Member Briefing May 11, 2022
NFIB: Small Business Expectations for Better Business Conditions at 48-year Low
The NFIB Small Business Optimism Index was unchanged in April, remaining at 93.2 and the fourth consecutive month below the 48-year average of 98. Small business owners expecting better business conditions over the next six months decreased one point to a net negative 50%, the lowest level recorded in the 48-year-old survey.
- Thirty -two percent of small business owners report that inflation is their single most important problem in operating their business, the highest reading since the fourth quarter of 1980.
- Forty-seven percent of owners reported job openings that could not be filled, unchanged from March.
- The net percent of owners raising average selling prices decreased two points to a net 70% (seasonally adjusted), two points below last month’s highest reading.
- Thirty-six percent of owners reported that supply chain disruptions have had a significant impact on their business.
- A net 46% reported raising compensation, down three points from March. A net 27% of owners plan to raise compensation in the next three months.
Invasion of Ukraine Headlines
- Ukraine and Russia: the Latest News – Reuters
- In shift, Democrats De-Link Ukraine Aid from COVID-19 Money – The Hill
- Biden Signs Lend-Lease Act to Speed Weapons Delivery to Ukraine – Bloomberg
- Zelensky Urges International Action against Russia Over Ukrainian Ports Blockade – Axios
- Germany Prepares Crisis Plan for Abrupt End to Russian Gas – Reuters
- Russia Strikes Shopping Mall, Warehouse in Odessa After Victory Day Celebrations – WSJ
- Ukrainians Unearth Horrors Near Kyiv, a Month After Russian Retreat – Politico
- Nearly Encircled, Ukraine’s Last Stronghold in Luhansk Resists Russian Onslaught – WSJ
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Step One… Biden Calls Inflation His top Domestic Priority
President Joe Biden sought Tuesday to ease fears over inflation, promising that tackling rising prices is his top domestic priority. He called inflation the nation’s top economic challenge, blaming the twin challenges of a “once-in-a-century pandemic” and the war in Ukraine. Americans are grappling with the worst inflation in 40 years, fueled by surges in gas, food and rent costs.
Republicans charge high spending by Democrats is behind rising prices. Every congressional Republican voted against last year’s $1.9 trillion COVID-19 relief package that some said added too much kindling to a hot economy. Biden rejected that argument, saying his policies helped, not hurt, the economy. “It’s not because of spending,” Biden said. “We’ve brought down the deficit.” The deficit has dropped largely because of expiring stimulus programs and higher inflation, according to the nonpartisan Committee for a Responsible Federal Budget.
Two Classes of Jobs Have Manufacturing Wages Lagging US Average in “Amazon Era”
Professor Michael Hicks, a professor of economics at Indiana’s Ball State University, notes that part of the situation is an increasing split in manufacturing jobs: not in durable goods and nondurable goods, as the Department of Labor has it, but high-wage jobs compatible with increasing automation and low-wage jobs too cheap to automate. The sluggish growth of the average manufacturing wage? It isn’t stagnant wage growth across the board. It’s employment growth in the second, lower-paying category.
Over the past half-decade or so, Hicks says, manufacturing jobs have bifurcated into two categories, often clumsily described in terms of low- or high-skilled, as a result of how increased automation during the Great Recession carved out the middle earners in manufacturing.
US COVID – The ‘Five Pandemics’ Driving 1 Million U.S. COVID Deaths
One way to start understanding how a country as advanced as the U.S. lost so many people is to look at the ocean of public health data that was gathered as 1 million individual tragedies rippled through civic life. Analysis of the data will continue for years, but it is clear that, when it comes to deadliness, there were five different pandemics — depending on when and where you lived, and who you were. The Five are:
- Earlier vs. later
- Older vs. younger (but there’s fine print)
- Unvaccinated vs. vaccinated
- Rural vs. urban
- Poorer vs. wealthier
Are COVID Surges Becoming More Predictable? New Omicron Variants Offer a Hint
Nearly six months after researchers in South Africa identified the Omicron coronavirus variant, two offshoots of the game-changing lineage are once again driving a surge in COVID-19 cases there. Several studies released in the past week show that the variants — known as BA.4 and BA.5 — are slightly more transmissible than earlier forms of Omicron1, and can dodge some of the immune protection conferred by previous infection and vaccination2,3.
However, scientists say it is not yet clear whether BA.4 and BA.5 will cause much of a spike in hospitalizations in South Africa or elsewhere. High levels of population immunity — provided by previous waves of Omicron infection and by vaccination — might blunt much of the damage previously associated with new SARS-CoV-2 variants. Moreover, the rise of BA.4 and BA.5 — as well as that of another Omicron offshoot in North America — could mean that SARS-CoV-2 waves are beginning to settle into predictable patterns, with new waves periodically emerging from circulating strains. “These are the first signs that the virus is evolving differently” compared with the first two years of the pandemic, when variants seemed to appear out of nowhere, says Tulio de Oliveira, a bioinformatician at Stellenbosch University in South Africa, who led one of the studies.
Gubernatorial Race: Lawsuit Could Open Door for Cuomo to Challenge Gov. Hochul in Dem Primary, Suozzi Claims Momentum
Ex-Gov. Andrew Cuomo could get another crack at getting on the ballot to take on his former No. 2 and successor, Gov. Kathy Hochul in the Democratic primary, The Post has learned. A plaintiff seeking to intervene in the Albany redistricting case is asking the judge to reopen the petitioning period for statewide primary elections — opening the door for a potential Cuomo reemergence.
Meanwhile a poll conducted by the Democratic gubernatorial campaign of Rep. Tom Suozzi shows him building momentum in the final weeks of the primary and has the potential to surpass Gov. Kathy Hochul with voters by June when voting begins. The poll comes as the Long Island congressman has criticized Hochul’s administration on issues like crime and public safety over the last several months. It also coincides with a rough stretch of news for the governor, including the resignation of her lieutenant governor, Brian Benjamin, following an indictment on fraud and bribery charges.
Fed Flags ‘Risk of Sudden Significant Deterioration’ in New Report
The Federal Reserve painted a somewhat concerning picture of the global financial system in its latest semi-annual Financial Stability Report, citing particular examples that may warrant further attention. Surging inflation and Russia’s war in Ukraine have supplanted the coronavirus pandemic, while a quick monetary policy tightening cycle may result in lower economic output and raise borrowing costs. In turn, that could lead to job losses, unsustainable debt levels for businesses and impact the housing market via higher mortgage rates.
Besides broad economic issues, the Financial Stability Report also looks at trends in trading and investing. “A sharp rise in interest rates could lead to higher volatility, stresses to market liquidity, and a large correction in prices of risky assets, potentially causing losses at a range of financial intermediaries. Declining depth at times of rising uncertainty and volatility could result in a negative feedback loop, as lower liquidity in turn may cause prices to be more volatile.”
Fed’s Williams Says Lowering Inflation Is Central Bank’s Main Mission
Federal Reserve Bank of New York President John Williams said that lowering inflation is the U.S. central bank’s main mission now and he doesn’t think that making monetary policy more restrictive would necessarily cause a recession. “The challenge for monetary policy today is clear: to bring inflation down while maintaining a strong economy,” Mr. Williams said in a speech Tuesday in Germany. “I am confident we have the right tools to achieve our goals.”
Mr. Williams pointed to durable-goods purchases and home buying as sources of imbalances, adding that Fed actions will bring these imbalances back into line and “will also turn down the heat in the labor market, reducing the imbalance between job openings and available labor supply.”
Housing Supply is Finally Improving, as High Prices and Rising Rates Weigh on Sales
The supply of homes for sale could increase in the next few weeks, according to new data from Realtor.com. In April, inventory was 12% lower than in the same month last year, the smallest year-over-year decline since the end of 2019. Another reading for just the last week in April shows inventory down only about 3% from a year ago.
The shift in supply is likely due to a slower sales pace stemming from the recent rapid increase in mortgage rates, which has made expensive homes even pricier. The average rate on the 30-year fixed has jumped more than 2.5 percentage points since the start of the year.
Supply Chain: – Why Is There a Baby Formula Shortage? What to Know and Why It’s Getting Worse
Nationwide, 40% of the most popular baby formula brands were out of stock in the week starting April 24, up from 31% two weeks earlier. A normal rate is less than 10%. The shortage, caused by a mix of supply chain issues and a recall, has led to empty shelves at some stores, product restrictions and panic among parents and caregivers searching for formula to feed their babies.
There are two reasons for the shortage. Supply chain issues caused by the Covid-19 pandemic have made baby formula harder to find for months. The shortage worsened after Abbott Laboratories, a major formula manufacturer, voluntarily recalled some products and closed a plant where the products were made in Sturgis, Mich. Abbott said it is working to increase Similac production at other FDA-registered facilities and shipping formula from Europe by air.
Macron Floats European ‘Community’ Open to Ukraine and UK
French President Emmanuel Macron used a speech on Europe Day to put forward a sweeping, avant-garde but detail-light proposal to redraw the political map of the Continent with a new organization that would give Ukraine a closer relationship with the EU short of membership — and could even include the U.K.
Macron, who was inaugurated for his second term on Saturday, offered virtually no specifics about the proposal. And the Elysée Palace did not provide any fact sheets or other policy briefs as it has on previous occasions when Macron has laid out bold prescriptions for Europe. The French leader appeared to be animated by a desire to find a solution for war-torn Ukraine, which has pleaded desperately for fast-track membership of the EU in the months since Russia’s brutal invasion.
Read more at Politico
IBM Study: Sustainability Ranks Among Highest Priorities on CEO Agendas, Yet Lack of Data Insights Hinders Progress
A new IBM Institute for Business Value (IBV) study revealed that sustainability is rising higher on corporate agendas, and CEOs recognize sustainability as a business imperative and growth driver. Yet as CEOs face growing pressures from boards and investors, a lack of reliable data insights is hindering their ability to take action.
IBM’s annual CEO study, Own your impact: Practical pathways to transformational sustainability, which surveyed more than 3,000 CEOs worldwide, found that nearly half of respondents rank sustainability as a top priority for their organizations— an increase of 37% from 2021. However, more than half (51%) also cite sustainability as among their greatest challenges in the next two to three years, with lack of data insights, unclear ROI, and technology barriers, as hurdles.
Amazon Fires Two Employees Tied to Staten Island Union Effort
Amazon has fired two employees tied to an organizing campaign that resulted in the company’s first unionized warehouse in the U.S. Mat Cusick and Tristan Dutchin told CNBC they were fired by Amazon in recent days. Both Cusick and Dutchin have been working with the Amazon Labor Union, an upstart group led by current and former company employees, to organize workers at the e-commerce giant’s warehouses on New York’s Staten Island.
Cusick, who serves as ALU’s communications director, said he was fired last week after going on “Covid care leave,” which allows employees to care for family members sick with Covid-19. Dutchin said he was fired on Saturday after he wrapped up his shift. Amazon told him he had failed to meet the company’s productivity goals.
WHO Chief Says China’s Zero-COVID Policy Not ‘Sustainable’
The head of the World Health Organization said on Tuesday China’s zero-tolerance COVID-19 policy is not sustainable given what is now known of the virus, in rare public comments by the U.N. agency on a government’s handling of the pandemic. “We don’t think that it is sustainable considering the behaviour of the virus and what we now anticipate in the future,” WHO Director-General Tedros Adhanom Ghebreyesus told a media briefing.
China’s zero-COVID policy has drawn criticism ranging from scientists to its own citizens, leading to a cycle of lockdowns of many millions of people, anguish and anger. Most other nations that shared its approach initially have now at least begun a transition to strategies to live with the virus.