Member Briefing May 10, 2023
NFIB: U.S. Small Business Sentiment Slumps to More Than 10-Year Low
The National Federation of Independent Business (NFIB) said on Tuesday its Small Business Optimism Index dropped 1.1 points to 89.0 last month, the lowest level since January 2013. It was the 16th straight month that the index remained below the 49-year average of 98. Higher interest rates tied to the Federal Reserve's battle to tame inflation combined with tighter credit conditions following recent financial market stress are stoking fears of a recession this year. A fight over raising the federal government's borrowing cap is also helping to cloud the economy.
The share of owners expecting better business conditions over the next six months fell two points to a net negative 49%. A net negative 19% expected higher inflation-adjusted sales, down four points from March. While the survey hinted at an economic slowdown, economists cautioned against reading too much into the drop in sentiment. "The decline is broadly in line with the weakness in consumer sentiment seen over the past year," said Michael Pearce, lead U.S. economist at Oxford Economics in New York.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Downbeat Putin Slams West at Low-Key Victory Day Parade in Russia - Politico
- Russia Marks Victory Day With New Strikes on Ukraine, But Pared-Back Parade - Reuters
- NATO Forces on High Alert After Black Sea Incident – TVP (Poland)
- AFP Journalist Arman Soldin Killed by Rocket Fire in Ukraine - CBS
- EU Targets Eight Chinese Companies in Russia Sanctions Push - WSJ
- How Ukrainians Modify Civilian Drones for Military Use – The Economist
- US, NATO Missile Defense Exercise Kicks Off in Atlantic Amid Russian Show of Force – Stars and Stripes
- FBI Says it has Sabotaged Hacking Tool Created by Elite Russian Spies - Reuters
- Slide Show: Latest Ukraine Satellite Images Reveal Devastation of Russian Invasion – 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
CPI Forecasts Show Inflation Improvement Slowing to a Crawl
Forecasts for the April Consumer Price Index report due to be released today suggest progress in the fight against inflation has slowed to a crawl. The April CPI report is expected to show a 5.0% increase in inflation from a year ago, according to FactSet’s consensus forecasts. That would be the same annual rate of inflation that was logged in March. While down substantially from the inflation rates seen in 2022, it would show upward pressure on prices continuing at a pace well above the Fed’s target levels.
For the month, the CPI is forecast to rise 0.4%, while core CPI—which excludes volatile food and energy costs—is expected to rise 0.3%. In the March report, the overall CPI clocked in at an increase of 0.1%, which was the smallest increase in two years. Core CPI is forecast to rise 0.3% for the month versus 0.4% in March. The CPI, year over year, is forecast to rise 5.0% in April, the same pace as in March. Core CPI, year over year, is forecast to rise 5.4% versus 5.6% in March.
China Finally Has a Rival as the World’s Factory Floor
Western companies are desperately looking for a backup to China as the world’s factory floor, a strategy widely termed “China plus one.” India is making a concerted push to be the plus one. Only India has a labor force and an internal market comparable in size to China’s; India’s population may be the world’s largest, according to the United Nations. Western governments see democratic India as a natural partner, and the Indian government has pushed to make the business environment more friendly than in the past.
China still towers over every other country in global manufacturing, a position it cemented when multinationals flooded in after it joined the World Trade Organization in 2001. But a growing list of factors has prompted companies to search for a backup. First, there were rising labor costs in China and pressure from the Chinese government to transfer technology to Chinese competitors. Then there were President Trump’s tariffs on Chinese imports in 2018, Covid lockdowns from 2020 through last year, and now a push by Western governments to decouple their economies from China.
COVID News – Novavax Announces Positive Flu/COVID-19 Vaccine Data
Novavax on Tuesday announced positive data for its flu and COVID-19 combination vaccine – the same day as it revealed plans to cut about a quarter of its workforce in a restructuring move intended to stabilize the embattled pharmaceutical company. The combination shot showed a “robust” immune response in the company’s phase two trial. It also was well-tolerated and showed a “reassuring” preliminary safety profile.
"The reactogenicity results support our previous observations that this technology is well suited for combination vaccines because large amounts of antigen can be incorporated without impacting tolerability," Filip Dubovsky, Novavax’s president of research and development, said in a statement. "The immune responses we observed were robust, and the data we have shared today significantly increase the probability of Phase 3 success."
McCarthy, Biden Meet on Debt Ceiling, Agree to Meet Again Later This Week
President Joe Biden and congressional leaders confronted each other on the debt limit impasse Tuesday, ending their meeting with no breakthrough but agreeing to meet again this week to try to avert the looming risk of an unprecedented government default. Speaking at the White House, Biden described the talks as “productive” even though House Speaker Kevin McCarthy said after the high-stakes Oval Office meeting that he “didn’t see any new movement” toward resolving the stalemate.
House Democratic leader Hakeem Jeffries said lawmakers and their staffs were to continue discussions as soon as Tuesday evening on the annual federal budget at Biden’s encouragement. McCarthy said Biden had directed their staffs to continue discussions, and that the leaders themselves would convene again in person on Friday at the White House.
Biden to Speak in Westchester About Debt Standoff in D.C.
President Joe Biden is set to stop in Westchester County on Wednesday for a speech about the partisan standoff over the nation's debt limit and the economic crisis that will occur if it isn't resolved within weeks. Biden is expected to speak after 1 p.m. at SUNY Westchester Community College in Valhalla, in what will be his fourth trip to New York and third to the Hudson Valley since October. He plans to attend campaign fundraisers in New York City afterward.
Biden's Westchester visit on Wednesday falls on the edge of the congressional district of Rep. Mike Lawler, a Republican freshman from Rockland County who unseated five-term Democratic Rep. Sean Patrick Maloney in November in one of the nation's closest House races. Lawler and most other House Republicans last month voted for a bill that would lift the debt limit, in return for spending cuts and various policy priorities. Among other things, they aimed to: stop Biden from erasing college-loan debt; impose work requirements on Medicaid recipients; and allow more gas and oil drilling.
Biden Tax Credits, Trump Tariffs Together Boost US Manufacturing
Over the past five years, Washington has enacted two sets of policies to stimulate domestic manufacturing production: tariffs and tax credits. The Trump administration favored tariffs, while the Biden administration is using tax credits. Both policies are now working to bring manufacturing back to the U.S. The Trump administration’s Section 301 tariffs on Chinese imports have already reduced America’s dependence on China. Between 2017 and 2022, imports to the U.S. worldwide rose by 39%, while imports to the U.S. from China rose by only 6%.
The Biden administration’s tax credit policies have also had positive effects on manufacturing industries. Last year’s CHIPS Act allocated $39 billion worth of tax credits spread over 10 years to help microchip manufacturers establish U.S.-based fabrication facilities. This has initiated roughly $150 billion in investments that could create 20,000 direct jobs. That’s a boon for Ohio, where Intel is building a large fab complex. Upstate New York is also expecting a new Micron operation; Arizona is preparing for a new TSMC plant.
FBI Counterproliferation Summit June 1st at Westchester Community College
The FBI would like to extend this invitation to those Council members involved in manufacturing or export of product in the lower Hudson Valley region. We will be doing a Counterproliferation Summit on June 1st at Westchester Community College. Registration is in the link below and the doors will open at 8:15am with a start of 9:00 am. This will be in person only and a good opportunity to network with the various government agencies present.
Federal Bureau of Investigation (FBI) New York, in partnership with the Cybersecurity and Infrastructure Security Agency (CISA) and the Department of Commerce Bureau of Industry and Security (BIS), will be sponsoring this Counterproliferation Summit for private industry partners in the lower Hudson Valley region. The following topics will be covered:
- What to do with suspicious orders.
- How you can assist the US Government in stopping advanced weapons proliferation.
- How to prepare for ransomware, and other common cyber attacks.
Read more and register
Unemployment for Recent College Grads is the Lowest in a Generation
The class of 2023 was sent home freshman year in the midst of COVID-19 shutdowns. The job market they face as graduating seniors is more than fully recovered, with employers edgy about a possible recession, but still desperate to hire. Unemployment for 20- to 24-year-olds fell to 5.4% in April, the lowest it’s been since 1969.
The class of 2023 is entering a job market “that is much stronger than it was just one year ago, stronger than it was before the pandemic even began,” said Elise Gould at the Economic Policy Institute. After years of virtual recruitment, many employers showed up on campuses this year, said Mary Gatta at the National Association of Colleges and Employers. “They are planning to hire 3.9% more graduates than they did from the class of 2022,” Gatta said
Age, Experience Matter in Cost of Workplace Injuries
After examing more than 1.2 million worker compensation claims from 2016 to 2020, a new study from The Travelers Companies, Inc. shows that an employee’s time spent in a particular role and their age were driving factors in injury frequency and cost of claims, respectively.
Employees in their first year on a job, regardless of their age or industry experience, represented more than one-third (34%) of all claims and accounted for nearly 7 million missed workdays due to injury. Though they were injured less often than most other age groups, employees ages 60 and older had higher average costs per claim, totaling nearly 15% more than employees between the ages of 35 and 49 and approximately 140% more than those ages 18 to 24.
watsonx: IBM Unveils New AI and Data Platform
International Business Machines Corp (IBM.N) on Tuesday launched watsonx, a new artificial intelligence and data platform to help companies integrate AI in their business. The new AI platform launch comes over a decade after IBM's software called Watson got attention for winning the game show Jeopardy. IBM at the time said Watson could “learn” and process human language. But Watson's high cost at the time made it a challenge for companies to use, according to Reuters reporting.
Chatbot ChatGPT's overnight success is making AI adoption at companies a focus, and IBM is looking to grab new business. IBM said companies can use the watsonx platform to train and deploy AI models, automatically generate code using natural language and use various large language models built for different purposes such as chemical creation or climate change modeling.
UAW Wins Election to Unionize Yanfeng Auto Supplies Plant
In a win for the UAW, employees at an automotive parts plant in Kansas City, Missouri, voted in a strong majority on May 4 to join the union. Workers at Yanfeng USA’s Riverside Facility will join the UAW Local 710 thanks to an election that saw 311 votes in favor of joining the union versus 26 opposed: In all, the UAW says the election will see more than 400 workers join the union. The Riverside plant is the sixth owned by Yanfeng USA to join the union, including three Yanfeng locations in Michigan and one each in Alabama and Ontario.
Statements from organizing members of the union suggest that protecting workers from discrimination, in addition to usual concerns about compensation and workers’ rights, was also on the mind for union voters. In a May 5 statement, UAW President Shawn Fain congratulated the Riverside Yanfeng USA employees, said they had faced “low wages, racial discrimination, and no seniority rights,” and welcomed them to the union.
Reform or Die? If the US Gets its Way, the WTO Might do Both
The creation of the WTO in 1995 represented the high-water mark of globalization and the liberal world order following the fall of the Berlin Wall. But China’s accession six years later ushered in a new era of rivalry with the West that only intensified as its share of global trade grew. In Washington’s view, the WTO’s strict enforcement of its trade rules hurt U.S. jobs and industry while enabling China’s rise as a mercantilist superpower.
The United States put the World Trade Organization into intensive care by single-handedly killing off its highest court four years ago — in so doing endangering the global rules-based trading system. Now Washington is — ever so quietly — floating the idea of a new-look appeals process that could help get the WTO off life support. And that is leading some trade diplomats in Geneva to question whether the patient would survive the operation that Joe Biden’s administration has in mind. “It's reform or die,” one senior Geneva trade diplomat told POLITICO, setting out the scale of the task before the WTO and its director-general, Ngozi Okonjo-Iweala.
Here Comes the Heat – Above Average Temperatures Predicted for Summer Cooling Season
Through the first four weeks of the summer cooling season (Apr-Oct), the major markets have seen mild temperatures. In total, Chicago, Houston, Dallas, Boston, Philadelphia, and New York are 68 cooling degree days (CDDs) below historic trends. That is about to change as the three-month NOAA outlook through July shows above normal temperatures across the board. Real feel temps in Houston and Dallas over the weekend hit the century mark.
U.S. natural gas futures rose about 2% to a fresh one-week high on Tuesday on a decline in U.S. daily output and a drop in gas exports from Canada as wildfires shut in some oil and associated gas production. Prices climbed despite forecasts for milder weather and less U.S. demand over the next two weeks than previously expected. Front-month gas futures for June delivery on the New York Mercantile Exchange were up 4.1 cents, or 1.8%, to $2.279 per million British thermal units at 9:01 a.m.
NYSDEC Extends Deadline Again for New Part 360 Solid Waste Management Facility Regulatory Compliance
The New York State Department of Environmental Conservation (NYSDEC) has extended the deadline for Solid Waste Management Facilities (SWMF) in New York State to comply with certain provisions of the NYSDEC Part 360 series regulations that were effective November 4, 2017. The NYSDEC issued two (2) Enforcement Discretion Letters, dated April 6, 2023, which replace, but are substantially the same as the previous series of letters dated April 27, 2022.
The last discretion enforcement phase that was set to end on May 3, 2023 has been extended until May 3, 2024, or until the new Part 360 regulations are adopted and in effect, whichever is earlier.