Member Briefing June 12, 2023
It’s Going to Be a Big Week for Macroeconomic News
A huge week is setting up on the macroeconomic front, with the Federal Reserve and the European Central Bank both scheduled to decide on interest rates and update on monetary policy amid persistent inflation. The consensus view is that the ECB will lift interest rates by a quarter point and the Federal Reserve will stand pat. In recent public statements, Fed officials have argued that monetary policy is currently restrictive, but that core inflation remains too high. As such, the Fed still has a bias towards increasing rates further if needed, but at least for the June meeting, may adopt more of a patient position in monitoring the lagged effects of past rate moves.
On the morning the Fed starts their deliberations, we’ll receive CPI inflation data for the month of May, PPI data will follow the next day. Expectations are that headline inflation will continue to slow, but core inflation may remain well above the Fed’s target. At the meeting the Fed will provide a Summary of Economic Projections (SEP) this includes estimates from policy makers on where they see rates at the end of 2023. Though the Fed emphasizes that the SEP don’t constitute an explicit forecast, it will be interesting to note how projections have evolved compared to March.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- NATO Condemns Russia's Withdrawal From Conventional Armed Forces Treaty – US News
- The Ukrainian Army Lost Bradley Fighting Vehicles And A Leopard 2 Tank Trying And Failing To Breach Russian Defenses In Southern Ukraine - Forbes
- Ukraine has Destroyed 2 Prized Russian Thermobaric Rocket Launchers. – Business Insider
- Ukraine’s Counteroffensive Underway. Here’s What to Expect - CNN
- Risks Rise for Putin as Ukraine's Counteroffensive Begins – Washington Post
- Russia's Central Bank Sounds Alarms on the Economy as the Falling Ruble and Record Labor Shortage add Inflationary Pressures – Business Insider
- Kyiv Says it Has Proof Russia Blew up Kakhovka Dam - CNBC
- Ukraine Says Russia Blew up Dam to Prevent Offensive in South – Reuters
- Ukraine Counts ‘Catastrophic’ Environmental Cost After Dam Blast - NBC
- 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
Labor Force Participation Rises, But There Are Still Not Enough Workers
The labor force participation rate for those aged 25-54 was 83.4% in May, the highest since January 2007. While there continues to be a debate about where the workers are, this suggests activity among prime-aged workers has bounced back. Groups that have seen disproportionate declines in employment relative to pre-pandemic trends include the 55+ population and young men (aged 20-34) with less education. The biggest decline is among those ages 55+, who had a participation rate of 38.4% in April. This is down from 40.3% in February 2020. Foreign-born employment jumped to 30,259,000 in May, the highest on record and roughly equivalent to its pre-pandemic growth trend.
The headline labor force participation rate remained at 62.6% in May, the same pace as in April and remaining the best rate in three years. The participation rate remained 0.8% below pre-pandemic levels but has trended higher in recent months. The make-up of the US labor force has changed in the post-pandemic years, but despite the increases in the labor force participation rate and foreign-born employment, there aren’t enough people for the open jobs in the economy.
Forbes 2000 Largest Global Companies List Turns 20
The 20th anniversary edition of the Global 2000 ranking the world’s largest companies shows just how much has changed since the early years of the 21st century. The top three slots on the list in 2003 belonged to Citigroup, General Electric and American International Group. New York money center bank Citigroup is still ranked in the top 25, but once dominant AIG and GE have fallen far in the rankings.
The Global 2000 ranks the largest companies in the world using four metrics: sales, profits, assets and market value. As a group, the companies on the 2023 list account for $50.8 trillion in sales, $4.4 trillion in profits, $231 trillion in assets and $74 trillion in market value. Cumulative profits, assets and market value are all down slightly from last year, though this is the first time total revenue has surpassed $50 trillion. There are 58 countries represented by the publicly traded companies on the list. The U.S. leads the way with 611 companies on the ranking, and China comes in second with 346 Global 2000 companies.
COVID Update - Metformin Reduces the Risk of Developing Long Term Symptoms by 40%, Study Finds
Metformin—a cheap, safe, and widely available diabetes drug—could reduce the incidence of long covid if given during the acute phase of covid-19, a new study indicates.1A two week course of metformin given within three days of testing positive for SARS-CoV-2 led to 40% fewer long covid diagnoses over the following 10 months compared with people who had taken placebo, according to a randomised controlled trial.
The authors of the study, published in Lancet Infectious Diseases, caution that the trial did not look at whether metformin would be effective as a treatment for those who already have long covid. The 1126 people included in the trial had tested positive for SARS-CoV-2 in the previous three days but had no known previous covid infection. They were not admitted to hospital for covid-19 but were at higher risk of developing severe covid-19 as they were overweight or obese. The median age of participants was 45 years; 44% were male and 56% were female.
NYS COVID Update
The Governor updated COVID data for the week ending June 2.
- Weekly: 28
- Total Reported to CDC: 79,698
- Average Daily Patients in Hospital statewide: 514
- Average Daily Patients in ICU Statewide: 54
7 Day Average Cases per 100K population
- 2.0 positive cases per 100,00 population, Statewide
- 2.4 positive cases per 100,00 population, Mid-Hudson
Challenge to New York Congressional District Maps Snakes its Way Through Courts
A mid-level state appellate court heard arguments last week in a court case that may lead to yet another iteration of congressional districts in time for the 2024 election. Lines drawn by legislative Democrats in 2022 would have made their party the favorites in 22 of 26 congressional races. The lines were challenged by a coalition of Republican groups who said they were unconstitutionally gerrymandered. The state Court of Appeals ultimately decided in their favor, overturning lines drawn by the legislature.
The court placed the task of drawing the new lines in the hands of a special master who created the congressional districts that are in place today. In November, Democrats were only able to win 15 of 26 seats in the state, far fewer than they had hoped. Since then, party leaders in Washington and Albany have been looking for a way to reverse their fortunes and the latest court case is a part of that effort. Democrats argue that the decision made by the court in 2022 should only impact that year’s races, and not races until the next redistricting is scheduled in 2032. They want the decision on more permanent lines to be returned to the Independent Redistricting Commission as mandated by the state constitution.
Here We Go Again - Vessel Backlog Grows at West Coast Ports
The number of vessels due to dock at the Port of Los Angeles and Long Beach is increasing as labor slowdowns at West Coast port terminals have impacted supply chain operations, from trucks to rails and ocean carriers. On Wednesday, six vessels were delayed at the Port of Los Angeles, while two vessels at the Port of Long Beach were at anchor on arrival — unable to interface with the port operations, according to a vessel update announced by the Marine Exchange of Southern California Vessel Traffic Service, Los Angeles and Long Beach.
Data from MarineTraffic shows that vessel problems are shifting from isolated to more pervasive. Over the past 2½ months, average wait times at anchorage in LA were between a half-day to 1½ days, with service time averaging of two to five days. The Department of Transportation and Biden Administration are said to be closely watching the developments at the West Coast ports as trade groups from retail to manufacturing warn of economic damage and urge the Biden administration to step in.
Rockland Community College Names New President
Dr. Lester Edgardo Sandres Rápalo, Ed.D., MBA, MA, a Bronx Community College administrator, has been tapped to become Rockland Community College’s new president. The appointee is the eighth president in the SUNY school’s 64-year history. He succeeds Michael Baston, who stepped down in 2022. RCC’s Board of Trustees approved Rápalo’s appointment March 13, and SUNY did the same June 6. He takes office on July 1. Rápalo last served as provost and vice president for academic affairs at Bronx Community College, City University of New York (CUNY).
Dr. Rápalo has over 25 years of experience bringing together multiple stakeholders to provide and make accessible quality education to all members of the community. As a college administrator, Dr. Rápalo has experience in academic affairs, student affairs, enrollment management, strategic and fiscal planning, fundraising, business partnerships and coalition building, study abroad, on-line learning and assessment, and faculty and student conflict resolution. In addition, Dr. Rápalo has demonstrated a strong commitment to celebrating diversity and fostering an inclusive environment conducive to faculty, student, and staff success.
U.S. Struggles to Turn Steel Imports ‘Green’ With Tariffs
As a candidate, President Biden promised U.S. steelworkers he would levy tariffs on steel imported from countries that fail to meet climate obligations. That is proving to be easier said than done. Biden’s plan calls for imposing tariffs on steel and aluminum imports based on how much greenhouse gases are emitted in production. That mechanism, dubbed the Global Arrangement on Sustainable Steel and Aluminum, would initially apply to the European Union countries before expanding to other allies later.
The new pact, if successful, could alter the global trade for industrial materials, shifting advantages across borders. Products made from recycled metals using solar power in the U.S. and Germany could gain an edge over those made at coal-fired blast furnaces in China and Ukraine, triggering trade disputes. So far, however, the U.S. and EU can’t agree on how to design the new system. EU officials insist it should be based on the bloc’s own newly approved plan to impose tariffs on imported materials based on the price of carbon paid by domestic producers. The levy aims to protect European manufacturers facing high costs of climate measures against cheap imports.
Report: Quiet Quitting Trend is Far from Over
“Building the Winning Team: Insight for Recruiting and Retaining Top Talent” is a new employee health and wellbeing report released by the UK-based tech-driven insurance company YuLife and YouGov, an international online research data and analytics technology group. It finds that 55% of workers in the United States and the United Kingdom either are looking for a new job or recently started one. What’s more, 35% are likely to make a change in the next year.
In other findings almost half (49%) of working adults believe that if they were planning on leaving their current role, it is unlikely their current employer could persuade them to stay without offering a pay rise. When asked to select all factors that would lead respondents to consider leaving their job, 54% said poor pay, 44% said poor management, and 40% said low job satisfaction. The report is based on the results of two surveys conducted in the U.S. and the U.K. of nearly 5,000 adults in April 2023.
Robotic Picking Market Worth $6.8 Billion by 2030
The market for robotic picking is in the early stages of growth but presents huge potential, according to new research from Interact Analysis. The market was worth $236 million in 2022, but by 2030 this will increase to $6.8 billion. The report also noted that rising labor costs and supply chain constraints are likely to be key drivers for the market, as companies turn to automation to relieve operational pressures. The growth of e-commerce and warehouse automation will also impact the market for robotic picking technology.
There are a number of factors that are influencing the adoption speed of robotic picking technology, one of which is shift patterns. Those companies with 2-shift and 3-shift operations have a tendency towards faster adoption rates than those with lower shift patterns as they can significantly reduce labor costs by installing the technology. The growth of e-commerce is having a huge impact on the market due to the 24/7 nature of its operations, with multiple shifts. Picking robots can work longer hours and achieve a greater number of picks than manual workers at a lower overall cost.
UAW Gears Up for Fight Over Battery Worker Pay
The UAW is preparing for a major fight with Detroit’s legacy carmakers over the future of workers at their electric-vehicle battery plants.The dispute could be lengthy and complex, since the 18,000 or so workers those carmakers — General Motors, Ford Motor Co. and Stellantis — plan to hire in the U.S. will work for a patchwork of joint ventures not covered by existing labor contracts. The new corporate structures also mean the UAW might have to craft new deals for each plant.
The outcome of the negotiations, due to kick off in July and accelerate in the fall, could have far-reaching consequences — not just for auto workers sweating the move to electrification. As producers of everything from EV batteries to semiconductors, along with miners and processors of lithium, try to bring manufacturing back to the U.S., unions will fight to represent a new generation of workers doing jobs that moved abroad decades ago.
Boeing Warns of New 787 Delivery Delays
Boeing Commercial Airplanes is dealing with a new issue causing delays in deliveries of its 787 Dreamliner aircraft, unrelated to problems that caused similar delays in 2022 and earlier this year. “We are inspecting 787s in our inventory for a nonconforming condition related to a fitting on the horizontal stabilizer,” Boeing said in a statement. “Airplanes found to have a nonconforming condition will be reworked prior to ticket and delivery.”
The issue is not expected to slow 787 production, which Boeing is increasing from three to four aircraft per month in order to fill high demand for the twin-engine, wide-body jets. The repair involves replacing some improperly sized “shimming” on some 787s at the point where the stabilizer structure meets the fuselage. The time required to inspect 90 aircraft assembled and in inventory awaiting delivery, and to implement repairs to the affected aircraft, could add two weeks to the delivery schedule, according to Boeing.
U.S. Struggle to Restock Munitions Not Lost on China
The US could be vulnerable in a future conflict with China or other near-peer adversary, with the US quickly exhausting munitions. Critics argue that the current administration has been slow in responding to the need for a swift build-up of deterrents, specifically new munitions stockpiles, to ensure future conflicts can be avoided. The problem has come into sharp relief only in the last few years as Russia invaded Ukraine, leading to a prolonged war that has drained U.S. munitions stockpiles.
A swift response may not be possible, in large part because of how shrunken the U.S. manufacturing base has become since the Cold War. All of a sudden, Washington is reckoning with the fact that so many parts and pieces of munitions, planes, and ships it needs are being manufactured overseas, including in China. Among the deficiencies: components of solid rocket motors, shell casings, machine tools, fuses and precursor elements to propellants and explosives, many of which are made in China and India.
OSHA Uses General Duty Clause to Cite Amazon for Medical Mismanagement
The General Duty Clause (GDC) was included in the agency’s enabling legislation, the Occupational Safety and Health Act of 1970 (OSH Act), the GDC provision imposes on employers the general duty of maintaining a safe and healthy workplace for their employees in the absence of and beyond specific regulations aimed at addressing injuries and illnesses. It specifically states, “Each employer shall furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”
The agency has recently issued charges and fines under the GDC umbrella to employers who it determined have engaged in what OSHA holds to have been the medical mismanagement of their workers’ injuries. These medical mismanagement charges have been leveled against employers who in particular are facing union organizing campaigns where safety has been raised as an issue, most notably the unionizing efforts directed at Amazon’s distribution centers.
GM to Partner with Tesla on Chargers
General Motors Corp. is partnering with Tesla Inc. and will begin using Tesla's North American Charging Standard ports in its electric vehicles by 2025. The collaboration will allow GM drivers to access 12,000 Tesla superchargers in 2024 with the use of an adapter. After 2025, GM will begin making an adapter that will allow its NACS vehicles to charge on CCS ports. The announcement comes just two weeks after Ford’s decision to also partner with Tesla on a similar timetable, with access beginning in Spring 2024.
Tesla’s charging network will also be integrated into GM’s vehicles and apps, allowing drivers to locate and pay for them without extra work. GM currently has 134,000 chargers on its Ultium Charge 360 Network, and plans to add 5,000 more DC fast chargers through partnerships with Pilot Company and EVgo. Tesla has approximately 45,000 superchargers worldwide at nearly 5,000 Supercharger stations. The GM and Ford deals represent it making good on its commitment made in February to opening up 7,500 of its private charging stations to non-Tesla drivers by the end of 2024.