Member Briefing March 7, 2024
JOLTS: Job Openings Little Changed at 8.86 Million in January, 622K in Manufacturing
The number of job openings on the last business day of January stood at 8.86 million, the US Bureau of Labor Statistics (BLS) reported in the Job Openings and Labor Turnover Survey (JOLTS) on Wednesday. This reading followed 8.88 million (revised from 9.02 million) openings in December and came in slightly below the market expectation of 8.9 million. "Over the month, the number of hires and total separations were little changed at 5.7 million and 5.3 million, respectively," the BLS noted in its press release. "Within separations, quits (3.4 million) and layoffs and discharges (1.6 million) changed little."
In manufacturing there were 622,000 openings in January, down from 719,000 a year earlier. The sector saw 394,00 new hires in January, down form 429,000 a year earlier and there were at total of 363,000 separations, off from 421,000 in January 2023.
Powell Testimony: Fed Won’t Rush Rate Cuts
Federal Reserve Chairman Jerome Powell told lawmakers that the central bank’s policy-setting committee still isn’t convinced that continued progress toward their 2% inflation objective is “assured,” and that it won’t make sense to cut interest rates until it is confident. He still expects cuts to come this yearnoting that the inflation situation has “eased notably” over the past year, without any significant spikes in unemployment. The labor market remains “relatively tight” even as surging immigration has made more workers available.
Powell reiterated that officials still need to be convinced that the trajectory of inflation is sustainably cooling before they cut rates. Given that the U.S. economy remains strong, the Fed can afford to carefully and thoughtfully approach the decision. “The pandemic is still writing the story of our economy right now and we should just be prepared to be surprised with the next chapter,” Powell said Wednesday. That was the case in 2023, Powell said, when the U.S. economy delivered very strong growth and a robust labor market, while inflation declined sharply—a situation very few forecasters correctly anticipated.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Crew Abandon Ship Damaged in Fresh Attack off Yemen - BBC
- Iran-Backed Houthi Rebels Vow to Keep Attacking British Shipping – Politico
- Gaza Cease-Fire Talks Enter Precarious Moment -WSJ
- Israel’s Plan to Hunt Down Hamas Killers – Politico
- U.S. Pushes For Initial Gaza Ceasefire Without Return Of Hostages - Report
- Israel Approves Plans for 3,400 New Homes in West Bank Settlements - 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
- Alexei Navalny’s Widow Calls For Election Day Protest Against Putin - Forbes
- Russia Strikes Odesa During Visit by Zelensky and Greek Leader- WSJ
- Kyiv Says Seven Dead as Drone Attack Sinks Russian Ship - BBC
- France and Moldova to Sign Defence Pact Amid Fears of Russian Destabilization – Reuters
- Ukraine First Lady Declines State of the Union Invitation – The Hill
- Chess Champ Garry Kasparov Calls Inclusion on Moscow’s Terrorist List an ‘Honor’ - 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
- International Women’s Day 2024: The Economy Has a ‘Female Face’ - VOA
- India Opens New Naval Base Near Maldives Amid Tense Ties and With Eye on Beijing – Reuters
- Haiti Gang Leader Threatens 'Civil War' if PM Does Not Resign - BBC
- El Niño is Starting to Die Down - But it Won’t Spell the End of Extreme Weather, WMO Warns - Euronews
- Millions of Sudanese Go Hungry as War Disrupts Food Supply - Reuters
- Italy Impounds Charity Ship Involved in at Sea Dispute With Libya - Reuters
- Paris Olympics Aim to Lift Up Capital’s Disenfranchised Suburbs - VOA
- Russia, China Planning For Joint Nuclear Power Plant On The Moon By 2035 - Forbes
Policy and Politics
SEC Approves Weakened Climate Disclosure Rule
The Securities and Exchange Commission approved sweeping new requirements that public companies disclose their greenhouse-gas emissions, but stopped short of mandating that they report emissions from their supply chains and customers’ use of their products. The rule is the result of a contentious two-year process involving intense lobbying from some of the world’s biggest industries and influential climate groups. It has faced relentless criticism from corporations and Republican lawmakers who say the agency is reaching beyond its authority. Companies will need to start reporting emissions for fiscal year 2026. Some smaller companies won’t be required to disclose emissions.
In a backtrack from the SEC’s original proposal, the amended rule doesn’t require companies to report certain indirect emissions, which could include the distribution and use of their products, such as coal or crude oil. Companies had railed against the requirement, saying they would be overly burdensome and complex. The new rule will also require companies to report climate-related risks, such as floods and wildfires, that could have a “material impact” on their bottom line. Steps taken to mitigate or adapt to climate risks will need to be disclosed, as well as losses incurred as a result of severe weather, the SEC said.
House Moves to Pass Initial Tranche of Funding Measures Ahead of First Deadline
House lawmakers will aim to clear a first group of six government funding measures on Wednesday afternoon, working to beat the first of two looming government shutdown deadlines. The package will be considered under an expedited process known as suspension of the rules, requiring two-thirds of the chamber's support. The bill tops out at 1,050 pages. Assuming it passes, we'll see how quickly the Senate can move to take up and pass the package. Friday is the first of the pair of shutdown deadlines, with the next coming March 22.
Conservatives panned the compromise package, trotted out by congressional leaders over the weekend. The House Freedom Caucus said in a statement that "House Republicans Strike Out" and that the package "surrenders Republicans' leverage" for border security negotiations.
Credit Card Late Fees Capped at $8 as Part of Biden Crackdown
Federal regulators finalized a rule on Tuesday to cap most credit card late fees at $8 as part of a broader push by the Biden administration to eliminate junk fees. The Consumer Financial Protection Bureau estimates the new regulation, first proposed in February 2023, will save families more than $10 billion a year by cutting fees from an average of $32. The new rule applies to large credit card issuers – those with more than 1 million accounts. These companies represent more than 95% of total outstanding credit card debt, according to the CFPB.
The financial industry slammed the CFPB, warning the new regulation will hurt consumers by causing more people to pay late, damaging their credit scores. “Today’s announcement is a prime example of how the CFPB has been politicized, and how its regulatory actions promote rhetoric over analysis and data,” Greg Baer, CEO of the Bank Policy Institute, a bank trade group, said in a statement. He added that the CFPB puts “perceived short-term political gain over long-term benefits of consumers.” The US Chamber of Commerce went a step further, saying it will “imminently” file a lawsuit against the CFPB to prevent the “misguided and harmful” regulation from taking effect.
Health and Wellness
Long-Term Data Reveals SARS-CoV-2 Infection and Vaccine-Induced Antibody Responses Are Long-Lasting
A long-term analysis conducted by leading microbiologists at the Icahn School of Medicine at Mount Sinai reveals that antibody responses induced by COVID-19 vaccines are long-lasting. The study results, published online in the journal Immunity on February 22, challenge the idea that mRNA-based vaccine immunity wanes quickly. The Mount Sinai research team’s analysis of more than 8,000 samples collected over a three-year period in New York City examined how antibody responses to the virus’s spike protein changed after infections, during the primary immunization series, during monovalent and bivalent booster vaccination, and during breakthrough infections.
They found that upon primary immunization, participants with pre-existing immunity (those who had previously been infected with the virus) mounted higher antibody responses faster and achieved higher steady-state antibody titers than individuals who had not been previously infected. The waning of antibody response was characterized by two phases: an initial rapid decay from the strong peak after vaccination, followed by a stabilization phase with very slow decay, suggesting that antibody levels were very long-lasting. Booster vaccination equalized the differences in antibody concentration between participants with and without pre-existing immunity.
Election 2024
- Nikki Haley Ends Presidential Campaign—Clearing Way For Trump’s Republican Nomination– Forbes
- Super Tuesday Solidifies the 2024 Election – The Dispatch
- Elon Musk Says He Isn’t Donating to Trump or Biden for President - WSJ
- Biden-Trump Gaffe Tracker: Key Blunders From The 2024 Presidential Campaign - Forbes
- Adam Schiff, Steve Garvey Advance to Runoff in California Senate Race - 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
Manufacturing Investment Hit New Peak in January as IRA and CHIPs Funding Kicks In
After it appeared to top out at around $200 billion last summer, private investment in manufacturing construction has kept going up. It reached a seasonally adjusted $225 billion in new spending in January — a jump of more than 180 percent from its usual level, around $80 billion annually over the last decade. That money, incentivized by business tax breaks, is being used to build facilities that make electric vehicles, batteries, semiconductors, electronics and other energy products.
While investment in plants hasn’t translated yet to an increase in manufacturing activity, which remains near its average level of the past 10 years, policymakers and manufacturers are sounding some boldly optimistic notes. “If we can continue on this trajectory, this resurgence, imagine what the state of manufacturing might look like in 2030 — at the end of the decade,” National Association of Manufacturers CEO Jay Timmons said in his annual address to member companies last month.
Corning to Build $900M Solar Component Facility in Michigan
New York Specialty materials maker Corning plans to invest up to $900 million to build a solar component manufacturing plant in Richland Township, Michigan, the Michigan Economic Development Corporation announced Feb. 27. The facility is expected to create over 1,100 jobs and will be operated under Corning’s subsidiary, Solar Technology.
The board of the Michigan Strategic Fund, a state initiative to draw investments to the state, approved over $109.3 million in state incentives to support the project. Funding includes $68 million in workforce development grants, $12.3 in manufacturing property incentives and $29 million for public infrastructure, road improvements and other related expenses. “These approved incentives helped confirm Michigan as the natural choice for this new endeavor,” Scott Forester, Corning division VP and program executive, solar, said in a statement. “The planned facility will create thousands of local jobs and advance the goal of expanding access to U.S. renewable energy solutions.”
Read more at Manufacturing Dive
Household Debt is Up Sharply. When Should We Worry
Household debt reached $17.5 trillion in the fourth quarter of last year, according to the Federal Reserve Bank of New York. It seems that auto loans and credit card balances are the main culprits. And what’s more, the amount we are paying in interest on this debt — as a percentage of our income — has been moving up sharply. In just the final three months of last year, we added to our household debt $271 billion. That is 19% higher than the average for that time of year over the last two decades, said Cassie Happe, an analyst at WalletHub.
The average rate on that credit card debt reached 22.8% last year, a record high. On the other hand, incomes have gone up quite a bit. We’re more able to carry the debt we’re taking on, but it doesn’t always feel that way. “I think if you say this to the average American, they would say, ‘What wage gains? My rent is up, my grocery bill is up,'” said Ted Rossman, a senior industry analyst at Bankrate. But when you look at the interest we’re paying as a percentage of our incomes, things are not nearly as bad as in just before the 2008 financial crisis, the dot com bubble, or in the mid-80s.
Gold Price Surges to Record High. What’s Behind the Buying?
The price of gold has surged to a record high, driven by growing expectations of US interest rate cuts, investors hunting for haven assets and months of prodigious buying by central banks and Chinese investors. The yellow metal struck $2,141 per troy ounce on Tuesday, beating the previous record of $2,135 set in December, according to LSEG data, before soon paring gains to trade up 0.8 per cent at $2,131 on the day.
Tuesday’s move represents a continuation of a rally triggered on Friday by growing hopes of a Federal Reserve rate cut in June following weaker economic data. Gold, an asset with no yield, benefits from lower borrowing costs as investors feel they have not missed out so much by not putting their cash into bonds. Gold has been on a searing 16-month rally, surging 30 per cent from just above $1,600 per troy ounce in late 2022, supported primarily by record buying by central bank emerging markets after the US weaponised the dollar in its sanctions against Russia for its full invasion of Ukraine.
Treasury Sanctions Members of the Intellexa Commercial Spyware Consortium
The Department of Treasury on Tuesday banned Greece-based software developer Intellexa from doing business in the U.S.. Since its founding in 2019, the Intellexa Consortium has acted as a marketing label for a variety of offensive cyber companies that offer commercial spyware and surveillance tools to enable targeted and mass surveillance campaigns. These tools are packaged as a suite of tools under the brand-name “Predator” spyware, which can infiltrate a range of electronic devices through zero-click attacks that require no user interaction for the spyware to infect the device.
Once a device is infected by the Predator spyware, the spyware can be leveraged for a variety of information stealing and surveillance capabilities—this includes the unauthorized extraction of data, geolocation tracking, and access to a variety of applications and personal information on the compromised device. The Predator spyware has been deployed by foreign actors in an effort to covertly surveil U.S. government officials, journalists, and policy experts. In the event of a successful Predator infection, the spyware’s operators can access and retrieve sensitive information including contacts, call logs, and messaging information, microphone recordings, and media from the device.
Read more at The Treasury Department
Boeing, Machinists Union Kick off Contract Talks on Friday
Boeing and its largest union open talks on Friday seeking the first new contract in 16 years as the U.S. planemaker grapples with its ongoing 737 MAX safety crisis and after big gains by workers in other sectors of the economy. U.S. unions have capitalized on tight labor markets to win hefty contracts at the bargaining table, with mainline pilots, autoworkers and others scoring big raises in 2023.
The International Association of Machinists and Aerospace Workers (IAM), which represents over 30,000 Washington state workers building Boeing's 737 MAX jets, wants better retirement benefits and wage increases exceeding 40% over three to four years after what it termed years of stagnant earnings. Unlike auto workers who were able to leverage strong industry profits, Boeing is losing ground to rival Airbus (AIR.PA), opens new tab and trying to manage a crisis that erupted after a door plug blew off an Alaska Airlines 737 MAX jet in mid-air on Jan. 5. Boeing reported a net loss of $2.2 billion in 2023 after losing $5 billion in 2022.
Logistics: Preparing for Longer Conflict in the Red Sea
With recent U.S.-led airstrikes failing to deter Houthi attacks against vessels in the Red Sea, it’s clear that the Yemen-based militant group maintains the intent to continue its campaign, says Gabrielle Reid, associate director of Strategic Intelligence at S-RM, a corporate and cybersecurity consultancy. Here are her insights into how significantly these attacks have disrupted the flow of trade and their political implications going forward:
Ongoing attacks could lead to operational independence for Houthis. The success of the Houthi attacks in disrupting the global flow of trade has regional as well as global significance.
Houthi attacks have exposed main chokepoints and increased political leverage. While the attacks have been largely motivated by the ongoing Israel/Hamas war, the targeting of merchant vessels by the Houthis and the associated disruptions to international trade have helped the Houthis win broader credibility in Yemen and likely have increased leverage in any future peace talks in the country.
U.S. attacks won’t sufficiently damage Houthi capabilities as long as Iran continues to support the rebel group. Further U.S.-led airstrikes might temporarily reduce Houthi weapons and materiel stockpiles, but with the current U.S. strategy focused on sufficiently degrading their military capabilities to curtail Red Sea attacks, this is unlikely to fundamentally degrade Houthi capabilities in the coming weeks to months
Read more at Material Handling & Logistics
OPEC+ Members Extend Oil Output Cuts to Second Quarter
OPEC+ members led by Saudi Arabia and Russia agreed on Sunday to extend voluntary oil output cuts of 2.2 million barrels per day into the second quarter, giving extra support to the market amid concerns over global growth and rising output outside the group. Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), said it would extend its voluntary cut of 1 million barrels per day (bpd) through the end of June, leaving its output at around 9 million bpd.
OPEC+ members announced the cuts individually on Sunday and OPEC later issued a statement confirming the 2.2 million bpd total. Saudi state news agency SPA said the cuts would be reversed gradually, according to market conditions. Oil has found support in 2024 from rising geopolitical tensions and Houthi attacks on Red Sea shipping, although concern about economic growth has weighed. While OPEC+ was widely expected to keep the cuts in place, Russia's announcement could bolster prices further.
US Military to Invest Billions in Simulation, Training
The US is gearing up for a surge in military simulation and training spending, with forecasts indicating an annual expenditure exceeding $26bn up to 2028. This initiative is driven by a commitment to enhance military readiness and response capabilities. According to GlobalData’s latest report, titled “United States (US) Defense Market Size, Trends, Budget Allocation, Regulations, Acquisitions, Competitive Landscape, and Forecast to 2028,” the US military is directing funds towards optimising training systems across air, land, and sea domains. This investment, totaling an estimated $159bn between 2023 and 2028, highlights a shift towards holistic readiness enhancement.
Contrary to the traditional focus on combat hardware, this investment emphasises the importance of personnel preparedness and adaptability in the face of evolving geopolitical challenges. The allocation of resources into training systems is a strategic move to navigate the complexities of modern warfare.