Member Briefing March 18, 2024
US Industrial Output Barely Rises In February
The Federal Reserve released a report on Friday showing a slight increase in U.S. industrial production in the month of February. The Fed said industrial production inched up by 0.1 percent in February after falling by a downwardly revised 0.5 percent in January. The uptick in production came as manufacturing climbed by 0.8 percent in February after slumping by 1.1 percent in January and mining output surged by 2.2 percent in February after plunging by 2.9 percent in January. Motor vehicles and parts output rose 1.8% after a 3.8% decline in the prior month. Excluding autos, total industrial output was flat in February.
The increases in manufacturing and mining output were largely offset by a substantial pullback by utilities output. The report said capacity utilization for the industrial sector came in at 78.3 percent in February, unchanged from a downwardly revised reading in January. Capacity utilization in the manufacturing and mining sectors rose to 77.0 percent and 93.8 percent, respectively, while capacity utilization in the utilities sector tumbled to 67.8 percent.
Wholesale Inflation Rose 0.6% in February, Much More Than Expected
The producer price index, which measures pipeline costs for raw, intermediate and finished goods, jumped 0.6% on the month, the Labor Department’s Bureau of Labor Statistics reported Thursday. That was higher than the 0.3% forecast from Dow Jones and comes after a 0.3% increase in January. Excluding food and energy, the core PPI accelerated by 0.3%, compared with the estimate for a 0.2% increase. Another measure that also excludes trade services rose 0.4%, compared with the 0.6% gain in January, and was above the estimate for a 0.2% advance.
The PPI is considered a leading indicator for inflation as it indicates costs early in the supply chain. The BLS reported that about two-thirds of the rise in the headline PPI came from a 1.2% surge in goods prices, the biggest increase since August 2023. As with the CPI, the acceleration was traced to energy prices, with saw a 4.4% increase in the final demand measure. Gasoline prices jumped 6.8% at the wholesale level. Services costs increased 0.3%, boosted by a 3.8% surge in traveler accommodation services.
Read more at CNBC
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Netanyahu Says Israel to Press on With Rafah Assault Plan - Reuters
- Houthis Attack US Destroyer in Red Sea – Marine Link
- Cease Fire Talks With Israel and Hamas Resume in Qatar - AP
- First Gaza Aid Ship Unloads Supplies at Besieged Enclave – Politico
- Schumer Calls for End of Netanyahu-Led Government in Israel - WSJ
- Palestinian Leader Appoints Longtime Adviser as Prime Minister in the Face of Calls for Reform - AP
- Born on 7 October: Gaza Mum's Fight to Feed Her Baby - BBC
- 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
- No Surprise as Putin Wins 5th Term - NPR
- Ukraine Drones Attack Refinery, Target Moscow, Disrupt Power, Russia Says – Reuters
- With Navalny Dead, His Allies Keep Fighting to Undermine Putin’s Grip on Power - AP
- Vladivostok is a Window into Wartime Russia – The Economist
- Russia: Schools and Shops Shut in Belgorod Amid Air Strikes - BBC
- At Gunpoint, Ukrainians in Occupied Regions Vote in Russia’s Election – Washington Post
- 5 Scenarios for Russia After Putin’s Next Term – Politico
- 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
- Africa to Play 'Huge Role' in US Critical Mineral Strategy, Says Treasury's No. 2 – Reuters
- European Lawmakers Pass AI Act, World’s First Comprehensive AI Law - CNBC
- Wales is Getting the First Black Leader in Europe – Politico
- Indian Navy Seizes Ship from Somali Pirates and Rescues 17 Crew – Reuters
- Watch as Iceland Volcano Erupts Again, Spilling Lava Towards Town - BBC
- Japan’s Stock Market Is Back – Barron’s
- Venezuelan Opposition Leader Faces Deadline for Standing Down in Race Against Maduro - AP
- Drone Swarms Are About to Change the Balance of Military Power - WSJ
Policy and Politics
Budget Talks Shine Light on Fight for Government Transparency
It's an irony of Albany's budget timeline: Sunshine Week, or time dedicated each March to advocate for expanded government transparency across the nation, typically lines up with the release of both houses of New York's Legislature's budget proposals – commencing government negotiations largely done in secret. When Gov. Hochul took office, she promised to improve transparency from her predecessor and make FOILed documents public, but little changes have been implemented since. The state budget process remains largely out of public eye, with a shorter period in New York for budget adoption compared to most other U.S. states.
But in deviation from her predecessor, Hochul has shed light on budget talks for state Republican leaders in the minority – meeting with them during ongoing spending talks.Even so, legislative leaders often drop budget bills in a rush, asking for a message of necessity from the governor to vote on the measures immediately – often before lawmakers, the press and public have a chance to read the spending plan.
Read more at NY State of Politics
Empire Center Releases First “Empire Index” Poll Of Public Sentiment and Awareness of Major Policy Issues.
The Empire Center for Public Policy today announced the results of its first statewide “Empire Index” poll. The poll, conducted in late January and early February by Morning Consult, surveyed 959 registered voters in New York. “The most surprising finding in this poll was that most people think New York spends less than one-third of what it actually does on public schools,” said Tim Hoefer, president & CEO. “This poll helps us understand how public policy is affecting people, how people understand public policy and how we can make living and working in New York better.” Key findings included:
- Asked to estimate the annual per-pupil cost of educating a student in New York’s public school system, the median response was $8,000, less than one-third of the actual cost ($26,571 in the most recent federal data).
- Asked what respondents would be “willing to pay on your monthly energy bill for cleaner energy,” a total of 60 percent indicated less than $20, with 31 percent saying “nothing” and 18 percent saying “more than nothing but no more than $10 per month.”
- 55 percent of respondents said New York State is on the wrong track, while 45 percent said the state is going in the right direction.
- 54 percent said the cost of living was worse or much worse in 2024 compared to 2023, while 19 percent said it was better or much better.
- Asked to select the top three challenges to living in New York from a list of 16 items 63 percent said the cost of living.
Read more at The Empire Center
Republicans Call for Defense Budget to Match Inflation
Republicans are condemning President Joe Biden’s fiscal 2025 defense spending request for failing to keep pace with inflation, but it’s unclear whether there’s appetite on Capitol Hill to revisit the cap Congress itself imposed as part of last year’s debt ceiling agreement. The debt ceiling agreement capped defense spending at $895 billion for FY25, ensuring the Defense Department would have to trim certain accounts. But these reductions, including a proposal to buy one fewer Virginia-class attack submarine and fewer F-35 fighter jets, are now generating outcry from lawmakers.
Meanwhile, Congress has not yet passed its five-months-overdue FY24 defense spending bill. And the $95 billion foreign aid bill for Ukraine, Israel and Taiwan remains stuck in the House. House Armed Services Chairman Mike Rogers, R-Ala., noted in a statement Monday Biden’s “budget request complies with the mandated numbers of the” debt ceiling deal. “Unfortunately, this defense top line number fails to keep pace with inflation and our adversaries,” said Rogers. “Our defense budget should be built with the goal of deterring the threats facing our nation. Instead, we are forced to build a budget to meet an arbitrary number. I worry about the long-term impact this budget process will have on our national defense.”
Health and Wellness
Neurological Conditions the Leading Cause of Ill Health Globally, Study Finds
A systematic analysis of data from a 2021 study suggests that overall disability, illness and premature death from neurological conditions rose by 18% from 375 million years of healthy life lost in 1990 to 443 million years in 2021. Published in The Lancet, the study by scientists at the University of Washington, Aukland University and the WHO Brain Health Unit, found the burden imposed by 37 conditions was much greater than previously understood, affecting 43% of the global population. The authors attributed the nervous system epidemic principally to the growth and aging of the global population and increased exposure to environmental, metabolic and lifestyle risk factors.
The top contributors to neurological health loss in 2021 were stroke, neonatal encephalopathy, migraine, dementia conditions including Alzheimer's, diabetic neuropathy, meningitis, epilepsy, neurological complications from preterm birth, autism spectrum disorder and nervous system cancers. Cognitive impairment and Guillain-Barre syndrome resulting from COVID-19 accounted for 2.48 million years of healthy life lost in 2021, followed by tension headaches and migraines, with around 2 billion and 1.1 billion cases, respectively, but the fastest growing area of concern was nerve damage from diabetes.
NYS COVID Update
The Governor updated COVID data for the week ending March 8th.
Deaths:
- Weekly: 48
- Total Reported to CDC: 83,005
Hospitalizations:
- Average Daily Patients in Hospital statewide: 743
- Patients in ICU Beds: 92
7 Day Average Cases per 100K population
- 3.8 positive cases per 100,00 population, Statewide
- 5.3 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Election 2024
- Why AP is Calling Trump and Biden ‘Presumptive Nominees’ for President - AP
- The Rough Years That Turned Gen Z Into America’s Most Disillusioned Voters - WSJ
- Former Vice President Mike Pence Says He’s Not Endorsing Trump – The Hill
- Biden Jokes About His Age, Trump at Annual Washington Gridiron Dinner - WSJ
- 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
Biden Opposition to Takeover of U.S. Steel Comes After Months of Lobbying
President Biden’s decision to oppose Nippon Steel’s attempt to buy United States Steel on Thursday last week was the culmination of months of agitation against the deal. Republican and Democratic lawmakers had called for the Biden administration to use national-security powers to block the $14.1 billion deal. The United Steelworkers union blasted it. Former President Donald Trump promised to scuttle it if he wins a second term. With the political pressure mounting, Biden signaled his opposition to the deal without explicitly saying he would block it.
“U.S. Steel has been an iconic American steel company for more than a century, and it is vital for it to remain an American steel company that is domestically owned and operated,” the president said on Thursday. Nippon Steel is fighting back. “We welcome the Administration’s scrutiny of the transaction, as an objective and comprehensive review of this transaction will demonstrate that it strengthens U.S. jobs, competition, and economic and national security,” Nippon and U.S. Steel said in a statement Wednesday.
Retail Sales Indicate Weaker Pace of Spending at Start of Year
While retail sales bounced 0.6%, that was slightly weaker than anticipated and comes with downward revisions at the start of the year which now show January sales declined 1.1%, rather than by the 0.8% drop reported previously. There was a lift from auto sales and building material stores, but the gain in gasoline sales was a bit more muted than expected given higher retail prices during the month and these retail series are nominal, or not adjusted for inflation. Nine of the 13 types of retailers tallied did report a rise in sales last month, which highlights the widespread nature of February sales growth, a notable difference from January.
It is increasingly evident that after years of a devil-may-care approach to spending, consumers have at last shown signs of being more reserved at the start of this year. In January, we saw a pivot from discretionary items back to non-discretionary purchases in the broader personal spending release. There's ultimately more competition for consumers dollars today while still-high prices for frequent purchases like food and gasoline may be diverting discretionary funds, just as higher interest payments may also be somewhat crowding out consumption.
Hot or Not: What’s the State of the EV Charging Sector?
Industry Week presents Hot or Not, the electric-vehicle sector round-up where they rank a selection of publicly traded companies based on their performance in the previous two quarters. This edition added charging companies into the mix for a more thorough look at all facets of EVs. As before, we’ve given each company a rating based on its stated production/delivery goals, financials, major news/deals, and the potential for its business to perform better.
EVgo is Hot. The charging company, which has made recent headlines for its partnership with Pilot Flying J, had a full year revenue of $161 million compared to 2022’s $54 million. Executives had initially aimed for $105 to $150 million for year, but raised the guidance to top out at $158 million in November. CFO Olga Shevorenkova said the growth was largely driven by increased charging revenues as the company added more than 900 charging stalls and gained more than 860,000 new customers in 2023. ChargePoint is Not Hot. ChargePoint is still in choppy waters. Last year started off positive but went downhill in the second half after the company announced layoffs last September.A $42 million impairment charge tanked ChargePoint’s profit margins in Q3 and its $110 million revenue for the quarter was also disappointing as it was below the expected range of $150 million to $165 million.
DiNapoli: Local Sales Tax Collections Up 1.6% in February, Driven By NYC
Local sales tax collections in New York state increased by 1.6% in February compared to the same month in 2023, according to data released today by State Comptroller Thomas P. DiNapoli. Overall, local collections totaled $1.67 billion, up $26.8 million from the same time last year. “February’s local sales tax collections grew at a modest pace, year over year, after coming in nearly flat in January,” DiNapoli said. “But this was largely driven by New York City.”
In February 2024: New York City’s collections totaled $759 million, an increase of 5.7%, or $40.7 million, from a year earlier. County and city collections in the rest of the state totaled $805 million, a decrease of -2.2%. Nearly two-thirds (37 of 57) of counties experienced year-over-year decreases.
Read more at The Comptroller’s Website
Slowdown in Outflow, But No Rebound in Latest NY Population Estimates
The pace of population change in most New York counties slowed during the 12 months ending July 1, 2023, the third annual period measured by U.S. Census estimates since the disruption of the 2020 pandemic. Accounting for most of the state’s previously reported loss of 101,984 residents during the period was a further decline of 77,763 in New York City’s population, according to the Census Bureau’s just-released Vintage 2023 data.
Most of the Empire State’s population loss has been driven by net domestic migration — defined as the extent to which the number of people moving from New York counties to other U.S. counties, in and out of state, exceeds the number moving in. During the latest 12-month period, New York’s statewide net loss to the rest of the country came to 216,778 residents, which was lower than the previous year but still among the biggest annual outflows ever. Most of the domestic outmigration last year originated in the five boroughs of New York City, which lost a combined 162,310 people to other U.S. counties in 2022-23. The seven downstate suburban counties of the Metropolitan Commuter Transportation District added combined domestic outflows of 32,598 residents (-0.7 percent).
Read more at The Empire Center
State Funds Hydrogen and Clean Fuel Program
The state has made $16 million available to advance innovation in clean hydrogen through the Hydrogen and Clean Fuel Program. This funding will be directed to support research, development, and demonstration projects as well as leverage federal hydrogen funding opportunities.
The grants will be administered by the New York State Energy Research and Development Authority. The funding is being made available through two competitive grants, one under the state’s Hydrogen and Clean Fuel Program, and the other to help entities applying for federal hydrogen funding for New York-based projects.
Ørsted Powers Up All Turbines at First US Commercial-Scale Offshore Wind Farm
Ørsted has installed and powered up all 12 turbines at the landmark South Fork project, and the first utility-scale U.S. offshore wind farm has started delivering power to Long Island and the Rockaways, offshore New York. The commissioning of the wind farm is in its final stage, and when at full capacity of 130 MW, it will generate enough renewable energy to power approximately 70,000 homes. The renewable energy is generated roughly 35 miles off the coast of Montauk, and will eliminate up to six million tons of carbon emissions over the life of the project, the equivalent of taking 60,000 cars off the road for the next twenty years.
The South Fork Wind began construction in February 2022, beginning with the onshore export cable system that links the project to the Long Island electric grid. The wind farm reached its ‘steel in the water’ milestone in June 2023 with the installation of the project’s first monopile foundation, and its final Siemens Gamesa-suppied turbine was installed in February 2024.
Revised IEA Outlook Signals Tighter Oil Market
The IEA raised its view on 2024 oil demand growth for a fourth time since November as Houthi attacks disrupt Red Sea shipping but warned that "the global economic slowdown acts as an additional headwind to oil use". The energy watchdog forecast demand will rise by 1.3 million barrels per day in 2024, up 110,000 bpd from last month, but still lower than growth of 2.3 million bpd last year. The IEA also cut its 2024 supply forecast and now expects oil supply to rise by 800,000 bpd to 102.9 million bpd this year.
"Demand is staying high, while supplies are getting tighter, particularly on the fuel side. The refining margins are also very strong and a positive for crude demand," said Dennis Kissler, senior vice president of trading at BOK Financial. Last week Brent crude oil futures for May climbed $1.39, or 1.7%, to settle at $85.42 a barrel, the highest close since Nov. 6. U.S. West Texas Intermediate (WTI) crude for April rose $1.54, or 1.9%, to end at $81.26, also its highest since early November.
Chocolate Crisis Deepens - African Cocoa Plants Run Out of Beans
Major African cocoa plants in Ivory Coast and Ghana have stopped or cut processing because they cannot afford to buy beans, four trading sources said, meaning chocolate prices around the world are likely to soar. Chocolate-makers have already increased prices to consumers, after three years of poor cocoa harvests, with a fourth expected, in the two countries that produce nearly 60% of the world's cocoa.
Cocoa prices have more than doubled over the last year, scaling numerous all-time highs. Chocolate-makers cannot produce chocolate using raw cocoa and rely on processors to turn beans into butter and liquor that can be made into chocolate. But the processors say they cannot afford to buy the beans.