Member Briefing May 12, 2025
U.S. Productivity, Economy’s Secret Sauce, Falls For First Time In Almost 3 Years
Worker productivity, one of the biggest drivers of a strong U.S. economy since the pandemic, stumbled in the first quarter of 2025, for the first time since the second quarter of 2022. U.S. productivity decreased at a 0.8% annual rate in the first quarter, the government said Thursday. Economists surveyed by the Wall Street Journal had projected a 0.7% decrease. Over the past four quarters, U.S. productivity has increased at a 1.4% pace, the slowest pace since the first quarter of 2023. Productivity trends are hard to measure, and economists like to talk about five-year trends. A streak of stronger productivity as the U.S. came out of the pandemic has helped the economy grow while inflation cooled.
Output — or the amount of goods and services produced — fell at a 0.3% rate in the first quarter, while the amount of time employees worked increased 0.6%. Unit-labor costs, a key measure of wages, jumped 5.7% in the first quarter, up from 2% in the fourth quarter. Productivity is a magic elixir of sorts for economic growth and a higher standard of living. Businesses earn higher profits and can afford to pay employees more when workers produce more goods and services in the same amount of time as they did the year before.
US, China Agree to Lower Tariffs in 90-Day Cool-Off Period
The United States and China have agreed to temporarily slash reciprocal tariffs in a deal that surpassed expectations as the world's two biggest economies seek to end a damaging trade war that has stoked fears of recession and roiled financial markets. The U.S. will cut extra tariffs it imposed on Chinese imports in April this year to 30% from 145% and Chinese duties on U.S. imports will fall to 10% from 125%, the two countries said on Monday. The new measures are effective for 90 days. Trump gave a positive reading of the talks before they had concluded, saying that the two sides had negotiated "a total reset... in a friendly, but constructive, manner."
"The consensus from both delegations this weekend is neither side wants a decoupling," Bessent said. "And what had occurred with these very high tariffs ... was the equivalent of an embargo, and neither side wants that. We do want trade." U.S. Treasury Secretary Scott Bessent said. He added that the deal did not include sector-specific tariffs and that the U.S. would continue strategic rebalancing in areas including medicines, semiconductors and steel where it had identified supply chain vulnerabilities.
China’s Exports to U.S. Plunge, in Sign of Bite From Trump Tariffs
China said exports to the U.S. plunged in April, as the Trump administration’s tariff assault forced the world’s second-largest economy to redirect more of its goods to Southeast Asia, Latin America, Europe and Africa. Overall, China said its export growth demonstrated surprising resilience last month, with the headline figure showing exports rising 8.1% in dollar-denominated terms in April from a year earlier. But beneath that rosy number was a marked shift in the composition of outbound shipments from China, which has spent the past three decades building up its status as the world’s factory floor.
Chinese shipment of goods to the U.S. dropped 21% in April from a year earlier, while exports to the bloc of Southeast Asian nations known as Asean surged 21%, according to official trade figures released Friday by China’s General Administration of Customs. Exports to Latin America jumped 17%, while shipments to Africa soared 25%, the data showed. Chinese exports to the European Union rose 8.3%. The figures underscore the degree to which U.S. tariffs on China, which have been cranked up by 145% in President Trump’s first three months in office, have altered the global trade map.
Global Headlines
Middle East
- Trump Heads To The Middle East With Oil, Trade And Nuclear Ambitions On The Table – CNBC
- Hamas To Release Last American Hostage, Edan Alexander – USA Today
- Iran, US Resume Nuclear Talks As Red Lines Clash - Reuters
- Israel Says It Intercepted Missile Fired From Yemen; Houthis Claim Responsibility - Reuters
- Five Signs of Growing Risk of US War With Iran - Newsweek
- Hunger, Sickness and Crime Stalk Gaza Under Israel’s Blockade - WSJ
- Israel Won't Be Involved In New Gaza Aid Plan, Only In Security, US Envoy Says - Reuters
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Putin Says Ready For ‘Direct Talks’ With Ukraine But Zelensky Says He Must Agree - CNN
- Zelensky Agrees to Talks With Russia, After Trump Intervention - WSJ
- Ukraine Insists Truce Must Come Before Putin’s Proposed Peace Talks - WSJ
- US, Europeans Finalising 30-Day Ukraine-Russia Ceasefire Proposal - Diplomatic Source – Reuters
- EU And Ukraine Launch Special Tribunal To Prosecute Putin’s War Crimes - Politico
- Russia and North Korea Turn Their War Alliance Into a Propaganda Tool - WSJ
- Vladimir Putin Sends Message to Leo XIV, First American Pope - Newsweek
- Putin Parades China, North Korea Ties in Victory Day Show of Force - 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
Other Headlines
- An American Pope Will Try to Unify a Divided Church – WSJ
- Leo XIV’s Service to Poor Propelled Him to Papacy, Cardinals Say - NYT
- Chinese Companies Bought Up European Ports — And Now Brussels Is Starting To Worry - Politico
- India-Pakistan Ceasefire Appears To Hold After Accusations Of Violations - BBC
- India-Pakistan Massive 'Dogfight' Shows Changing Shape of Air Warfare - Newsweek
- South Korea's Conservatives Settle On Kim Moon-soo After Nomination Turmoil Exposes Rifts - Reuters
- Residents Stockpile Food, Rush To Bunkers As Conflict Rattles India And Pakistan - Reuters
- Germany’s Merz Softens Skepticism Of US Role In NATO After Meeting Rutte - Politico
- Brazil, China Discuss Railway From Peruvian Port To Brazil Territory – Reuters
Policy and Politics
State Legislature Approves $254 Billion Budget In Flurry Of Votes After Weeks Of Battles
Thirty-eight days after the April 1 deadline, the New York Legislature approved a state budget, over a week after Gov. Kathy Hochul declared victory in accomplishing her policy goals and insisting on holding up the process to see them through. In a slight consolation for those who have grown weary as the budget lapsed into the latest in 15 years, the second day of votes and debates ended hours earlier than anticipated with the Assembly unexpectedly concluding first – just before 9:30 p.m. as applause echoed through the Capitol’s stone hallways. The Senate followed minutes later.
Nine out of 10 bills were passed on Wednesday and Thursday to approve a state budget with a $254 billion top line. As budget officials say is customary, the top line number does not include an additional approximately $7 billion to pay off the state’s unemployment insurance debt. The state will use $8 billion of its reserves to pay off the debt and add to the unemployment trust so that it can pay out claims without going back into debt.
Read more at NY State of Politics
New York Will Boost Unemployment Benefits, Labor and Businesses Celebrate
Labor unions and business lobbyists successfully convinced Governor Kathy Hochul to pay off New York’s $6.2 billion unemployment insurance debt — and boost unemployment benefits for the first time in six years — as part of her final budget agreement with the state legislature. New York owed the money after borrowing from the federal government to cover pandemic-era unemployment claims. The state has been repaying the debt since then, through higher taxes on businesses, but was still years away from being in the black.
The state will use $8 billion of its reserves to pay off the debt and add to the unemployment trust so that it can pay out claims without going back into debt. State law requires that unemployment benefits remain frozen when the system is in debt, so weekly unemployment benefits have since 2019 been capped at $504, a lower benefit than neighboring states provide and less than a full-time minimum wage salary. The budget agreement will increase weekly benefits to a maximum of $869 this year, with more increases in future years.
The Empire Center Comments On The Budget Deal In Albany
The Empire Center released a statement from its Senior Fellow for Health Policy, Bill Hammond: “The state budget finally heading to approval in Albany was definitely not worth the wait. It calls for a spending increases that would have been unsustainable even in rosier times. Given the current reality – with obvious threats to federal funding, Wall Street and the broader economy – the plan from Governor Hochul and the Legislature is nothing less than reckless.
- The governor initially proposed the biggest state-funded spending increase since the 1980s, and the final budget will add substantially to that. Most of the new money is flowing to the state share of Medicaid, which is growing by more than 17 percent even though enrollment is down.
- One of the few bright notes is an agreement to pay off a $7 billion debt in the state’s unemployment fund, saving employers from a hangover of the pandemic that never should have been laid on their shoulders.
- Already, the governor and Legislature are warning that they might have to cut the budget later this year – a confession that what they have now is neither prudent nor truly balanced.
- Contrary to their rhetoric about affordability, the governor and Legislature are compounding the already excessive burden on the state’s taxpayers and economy and worsening the long-term decline of the Empire State.
Read more at The Empire Center
Political Headlines
- This Obscure New York Court Is Set To Decide Fate Of Trump’s Tariffs - WSJ
- Librarian Of Congress Carla Hayden Is Fired By Trump - Politico
- Trump Picks Casey Means For Surgeon General, After First Nominee Withdraws - NPR
- USPS Board Taps FedEx Director David Steiner As Next Postmaster General – Supply Chain Dive
- Trump's Immigration Crackdown Has US Employers Worried: Poll - Newsweek
- Trump Backs Tax Hike On Rich, But Says GOP ‘Should Probably Not Do It’ - CNBC
- David Souter, Former Supreme Court Justice, Dies at 85 – WSJ
- Trump Names Jeanine Pirro, Fox News Host, as Interim U.S. Attorney for D.C. - NYT
- US Wants To Spend Billions To Revamp Aging Air-Traffic Control System - Reuters
- NY Republicans Say They Rejected $30K SALT Cap, Calling It ‘Insulting’ - Politico
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
A Doctor’s Science-Backed Formula for Aging Better
Dr. Eric Topol wanted to know if genes were the reason some people live to very old ages without major health problems. Topol, a prominent cardiologist, decided to test the idea. He and his colleagues at the La Jolla, Calif.-based Scripps Research Translational Institute, which Topol helped found, enrolled people 85 years old and above—and healthy—in a research project. The researchers sequenced and scrutinized the participants’ DNA. The results led Topol to a different conclusion. It turned out there wasn’t much in the genes of these “super agers” that set them apart. But as a group, they were different from many Americans of similar ages. They were thinner. They exercised more. They were better-educated. Even at advanced ages, they continued to volunteer, dance, see friends and pursue activities that gave them purpose and enjoyment.
Topol is a self-described “techno optimist.” He has done tests on himself that measure the biological age of different organs, had his genes sequenced and participated in a research study that assesses people’s immune systems to try to predict their risks to different diseases. In the future, these strategies, along with improvements in artificial intelligence, may allow for dramatic changes to the way people age. For now, there are some simple and practical things people can do to improve longevity. Topol, who is 70, says, “I am taking my own advice.” He shared some of his own plan with The Wall Street Journal.
Industry News
Trade War Updates
- First Chinese Freight Ship Goods Hit With Trump’s 145%-Plus Tariffs Arriving At U.S. Ports - CNBC
- Inside China's Decision To Come To The Table On Trump Tariffs - Reuters
- Trump Floats 80% China Tariff, Says Many Trade Deals 'In the Hopper' – WSJ
- Why America’s ‘Beautiful Beef’ Is a Trade War Sore Point for Europe - NYT
- What's In The US-UK Trade Framework? – ABC News
- ‘Lot Of Other Countries In The Queue’: UK Trade Deal Is A First Step On A Long Road - Politico
- Trump Vows To Increase Trade With India, Pakistan After Praising Ceasefire Agreement: 'A Job Well Done!' - Fox
- More Fed Officials Warn Trump Tariffs Could Produce Higher Inflation And Slower Growth – Yahoo Finance
- Japan PM Ishiba Reiterates Call To Eliminate All Tariffs With US – Nikkei Asia
The Aluminum Sector Isn’t Moving To The U.S. Despite Tariffs — Due To One Key Reason: Electricity Costs
Sweeping tariffs imposed by U.S. President Donald Trump on imported aluminum are reshaping global trade flows and inflating costs for American consumers. But they are falling short of their primary goal: to revive domestic aluminum production. Instead, rising costs, particularly skyrocketing electricity prices in the U.S. relative to global competitors, are leading to smelter closures rather than restarts. But while tariffs are effectively leading to prices rise in the U.S., they haven’t spurred a revival in domestic smelting, the energy-intensive process of producing primary aluminum.
The primary barrier remains the lack of access to competitively priced, long-term power, according to the industry. “Energy costs are a significant factor in the overall production cost of a smelter,” said Ami Shivkar, principal analyst of aluminum markets at analytics firm Wood Mackenzie. “High energy costs plague the US aluminium industry, forcing cutbacks and closures.” “Canadian, Norwegian, and Middle Eastern aluminium smelters typically secure long-term energy contracts or operate captive power generation facilities. US smelter capacity, however, largely relies on short-term power contracts, placing it at a disadvantage,” Shivkar added, noting that energy costs for U.S. aluminum smelters were about $550 per tonne compared to $290 per tonne for Canadian smelters.
Cleveland-Cliffs Closing More Plants in Move to Save $300M Per Year
Cleveland-Cliffs Inc. will lay off nearly 1,000 workers in the coming weeks as it fully idles two plants in Pennsylvania and one in Illinois as part of a plan to save $300 million annually. The moves come about six weeks after executives said they planned to similarly cut back some operations in Minnesota and Michigan, which cost about 1,200 people their jobs. Shares of Cliffs have now lost more than 40% of their value over the past six months, a slide that has cut the company’s market capitalization to $3.5 billion.
In addition to the planned closings, Chairman, President and CEO Lourenco Goncalves and his team also are stepping away from plans to build a transformer production plant in West Virginia and cutting their 2025 capital spending forecast by another $25 million. They disclosed their plans alongside Cliffs’ first-quarter report, which showed a net loss of $495 million on sales of $4.6 billion.
Nippon Steel Expects Profit To Drop 43% This Year, US Steel Decision By Early June
Nippon Steel expects net profit to slide 43% in the fiscal year ending March 2026, it said on Friday, citing a weak global steel market pressured by China's exports and the impact of new U.S. tariffs. Nippon Steel forecast net profit for the year through March 31, 2026 would fall to 200 billion yen ($1.4 billion), after reporting on Friday that profit fell 36% in the year ended March 2025 to 350.2 billion yen. "Excess production and increased exports from China, driven by a widening supply-demand gap amid the economic slowdown, show no signs of easing, and this difficult environment is expected to persist through the current fiscal year," President Tadashi Imai told a news conference.
Japan's biggest steelmaker also said it expects a U.S. decision on whether to approve the company's proposed acquisition of U.S. Steel by June 5. Imai reiterated Nippon Steel's core proposal to acquire full ownership of U.S. Steel remains the starting point in negotiations with U.S. authorities, though the company is also exploring various proposals to secure approval. U.S. President Donald Trump, who began his second term on January 20, initially stated he "wouldn't mind" if Nippon Steel bought a minority stake in U.S. Steel. Such a scenario would require an overhaul of the deal structure.
UAW Presses Stellantis To Boost Tariff-Free Production At Underutilized U.S. Plants
The UAW says its rocky relationship with Stellantis has improved tremendously since Carlos Tavares quit as CEO of the automaker five months ago. Now the union is putting that goodwill to the test with the help of President Donald Trump’s import tariffs, pressing Stellantis’ interim leadership to raise output at several U.S. plants with excess capacity. At a May 6 rally in Warren, Mich., union members made the case to North America COO Antonio Filosa that the company can easily create more jobs within its existing U.S. footprint to reduce its exposure to Trump’s 25 percent tariffs.
UAW Vice President Kevin Gotinsky, the union’s top liaison with Stellantis, pointed to Warren Truck Assembly Plant, which builds the Jeep Wagoneer and Grand Wagoneer SUVs. The union has argued the plant can handle overflow Ram 1500 production instead of a factory the company is expanding in Mexico for that purpose. The big Jeep SUVs share a platform with the Ram 1500, and Warren Truck assembled millions of the Dodge Dakota and previous-generation Ram pickups over nearly 40 years. T
Gilead Plans $11B In US Drug Production
Gilead on Wednesday became the latest U.S. drugmaker to pledge new investments in U.S. manufacturing, as President Trump threatens the worldwide industry with tariffs. The California biotech said it’s now planning an additional $11 billion in capital and operational investments in the U.S. on top of $21 billion already committed for U.S. manufacturing, research and development through 2030. The figure includes $4 billion for capital projects, $5 billion for technology, operations and research activities and $2 billion for digital and engineering projects.
The investments will help create about 800 new positions and indirectly support the creation of more than 2,200 jobs by 2028, Gilead said. The company said it’s planning to build three new facilities and upgrade three existing sites in the U.S. in the coming years. Gilead is already better positioned than many large drugmakers to stave off the effects of industry-specific tariffs. The “vast majority” of the company’s intellectual property is in the U.S. and more than 80% of profits are recognized in its home country, CEO Daniel O’Day told analysts and investors last month on a conference call.
Read more at Manufacturing Dive
Boeing Confirms Multi-Jet Order from Taiwan’s China Airlines
Boeing identified Taiwan-based China Airlines as the customer for a previously reported contract involving a total of 14 aircraft, and estimated at $11.9 billion based on listed process. The initial deliveries are expected in 2029. The order involves 10 Boeing 777-9 passenger aircraft and four 777-8 freighters, and it includes options to acquire five more 777-9s and four more 777-8 freighters. According to Boeing, China Airlines favors the higher passenger capacity and range of the new 777X for long-distance routes to North America and Europe.
The 777X is an update to Boeing’s 777 series twin-engine, long-range jets, which is scheduled to make its commercial debut in 2026 with Lufthansa. Boeing describes the 777X as the world’s largest twin-engine jet, and has described it as being more efficient and offering a better passenger experience than current 777 model, which first appeared in 1995. The 777-9 seats 426 passengers and has a range of 7,285 nautical miles (13,492 km / 8,383 mi.) The 777-8 accommodates 395 passengers and has a range of 8,745 nautical miles (16,196 km / 10,064 mi). The 777F freighter is based on the latter version.
Read more at American Machinist
New Date Eyed for Next Air Force One
A U.S. Air Force official reported that Boeing is now targeting 2027 to deliver two specially built and outfitted 747-8 jumbo jets to serve as Air Force One. According to the $3.9-billion contract the Pentagon issued to Boeing in 2018, the two new aircraft were due to be delivered in 2024. Testifying to a House Armed Services subcommittee hearing, USAF acting acquisitions chief Darlene Costello could not guarantee the 2027 delivery, but she indicated that the Air Force and Boeing were working to finalize an acceptable date.
The Air Force One project has been delayed by several factors, including the wiring design, Boeing’s workforce issues, and other complications with system suppliers. The delay is a contentious issue with the White House, which currently relies on 747s that are more than 40 years old and have significant maintenance and upkeep requirements. Boeing no longer takes orders for 747 commercial aircraft (it continues to offer them as cargo jets) but it was pleased to win the Air Force One order during the first term of President Trump. The new Air Force One will be improved with advanced security and performances standards, and modern communications equipment, as suitable to function as a traveling White House.
Read more at American Machinist
Hyundai Unveils Its Next-Generation Hybrid Powertrain System
Hyundai Motor Group unveiled its next-generation hybrid system utilizing advanced electrification technology that boosts performance and increases fuel economy, the automaker announced in a press release April 21. The automaker says the new hybrid system offers 19% more power and a 45% improvement in fuel efficiency compared to internal combustion engines of the same class. A version of the new hybrid powertrain paired with a 2.5 turbo-charged engine will debut in the all-new Palisade SUV hybrid, which recently entered production in Ulsan, South Korea, but will be offered in other Hyundai and Kia models in the future. The automaker also plans to launch a second hybrid system paired with a 1.6-liter engine for smaller vehicles.
Hyundai’s new hybrid system features a redesigned transmission with two integrated electric motors. The improved design maintains precise control of engine load and power output of the two motors to ensure that the gas engine operates at its highest efficiency. Hyundai also says the dual-motor transmission design helps to reduce noise and vibrations for a more refined driving experience.