Member Briefing May 2, 2022
Ballooning Benefits Cause Employment Costs Index to Jump 1.4 Percent in Q1
Compensation costs for civilian workers increased 1.4 percent, seasonally adjusted, for the 3-month period ending in March 2022, the U.S. Bureau of Labor Statistics reported Friday. Wages and salaries increased 1.2 percent and benefit costs increased 1.8 percent from December 2021. Wages and salaries increased 4.7 percent for the 12-month period ending in March 2022 and increased 2.7 percent for the 12-month period ending in March 2021. Benefit costs increased 4.1 percent over the year.
In the manufacturing sector the index rose 1.9% in Q1 and 4.9% year on year with the benefits portion being 0.4 in Q1 and 2.5 year on year.
Invasion of Ukraine Headlines
- Ukraine and Russia: the Latest News – Reuters
- Germany Drops Opposition to Embargo on Russian Oil – WSJ
- Russian State TV Simulates Deadly Nuclear Strike on Europe Amid UK WW3 Warning – The Record (UK)
- Pelosi Leads Delegation to Kyiv and Poland; Vows US Support – The Hill
- Russia’s Occupation of Southern Ukraine Hardens, With Rubles, Russian Schools and Lenin Statues – WSJ
- Russian Central Bank Cuts Rates – CNBC
- McCaul Says he Would Call House Back From Recess to Pass Ukraine Aid – The Hill
- Some Women and Children Evacuated from Mariupol – Politico
- Russia Bombs Ukraine Capital During UN Chief’s Visit – The Hill
- Russia’s Army is in a Woeful State – The Economist
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Fed Prepares Double-Barreled Tightening With Bond Runoff
This Wednesday, officials are to announce plans on how they will shrink the nearly $9 trillion portfolio of mostly Treasury and mortgage securities it accumulated to support financial markets and the economy during the pandemic. Officials have recently indicated they would allow $95 billion in securities to mature every month—$60 billion in Treasuries and $35 billion in mortgage-backed securities. Runoff is likely to start in June and reach the new caps in just a couple months instead of a year.
The Fed wasn’t in a rush five years ago because inflation was running just below its 2% target. This time, the Fed is in a hurry to remove stimulus because inflation was 6.6% in March using the Fed’s preferred index, near a four-decade high.
Fed’s Inflation Gauge Rose 6.6 Percent Annually in March
The personal consumption expenditures (PCE) price index — the Federal Reserve’s preferred gauge of inflation — rose 6.6 percent over the 12 months ending in March, up from a 6.3 percent annual inflation rate in February, the Bureau of Economic Analysis (BEA) reported Friday. Annual inflation without food or energy prices, which are more volatile, fell slightly to 5.2 percent in March, down from 5.2 percent in February.
Prices rose 0.6 percent in March alone, largely in line with the monthly inflation rate since October, and by 0.5 percent without food or energy. Rising consumer prices also cut into disposable incomes last month despite rapid wage growth over the past year. Disposable incomes rose 0.5 percent in March, but fell 0.4 percent when adjusted for inflation.
US COVID – Rate of Boosters Decline
The US CDC is reporting 80.9 million cumulative cases of COVID-19 and 989,408 deaths. The average daily incidence has nearly doubled from the recent low of 24,982 new cases per day on April 4 to 48,692 on April 26. The daily mortality continues to decline, down to 299 deaths per day—the first day below 300 since July 23, 2021.* Notably, new COVID-19 hospital admissions continue to trend upwards, with an increase of 17.6% over the past week.
After a slight increase starting in late March, following US FDA authorization of a second booster dose, daily vaccinations are once again declining, down from 485,000 doses per day on April 12 to 394,000 on April 21 (-18.6%). A total of 257 million individuals have received at least 1 vaccine dose, which corresponds to 77.5% of the entire US population. A total of 219 million individuals are fully vaccinated, which corresponds to 66.1% of the total population. This corresponds to 45.7% of fully vaccinated individuals, including 68.5% of fully vaccinated adults aged 65 years or older. Only 49.5% of individuals eligible for a first booster dose have received one.
NYS Vaccine and COVID Update –
Vaccine Stats as of April 29:
One Vaccine Dose
- 90.1% of all New Yorkers – 16,560,496
- In the Hudson Valley 1,724,897
- 76.8% of all New Yorkers – 14,839,950
- In the Hudson Valley – 1,514,706
- All New Yorkers – 8,037,101
- In the Hudson Valley – 968,646
The Governor updated COVID data through April 29. There were 12 COVID related deaths for a total reported of 70,763
- Patients Currently in Hospital statewide: 1,868
- Patients Currently in ICU Statewide: 196
7 Day Average Positivity Rate – Cases per 100K population
- Statewide 6.74% – 34.50 positive cases per 100,00 population
- Mid-Hudson: 5.08% – 30.14 positive cases per 100,00 population
Moderna Asks FDA To Authorize First COVID Vaccine For Young Children
Moderna has requested an emergency use authorization from the Food and Drug Administration for its COVID-19 vaccine for young children. If authorized, it would be the first vaccine for children between the ages of six months and five years old. The company said that clinical trials showed a robust immune response when young children were given two 25-microgram doses of the vaccine. The company said that the amount of neutralizing antibodies was similar to that of adults, who were given two 100-microgram doses of the vaccine.
The company said that the efficacy of the vaccines was 51% for children between two and five years old, while it was 37% for children between six months and two years old. That is similar to the efficacy against the Omicron variant for adults.
Study: Prior COVID Infections and Today’s Vaccines Likely Won’t Help You Avoid the New Omicron Variants
New Omicron sublineages, discovered by South African scientists this month, are likely able to evade vaccines and natural immunity from prior infections, the head of gene sequencing units that produced a study on the strains said. The BA.4 and BA.5 sublineages appear to be more infectious than the earlier BA.2 lineage, which itself was more infectious than the original Omicron variant, said Tulio de Oliveira, the head of the institutes at the universities of KwaZulu-Natal and Stellenbosch.
With almost all South Africans either having been vaccinated against the coronavirus or having had a prior infection, the current surge in cases means that the strains are more likely to be capable of evading the body’s defenses rather than simply being more transmissible, de Oliveira said.
Economy Shrinks 1.4% in First Quarter, GDP shows, but Mainly Due to Record Trade Deficit
The Commerce Department reported Thursday that the nation’s gross domestic product shrank at an annual rate of 1.4% in the first three months of this year — a marked contrast from the final months of 2021, which saw some of the fastest growth in decades.
But economists say that’s not as worrisome as it might seem. Consumption and fixed investment rose quite strongly, by 2.7% and 7.3% respectively, but GDP growth was hugely depressed by a massive 3.2 percentage point drag from net foreign trade, and a 0.8pp hit from inventories. And consumers continue to spend freely, and businesses are still investing, despite the sharp drop in headline GDP growth. “We should not take that as a signal of the direction of the economy,” says Ben Herzon, senior U.S. economist with S&P Global Market Intelligence. He notes that GDP was dragged down by a drop in exports, inventories and government spending.
Lawmakers Scramble to Interpret Court Ruling and Set New August Primary Date
If candidates for state Senate and Congress thought petitioning was behind them, the New York Court of Appeals ruling has now turned that on its head. The process of gathering signatures to get on the ballot will almost definitely start over for them. “But,” says election lawyer Sarah Steiner, “remember how last year the Legislature shortened the petition period for COVID and lowered the number of signatures you needed to get on the ballot for various offices — the Legislature, who are the people who would have to petition, they would be wise to do that again.”
What this possibly means is two separate primaries, although the Legislature will have to pass a new law in the coming weeks to make that a reality. “I think this decision is kind of an earthquake here in New York,” says election lawyer Jerry Goldfeder. “We will go forward with the statewide primary, we will go forward with the judicial races, the county races, the political party position races and probably the Assembly races, because they are not involved. But it looks like we will have to have an August or early September primary.”
Why One Million Women Are Missing from the Workforce
In April 2020 as the pandemic took hold, women’s unemployment surpassed men’s by 2.5%. Today, women’s unemployment rate lags men’s by only .1% but the labor force participation rate for women is still a full percentage point lower than it was pre-pandemic. There are several factors contributing to the slower return of women to the workforce. All of them are helping to fuel a workforce shortage that is unsustainable for the American economy and will disadvantage women in the long run.
Among the key findings of a report from the US Chamber of Commerce into what is keeping nearly 1 million women home include a re-examining of work/life balance, a desire to stay home to care for children coupled with the affordable child care access, and the types of jobs traditionally held by women are more vulnerable to the vagueries of the pandemic.
Business Workforce Survey 2022
New York State – in partnership with the Business Council of New York State – has developed a comprehensive online survey to solicit vital feedback from businesses on the skills required for workers to be successful in today’s complex economy, and how New York can prepare and position its labor force to better serve companies’ needs.
Collective results from this survey will be used by the State and the Regional Economic Development Councils to develop an inventory of and strategy to address regional needs. Individual responses will be kept confidential.
The survey can be found here
German Economy Surprises to the Upside
Recession avoided. According to the statistical office’s flash estimate, the German economy grew by 0.2% quarter-on-quarter in the first quarter of 2022, from -0.3% QoQ in 4Q 2021. On the year, the economy grew by 3.7%. However, don’t forget that even with this small growth surprise, the German economy is still below pre-pandemic levels. GDP components will only be released later in May but according to the statistical office, investment was the main driver of growth.
French GDP Stagnates in 1Q, Hit by Household Consumption
France’s economic growth came to a halt in the first quarter, posting a 0% quarterly variation after 0.8% in the fourth quarter of 2021. Domestic demand is falling in France, detracting 0.6 percentage points from GDP growth. Within domestic demand, it is above all household consumption that is clearly down, with a drop of 1.3% over the quarter on the back of high inflation and pessimism linked to the war in Ukraine. It should be noted that the total production of goods and services continues to increase in 1Q, but at a less dynamic pace than the previous quarter (+0.5% from +1.0%).
Ukraine War Speeds Up US Cyber Agenda
The war in Ukraine has pushed the United States to expedite its investment in cybersecurity amid constant — though so far unrealized — warnings of Russian cyberattacks on government agencies, election systems and critical infrastructure. Following the invasion of Ukraine, federal agencies have invested millions in cyber technology, seized and sanctioned hacking forums, charged Russian cyber criminals, and issued almost weekly warnings on the latest threat risks.
Although many of these efforts predate the Russian invasion, experts say that the war in Ukraine gave the actions momentum and priority, such as lawmakers passing the cyber incident reporting law and the Department of Justice (DOJ) indicting Russian hackers.
Ford to Lean Primarily on Price Increases to Offset Rising Costs
CEO Jim Farley told analysts and investors the automaker wasn’t spared by supply chain and inflationary pressures in the first quarter: Ford’s spending on commodities this year is now expected to be $4 billion higher than previously forecast and about 53,000 nearly-completed vehicles are awaiting semiconductors. But consumers are still asking for more product and Ford finished the first quarter with $17 billion worth of orders on its books.
Ford posted a net loss of $3.1 billion in the first quarter on sales of $34.5 billion, which were 5% lower from the prior-year period. Adjusted earnings before interest and taxes were $2.3 billion versus $3.9 billion early last year. The company sold about 966,000 vehicles during the quarter, down from about 1.1 million both late last year and in the first three months of 2021, and still expects to grow its wholesale volumes 10% to 15% from 2021.
UAW and NDRC Sue Postal Service for Oshkosh Truck Contract
The United Auto Workers and the National Resources Defense Council announced a joint lawsuit against the United States Postal Service targeting Oshkosh Defense’s contract to build the next wave of mail trucks. 16 state attorneys general have since signed on to the lawsuit opposing the contract, which alleges that the $11.3 billion-dollar contract awarded to Oshkosh in February was awarded using an incomplete Environmental Impact Statement required by federal environmental law.
Britt Carmon, federal clean vehicles senior advocate at the NRDC, excoriated the Postal Service’s review in a statement, calling it an “error-filled, flimsy analysis” and calling for investment in electric vehicles instead of the 10% electric fleet the current contract promises. USPS spokesperson Kim Frum, in an email to the Washington Post, responded to the criticism by saying that the Postal Service had fully complied with the law by conducting “a robust and thorough review.”
Deeper Dive: New York Redistricting Mess
The state’s highest court struck down Democrats’ most effective gerrymander in a shocking ruling Wednesday, scuttling a map that would have likely netted the party 22 of New York’s 26 seats in an election when they desperately needed every one of them. The decision has incensed Democrats across the country — particularly since it was delivered by judges appointed by their own party’s governors.
“I think it looks bad. I think we’ve got egg on our face,” said Rep. Kathleen Rice (D-N.Y.), who is retiring from her Long Island seat next year. She was among some Democrats who questioned whether the legislature had overreached when it created a map so heavily slanted toward Democrats when the state constitution placed a check on gerrymandering. “It didn’t need to be that way,” she said. “We could have made lines that were fair and followed the rules and still have been effective at making sure that Democrats are represented.”