Member Briefing June 26,2024
US Consumer Confidence Declines on Weaker Outlook for Economy
US consumer confidence eased this month on a more muted outlook for business conditions, the job market and incomes. The Conference Board’s gauge of sentiment decreased to 100.4 from a downwardly revised 101.3 reading in May, data out Tuesday showed. June’s measure of expectations for the next six months fell nearly 2 points to 73, while present conditions increased from a downwardly revised May reading. Confidence has been subdued over the past few years as consumers contend with a higher cost of living, elevated borrowing costs and, more recently, a softening in the labor market.
- Only 12.5% of consumers expect business conditions to improve in the next six months, the smallest share since 2011.
- Concern about prices eased this month, though consumers still noted elevated prices for groceries. Inflation data for the month of May showed a broad pullback in price increases for US consumers.
- Consumers also pared buying plans for motor vehicles and major appliances, which are often financed. However, more respondents indicated they intend to take a vacation in the second half of the year, reflecting a pickup in domestic travel plans.
- Consumers’ view of the current labor market improved slightly. Some 38.1% of consumers said jobs were “plentiful,” up from 37% in May, while fewer said jobs were “hard to get.” The difference between these two — a metric closely followed by economists to gauge labor-market strength — rose for the first time since the start of the year.
State Labor Markets in Good Shape
State-level employment mirrored national developments in May, with pickups in both nonfarm payrolls and jobless rates across states. Payrolls moved higher in 41 states over the month. California and Texas led the nation with over 40K net headcounts added in each state. The next highest gains were in New York and Ohio, which added just over 20K jobs each. For Ohio, May marked the highest payroll print since October 2021. Nine states shed payrolls over the month. Minnesota posted the sharpest drop, losing over 8K jobs. As discussed in States in Focus, however, Minnesota's payroll dip was fairly concentrated and likely overstates its labor market weakness.
Unemployment rates edged higher in 16 states, were unchanged in 21 states and ticked down in 13 states. Although unemployment rate movements were fairly balanced, the number of states with higher jobless rates over the month reached its highest count since February (chart). That said, unemployment rates remain historically low on balance. California's continues to shoulder the highest jobless rate in the country, which dipped slightly to 5.2% in May. Despite rising unemployment rates over the month, there was no notable trend shift in joblessness across states.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Netanyahu: Israeli Forces Will Move to Lebanon Border as Rafah Winds Down - BBC
- Israel’s Army Must Start Drafting Ultra-Orthodox, High Court Rules - WSJ
- Israeli Airstrikes Kill at Least 24 in Gaza City, Health Officials Say – Reuters
- Iran Calls for New Nuclear Talks Amid Worsening Middle East Crisis - Newsweek
- Gaza’s Hunger Crisis Deepens in the South - WSJ
- Iran’s Presidential Election Friday Dominated by Khamenei Loyalists - Reuters
- 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
- International Criminal Court Issues Arrest Warrants for Russia's Shoigu and Gerasimov – Reuters
- Ukraine Gets Major Patriot Missile Boost From Spain - Newsweek
- Russia’s 3.3-Ton Glide Bombs Scatter Shrapnel Farther Than Half A Mile - Forbes
- Finland's Gasum to End Russian LNG Imports in Line With EU Sanctions - Reuters
- Russia Dealt Payments Blow by Top China Bank - Newsweek
- Russia Pins Dagestan Attack on Ukraine, Ignoring Religious Tensions - BBC
- Ukraine Starts EU Membership Talks in Midst of War - 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
- Von der Leyen, Costa, Kallas Approved for EU Top Jobs by Negotiators – Politico
- Part of Kenya’s Parliament is on Fire as Thousands of Protesters Enter. Several Bodies are Seen - AP
- China’s Chang’e-6 Moon Mission Returns to Earth With Historic Lunar Far Side Cargo - SCMP
- Mexico, US Officials Agree on Security Plan to Protect Avocado Inspectors – Reuters
- In Rare Rebuke, U.S. Ambassador Accuses China of Undermining Diplomacy - WSJ
- Justin Trudeau Gets a Wakeup Call With Stunning Special Election Loss – Politico
- Argentina's Growth Plummets 5.1% in First Quarter - Yahoo
- Wegovy Approved In China—But Novo Nordisk Promises Existing Patients Priority Amid Shortages - Forbes
- India's Congress Party Vows to Fight 'Fascist Rule' of Modi's BJP – Nikkei Asia
- King and Queen Welcome Japanese Emperor to UK - BBC
Policy and Politics
Obama Appointed Judges Strike Down Joe Biden's Student Loan Forgiveness
Two Barack Obama-appointed judges have partially blocked some of Joe Biden's student loan forgiveness plans. Federal judges in Kansas and Missouri on Monday halted parts of the Biden-Harris administration Saving on a Valuable Education (SAVE) plan that provides a faster path to student loan forgiveness and lower monthly repayments for borrowers. The program has faced two separate legal challenges in Republican-led states, which argue that the president overstepped his authority in implementing his debt relief plans by not acquiring input from Congress.
In Kansas, U.S. District Judge Daniel Crabtree ruled in a lawsuit filed by the state attorney general that the Department of Education (DoE) could not implement parts of the program designed to assist students with larger loans by lowering their monthly payments and reducing their repayment period from 25 years to 20 years. He permitted parts of the program that allow students who borrowed less than $12,000 to have their remaining loans forgiven after making repayments for 10 years instead of the usual 25 years. Separately, U.S. District Judge John Ross of Missouri ruled that the DoE could not forgive loan balances going forward but said the federal department could lower monthly payments. He said the DoE "lacks the requisite congressional authority to forgive loans under the SAVE plan."
NY Primary Results – Lattimer Unsets Bowman, Incumbents Barrett and Shrestha Easily Hold off Challengers
Incumbent Democrats were leading in two primary races for the state Assembly in the Hudson Valley on Tuesday. The Associated Press late Tuesday projected progressive incumbent Sarahana Shrestha defeated challenger Gabi Madden in the 103rd Assembly District. Shrestha was leading Gabi Madden by 2 to 1, while in the 106th Assembly District, 12-year incumbent Didi Barrett held a smaller lead over Claire Cousin, the first Black woman elected to the Columbia County Board of Supervisors. Cousin conceeded the race late Tuesday, trailing 57% to 43%.
George Latimer has unseated Rep. Jamaal Bowman (D-N.Y.) in the Democratic primary in New York’s 16th Congressional District, Decision Desk HQ projects, delivering a stinging blow to progressives in what has been the party’s most divisive primary of the cycle. Latimer, a Westchester County executive, defeated Bowman in a fierce contest that became a proxy battle between differing ideological factions of the Democratic Party, with the pivotal issue separating the candidates being their stances toward Israel amid the country’s ongoing war with Palestinian militant group Hamas.
Read more at NY State of Politics
Democrats Blast GOP for Blocking Corporate Tax Credits
Senate Democrats say Senate Republicans are blocking an expansion of the child tax credit and a package of corporate tax credits, even though business groups are clamoring for its passage, because they want to deny President Biden a legislative victory five months before Election Day.
“The business community still really wants that; we really want it. It’s all presidential politics — they don’t want to give Biden a win. a senior Senate Democrat said of the Senate Republican opposition to the House-passed Tax Relief for American Families and Workers Act of 2024. The package would restore research and development expensing for businesses, which lapsed in 2022. A spokesperson for Sen. Mike Crapo (Idaho), the top-ranking Republican on the Finance Committee, said her boss “fully supports extending the pro-growth business provisions” and “also supports expanding the child tax credit to provide additional tax relief to working families.” But she said Crapo “has policy concerns with the current bill, as do other Republican members, and he has been clear that he would like to find a compromise that a majority of Republican senators can support.”
Health and Wellness
A.I. Can Radically Lengthen Your Lifespan, Says Futurist Ray Kurzweil. Here’s How
We are beginning to use AI for discovery and design of both drugs and interventions, and by the end of the 2020s biological simulators will be sufficiently advanced to generate some key safety and efficacy data in hours rather than the years that clinical trials typically require. The transition from human trials to simulated in silico trials will be governed by two forces working in opposite directions. On the one hand there will be a legitimate concern over safety: we don’t want the simulations to miss relevant medical facts and erroneously declare a dangerous medication to be safe. On the other hand, simulated trials will be able to use vastly larger numbers of simulated patients and study a wide range of comorbidities and demographic factors—telling doctors in granular detail how a new treatment will likely affect many different kinds of patients.
In addition, getting lifesaving drugs to patients faster may save many lives. As a result of these technologies, the old linear models of progress in medicine and longevity will no longer be appropriate. Both our natural intuition and a backward-looking view of history suggest that the next twenty years of advances will be roughly like the last twenty, but this ignores the exponential nature of the process. Knowledge that radical life extension is close at hand is spreading, but most people—both doctors and patients—are still unaware of this grand transformation in our ability to reprogram our outdated biology.
Election 2024
- Just Over 100,000 Voted Early in New York 2024 Primary Elections – NY State of Politics
- 4 Races to Watch in New York 2024 Primaries for Congress – NY State of Politics
- Where Third-Party Candidates Could Spoil 2024 - Politico
- Laugh (or Cringe) at These History-Making Moments from Presidential Debates - AP
- 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
BlackSuit Ransomware Linked to Auto Dealers' Outages
Several major U.S. auto dealers have had to turn to pen and paper over the last week to close new car sales, manage auto repairs and conduct other business following a cyberattack. The BlackSuit ransomware gang is believed to be behind ongoing outages at CDK Global, a software provider for roughly 15,000 North America-based car dealerships. CDK has yet to acknowledge that the attack is a result of ransomware, but an incident like this could take weeks to recover from. Even after operations return to normal, CDK will have to investigate what data was stolen, how the attack happened and what impacts this has had on its customers.
CDK attempted to restore its systems on last week but was hit with a second cyberattack, causing them to shut down all systems again. The full impact of the CDK outages is still being pieced together. AutoNation, Group 1 Automotive, Penske Automotive Group, Sonic Automotive and Lithia Motors have each filed reports in the last few days with the Securities and Exchange Commission saying their services have been disrupted. A CDK spokesperson declined to comment Monday on the BlackSuit attribution.
The Covid Retirement Wave Could Be With Us for Good
But the labor force today looks different in one crucial point than it did before the pandemic: Workers have no interest in working into their 60s or 70s. In a March New York Fed survey, just 45.8% of respondents under age 62 said they would be likely to work past 62, down from 55.4% in March 2020, on the eve of the Covid-19 pandemic. Among respondents 45 or younger, the results were similar. Roughly 48.8% saw themselves working past 62, down from 56.5% in March 2020.
Many older workers retired early in the pandemic to protect themselves from Covid-19. But economists and Fed officials thought this wave of excess retirements would be temporary. The New York Fed survey suggests the pandemic may have, indeed, permanently changed how younger cohorts see retirement. This is a reversal from the aftermath of the 2007-09 recession. The labor-force participation of those between 25 and 54 fell by almost 3 percentage points between 2008 and 2015. But participation among older workers increased slightly. Today, participation among younger workers is at the highest level since 2002, while for those over 55 it has matched the lowest point since 2007.
Boeing Offers to Buy Spirit Aero for $35/shr
Boeing has offered to acquire Spirit AeroSystems in a deal funded mostly by stock that values its 737 fuselage supplier at about $35 per share, Bloomberg News reported on Monday, citing people familiar with the matter. That offer is worth about $4.08 billion, as per Reuters calculations based on Spirit's outstanding shares as of May 7. The per-share offer represents a premium of nearly 6% over Spirit's stock closing price on Monday and a 22.4% upside to its closing price on Feb. 29, the day before Boeing's takeover talks became public.
Boeing initiated talks earlier this year to buy back the Wichita, Kansas-based supplier it spun off in 2005, seeking to stabilize a key part of the supply chain for its strongest-selling jet following a mid-air blowout on a new 737 MAX in January.
Apple’s App Store Policies Charged Under New E.U. Competition Law
European Union regulators on Monday said Apple is in breach of sweeping new tech rules because it does not allow customers of its App Store to be steered to alternatives. The European Commission, the EU’s executive arm, also said it had opened a new probe into Apple over new contractual terms with developers.
The EU opened an investigation into Apple, Alphabet and Meta in March under a landmark new law known as the Digital Markets Act, or DMA, which aims to reel in the power of Big Tech firms. So-called anti-steering rules were one of the big areas of focus of the probe. Under the DMA, tech firms are not allowed to block businesses from telling their users about cheaper options for their products or about subscriptions outside of an app store. On Monday, regulators said in their preliminary findings that Apple was in breach of the DMA because its App Store rules “prevent app developers from freely steering consumers to alternative channels for offers and content.”
EU Charges Microsoft With ‘Abusive’ Bundling of Teams and Office, Breaching Antitrust Rules
The European Union on Tuesday accused Microsoft of breaching antitrust rules with the “abusive” bundling of its Teams and Office products. “The European Commission has informed Microsoft of its preliminary view that Microsoft has breached EU antitrust rules by tying its communication and collaboration product Teams to its popular productivity applications included in its suites for businesses Office 365 and Microsoft 365,” the European Commission — the EU’s executive arm — said in a Statement of Objections, which is sent to inform companies of concerns raised against them.
If the Commission decides that an infringement has taken place once companies have responded, it can ban the conduct and fine the charged company up to 10% of its global revenue. Microsoft took the pre-emptive step to unbundle Teams from Microsoft 365 in an effort to quash antitrust concerns by the EU. However, the Commission said in its Tuesday statement that the changes were “insufficient to address its concerns and that more changes to Microsoft’s conduct are necessary to restore competition.”
This Industrial Spinoff Is Pulling Lithium From Brine To Meet Growing Battery Demand
Lithium is hugely important to electrifying the world’s vehicles, with just one car’s battery requiring more than 17 pounds of it. But extracting and processing the critical mineral is both costly and tough on the environment. To meet that demand, Gradiant, which cleans up wastewater on an industrial scale, is spinning out a new business, called alkaLi. Instead of mining from rock, the standalone venture plans to extract lithium from brine – naturally occurring extremely salty water found in a variety of regions – and process it for use in batteries using a technique that it developed. It expects to raise $15 to $20 million, including from Gradiant itself, which will maintain a stake in the business, and to ultimately hire a new CEO to run it, Govindan said.
The new business in lithium is an offshoot of Gradiant’s core operations in industrial wastewater treatment, where it works with major customers that include semiconductor giants TSMC and Micron, pharmaceutical makers Pfizer and GSK, Coca-Cola and mining firm Rio Tinto. The firm, which has raised more than $400 million, including from billionaire John Arnold’s Centaurus Capital, reached a $1 billion valuation last year, the rare water-technology startup to hit that mark. Gradiant’s revenue reached $150 million last year, and it’s expected to hit $350 million this year. The lithium business currently has four commercial customers and represents “less than 10%” of Gradiant’s revenue, Govindan said.
Trucking Company U.S. Logistics Solutions Closes Suddenly, Files for Chapter 7 Bankruptcy
Competition in the American trucking market looks like it’s turning into a game of attrition. Niche operator US Logistics Solutions is the latest carrier to succumb to a business light on goods volume and weak on financial returns. The Texas-based company filed for chapter 7 liquidation and quickly shut down, eliminating about 2,000 jobs and more than 500 trucks from the freight market. The closure follows the shutdown this spring of truckload carrier Arnold Transportation, and marks one of the biggest failures in trucking since Yellow collapsed last year.
US Logistics operated in a narrow business called pool distribution, running trucks for retailers between distribution centers, its own network of warehouses and stores. That left the former unit of expedited trucker Forward Air exposed to a lackluster consumer market that’s taken a growing toll on retailers and merchants’ service providers.
Can Northeast Beat Heat Again?
The July–September seasonal temperature outlook from NOAA shows above average probabilities of above average temperatures across the U.S., including in the I-95 corridor which fared better than most last summer. The summer of 2023 was the hottest on record, according to data dating back to 1880. Forecasts suggest this summer will be warmer. Despite concerns of elevated risk of energy shortfalls by NERC (North American Electric Reliability Corporation), the U.S. power grid largely withstood the test of 2023.
While global average temperatures climbed higher in 2023, some U.S. regions fared better than others. The East Coast recorded a relatively normal summer. But NOAA forecasts that 2024 will be drastically different, with the I-95 corridor at the center of heat waves and with only a few states in the upper Midwest experiencing average summer temperatures. The Energy Information Administration expects an increase in cooling demand for this summer with 7% more forecast cooling degree days in 2Q24 and 3Q24 than the same quarters in 2023. Battery storage continues to demonstrate its value in these conditions. Storage creates a smarter, more flexible, and more reliable grid, helps transition away from fossil fuels, and mitigates the impact of rising temperatures on the electric grid.
Even Your Plumber Wants to Meet on Zoom Now
The cost of home-repair service visits has risen in recent years, just as more Americans have grown accustomed to video calls. Enter virtual plumbers and electricians: a small but growing crop of tradespeople offering their services to those interested in DIY fixes at cheaper rates. It’s a new take on an old craft—one with perks, including less physical strain—as well as some of the same Zoom hiccups familiar to any white-collar worker.
A technician for home-maintenance company Frontdoor, Allyson Saling enjoys the work-life balance afforded by the remote role, especially living in a rural area with a young son and five cats and dogs. She previously endured a 90-minute commute to her electrician job at the Dallas-Fort Worth airport. Customers occasionally dial in with complex tasks: Saling once helped someone install a service panel for a Jacuzzi over nine calls, including a run to Lowe’s, where she helped him pick out parts. Frontdoor, which started offering virtual visits last spring and charges a $25 flat annual fee, says its employees work to ensure safety, including by making sure power is off during jobs.