Member Briefing March 30, 2022
JOLT Report: Manufacturing Quits Up 7% in February As Hiring Growth Lags
The latest JOLT report, released March 29, shows the hire rate for the overall economy mostly unchanged, with manufacturing lagging slightly behind. Total hires in the overall economy rose 4.1% to 6,689,000 people while manufacturing hires rose 3.8% to 482,000. Potentially more concerning for manufacturers, though, are the relative rates of workers voluntarily leaving their jobs: in the overall economy, quits rose by 2.2%, but in manufacturing they increased by 7%.
Durable goods manufacturing, in particular, stood out: Quits in that sector rose 13.3% as 22,000 people willingly left their jobs. Durable-goods employment is the largest division of manufacturing by workers, employing about 7.8 million workers to nondurable’s 4.7 million, according to the Bureau’s latest data. It’s also the better-paying sector, as the average durable goods manufacturing employee makes about $31.94 an hour, compared to $27.84 an hour in nondurable goods manufacturing. The average private employee, according to the BLS, makes about $31.58 an hour.
Invasion of Ukraine Headlines
- Russia Promises to Scale down Operations Near Kyiv and North Ukraine – Reuters
- Blinken Skeptical of Latest Russia, Ukraine Talks – The Hill
- Putin Spokesman: Biden Comment in Poland a ‘Personal Insult’ – The Hill
- Russian Supply Chains Next in Line for Sanctions, Deputy U.S. Treasury Secretary Says – Reuters
- Russian Rouble Soars to 83 vs Dollar Before Easing – YahooFinance
- Ukraine Proposes Neutral Status With Guarantees, and Zelensky Calls for More Western Help – WSJ
- Eastern EU Countries Call for Help Over Refugee Health Costs – Politico
- Odesa Defies Russia and Embraces Signs of Life- BBC
- GRAPHIC: Fleeing Ukraine – Speed of Refugee Crisis has Few Modern Precedents – Reuters
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
U.S. Consumer Confidence Rebounds Slightly on Firm Job Market
The Conference Board’s index increased to 107.2 from a downwardly revised 105.7 reading in February, which was the lowest in a year, according to the group’s report Tuesday. Even though confidence edged up, Americans are facing the highest inflation since 1982, which is outpacing wage gains and being fanned further by the war in Ukraine. That’s already causing some to limit their purchases of certain goods or services, and a slowdown in consumption would pose a risk to economic growth.
Steady labor market gains have pushed employment back to pre-pandemic levels in some sectors, buoying U.S. households. The share of consumers who said jobs were “plentiful” increased to a record high 57.2%. A separate report Tuesday showed U.S. job openings remained near a record in February. Consumers were also mixed about their short-term financial prospects. The share who expect their incomes to rise in the next six months increased, but those who see their pay dropping also rose.
Administration Budget Proposal Includes Manufacturing Spending
President Joe Biden’s 2023 budget priorities call for big increases in military spending, and a proposed tax on the wealthiest in the country could reduce deficits. Congress must create and pass federal budgets, so Biden’s plan is more of a wish list than anything else, but presidential priorities often influence how the country spends its money.
Much of the budget focuses on social and domestic policies such as poverty fighting programs and farm policies. However, a handful of proposals could impact manufacturing and industrial production. The Commerce Department would get funding to advance reshoring of manufacturing, marketing of US goods abroad, and expansion of NIST. Defense spending would include shipbuilding and air force modernization, The Energy Department would get funds to advance domestic production of clean energy products. Homeland Security would support industrial cybersecurity efforts. The Labor Department would get additional funds to expand apprentice programs and build pathways for youth to skilled trades.
US COVID – Johns Hopkins Data in Motion Video for March 29th
JHU’s Daily COVID-19 Data in Motion report shares critical data on COVID-19 from the last 24 hours. Explore COVID-19 trends around the world with our in-depth data tracking:
- New cases and cumulative cases.
- US New deaths and cumulative deaths.
- US Daily new cases, testing, and positivity ratio by US state.
- New cases by country.
Omicron ‘Stealth’ COVID Variant BA.2 Now Dominant Globally
BA.2 is now dominant worldwide, prompting surges in many countries in Europe and Asia and raising concern over the potential for a new wave in the United States. BA.2 now represents nearly 86% of all sequenced cases, according to the World Health Organization. It is even more transmissible than its highly contagious Omicron siblings, BA.1 and BA.1.1, however the evidence so far suggests that it is no more likely to cause severe disease.
As with the other variants in the Omicron family, vaccines are less effective against BA.2 than against previous variants like Alpha or the original strain of coronavirus, and protection declines over time. However, according to UK Health Security Agency data, protection is restored by a booster jab, particularly for preventing hospitalization and death. A key concern about BA.2 was whether it could re-infect people who had already had BA.1. But data from both the UK and Denmark have shown that while Omicron can reinfect people who had other variants, such as Delta, only a handful of BA.2 reinfections in people who had BA.1 have been found so far among tens of thousands of cases.
EPA Publishes Best Practices for Indoor Air Quality in Combating COVID-19
The U.S. Environmental Protection Agency (EPA) has released new guidance on best practices to improve indoor air quality (IAQ) as part of the administration’s overall pandemic response plan for combating COVID-19.
Called the “Clean Air in Buildings Challenge,” the guidance advises, “[b]uilding owners and operators should engage experts, facilities managers, and others who are skilled, trained, and/or certified in HVAC work to develop and implement plans to improve IAQ and manage air flows.”
McMahon: Two Years in NY Still Posted Nation’s Largest Job Loss (By Far)
Two full years after the last monthly employment count of the pre-pandemic era, seasonally adjusted private-sector payrolls in New York State remained 454,000 jobs below the February 2020 level — by far the largest remaining employment deficit in any state.
As of February, job counts in 21 states had surpassed their pre-pandemic employment levels, according to federal Bureau of Labor Statistics data released today. The nation as a whole had recovered 19.6 million of the 21 million jobs lost in the spring of 2020, placing it within 1.1 percent of fully recovering from the pandemic based on seasonally adjusted estimates. New York, however, was still 4.1 percent below its pre-pandemic employment level. On a percentage basis, only Hawaii and Alaska were worse off.
BofA, Citi Expect Multiple 50-bps Fed Hikes This Year Due to Inflation
Bank of America (BofA) and Citi have joined a small but growing number of top investment banks calling for more aggressive interest rate increases from the U.S. Federal Reserve against a backdrop of soaring inflation data and hawkish comments from policymakers.
BoFA now expects two hikes of 50 basis points each at the Fed’s June and July meetings with “risks” of those expectations being pulled forward into May and June respectively. Citi, on the other hand, sees 50 basis-point increases in May, June, July, and September. The bank also expects 25 basis-point tightening in October and December.
Fed Study Points Finger at Fiscal Boost for High U.S. Inflation
Who’s to blame for high U.S. inflation? The folks who create fiscal policy — at least says those behind monetary policy. U.S. consumer prices have surged more than in other developed economies and one reason may be the massive government support provided to Americans during the pandemic, according to researchers at the Federal Reserve Bank of San Francisco. The researchers used an index of real disposable income to untangle how much support was received by U.S. households versus other OECD countries. They found two distinct peaks in the U.S. corresponding to the CARES Act, signed into law in March 2020 at the onset of Covid-19, and the American Rescue Plan Act a year later.
“Fiscal support measures designed to counteract the severity of the pandemic’s economic effect may have contributed to this divergence by raising inflation about 3 percentage points by the end of 2021,” wrote Òscar Jordà, Celeste Liu, Fernanda Nechio and Fabián Rivera-Reyes in the regional Fed’s weekly Economic Letter.
Scholz: Russian Energy Ban Would Mean European Recession
An immediate ban on Russian energy imports would trigger an economic recession in Germany and across Europe, German Chancellor Olaf Scholz warned Wednesday. Speaking to the Bundestag, Scholz said Germany would end its energy dependence on Russia in due course but cutting all ties now would hit the German economy when it was unprepared.
“We will end this dependence [on Russian oil, coal and gas] as quickly as we can, but to do that from one day to the next would mean plunging our country and all of Europe into a recession,” the chancellor said, warning that “hundreds of thousands of jobs would be at risk, entire industries would be on the brink.”
Germany’s Imported Energy Prices More than Doubled in February
Germany’s imported energy costs jumped by 129.5 percent in February amid energy-market turmoil and tightening natural gas supply ahead of Russia’s attack on Ukraine, Germany’s statistics office said Tuesday. Surging energy prices are set to push up inflation further in the coming month. Inflation in Germany hit 5.1 percent in February. Preliminary data for March will be released Wednesday.
Prices of domestically produced energy surged by 68 percent compared with the same month last year, while consumers had to pay 22.5 percent more for household energy and motor fuels than in February 2021, according to the Federal Statistical Office.
OSHA to Amend Occupational Injury, Illness Recordkeeping Regulation
On March 28 OSHA announced that it is proposing amendments to its occupational injury and illness recordkeeping regulation, 29 CFR 1904.41. The current regulation requires certain employers to electronically submit injury and illness information – that they are required to keep – to OSHA. The agency uses these reports to identify and respond to emerging hazards and makes aspects of the information publicly available.
In addition to reporting their Annual Summary of Work-Related Injuries and Illnesses, the proposed rule would require certain establishments in certain high-hazards industries to electronically submit additional information from their Log of Work-Related Injuries and Illnesses, as well as their Injury and Illness Incident Report.
New Report Finds Improving Credit Reports for Most Americans
The Federal Reserve Bank of New York earlier this month released the second installment of The State of Low-Income America: Credit Access and Debt Payment. The report finds that payment rates and median credit scores rose for all income groups through September 30, 2021. While overall bankruptcies declined substantially during the pandemic and new foreclosures were effectively halted, the report also finds that student loan default rates remain more than three times higher among borrowers in low- and moderate-income areas than in high-income areas.
“Although the COVID pandemic has taken a heavier toll on lower-income Americans, our data suggest that most borrowers—including those in lower-income areas—have been managing their financial responsibilities and debt repayments,” the authors stated. With a special focus on student loans, the report describes how most student loans were eligible for CARES Act emergency relief, pausing loan repayment through May 1, 2022. As a result, borrowers with student loans saw a sharper increase in their credit score compared to borrowers without student loans.
Three Reasons Why China Faces a Difficult Year
No date has been set for it yet, not even a month. But for every official, the orders are clear. Their work must focus on making sure that a crucial Communist Party congress, to be held in the second half of the year, goes smoothly. The conclave is widely expected to herald the start of at least another five years of rule for Xi Jinping. From the police to economic policymakers, all are trying to minimize untoward events that might overshadow his moment of political glory. “The word ‘stability’ is the key,” leaders intone about the coming year at official gatherings.
Among China-watchers, there is much speculation about the extent of opposition to Mr Xi within the elite, and the impact it might have on his political grip. But there is no convincing evidence that his plans could be derailed for the party congress and a meeting immediately afterwards of the Central Committee. Indeed, history suggests that for all the party’s preoccupation with stability in the build-up to party congresses, which normally are held every five years, the power of paramount leaders can survive enormous buffeting.