. Manufacturers and banks are particularly eager to see all of them extended.
The Senate Finance Committee’s plan to extract savings from the Medicaid and — perhaps — Medicare health insurance programs could depart in key respects from the version of the giant bill that narrowly passed the US House in May. The release of the panel’s draft will likely touch off a new round of wrangling between fiscal conservatives and moderates. A crucial decision for Majority Leader John Thune, Committee Chairman Mike Crapo and other panel members will be how to handle the $40,000 limit on state and local tax deductions that was crucial to passage of the bill in the House. Senate Republicans want to scale back the $350 billion cost of increasing the cap from $10,000 to $40,000.
The Bills To Watch In The Final Week Of Session
The state Senate is set to finish Thursday, though the final voting is expected to bleed into Friday. The Assembly tacked on a few extra days to complete its work on Tuesday of next week. So it’s crunch time in both chambers before legislators head back to their districts for the year. The ticking clock means that time is running out for a number of high-profile and consequential measures to get approved this year. Advocates and lawmakers alike are racing to get as many of their priorities done this year, lest they wait another six months to try again (barring a special session later to address federal spending cuts). Here are some of the top bills to watch out for as lawmakers approach the session’s finish line.
- Medical Aid in Dying Act - Following the Assembly’s passage in April, the state Senate is set to approve legislation that would permit terminally ill patients to end their lives with assistance from a doctor, in a historic first
- Prison and parole reforms - Since the death of Robert Brooks at Marcy Correctional Facility at the hands of corrections officers in December, legislators and prisoner advocates have pushed for a series of reforms to increase accountability in state prisons.
- Packaging Reduction and Recycling Infrastructure Act -Environmental advocates are pushing hard for legislation aimed at reducing plastic packaging in the state by 30% over the next 12 years. It has already passed in the state Senate, as it has in the past, and advocates are optimistic that it will make it through the Assembly for the first time before lawmakers go home for the year.
- NY HEAT Act - Another top priority for environmental advocates, this measure aims to make utilities cheaper for low- and middle-income New Yorkers and disincentivize new gas hookups, as a means to help the state phase out fossil fuels and hit its climate goals.
- AI regulations - As Republicans in Congress attempt to prevent states from passing their own artificial intelligence regulations, lawmakers in Albany are nonetheless plugging along with legislation that would put restrictions and safeguards on the emerging technology.
House Takes Up DOGE Cuts Amid Trump-Musk Feud Fallout
House Republicans this week will vote on codifying billions of dollars of cuts made by the Department of Government Efficiency (DOGE), days after the profound — and very public — breakup between President Trump and Elon Musk, the force behind the cost-cutting agency. The $9.4 billion package claws back funding for the U.S. Agency for International Development (USAID) and the Corporation for Public Broadcasting, which supports NPR and PBS, among other areas targeted by DOGE.
The House Rules Committee is scheduled to meet on the measure on Tuesday at 2 p.m., tee-ing up the legislation for the week. “We’re gonna codify the DOGE cuts, you’ll see that in a series of actions here in the House,” Speaker Mike Johnson (R-La.) told reporters on Friday. “We got the first rescissions package this week, we’ll be passing it early next week, that DOGE cuts, there’ll be more of that to come.”
Political Headlines
- Marines Are Deploying to Los Angeles Area– Reuters
- Political Divide Widens As Trump Deploys National Guard To Los Angeles – Reuters
- California to Sue Trump Over National Guard Deployment in Los Angeles - Politico
- Social Security Chief Says Musk’s DOGE Figures Heavily in Agency’s Plans - WSJ
- Major Cases Involving Trump Before The US Supreme Court - Reuters
- Brandon Straka and Scott Presler -The Other Nasty Breakup Inside MAGA - WSJ
- US States Seek To Ban Chinese Citizens From Buying Land, Property - Newsweek
- Why Elon Musk’s Attack On Trump Might Be A Genius Move - Forbes
- GOP Senators’ Competing Demands Risk Pulling Trump Megabill Apart - WSJ
- Stage Is Set And Tanks Are Arriving To Celebrate Army's 250th Anniversary On Trump's Birthday – USA Today
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
Employee Mental Health Is Deeply Intertwined With Job Conditions, Survey Finds
Work can either fuel employee well-being or become a source of strain for employees already stressed out by economic volatility and political tension, according to a May 12 survey of employee mental health by Inmar Intelligence. Of the 1,000 U.S. full- and part-time employees who responded to the May 12 survey, 34% said their job positively impacts their mental health, while 33% reported a negative impact, Inmar found.
Job security (45%), reasonable workload (40%) and supportive management (40%) are the top factors employees cited as having a positive impact on their mental health at work, the survey found. Flexible work options (39%) and a healthy work culture (38%) followed closely behind. Conversely, employees cited poor communication (32%), excessive or unclear workload (30%) and a toxic or stressful culture (29%) as key negative factors. They were followed by lack of recognition (25%) and unsupportive management (24%). These findings “reinforce that mental health and job conditions are deeply intertwined,” Inmar pointed out in the post.
Industry News
Trade War Updates
- Trump Says China ‘Not Easy’ as Trade Talks to Continue Tuesday - Bloomberg
- EU’s Zero-For-Zero Tariff Bid Stalls Amid US Pushback – Politico
- China's Factory-Gate Deflation Worst In 22 Months As Economic Headwinds Mount - Reuters
- Visa Economist: US Consumers Are Cautious But Still Spending – Yahoo Finance
- The Canned-Food Aisle Is Getting Squeezed by Rising Steel Tariffs - WSJ
- Tariff Impacts Begin As Vehicle Shipping Volume Drops By More Than 70% - Automotive News
- Conagra Seeking To Mitigate Steel Tariffs’ Impact On Cans – Food Dive
- Aluminium Producers In The US Win From Trump's Tariffs - Reuters
- Trump’s Tariffs: Tracking The Status Of International Trade Actions –Supply Chain Dive
Boeing Resumes 737 MAX Deliveries to China
Boeing has resumed transporting new aircraft to China, according to published reports, with a 737 MAX jet leaving the U.S. on June 6 for delivery to Xiamen Airlines. The manufacturer has not corroborated the development, first reported by Reuters. The news confirms a forecast made by Boeing CEO Kelly Ortberg in late May, in remarks to an investor conference, that deliveries to China would begin again soon. The Chinese market is critical to Boeing’s revenue forecast, as airlines there represent an estimated 10% of the company’s order backlog.
In April, several 737s were returned from the Boeing 737 Completion and Delivery Center in Zhoushan to the U.S. when Chinese carriers declined to take delivery of their orders, in response to the escalating tariff dispute between the U.S. and China. That impasse is now abating since the two countries agreed in May to pause the implementation of tariffs for 90 days and to engage in new trade negotiations. The backlog totals 5,643 commercial jets, with an estimated value of approximately $460 billion, including several dozen 737 MAX aircraft booked for Chinese carriers.
Read more at American Machinist
China Extends An Olive Branch To Western Auto Giants Over Rare Earth Shortage
China appears to have offered U.S. and European auto giants something of a reprieve after industry groups warned of increasing production threats over a rare earth shortage. China’s Ministry of Commerce on Saturday said it was willing to establish a so-called “green channel” for eligible export license applications to expedite the approval process to European Union firms. A Ministry of Commerce spokesperson said Wang expressed hope that the EU would take “reciprocal steps” and adopt measures to promote compliant trade of high-tech products with China.
The breakthrough comes after trade talks between Chinese Commerce Minister Wang Wentao and EU Trade Commissioner Maros Sefcovic met in Paris, France last week.Beijing also granted rare earth licenses to suppliers of U.S. auto giants General Motors, Ford and Jeep-maker Stellantis, Reuters reported on Friday, citing unnamed sources. The report said China’s Ministry of Commerce did not respond to a faxed request for comment.
Stellantis Scraps Plans For Illinois Battery Plant, Parts Hub
Stellantis still plans to reopen its shuttered assembly plant in Belvidere, Illinois, but it has canceled its plans to bring in a new electric vehicle battery facility and parts hub to the state, Matt Frantzen, president of UAW Local 1268, said in an email to Automotive Dive. The Belvidere factory, slated to open in 2027, will build a new mid-size truck, he said. But it could take about 18 months to get the plant fully operational, Frantzen added.
The battery plant project was included as part of a new labor agreement reached between the union and Stellantis in October 2023. Jodi Tinson, a spokesperson for Stellantis, confirmed the company’s plan to restart the Belvidere factory. She had no comment about the battery plant. Stellantis shut down the Belvidere Assembly in February 2023 as part of a series of cost-cutting moves. Frantzen said the company told the union “we’d have 1,500 jobs,” but noted Local 1268 represented about 1,800 people who could return. However, Frantzen said some former Belvidere workers have already informed him they don’t plan on returning. Stellantis has not revealed what type of truck Belvidere Assembly will build or whether it will be a traditional gas-powered vehicle, fully electric or hybrid.
GE Aerospace Expanding Hypersonic Testing in Ohio and New York
GE Aerospace reported it is making “significant investments” in its test infrastructure at three locations to speed results for its hypersonic propulsion systems – the engine technologies needed to power aircraft and weapons systems that travel at speeds of Mach 5 (3,836 mph) or greater. GE has not indicated the cost of the new investments. “This investment significantly accelerates GE Aerospace’s ability to meet future hypersonic propulsion needs,” stated Mark Rettig, vice president and general manager of Edison Works Advanced Programs at GE Aerospace.
Earlier this year, GE Aerospace reported it successfully advanced a hypersonic dual-mode ramjet from design concept to testing in less than a year, followed by testing of a liquid-fueled ramjet 10 months after concept definition. The projects include an updated test cell in Evendale, Ohio, to accommodate larger hypersonic propulsion systems than had been possible there, and to allow testing at higher Mach numbers and simulate more flight conditions. Separate projects will be implemented at Bohemia, N.Y., to update the test cell facilities there, which is a location acquired in 2022 via GE’s takeover of Innoveering, a hypersonic propulsion technologies business; and at the GE research center in Niskayuna, N.Y., to support evaluation of larger propulsion systems, and to evaluate and refine “next-generation hypersonic propulsion technologies.”
Read more at American Machinist
How Inflation And Tariffs Are Impacting Innovation At Hershey
As consumer tastes shift and buying habits change due to inflation and growing economic uncertainty, Hershey is placing a larger importance on innovation. The maker of Kisses, Reese’s and Dot’s, which posted $11.2 billion in net sales last year, is tightening its approach to product innovation and becoming more selective around which consumer trends receive the most attention and investment.
The confectionary giant is not only giving more attention to the products themselves, but also to the packaging the sweets and salty snacks are placed in and how they are displayed on store shelves. Food Dive sat down with Tiffany Menyhart, Hershey’s chief customer officer, at the Sweets & Snacks Expo in Indianapolis to talk about innovation, consumer trends and buying habits. Menyhart, a former Kraft Heinz and Mars Wrigley executive, joined Hershey in March. This interview has been edited for brevity and clarity.
Kimberly-Clark, Suzano Form $3.4B Tissue Joint Venture
Kleenex tissue maker Kimberly-Clark and pulp producer Suzano are forming a $3.4 billion global consumer and professional tissue joint venture in an effort to bolster their long-term growth strategies, the companies announced Thursday. Suzano has agreed to pay the tissue manufacturer $1.7 billion to acquire 51% of the new entity, which will be based in the Netherlands. The deal includes 9,000 employees and 22 manufacturing facilities across Europe, Asia, the Middle East, South and Central America, Africa and Oceania.
Kimberly-Clark will own the remaining 49% and retain its consumer and professional entities in the United States, as well as existing joint ventures in Mexico, South Korea and Bahrain, among other countries. The transaction is expected to close in mid-2026. The joint venture is expected to reduce Kimberly-Clark’s exposure to volatile input costs, improving the company’s ability to deliver expected and deliverable margins and profitability over time. Kimberly-Clark anticipates $300 million in additional costs from tariffs this year, Hsu said in his remarks during an April earnings call.
Read more at Manufacturing Dive
John Deere Plans $20B US Manufacturing Investment
John Deere recently put out a blog post outlining its commitment to U.S. manufacturing. The statement says John Deere will invest $20 billion into its U.S. footprint over the next decade, which includes major expansion projects in Iowa, Missouri, North Carolina and Tennessee. Today, the company has 60 manufacturing facilities in more than 16 U.S. states and employs over 30,000 American workers.
What is true is over the past 18 months, the company has been forced to lay off some employees, and it strategically slowed manufacturing at some production facilities in Iowa in response to depressed farmer demand for new tractors and combines. John Deere is not alone navigating a treacherous global farm economy. Machinery rivals AGCO and CNH also made the tough choice to layoff factory workers over the past 12 months. CNH even completely shutdown its overseas machinery imports during the first few days of the tariff policy rollout, although that pause was only temporary.
Waymo Halts Service In LA After Robotaxis Set Ablaze
Waymo has halted its robotaxi service in Los Angeles after multiple self-driving cars were set ablaze as protests over federal immigration raids unfolded in the city. A Waymo spokesperson confirmed the decision to remove its vehicles from downtown Los Angeles and pause services in that area was made in coordination with the Los Angeles Police Department.
Five Waymo vehicles that were lined up on the street in Los Angeles became entangled in the protests early Sunday evening, the Los Angeles Times reported. Windows were smashed, tires were slashed and messages against Immigration and Customs Enforcement (ICE) were spray painted on the vehicles, according to the news outlet, which added that three of the cars were set on fire. Waymo does not believe its vehicles were intentionally targeted, the company spokesperson said.
Modern Tech and Old-School Spycraft Are Redefining War
Deception, infiltration and spycraft have played a major role in warfare at least since the ancient Greeks gifted a wooden horse to the citizens of Troy. In more recent times, such operations rarely had a strategic effect, but the spectacular operations of Israeli intelligence against Hezbollah in Lebanon last fall and of Ukraine against Russia’s strategic bomber fleet last weekend have brought them back to the forefront of conflict in the 21st century.
Both showed how technological advances—such as drones, communications networks and smaller but more powerful batteries and explosives—can potentially alter the course of a war when they are coupled with superior tradecraft. Ultimately, success in this rapidly changing world depends on the ability to anticipate the new opportunities—something that big powers such as Russia and perhaps the U.S., can be slow to understand as the very nature of warfare evolves.