Member Briefing March 1, 2022
Invasion of Ukraine Headlines
- Huge Russian Column Bears Down on Kyiv
- Turkey to Limit Russian Warships from Mediterranean to Black Sea
- The Kremlin’s Propaganda Machine is Running at Full Throttle – The Economist
- Talks Yield No Results, But Will Continue – CBS News
- UN General Assembly Meets on the Russian Invasion of Ukraine, Zelensky Addresses – CNN
- Refugee Crisis Grows from Russia-Ukraine War – The Hill
- Europe and Canada Close Skies to Russian Planes – Reuters
- Zelensky Signs EU Membership Application – NPR
- Kosovo Asks for Permanent US Military Base – The Hill
- FedEx, UPS Halt Inbound Shipments to Russia and Ukraine – The Hill
- CEOs Speak Out Against Russia Invasion of Ukraine – CNN
U.S. Goods Trade Deficit Hits Record High, Will Weigh on Q1 GDP Growth
he U.S. trade deficit in goods widened sharply to a record high in January amid an increase in imports as businesses continued to replenish depleted inventories. Trade has been a drag on gross domestic product for six straight quarters.
The goods trade deficit jumped 7.1% to an all-time high of $107.6 billion last month. Imports of goods increased 1.7%, led by food and motor vehicles. There were also large increases in imports of industrial supplies, capital and consumer goods. Imports of other goods, however, tumbled 15.3%. Exports dropped 1.8%, weighed down by consumer goods, motor vehicles, food and other goods. But exports of capital goods and industrial supplies increased.
Supreme Court Takes up EPA’s Power to Limit Greenhouse Gas Emissions
The Supreme Court on Monday will consider how much power the Environmental Protection Agency has to limit greenhouse gas emissions from existing power plants, one of the most important cases of a term already loaded with blockbuster issues.
Energy-producing states led by West Virginia are urging the court to rule that the EPA does not have broad authority to shift the nation’s energy production away from coal-burning power plants toward cleaner sources, including solar and wind power. That kind of public policy can be set only by Congress, not by a federal agency, they argue.
At stake is the extent of the government’s authority over “the single largest industrial source of climate pollution in our country and one of the largest sources of carbon dioxide pollution in the world,” said Vickie Patton, general counsel of the Environmental Defense Fund.
Biden Delivers State of the Union Address Tonight
President Biden’s first State of the Union address Tuesday is poised to be a delicate balancing act between relaying his legislative priorities before a closely-divided Congress and courting weary voters ahead of the midterms who are feeling the pain of inflation and continued pandemic fatigue. The address also comes against the backdrop of freshly issued U.S. sanctions that aim to punish Russia in response to aggression by the Kremlin toward Ukraine.
The speech comes as inflation has left Americans facing rising prices on food, gas, and goods. The consumer price index rose 7.5 percent annually by the end of January, the fastest rise since 1982. Biden also goes into the address with approval ratings hovering in the 30-percent range for the last few months. Just 35 percent approved of Biden’s job as president as of a Feb. 16 Quinnipiac University poll.
US COVID – Cases Reach Pre-Omicron Levels
The U.S. tally of daily cases of COVID-19 has returned to levels seen before the highly infectious omicron strain was discovered in November, helping to lower hospitalizations, the number of patients in intensive-care units and the daily death toll. The U.S. is now averaging about 65,858 cases of COVID a day, down 62% from two weeks ago, according to a New York Times tracker, as the surge of cases caused by omicron continues to decline from its January peak.
The U.S. is averaging 52,909 hospitalizations a day, down 43% from two weeks ago. And deaths are at last starting to fall, down 24% to an average of 1,867 a day. The number of Americans in ICUs is down 42% to 10,033 a day.
Research Suggest COVID Origin om Wuhan Wet Market
Scientists have released three studies that reveal intriguing new clues about how the COVID-19 pandemic started. Two of the reports trace the outbreak back to a massive market that sold live animals, among other goods, in Wuhan, China, and a third suggests that the coronavirus SARS-CoV-2 spilled over from animals — possibly those sold at the market — into humans at least twice in November or December 20193.
Posted on 25 and 26 February, all three are preprints, and so have not been published in a peer-reviewed journal.
Expect a New Wave of Supply Chain Headaches with Ukraine Crisis, Bevy of Other Issues
As the world is anxious to recover its economy, a new wave of global supply chain disruptions is causing product shortages and high prices. Geopolitical conflicts and the lingering pandemic are creating different supply chain disruptions, ranging from the interrupted supply of basic materials from Ukraine to factory and port closures in China. At the same time, congested port operations and labor contract negotiations in the United States are likely to exacerbate these disruptions.
Even before the Russian invasion of Ukraine in late February, the International Monetary Fund (IMF) downgraded its 2022 global growth forecast to 4.4% amid Omicron surge in January. Current and future shortages of basic materials can disrupt the production of many products around the world, resulting in shortages and high prices.
Impacts of Climate Change Now Severe and Widespread, U.N. Panel Says
Storms, heat waves, droughts and other extreme weather events are occurring more frequently and with greater severity than experts had predicted several years ago and are now causing serious health and economic impacts the world over, a panel of scientists convened by the United Nations said Monday in a new report. Climate experts called the report the direst assessment of the impacts of climate change ever offered by the U.N. Intergovernmental Panel on Climate Change, which has been issuing climate assessments for more than three decades.
“The new contribution of this report shows how much faster these things are happening than we originally thought,” said Sherilee Harper, a University of Alberta climate scientist and a lead author of the report.
Chicago PMI fell to 56.3 in February from 65.2 in January, well below the consensus, 62.3.
The Chicago PMI is so volatile that it’s not certain this drop is a response to events in Ukraine, especially as the invasion began only last Thursday. The press release doesn’t mention the war. The index tends broadly to track movements in orders for Boeing aircraft, with a lag of two-to-four months, but it has recently outperformed; this correction brings the numbers back into line.
The Chicago PMI and national ISM indexes tend to follow similar trends but their month-to-month movements are not closely correlated, as our chart shows. The February Chicago reading increases the risk of a downside surprise in tomorrow’s ISM report – the consensus forecast is 58.0 – but not by much. The manufacturing recovery has slowed since last spring’s peak, but the sector is still in decent shape, despite ongoing supply-chain problems. In that context, note that supplier delivery times fell sharply in February, and prices paid dipped, despite rising oil prices.
What to Expect in the 2022 Spring Housing Market
Entering into 2022, the consensus among much of the real estate industry was that the spring housing market—the industry’s peak season—would be a bit less frenzied this year. After all, it couldn’t get much worse than the 2021 spring housing market, when over 70% of home listings saw a bidding war. Unfortunately for would-be homebuyers, that conventional wisdom has shifted. Not only does the spring housing market look like it’ll be red-hot, there’s a chance this goes down as the hottest spring homebuying season ever. Already, bidding wars are picking up again.
“Spring buying has sprung, and it’s wild and it’s crazy out there. It is causing some frustration at this point in the real estate market,” Devyn Bachman, vice president of research at John Burns Real Estate Consulting, told Fortune. The housing market is coming off a year in which U.S. home prices soared an unsustainable 18.8%. So how can the market still be so hot? To explain what’s going on, Fortune built three charts showing where the housing market stands as we enter the spring season.
COVID’s Impact on Wage and Leave Rules
With all of the other federal, state and local regulations relating to the COVID-19 pandemic imposed on employers over the last two years, it’s important not to forget some of the older regulations that apply as well. This is particularly the case in regard to employee leave and wage laws that are enforced by the U.S. Department of Labor (DOL).
DOL has issued Fact Sheet #84 addressing the compensability of time spent undergoing COVID health screenings, testing and vaccinations under the Fair Labor Standards Act (FLSA). It stresses that employees must be paid for time spent going to, waiting for and receiving medical attention required by an employer or on the employer’s premises during normal working hours.
Young Workers Rake In Biggest Wage Gains in Tight Labor Market
The country’s youngest workers are securing the fastest wage increases of any age group, the only one whose gains have outpaced inflation. Their pay progress reflects employers’ strong demand for labor as the economy recovers from the pandemic’s effects, particularly for many service jobs, such as at restaurants and retail stores, that tend to employ younger workers.
Median hourly wages for workers age 16 to 24 were 10.6% higher in January than a year earlier, far exceeding the 4% overall gain for all workers, according to Atlanta Federal Reserve Bank data.
Roadblocks to India’s Economic Recovery
Last year India’s government said the country was on track to have the “fastest-growing economy in the world”. Such optimism may be premature. Growth rates of 20.1% and 8.4% in the first two quarters of the 2021-22 financial year were flattered by comparison periods at the start of the pandemic. The release today of GDP data for the quarter ending in December 2021 is likely to show growth slowing to around 6% compared with the same period a year earlier, when covid-19 was less rampant.
Growth could slow even further in the quarter that is now under way. Omicron-related restrictions introduced in January hit economic activity. The war in Ukraine could be an even bigger dampener. As a big importer of oil India is sensitive to its price, which has surged. According to one estimate, a 10% increase in the crude-oil price could cut GDP growth rates by 0.2 percentage points. Inflation, already bubbling, could also soar.
NY Fed: Household Debt Climbs, Boosted by Mortgages and Auto Loans
The New York Fed’s Quarterly Report on Household Debt and Credit found that total household debt rose by $333 billion to reach $15.58 trillion in the fourth quarter of 2021. In nominal terms, the 2021 total increase in overall debt is the largest seen since 2007. Mortgage balances grew by $258 billion and auto loans increased by $15 billion.
Notably, credit card balances increased by $52 billion, representing the largest quarterly increase observed in the 22-year history of the data. In an associated blog post, New York Fed researchers found that the high volume of auto loan originations reflects the unprecedented sharp increases in the prices of homes and cars through 2021.