Skip to content

Member Briefing March 31, 2025

March 31, 2025

Posted By: Harold King in Daily Briefing,

Top Story

PCE = 2.5. Key Fed Inflation Measure Slightly Hotter Than Expected, Even Before Tariffs.

The Personal Consumption Expenditures Price Index climbed 2.5% year over year in February, according to data released Friday by the Bureau of Economic Analysis. Economists surveyed by FactSet expected annual price growth would be 2.5%, the same pace as January. Headline inflation was 0.3% on a monthly basis in February. That was in line with economists’ expectations and January’s pace.

Core PCE inflation—which excludes the more-volatile food and energy costs and can be a better indicator of growth trends—was up 2.8% year over year in February. Core inflation rose 0.4% month over month. That’s a bit higher than the consensus estimate from economists.
In addition to the latest inflation numbers, the bureau’s latest data show that consumer spending held up relatively well in February. Personal consumption expenditures increased $87.8 billion, or 0.4%, last month. That was a bit higher than the 0.3% gain economists expected to see and a marked acceleration from the outright decline of 0.3% in January.
Americans’ inflation-adjusted disposable income collectively increased by 0.5% in February. Compared to a year ago, real disposable incomes climbed by 1.8%, according to the bureau.

Read more at Barron’s

Fed 2024 Small Business Survey – Revenue Growth Remains Below Pre-Pandemic Levels

The S&P 500 is still up more than 160% from its level at the onset of Covid in 2020. But the smallest businesses have yet to fully recover from the pandemic, and now are slipping again. For the first time in three years, more small businesses reported a drop in revenue than an increase in 2024. That’s according to the 2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey, conducted from September to November and released today.

The share of firms reporting year-over-year revenue growth remained well below pre-pandemic levels, with 3% more companies saying sales declined over the preceding 12 months than those who said they increased. In 2018 and 2019, the net positive share (that is the difference between those who reported higher revenue and those who reported lower) hovered around 35%. That kind of performance helped build confidence. In those same years, about 60% more firms said they expected sales to rise rather than fall in the year ahead. Since 2021, that measure hasn’t gone above 40%. It helps explain why 57% of firms in this year’s survey cited reaching customers and growing sales as their top operational challenge, making it the most common complaint in 2024, overtaking hiring and retention as the biggest obstacle.

Read more at Forbes

Consumer Sentiment Worsens As Inflation Fears Grow, University Of Michigan Survey Shows

The final version of the university’s closely watched Survey of Consumers showed a reading of 57.0 for the month, down 11.9% from February and 28.2% from a year ago. Economists surveyed by Dow Jones had been expecting 57.9, which was the mid-month level. It was the third consecutive decrease and stretched across party lines and income groups, survey director Joanne Hsu said. “Consumers continue to worry about the potential for pain amid ongoing economic policy developments,” she said.

In addition to worries about the current state of affairs, the survey’s index of consumer expectations tumbled to 52.6, down 17.8% from a month ago and 32% for the same period in 2024. Inflation fears drove much of the downturn. Respondents expect inflation a year from now to run at a 5% rate, up 0.1 percentage point from the mid-month reading, and a 0.7 percentage point acceleration from February. At the five-year horizon, the outlook now is for 4.1%, the first time the survey has had a reading above 4% since February 1993.

Read more at CNBC

Global Headlines

Middle East

Ukraine

Other Headlines

Policy and Politics

State Releases Initial Rules For Cap-And-Invest Program

Last Wednesday, the Department of Environmental Conservation released long-awaited draft rules for how and when major companies would need to report their greenhouse gas emissions under the proposed cap-and-invest program. While the reporting rules aren’t enough to get the program actually up and running, and don’t set any standards for the emission caps that companies can hit before they must start buying carbon credits, environmental activists consider the release of the draft reporting rules a meaningful step forward in the process.

The new draft reporting rules would require companies to begin keeping track of their emissions in 2026, with the first reporting deadline coming in June 2027 for the previous year. The draft rules lay out which companies would be required to report emissions under the program. Those include facilities that produce at least 10,000 metric tons of carbon dioxide equivalent, such as landfills and natural gas compression stations, suppliers of natural gas in the state, waste haulers and electric power plants. The public will have the opportunity to comment on the draft reporting rules between April 2 and July 1, and environmental advocates plan to actively engage during the open comment period.

Read more at City & State

Why Republicans Might Approve A Budget Whose Numbers Don’t Match Up

Republican leaders are expected to embrace a novel strategy as they seek to push forward as soon as this coming week with their partisan package of tax cuts, border security enhancements, military spending and more. Rather than align House and Senate committees behind the same savings targets in the budget framework for that megabill, they want to set different numbers for each chamber.

The split screen could be stark, at least on paper. House committees will be asked to cut at least $2 trillion in spending from safety-net programs, while Senate committees might be directed to find a minimum of a few billion dollars in savings. It’s possible to write a final package that can bridge the difference, but it’s likely to be politically tricky — requiring trust between GOP lawmakers in the two chambers after months of cross-Capitol competition. The approach is seen as necessary if Republicans are going to stay on the ambitious timeline they’ve set for passing their party-line legislation. Without unifying behind a budget blueprint that can clear both chambers, Republicans won’t be able to take advantage of reconciliation, which prevents the minority from halting the process with a filibuster. So threading the needle on the budget is a crucial task.

Read more at Politico

Wall Street Bonuses Hit Record High Of $47.5 Billion In 2024, State Comptroller Says

Last year was a good year for New York's financial industry as Wall Street bonuses reached a record $47.5 billion in 2024, its first major increase since the COVID-19 pandemic highs, according to a report released Wednesday by state Comptroller Tom DiNapoli. The comptroller said the average bonus of nearly $245,000 represents a more than 30% increase from the previous year and the state is getting about $600 million more in tax revenue as a result. He said robust economic growth led to increased trading, account supervision, underwriting and selling revenues, driving strong profits and helping generate the first significant bump in the average bonus estimate since 2021.

DiNapoli said that Wall Street accounted for 19% of the state’s tax collections in fiscal year 2023-24 and 7% of city tax revenue in fiscal year 2024. DiNapoli estimates the 2024 bonuses will generate $600 million more in state income tax revenue and $275 million more for the city when compared to the previous year.

Read more at NY State of Politics

Trump’s First 100 Days

Health and Wellness

Vaccine Critic’s Apparent Selection To Head HHS Autism Study Shocks Experts

News that a major player in the anti-vaccine community may have been tasked by the Department of Health and Human Services to conduct a study looking for a link between immunizations and autism has been met with incredulity and dropped jaws among vaccine experts and others familiar with the anti-vaccine movement. The apparent choice of David Geier — who does not have a medical degree and who was disciplined by the State of Maryland’s Board of Physicians for practicing medicine without a license — to conduct a study looking for the link that HHS Secretary Robert F. Kennedy Jr. has long asserted exists, despite mountains of evidence to the contrary, struck many as a surreal choice.

In the early 2000s, Geier and his father were granted access to vaccine safety data maintained by the Centers for Disease Control and Prevention on the grounds they were conducting a study into adverse events following receipt of a vaccine for diphtheria, tetanus, and pertussis. But their access was later terminated after officials concluded they were instead trying to mine the data for evidence that the DTaP vaccine triggered higher rates of autism in children who received it and to manipulate the data in ways that could have undermined the confidentiality of the people whose information was in the database.

Read more at STAT

Industry News

Hudson Valley Job Count Bumped Higher in February, Manufacturing Up by 500

Over the past year, the private sector job count in the Hudson Valley rose by 6,800, or 0.8 percent, to 817,500 in February 2025. The greatest gains were in private education and health services (+3,400), leisure and hospitality (+2,900), professional and business services (+2,000), trade, transportation and utilities (+1,600), financial activities (+600), other services (+200). Losses occurred in mining, logging and construction (-3,200) and information (-1,200).

Manufacturing employment in the Valley increased by 500 to 41,000 in February 2025 from 40,400 in January and 40,500 in February 2024.
Statewide Manufacturing employment increased by 300 to 410,900 in February 2025 from 410,600 in January but declined by 2,900 from February 2024.
Nationally Manufacturing employment increased by 37,000 to 12,711,000 in February 2025 from 12,674,000 in January by declined by 89,000 from February 2024.

Read the Labor Market Profile

Korean Air Expanding with Boeing, GE Orders

Korean Air has finalized an order worth up to $24.9-billion order for up to 50 Boeing wide-body aircraft. Boeing will supply 20 777-9 jets and 20 787-10s, and Korean Air also acquired options for 10 more 787 Dreamliners. The contract had been announced last summer as a “commitment” between the airline and the OEM, and now represents the largest order to date between the two companies.

In December, Korean Air completed its acquisition of a majority stake in Asiana Airlines, consolidating their operations and creating South Korea’s largest carrier. The number of new wide-body jets indicates its plan to enhance its intercontinental air service. Both Boeing models are twin-engine jets designed for long-distance, international flights; the 777-9 seats 426 passengers and has a range of has 7,285 nautical miles / 13,492 km / 8,383 mi. The 787-10 carries 336 passengers and has a range of 6,330 nmi / 11,720 km / 7,280 mi.

Read more at American Machinist

TSMC To Reportedly Speed Up Fab Building In The US, Third Fab To Begin Construction This Year

It took TSMC around five years to build the first module of its Fab 21 near Phoenix, Arizona, from groundbreaking to production start. This is significantly longer than the company takes to construct a fab in Taiwan. Building Fab 21 module 1 took nearly five years due to labor issues, soaring costs, and cultural barriers. However, now that all the potential construction bottlenecks and reliable contractors have been identified, it should be easier and faster for TSMC to build new Fab 21 modules at a pace closer to its usual two-year timeline in Taiwan.

TSMC has not officially confirmed whether it will match its domestic build speed in the U.S. However, Nikkei says the company plans to start constructing its third fab in the U.S. — Fab 21 module 3 — this year. Currently, the company is finishing equipment installation into its Fab 21 module 1 and then plans to move tools into its Fab 21 module 2 once its construction is complete. TSMC expects to start trial production of chips using its 3nm-class process technologies (N3B, N3E, N3P, N3X, etc.) at Fab 21 module 2 sometime in 2026 and then initiate high-volume manufacturing there by 2028, just as planned.

Read more at Tom’s Hardware

Lockheed Wins $238M More for New F-35s

The U.S. Dept. of Defense approved $238 million more for Lockheed Martin’s purchasing activities in advance of the start of production for Lot 20 of the F-35 Joint Strike Fighter. The “undefinitized” award is a modification to an $869.9-million, November 2024 assignment that covers procurement of long-lead materials, parts, and components, plus associated support services for next round of F-35s to be built – but not necessarily for the U.S. Air Force, U.S. Marine Corps, or U.S. Navy.

The F-35’s Lots 18 and 19 are in production currently, though Lockheed and the Pentagon have not yet finalized the production scope in terms of unit numbers and cost. The cost-overruns in the program have strained the relationship between the DoD and Lockheed, and the situation is also complicated by the ongoing Technical Refresh-3 that will update the F-35’s propulsion system and warfare capabilities. Lockheed has previously indicated it plans to deliver more than 150 F-35 jets annually from 2025 onward.Work will be carried out by Lockheed mainly in Texas, but also in California, Florida, Maryland, New Hampshire, and in the U.K. and Italy. The award will cover activities through May 2031.

Read more at American Machinist

Cleveland-Cliffs Lays Off More Than 1,200 Workers As Tariffs Hit Demand

Cleveland-Cliffs is laying off workers in Michigan and Minnesota as the steelmaker attempts to mitigate the knock-on effects of the Trump administration’s tariffs on steel and auto imports. The company plans to idle some operations at its Dearborn, Michigan, plant due to falling automotive demand, leading to 600 job cuts, according to an emailed company statement. Cleveland-Cliffs will also idle operations at two iron ore mines in Minnesota, resulting in 630 layoffs.

“These actions will allow the company to operate more efficiently and in a more cost competitive way for the current market environment,” the company said in its statement. “We believe that, once President Trump’s policies take full effect and automotive production is re-shored, we should be able to resume steel production at Dearborn Works.

Read more at Manufacturing Dive

Siemens Completes $10B Altair Deal To Boost AI

Siemens AG acquired Troy, Michigan-based Altair Engineering in an effort to expand its industrial software portfolio and artificial intelligence capabilities, the automation manufacturer announced this week. The German multinational group on Wednesday said it completed the $10 billion deal, allowing Siemens to leverage Altair’s advanced simulation technology for its digital twin tool Xcelerator.

The acquisition is part of Siemens’ “One Tech Company” program launched last year with the aim of growing its digital revenues through investments in AI-enabled products and connected hardware. Altair will expand Siemens’ digital offerings for its customers with new capabilities in mechanical and electromagnetic simulation, high-performance computing, data science and AI, according to a news release. In addition to Altair, Siemens is targeting smaller businesses with the recent acquisitions of Trayer Engineering Corporation, a California-based switchgear manufacturer, and Denmark-based fire suppression firm Danfoss Fire Safety.

Read more at Manufacturing Dive

Do Tariffs Put North American Auto Ties At Risk?

Canada and Mexico are integral to the North American supply chain and have relationships with auto manufacturers dating to the early 1900s. Those ties remained strong throughout the 20th and early 21st centuries. When the automotive industry plummeted into catastrophe during the Great Recession, it wasn’t just the U.S. government that pitched in to preserve it. Canada offered its own tax dollars as part of President Barack Obama's task force that led General Motors and Chrysler through bankruptcy. Mexico and Canada have no domestically based automakers — yet U.S. vehicle manufacturers have relied on labor from their neighbors to the north and south since the early days of auto production in North America. President Donald Trump's decision Wednesday to slap 25% tariffs on imported cars and parts stirs economic worry across the three countries.

Though much has changed since the earliest days of automotive manufacturing, the ties that link the Detroit Three to Mexico go back 100 years. In 1925, Ford Motor Co. opened a new company in Mexico City and built its first assembly plant there five years later. The plant had 260 employees and produced five Model T's a day. Trade relationships with Canada go back just as far as Mexico, but workplaces are different thanks to the country’s strong unions. They also began with Henry Ford, who built his first Canadian automotive plant in 1904, largely to escape tariffs levied on Canadian imports.

Read More at Manufacturing Dive

Tariffs on Screws Are Already Hitting Manufacturers

Rising costs for screws are rippling through manufacturing supply chains. President Trump’s tariffs implemented this month on steel and aluminum imports have scrambled the supply chains of companies that make everything from car parts to appliances and football helmets to lawn mowers. Unlike a similar Trump levy in 2018, the latest ones cover a wider range of imports, including the screws, nails and bolts that serve as the connective tissue in manufacturing.

Manufacturing executives said the U.S. doesn’t have the plants to churn out the amount of steel wire or screws and other fasteners needed to displace imports. “The production capacity we need doesn’t exist here in the U.S.,” said Gene Simpson, president of Illinois-based fastener maker Semblex. “It’s a select group of suppliers.” And companies that use screws and other metal parts covered by tariffs say their customers won’t tolerate price increases. Some construction contractors may delay projects until they get a handle on how to blunt the effects of import duties.

Read more at The WSJ

America's Falling Birth Rate Sparks Fears for the Economy

The declining U.S. birth rate, and the broader demographic shifts it contributes towards, have become a growing concern for policymakers and economists alike. Economic and demographic experts told Newsweek that the trend is one that threatens to destabilize not only the U.S. economy—potentially resulting in several percentage points being knocked off America's annual GDP growth—but global markets as well.

"I think it's the single most important issue facing economies across the world, and by some distance," said James Pomeroy, a global economist at HSBC. U.S. birth rates have been trending downward for decades. According to the Centers for Disease Control and Prevention (CDC), the number of births declined 2 percent between 2022 and 2023, with the general fertility rate dropping 3 percent to 54.5 births per 1,000 women aged 15-44. A shrinking workforce, a depleted consumer base, reduced tax revenue and added strains on Social Security can all be listed among the possible impacts of an unchecked drop in fertility. Taken together, these lead Jesús Fernández-Villaverde, a professor of economics at the University of Pennsylvania, to describe the issue as "the existential problem of our time." He said that, in the long-run, the primary challenge would be a "huge decrease" in the country's growth rate, and cited Japan as a key example.

Read more at Newsweek

CI Newsletter March #56 3.27.2025March 28, 2025 Member Briefing April 1, 2025April 1, 2025