Member Briefing March 9, 2023
BLS: January Job Openings and Quits Decrease; Layoffs and Discharges Increase
The number of job openings in the United States fell to 10.8 million in January, down from an upwardly revised 11.23 million in December, the Bureau of Labor Statistics reported Wednesday as part of its monthly Job Openings and Labor Turnover Survey, or JOLTS. The report showed that hiring increased to 6.37 million from 6.25 million, layoffs surged to 1.72 million from 1.48 million, and quits dropped to 3.89 million from 4.09 million. In January, there were nearly 1.9 available jobs for every job seeker.
The continued imbalance between worker supply and demand means the US job market remained tight in January — and that's not what the Federal Reserve is looking for in its efforts to cool the economy. The Fed remains highly attuned to the monthly JOLTS report as the data can serve as a proxy for labor market demand. Fed officials have expressed concern that a tight labor market could keep upward pressure on wages and, in turn, inflation.
Read more at The Bureau of Labor Statistics
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- EU Pledges to Spend Over $1 Billion on Arms for Ukraine, Member States - WSJ
- Russians Claim Control Over Bakhmut's East, Ukrainians Defiant – Reuters
- Russian Forces Claim Progress in Bakhmut But No End in Sight – ABC News
- Massive Pro-EU, Anti-Russia Protest Erupts in Georgia - Politico
- Ukraine and UN Chief Call for New Grain Deal to Safeguard Global Food Supplies – The Guardian
- Grain Traders Bank On Renewal of Vital Ukraine Crop Deal - Bloomberg
- F-16s Won't Be a 'Game Changer' for Ukraine, Air Force's Europe Commander Says – Military Times
- EU Court Annuls Sanctions Against Mother of Putin Ally, in Rare Decision – Reuters
- Did Russia Censor the 'Top Gun: Maverick' Script? – Military Times
- India's Oil Deals With Russia Dent Decades-Old Dollar Dominance – Reuters
- Trial Targets Bankers Who Moved Money for Putin’s Cellist Friend - WSJ
- 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
Fed Chair Seeks to Calm Markets In House Testimony
Federal Reserve Chairman Jerome Powell wrapped up his second and final day of Congressional testimony with a relatively uneventful three-hour hearing in front of the House Financial Services Committee. Markets remained relatively flat throughout the question-and-answer session. That stands in stark contrast to Tuesday's Senate Banking Committee hearing, when stocks plunged after Powell opened the door to higher interest rate hikes to fight sticky inflation.
On Wednesday, Powell attempted to calm investor fears, stressing no decision had yet been made about steeper rate hikes. "If — and I stress that no decision has been made on this — if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes," he said.
US Trade Deficit Widens Slightly in January
The U.S. trade deficit widened in January on a pickup in imports, to mark the biggest gap in three months, according to government data released on Wednesday. The overall trade gap grew $1.1 billion from December to $68.3 billion in January, according to Commerce Department data, amid a rise in consumer goods imports along with that of autos and parts. January imports rose $9.6 billion from December to $325.8 billion, while exports picked up by $8.5 billion to $257.5 billion.
"The rebound in trade flows to start the year signals that the economy continues to carry momentum, but we do not expect the strength to be sustained in the months ahead," said Matthew Martin, U.S. economist at Oxford Economics, in a note. "Imports and exports are likely to weaken as consumers and businesses pull back, leading the deficit to move mainly sideways through the first half of the year," he added.
US COVID – CDC: XBB.1.5 Responsible for 90% of New Coronavirus Infections
According to updated estimates from the Centers for Disease Control and Prevention, XBB.1.5 caused nearly 90% of new coronavirus cases this week. That’s up from 85% of cases last week. It’s the only strain showing significant growth. Coronavirus cases, hospitalizations and deaths are on the decline, signaling that the U.S. has avoided a large seasonal COVID-19 surge like it saw the past two years. The main reason is likely the high level of immunity across the population whether through vaccination, infection or both.
Still, nearly half of U.S. counties are experiencing a “high” level of COVID-19 transmission, according to CDC data.
The Apprenticeship Renaissance: Why a Time-Tested Career Pathway Might Be the Best Way to Close Talent Gaps
According to data released recently by the Department of Labor, the number of active apprentices has grown 98 percent from 2013 to 2022. Apprenticeships allow individuals to learn while they earn by receiving supervised on-the-job training and education related to both their specific role and the industry more broadly. Nearly 15,000 new apprentice programs have been created in the past five years across a range of occupations, from skilled trades to high-tech fields and emerging industries.
For young people joining the workforce, these learn-and-earn programs can serve as a faster entry point directly into a career without burdening them with college debt. For tenured workers, apprenticeships can offer an opportunity to reskill into new roles. And for employers, apprenticeships reduce onboarding costs — because apprentices make an impact right away — while serving as valuable talent pipelines that produce workers who are guaranteed to have the skills companies need.
Read more at Talent Management
Report: Women Key to Addressing Manufacturing Labor Shortage
Addressing child care, increasing workplace flexibility and creating distinct leadership pathways will help manufacturers recruit more women, according to a report from the Manufacturing Institute and Colonial Life. The Manufacturing Institute’s 35×30 program targets increasing representation in the industry to 35% by 2030 through shifting perceptions and highlighting more women as role models. By raising the percentage to 35%, the sector would add 800,000 more female manufacturing employees.
“Our industry should look at this as an opportunity to provide real solutions that better allow our workforce to manage both professional and personal responsibilities.” MI vice president of strategic engagement and inclusion AJ Jorgenson said. Other tactics employers said they are using to recruit women include offering more competitive wages, creating inclusive cultures, open communication and a zero-tolerance harassment policy.
Q4 Earnings Calls Show Executives Relatively Sanguine About the Labor Market, Wary of the Demand Outlook.
Market and economy watchers surprised by the recent data showing that inflation is persisting really shouldn’t have been: Many leaders of IndustryWeek U.S. 500 companies told us as much in the first few weeks of 2023—and they often added that they are raising prices further, perhaps helping extend those inflationary pressures into the second half of the year. Three years after COVID-19 began disrupting businesses in earnest, higher prices continue to flow into and through this economy.
That’s the most definitive takeaway from IndustryWeek’s latest quarterly dive into the conference call transcripts of the five largest companies in 10 sectors of the IndustryWeek U.S. 500 list of publicly traded companies. As they did in November, IndustryWeek scoured executives’ comments for forward-looking statements about price increases, the labor market, the state of supply chains and overall demand and rated them on a five-notch spectrum from fully positive to fully negative.
Key Treasury Yield Curve Hits Deepest Inversion Since 1981
The bond market is doubling down on the prospect of a US recession after Federal Reserve Chair Jerome Powell warned of a return to bigger interest-rate hikes to cool inflation and the economy. As swaps traders price in a full percentage point of Fed hikes over the next four meetings, the yield on two-year Treasury notes touched 5.08% on Wednesday, its highest level since 2007. Critically, longer-dated yields remained stalled, with the 10-year rate remaining relatively unchanged under 4% and 30-year bonds having barely budged since Friday.
As a result, the closely-watched spread between 2- and 10-year yields this week showed a discount larger than a percentage point for the first time since 1981, when then-Fed Chair Paul Volcker was engineering hikes that broke the back of double-digit inflation at the cost of a lengthy recession. A similar dynamic is unfolding now, according to Ken Griffin, the chief executive officer and founder of hedge fund giant Citadel.
Fed Report: 2.2 Million More People Are Retired than Was Expected. Was I Just the Pandemic?
Last week, the Federal Reserve delivered a report to Congress on why the labor market is still so tight and why it will not return to pre-pandemic levels. One key factor is excess retirements. Right now, 2.2 million more people are retired than the Fed had expected. Many older workers retired earlier than planned during the pandemic. They were scared of contracting COVID at work. They cashed in on the hot housing market and record-breaking 401(k) plans. They took a buyout package, or they were laid off.
In reality, these 2 million-plus excess retirements shouldn’t be that shocking, per Kathryn Edwards, a labor economist at the Rand Corp. Retirement rates have been increasing as baby boomers age. “Rather than incremental, it was a large exodus from the labor force of people who were going to leave pretty soon anyway,” Edwards said. “This story is genuinely about 30 years of labor force trends that we have been very slow to see. And I think a little reluctant to see.”
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Federal Investigators to Probe Norfolk Southern’s ‘Safety Culture’
The federal agency probing the Feb. 3 derailment of a Norfolk Southern train that spewed toxic chemicals in East Palestine, Ohio, announced Tuesday that it plans a special investigation into the railroad’s safety culture — an unusual move for the agency, which typically focuses on the causes of individual accidents. The independent National Transportation Safety Board said it’s undertaking a focus on the railroad itself “given the number and significance of recent Norfolk Southern accidents”
NTSB urged the company to “take immediate action today to review and assess its safety practices, with the input of employees and others, and implement necessary changes to improve safety.” Norfolk Southern announced several safety measures on Monday, but most were focused on addressing one of the specific problems thought to have caused the Feb. 3 derailment, primarily involving an overheating wheel and the adequacy of detection technology.
Climate of Confusion Surrounds CLCPA
According to a new Siena College poll, nearly four years after passage of the Climate Leadership and Community Protection Act (CLCPA), most New Yorkers still aren’t familiar with the law. And despite supporting “aggressive” action to reduce the state’s greenhouse gas emissions, willingness to pay the associated costs is low, and respondents were conflicted about the transition from natural gas to electrification mandated by the CLCPA.
Respondents’ lack of understanding of the CLCPA is reflected in their concerns about its costs. Over a quarter of poll respondents were not willing to pay anything for compliance, and more than half were unwilling to pay more than $20 per month, or $240 per year. At $40 per month—less than $500 per year—unwillingness to pay reached 67 percent. But with the CLCPA costing $280 billion to $340 billion over the next 28 years, the annual cost per person in New York—man, woman and child—will be between $500 and $600 per year or roughly $1,300 to $1,600 per household.
Read more at The Empire Center
Lithium Mine Breaks Ground in Nevada
What could become the nation’s largest lithium mine broke ground in Nevada this week, positioning the political swing state as a likely leader in pumping out battery minerals critical for making electric vehicles and meeting President Joe Biden’s climate goals. The Thacker Pass project in northern Nevada appears to be moving past a lengthy legal brawl with strong bipartisan support and hefty federal backing, analysts say.
The mine in Humboldt County is part of a surge of projects that could shift the Silver State toward a lithium economy and have far-reaching implications for both the state’s and the nation’s economy and political future. Developer Lithium Americas Corp. has said it plans to produce 80,000 metric tons annually of battery-quality lithium carbonate, an amount that Fox said will meet the nation’s current demand.
Uncertainty Abounds as EV Tax Credit Guidance Looms
Electric vehicle buyers and makers, as well as mining companies, are eagerly anticipating the Biden administration’s expected announcement this month on which vehicles can get credits worth up to $7,500 under last year’s climate law. The law has specific sourcing requirements for battery minerals and battery components; the department said in December that it would issue the new guidance this month.
While Treasury will provide granular details of how it will carry out the requirements, the law itself dictates the basic standards. A buyer can get up to $3,750 of the $7,500 credit if at least 40 percent of the car’s critical minerals like lithium and cobalt, as measured by value, were extracted or processed in North America or a country with which the United States has a free-trade agreement. If the minerals are recycled, that process would have to happen in North America. The mineral requirement rises through the following years, until it reaches 80 percent in 2027.
Oklahoma Weed Legalization Referendum Defeated
Oklahoma voters overwhelmingly rejected recreational marijuana legalization at the ballot on Tuesday, hitting the brakes on what’s become the country’s wildest weed market over the last five years. The Associated Press called the contest with roughly two thirds of precincts counted and the petition failing by a more than 20-point margin. Oklahoma voters backed medical marijuana legalization by a double-digit margin in 2018, despite overwhelming opposition from elected officials, health care groups and business interests.
The rejection of the Oklahoma referendum marks the latest ballot failure for legalization advocates in recent months. Voters in Arkansas, South Dakota and North Dakota defeated legalization referendums in November, while voters in Maryland and Missouri approved adult-use legalization petitions.
Citrus cCrisis: As An Iconic Florida Crop Fades, Another Tree Rises
The citrus industry, long a defining symbol of Florida, is facing an existential crisis due to a plant disease that arrived in the state in 2005 and has spread to affect 80% of the orange groves. In 2004, Florida had an estimated 7,000 growers. Today, there are about 2,000. If the latest estimates hold, the state’s current growing season will yield 61% less fruit than last season, partly due to hurricane effects.
Ideas for new crops have arisen as farmers try to keep the land in use, such as blueberries, cotton, alfalfa, eucalyptus, and sugar beets. But pongamia carries the most promise so far. In India, Australia, and parts of southeast Asia, pongamia grows wild as it bears little beanlike pods that, in India, are crushed and used for lamp oil. Terviva hopes to corner the tree’s American market; their plan, use it for biofuel production, fertilizer feedstock, and a more sustainable alternative to soybeans for protein.