Member Briefing March13, 2024
CPI = 3.2%, Inflation Comes In Higher Than Expected For Fourth Straight Month
The consumer price index, a broad measure of goods and services costs, increased 0.4% for the month and 3.2% from a year ago, the Labor Department’s Bureau of Labor Statistics reported Tuesday. The monthly gain was in line with expectations, but the annual rate was slightly ahead of the 3.1% forecast from the Dow Jones consensus. Excluding volatile food and energy prices, the core CPI rose 0.4% on the month and was up 3.8% on the year. Both were one-tenth of a percentage point higher than forecast.
A 2.3% increase in energy costs helped boost the headline inflation number. Food costs were flat on the month, while shelter rose another 0.4%. The BLS reported that the increases in energy and shelter amounted to more than 60% of the total gain. Gasoline jumped 3.8% on the month. Airline fares posted a 3.6% increase, apparel prices rose 0.6% and used vehicles were up 0.5%. Medical care services, which helped feed a higher-than-expected CPI increase in January, decreased 0.1% last month.
NFIB Small Business Optimism Index Dips in February
The NFIB Small Business Optimism Index decreased in February to 89.4, marking the 26th consecutive month below the 50-year average of 98. Twenty-three percent of small business owners reported that inflation was their single most important business problem in operating their business, up three points from last month and replacing labor quality as the top problem. Key findings include:
- Reports of labor quality as the single most important problem for business owners decreased five points to 16%, the lowest reading since April 2020.
- The net percent of owners who expect real sales to be higher increased six points from January to a net negative 10% (seasonally adjusted), an improvement from last month.
- Small business owners’ plans to fill open positions continue to slow, with a seasonally adjusted net 12% planning to create new jobs in the next three months, the lowest level since May 2020.
- Thirty-seven percent (seasonally adjusted) of all owners reported job openings they could not fill in the current period, down two points from January and the lowest reading since January 2021.
- The net percent of owners raising average selling prices declined one point from January to a net 21% (seasonally adjusted), the lowest reading since January 2021.
Global Headlines
Middle East
- Israel and Hamas: The Latest News – The Guardian
- Hezbollah Fires More Than 100 Rockets Into Israel, Drawing Retaliation - NYT
- No Cease-Fire For Hamas And Israel As Ramadan Starts - Forbes
- Hamas Took More Than 200 Hostages From Israel. Here’s What We Know - WSJ
- EU Leaders Plan to Demand ‘Sustainable Cease-Fire’ in Gaza – Politico
- Israeli Jets Hit Lebanon's Bekaa Valley for a Second Day – Reuters
- First Boat Carrying Aid for Starving Gazans Departs Cyprus - WSJ
- 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
- Zelenskiy Says Frontline Situation Better Than in Prior Three Months – Reuters
- Russia is Hit by a Wave of Ukrainian Drone Attacks and a Border Incursion Ahead of Putin's Re-Election – NBC
- France Overtakes Russia as World’s No. 2 Arms Exporter - Politico
- Ukraine War Sparks Rare Challenge to Putin From Russian Soldiers’ Wives - WSJ
- Putin Defectors Vow To 'Liberate Russia' As Tanks Roll in From Ukraine - Newsweek
- White House Expected to Announce it’s Sending ATACMS Munitions to Ukraine – 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
- China, Russia, Iran Join Forces for War Games Amid US-Houthi Clashes - Newsweek
- China Could Meddle In 2024 U.S. Elections, Intelligence Report Alleges - Forbes
- Venezuela Rushes to Mend Iran Relationship as US Sanctions Loom - Reuters
- Romania’s President Launches Bid for NATO Top Job Against Mark Rutte – Politico
- Chinese Premier Li to Skip Meeting with Global CEOs at Key Business Summit – Reuters
- Haitian PM Tenders resignation After Jamaica Talks - Reuters
- Is Kim Jong Un Preparing North Korea for War? - NBC
- India, America's New Partner Against China, Shows Off Aircraft Carriers - Newsweek
Policy and Politics
Biden, GOP Release Dueling Budget Blueprints
President Biden and House Republicans are pushing dueling budget blueprints for the coming year as the battle for control of the White House and Congress heats up. Biden released his 2025 budget request Monday, and the GOP-controlled House Budget Committee advanced its budget resolution last week. It’s unlikely that either becomes law, but they provide an indication of each side’s priorities heading into the next funding cycle.
Here’s how the two compare on taxes, entitlements, defense, the border and more.
One House Budgets Kick Off Next Phase of State Budget Negotiations
The next phase of Albany’s budget negotiations kicked off Monday night, as both Democratic state Senate and Assembly conferences were poised to release their “one house” budget proposals. Only the state Senate’s document was released online late Monday night as R1952. The documents establish the Legislature’s stance on Gov. Kathy Hochul’s 2024 $233 billion budget proposal released in January.
Largely dealing with fiscal issues rather than policy, the proposals are introduced as legislation and slated for a chamber-wide vote later this week. Sources describe the proposals as symbolic, because a three-way agreement is needed between the governor and both legislative houses in order to finalize the multi-billion dollar state budget.
Read more at NY State of Politics
House to Hold TikTok Briefing With Intel Officials Ahead of Vote on Potential Ban
Intelligence officials from the FBI, Department of Justice and Office of the Director of National Intelligence briefed House lawmakers about TikTok on Tuesday, a Republican aide told The Hill. The 1 p.m. briefing comes ahead of an impending floor vote this week on a bill that could ban TikTok, the popular social media app owned by China-based ByteDance.
The Protecting Americans From Foreign Adversary Controlled Applications Act would force ByteDance to divest TikTok or face a ban on U.S. app stores and web-hosting services. It also would lay out a process for the president to designate other foreign adversary-controlled apps. It advanced out of the House Energy and Commerce Committee with a rare unanimous 50-0 vote Thursday, two days after it was introduced. But lawmakers on both sides of the aisle have raised concerns about the bill.
Health and Wellness
Mental Health-Related Absences Up 33% in 2023
Mental health-related leaves of absence are surging in the workplace, new data finds, up 33 percent in 2023 over 2022—analysis indicating that mental health pressures among employees show no signs of relenting. Further, employee leaves of absence for mental health issues are up a whopping 300 percent from 2017 to 2023, according to the analysis out last week from mental health services provider ComPsych. A leave of absence, ComPsych said, can vary from a few days to weeks.
Female employees and younger workers, in particular, are driving the surge. In 2023, 69 percent of mental health-related leaves of absence were taken by women. Of these, a third (33 percent) were taken by Millennial women. Well over half of employees (57 percent) are experiencing at least moderate levels of burnout, according to a recent report from Aflac, while a Mercer survey found that 67 percent of employers consider depression and anxiety a concern at work, with 21 percent citing it as a serious concern. Sixty-eight percent said job-related stress is a concern, and 59 percent cited financial stress. Other research has found that inflation, in particular, is taking a toll on employee mental health.
Election 2024
- Biden and Trump Clinch Nominations - AP
- Biden’s Budget for the Next Fiscal Year is Unlikely to Gain Traction in Congress, But it Will be a Campaign Cornerstone - WSJ
- RNC Lays Off Dozens of Staffers Says After Trump’s Team Takes Over - CNN
- 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
The Conference Board Employment Trends Index Decreased in February
The Conference Board Employment Trends Index™ (ETI) decreased in February to 112.29, from a downwardly revised 113.18 in January. The Employment Trends Index is a leading composite index for employment. When the Index increases, employment is likely to grow as well, and vice versa. Turning points in the Index indicate that a change in the trend of job gains or losses is about to occur in the coming months.
The Employment Trends Index aggregates eight leading indicators of employment, each of which has proven accurate in its own area. Aggregating individual indicators into a composite index filters out "noise" to show underlying trends more clearly. February's decrease in the Employment Trends Index was driven by negative contributions from four of its eight components: Percentage of Respondents Who Say They Find "Jobs Hard to Get", Percentage of Firms with Positions Not Able to Fill Right Now, Number of Employees Hired by the Temporary-Help Industry, and Initial Claims for Unemployment Insurance.
Federal Judge Voids NLRB's New Joint Employer Rule
A federal judge in Texas has blocked a new rule by the National Labor Relations Board that would have made it easier for millions of workers to form unions at big companies. The rule, which was due to go into effect Monday, would have set new standards for determining when two companies should be considered “joint employers” in labor negotiations. Under the current NLRB rule, which was passed by a Republican-dominated board in 2020, a company like McDonald’s isn’t considered a joint employer of most of its workers since they are directly employed by franchisees.
The new rule would have expanded that definition to say companies may be considered joint employers if they have the ability to control — directly or indirectly — at least one condition of employment. Conditions include wages and benefits, hours and scheduling, the assignment of duties, work rules and hiring. The U.S. Chamber of Commerce, which filed the successful legal action against the rule in November along with other organizations, argued the regulation would have made it too easy for the NLRB to declare joint-employer status, potentially leading to companies facing liability for workers not on their payroll and work establishments they don't truly control.
East Coast, Gulf Coast Dockworker Talks Are Starting Under Threat of a Strike
Contract talks at East Coast and Gulf Coast ports are starting this year under very different circumstances than the West Coast negotiations that rattled supply chains over the past two years. Cargo bottlenecks that left imports tied up at sea and at ports have largely cleared while record earnings for ocean carriers, a source of rancor during the West Coast talks, are dissipating in a vastly changed freight market.
The International Longshoremen’s Association is seeking to build on strong wage gains other transportation unions have won. The dockworkers’ union is already threatening a strike against shipping companies and port employers if a deal on a new multiyear contract can’t be reached before the current agreement expires Sept. 30. Harold Daggett, the ILA’s combative president, told dockworkers at a protest in January outside the Manhattan offices of wind energy giant Orsted, that the forthcoming contract would be the best the union ever had. The head of the union that represents more than 45,000 workers at ports from Maine to Texas has told local chapters to resolve local work issues with employers by May 17 so that a coast-wide deal can be negotiated before the current contract expires. Formal negotiations would be scheduled once the local agreements are reached.
Boeing Whistleblower John Barnett Found Dead This Weekend—Here’s What To Know
Boeing whistleblower John Barnett was found dead in a South Carolina parking lot just days after giving evidence against the company in a lawsuit against them, as the company faces increasing scrutiny over the safety of its aircraft. Barnett, 62, was found dead in his truck in a hotel car park in South Carolina over the weekend, where he had been giving evidence against his former employer in a whistleblower lawsuit and had been expected to attend court for further questioning on Saturday.
The Charleston County coroner’s office in South Carolina said Barnett died from what appeared to be a “self-inflicted” wound on March 9, adding that local police are investigating. Barnett was a Boeing veteran who worked at the company for 32 years until retiring in 2017, including seven years as a quality control manager at the South Carolina plant where it builds its 787 Dreamliner jet. In 2019, Barnett was one of several whistleblowers to raise concerns over the company’s manufacturing process, claiming the rush to complete aircraft meant safety was compromised as workers were pressured to cut corners and install sub-standard parts for the planes.
3M Names William Brown Chief Executive
Industrial conglomerate 3M on Tuesday said that William Brown will be appointed as chief executive officer, effective May 1. Brown, 61, the former CEO of L3Harris Technologies, will succeed Michael Roman, who will become executive chairman of 3M's board on the same date. "Bill's strong track record as a CEO for a global technology company makes him the right leader for 3M," Roman said in a statement.
Brown's appointment comes after the company in January forecast full-year earnings below Wall Street estimates, citing a "muted" macro environment. The company's electronics business in particular, which makes displays for smartphones and tablets, has been grappling with the effects of sticky inflation, with customers cutting back on discretionary purchases, particularly in markets such as China. To mitigate this, the diversified manufacturer has rolled out a major restructuring that includes cutting thousands of jobs and the spinoff of its healthcare business into a listed company.
Intel Survived Bid to Halt Millions in Sales to China's Huawei
Intel has survived an effort to halt hundreds of millions of dollars' worth of chip sales to Huawei, two people familiar with the matter said, giving one of the world's largest chipmakers more time to sell to the heavily sanctioned Chinese telecoms company. U.S. President Joe Biden has long been under pressure to revoke a license, issued by the Trump administration, that allows Intel to ship advanced central processors to Huawei for use in laptops.
The push came from Intel rival Advanced Micro Devices which argued it was unfair that it did not receive a license to sell similar chips to Huawei and from China hawks, who are seeking to stop all sales to the Chinese firm. Intel's ability to hang on to a license to sell chips while a rival could not obtain similar permission demonstrates the uneven and uncertain terrain companies face as the U.S. seeks to limit Beijing's access to sophisticated American technology, especially to a heavily sanctioned company like Huawei.
GE Aerospace Invests $650 Million to Improve U.S. Manufacturing Plants and its Supply Chain
GE Aerospace has announced plans to improve its manufacturing facilities and supply chain. The company will invest $650 million into the project, which includes $450 million for new machines, inspection equipment, building upgrades, and new test cells and safety enhancements at its 22 U.S. facilities located in 14 states. $100 million in funding will be spent on supplier partners across the country. GE Aerospace will also allocate $100 million to improve the resilience of its domestic supply chain and help suppliers build and maintain capacity for increased growth. As part of this ambitious project, GE Aerospace plans to create 1,000 new jobs in the U.S.
In a recent quote, H. Lawrence Culp, Jr., Chairman and CEO of GE and CEO of GE Aerospace, said, “As GE Aerospace prepares to become a standalone company this spring, we are making significant investments in the future of flight and in the dozens of communities and supplier partners helping us build it. These investments are part of the next chapter for GE Aerospace, supporting cutting-edge equipment and safety enhancements that will help us meet our customers’ growing needs.”
U.S. Airlines Warn of More Boeing Delivery Delays Due to Safety Crisis
U.S. carriers warned on Tuesday that their plans to increase capacity were in doubt due to more jet delivery delays from Boeing (BA.N), opens new tab, as the hit to the airline industry from the planemaker's safety crisis worsens. The airline industry has cut expectations for deliveries this year due to Boeing's problems, complicating their efforts to meet record travel demand. Boeing has been under heavy regulatory scrutiny following a harrowing Jan. 5 midair panel blowout incident that led to probes into the company's safety and quality standards in its production process.
"Boeing deliveries are going to be way behind this year," United Airlines CEO Scott Kirby said at a conference, organized by J.P. Morgan, a week after the carrier said it was pausing pilot hiring for two months. Rival Southwest Airlines said on Tuesday it expects 42% less MAX deliveries this year from Boeing than previously estimated, and that will likely result in a cut in its 2024 capacity. Heightened regulatory and legislative scrutiny at Boeing have frustrated airliners as its problems have started to affect their ability to meet customer demand.
Jamie Dimon Warns US Recession ‘Not Off the Table’ Yet
CEO Jamie Dimon on Tuesday urged the Federal Reserve to wait past June before cutting interest rates, arguing the central bank needs to shore up its inflation-fighting credibility. “I think they have to be data-dependent. If I were them, I would wait,” Dimon said at the Australian Financial Review business summit via a livestream from New York. “You can always cut it quickly and dramatically. Their credibility is a little bit at stake here. I would even wait past June and let it all sort it out.”
Dimon said the U.S. economy was doing so well it could almost be characterized as a boom, but cautioned against the wholesale embrace of the soft landing narrative by markets. He put the odds of a recession of some sort at around 65% and refused to rule out the possibility of stagflation. He has previously warned that geopolitical tensions, including the war in Ukraine and conflict in Gaza, could weigh on global growth. Dimon said the surge in debt and equity markets since late 2023 had some bubble-like characteristics and linked it in part to the legacy of the pandemic-era fiscal and monetary stimulus, which was “still in the system, you can’t say that they’re gone.”