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Member Briefing May 14, 2025

May 14, 2025

Posted By: Harold King in Daily Briefing,

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CPI = 2.3% - Inflation Cooled Year on Year But Up in April in Midst of Tariff Swings

Annual inflation cooled in April, a month when businesses were yanked back and forth as they tried to adjust to President Trump’s unpredictable trade policies. However, prices rose 0.2% from the previous month, matching forecasts of economists polled by The Wall Street Journal. In March, month-over-month prices had fallen 0.1%. The consumer-price index was up 2.3% in April from a year earlier, the Labor Department reported Tuesday, cooler than March’s gain of 2.4%. That was below the 2.4% that economists had expected. Prices excluding food and energy categories—the so-called core measure that economists watch in an effort to better capture inflation’s underlying trend—rose 2.8%.

Used vehicle prices saw their second straight drop, down 0.5%, while new vehicles were flat.
Apparel costs also were off 0.2%
Medical care services increased 0.5%.
Health insurance increased 0.4%
Motor vehicle insurance was up 0.6%.
Egg prices tumbled, falling 12.7%, though they were still up 49.3% from a year ago.

Read more at The WSJ

NFIB: Small Business Optimism Declines in April

The NFIB Small Business Optimism Index declined by 1.6 points in April to 95.8, the second consecutive month below the 51-year average of 98. The Uncertainty Index decreased four points from March to 92 but remained far above the historical average of 68. Seasonally adjusted, 34% of business owners reported job openings they could not fill in April, down six points from March. The last time job openings were below this level was in January 2021.

The net percent of owners expecting better business conditions fell six points from March to a net 15% the lowest since last October. This component, along with unfilled job openings, contributed most to the Optimism Index’s decline.
The net percent of owners expecting higher real sales volumes fell four points from March to a net negative 1%. This is the fourth consecutive month real sales expectations declined.
Eighteen percent plan capital outlays in the next six months, down three points from March. The last time the percent of firms planning capital outlays was this low was in April 2020, during the COVID-19 pandemic.
The percent of small business owners reporting labor quality as the single most important problem for business was unchanged from March at 19%, remaining the top issue for the third consecutive month.
Fourteen percent of owners reported that inflation was their single most important problem in operating their business, down two points from March and the lowest reading since September 2021. Inflation is now ranked in third place as the single most important problem.
When asked to rate the overall health of their business, 13% reported excellent (up two points), and 56% reported good (up three points). Twenty-seven percent reported the health of their business was fair (down four points) and 4% reported poor (unchanged).

Read more at The NFIB

Trump’s Tariffs Face Key Legal Hearing Today—Here’s What To Know About Possible Block

The U.S. Court of International Trade is considering a request by a coalition of small businesses to broadly halt Trump’s “Liberation Day” tariffs on foreign imports—the firms are seeking an injunction that would pause tariffs while their broader lawsuit against them plays out. Plaintiffs argue Trump’s tariffs are unlawful because while the president said he implemented the tariffs under the International Emergency Economic Powers Act (IEEPA), that law—which allows presidents to impose some economic sanctions during national emergencies—does not permit imposing tariffs, and there is no national emergency to justify using the law even if it did.

The tariffs must be halted immediately while the litigation plays out, the plaintiffs argue, because of the “irreparable harm” they pose to businesses like theirs, leading to consequences like being unable to source materials, raising prices, postponing expansions, losing business, damaging relationships with manufacturers overseas and potentially having to shut down. The Trump administration opposes blocking the tariffs, arguing the plaintiffs haven’t properly shown they’d face significant harm if Trump’s tariffs aren’t paused, and claiming the IEEPA’s “text, purpose and history” authorize Trump to impose his tariffs. It’s unclear how quickly the panel of judges will rule on whether to block the tariffs after Tuesday’s hearing

Read more at Forbes

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Policy and Politics

Which Bills Could Pass Now That The State Budget Is Done?

New York finally has a budget, but there is still over a month left to go in the legislative session. State lawmakers covered a lot in the $254 billion spending plan, from public safety to education and housing. But other policy issues still remain on the docket. Lawmakers are concerned about criminal justice reform, immigration issues, healthcare, climate policy and other issues as session days tick away. What they will manage to get to after New York’s budget odyssey is anyone's guess. Two Bills of interest to manufacturers are:

The Packaging Reduction and Recycling Infrastructure Act is getting renewed attention this year after passing the state Senate in 2024. The bill, which would require companies to reduce the amount of packaging in their products while covering the costs of recycling and discarding waste, has drawn intense lobbying from the chemical industry.
The NY HEAT Act remains a sticking point this year after once again being left out of the state budget. I. Environmentalists see it as necessary to wean the state off its reliance on fossil fuels, while critics think it will increase the costs for commercial rate-payers.

Read more at City & State

House Panel Releases Sweeping GOP Tax Bill

Late Monday the House Ways and Means Committee released a fuller version of its part of Republicans’ bill full of President Trump’s legislative priorities, kicking off what is expected to be a showdown over the tax provisions in the sprawling measure. In one of the most long-awaited details, the legislation increases the state and local tax (SALT) deduction cap from $10,000 to $30,000 for single and joint filers — which would phase down as income grows — a figure lower than the proposal floated by key stakeholders. Moderate Republicans from high-tax blue states pushing for a higher SALT deduction cap were quick to push back on the panel’s text.

The bill includes several tax-related promises Trump made on the campaign trail, including getting rid of taxes on tips and overtime — provisions set to expire at the end of 2028. The bill also proposes exempting car loan interest payments through 2028, with several exceptions. The bill also makes the 2017 income tax rate reductions permanent, a priority for many Republicans. The 2017 tax law specifies marginal tax rates of 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent and 37 percent.

Read more at The Hill

NY Fed Says Household Debt Up In Third Quarter As Rising Incomes Ease Debt Burden

Rising income levels helped Americans manage their expanding debt loads during the third quarter, even as some signs of stress mounted, the New York Federal Reserve said in a report released on Wednesday. The regional Fed bank said in its latest Quarterly Report on Household Debt and Credit that total levels of debt during the recently finished quarter rose 0.8% from the prior quarter to $17.94 trillion. Total debt levels are up $3.8 trillion since the close of 2019. Borrowing that was in some form of delinquency rose to 3.5% of the outstanding debt during the third quarter, up from 3.2% in a similar status during the second quarter.

At the same time, types of debt moving into troubled status during the quarter were mixed, with credit card delinquency transition rates ebbing but trouble rising "slightly" for auto-related debt and mortgages, the New York Fed said in a press release. Some 126,000 consumers had a bankruptcy added to their credit reports, down a touch from the prior quarter. during the third quarter Americans' total disposable income reached $21.8 trillion and the ratio of total debt balance to income moderated to 82%, below the 86% ratio seen at the end of 2019. "Relative to incomes, balances are actually lower than they were before the pandemic."

Read more at Reuters

Political Headlines

Health and Wellness

Good News For Night Owls: When You Need Sleep Is Determined Not By Laziness, But Chronotype. Here’s What That Means

When you need sleep depends on what’s called your chronotype—your body’s natural inclination towards certain times of day. And that, he explained, is largely genetic. “There is vast variability in chronotype,” says Matt Walker, a professor of neuroscience and psychology at the University of California, Berkeley, and founder and director of the Center for Human Sleep Science. “And it’s important to sleep in harmony with yours.” (You can determine it with this free calculator.) “Society is currently biased toward the morning types,” he said at the symposium, “as we have a notion that the type A type should be rewarded.” And unfortunately, he acknowledged, “we stigmatize the night owls.”

That’s particularly true in light of society’s tendency toward what Walker called “competitive undersleeping,” or bragging about, say, awaking at dawn or only needing four hours of shut-eye. What’s implied with that, he says, is that idea that “I’m so busy and I’m so important, which is why I’m awake so much.” While such “genetic short sleepers” do exist, they are rare—rarer than the probability of being struck by lightning, says Walker. In general, people need between seven to nine hours of rest a night. There’s also the misunderstanding that when night owls stay up late and then wake up early, others assume that they must just need less sleep. But really, he explains, “They are being forced to sleep at the wrong time.” Below, everything you need to know about your chronotype, and how to get enough sleep in spite of what the rest of the world tells you.

Read more at Fortune Well

Industry News

Trade War Updates

Foreign-Trade Zone Offers Tariff Shelter To Importers

Foreign trade zones are experiencing a surge in popularity among US businesses seeking to navigate the financial impact of US tariffs. These designated areas allow companies to store or assemble products without incurring immediate tariffs. Instead, tariffs are paid when the goods are shipped out to domestic buyers. The program dates back to 1934, when the zones were legalized to encourage foreign commerce and mitigate some of the effects of the Smoot-Hawley tariffs, which discouraged imports. Some are operated by economic development nonprofits, some by municipalities and some by private entities.

Foreign-trade zone operators charge companies a setup fee and storage fees. Tenants those charges a drop in the bucket compared with the upfront tariff bills some companies are facing. Proponents say deferring tariff payments can keep companies’ supply chains functioning and avoid potential bottlenecks. The facilities can’t solve all tariff challenges. If Trump lowers duties—as he agreed Monday to do on Chinese imports while trade negotiations continue—companies will still be on the hook for the amount assessed when their goods entered a foreign-trade zone.

Read more at The WSJ

Read about our local FTZ

Machine Tool Demand Growing, but Uncertain Times May Be Ahead

New orders for CNC machine tools and related technology made a 32.6% leap from February to March, up to $515.8 million according to the latest U.S. Manufacturing Technology Orders report. That result represents 33.8% rise over the March 2024 USMTO summary, and it raises the year-to-date total for manufacturing orders to $1.255 billion, or 12.4% higher than the January-March total for last year. “The first quarter of 2025 showed strong signs that demand for manufacturing technology was beginning to recover after two years of mild decline,” according to AMT - the Assn. of Manufacturing Technology, which compiles the monthly report.

Better demand was noted from aerospace machine shops during March; those businesses “increased their orders … to the highest monthly value on record and the most units ordered since December 2023,” AMT reported. That level of demand may be impeded by an ongoing strike by the International Assn. of Machinists union versus Pratt & Whitney operations, comparable to the adverse effect of the IAM strike against Boeing operations during September-October 2024. While the current state of demand is positive, AMT remained cautious in its outlook. “Increasing uncertainty and downside risks to the economy could upend the positive path of manufacturing technology orders,” the group noted.

Read more at American Machinist

Honda Motor Reports 76% Plunge In Operating Profit In Huge Earnings Miss

Japanese auto giant Honda missed fiscal fourth-quarter earnings estimates as operating profit plunged 76%, with the company bracing for the full impact of U.S. tariffs. Revenue was 5.36 trillion yen ($47.26 billion) vs. 5.36 trillion yen while operating profit was 73.5 billion yen vs. 275.52 billion yen. Honda’s fourth quarter ends March 31. For its financial year ended in March, revenue came in at 21.69 trillion yen, compared with the average estimate of 21.63 trillion yen from LSEG and marking a 6.2% rise year on year. Operating profit fell 12.2% to 1.21 trillion yen, against the average LSEG estimate of 1.41 trillion yen. Net profit for its full year declined 24.5% to 835.84 billion.

While its motorcycle business achieved record high sales volume and operating profit, Honda’s automobile business saw a drop in sales, mainly in China and Southeast Asia. Hybrid electric vehicle sales in North America, however, expanded due to higher EV incentives in the region. In its earnings release, Honda had downgraded almost every financial metric for its current fiscal year ending in March 2026, compared with its latest full-year results. Its full-year operating profit is projected to fall almost 59% to 500 billion yen.

Read more at CNBC

Toyota Reveals New Name, Upgraded Tech For Its Sole U.S. EV

Toyota Motor on Tuesday revealed a redesigned version of its sole all-electric vehicle in the U.S., with a simplified name and notable increases in EV technologies and capabilities. The new name for the EV for the 2026 model year is the “bZ,” cut down from the “bZ4X.” Toyota says the name change is to simplify it for customers, but it’s also likely a move to distance the updated model from its predecessor.

The bZ4X received lackluster reviews, including from Motor Trend, which panned the vehicle as a compliance car. The vehicle also was recalled shortly after its launch for a problem in which its wheels could detach, leading to embarrassing headlines for the company that’s known for its reliability. Toyota appears to address many concerns of the first-generation EV with the 2026 model year updates, including a 25% increase in EV range, up to 50% improvement in horsepower and fast-charging capabilities. Toyota said the bZ is scheduled to begin arriving in U.S. showrooms from its Japanese production plant during the second half of this year. It declined to release future pricing of the car, which currently ranges from roughly $37,000 to $42,000, depending on the model.

Read more at CNBC

GM’s New Battery Will Cut The Cost Of Its Electric Trucks By Over $6,000

General Motors, which sells the biggest lineup of electric vehicles in the U.S., plans to slash the cost of its rechargeable pickups and large SUVs by thousands of dollars thanks to a new type of battery that uses more of the cheap material manganese and much less of expensive metals cobalt and nickel while still offering a long driving range. The lithium-manganese-rich (LMR) cathode, which has been in development by GM and battery partner LG Energy for a decade, will cut the cost of battery packs in electric vehicles like the Chevrolet Silverado EV, GMC Hummer and Cadillac Escalade by more than $6,000, GM’s vice president of battery propulsion Kurt Kelty told Forbes.

It has nearly the same driving range as “high nickel” lithium-ion cells now used in most EVs while competing on price with cheaper lithium-iron-phosphate (LFP) cells from Chinese battery makers that are heavier and offer less range, he said. The new batteries are also durable enough to be recharged frequently for at least eight years. The LMR packs will be made by Ultium Cells, the GM-LG Energy battery joint venture, in Michigan and Ohio, with a goal of getting most of the lithium, manganese and other raw materials from non-Chinese suppliers. GM also plans to cut battery costs by shifting to a flat “prismatic” cell instead of the traditional cylindrical form.

Read more at Forbes

Container Rates Await New Demand

While the United States and China exhale after the trading titans agreed to a 90-day pause in tariffs, it’s not yet clear to what degree demand may rematerialize on the eastbound trans-Pacific, and how that could weigh on ocean container rates. Despite the sharp drop in China-U.S. volumes since April, trans-Pacific container rates have remained level at about $2,300 per forty-foot equivalent unit to the West Coast and $3,400 per FEU to the East Coast, according to the Freightos Baltic Index, as carriers reduced capacity by an estimated 22% through blank sailings and service suspensions, and by deploying smaller vessels.

The now 30% minimum tariff on all Chinese goods is higher than the highest tariffs applied to a more limited list of goods during the first Trump administration, said research head Judah Levine of shipping analyst Freightos, in a note. But Levine pointed to National Retail Federation U.S. ocean import data showing that even with a minimum 20% tariff on all Chinese goods in March, U.S. importers continued to frontload inventory ahead of the prospect of even higher tariffs. “Volumes in March and April were 11% higher than in 2024 and featured one of the strongest Aprils on record, though some of that growth was from countries other than China, like Vietnam and Thailand.”

Read more at Freight Waves

FedEx, Amazon Strike Large-Package Delivery Deal

FedEx will deliver large packages to Amazon’s residential customers under a multi-year agreement, FedEx said in an emailed statement Monday. The two parties signed a partnership deal in late February that provides Amazon “cost favorability” when compared to using UPS, Business Insider reported, citing an internal document. Further details of the arrangement, including its timing and scope, were not provided by FedEx or Amazon.

“FedEx joins our other third-party partners like UPS and the USPS, that work alongside our own last mile delivery network to help us balance capacity to best serve customers,” Amazon spokesperson Steve Kelly said in an emailed statement. The agreement comes nearly six years after FedEx let its Express and Ground shipping contracts with the e-commerce giant expire.

Read more at Supply Chain Dive

America's Longest Cable-Stayed Bridge To Link US With Canada

Abridge connecting the U.S. and Canada will open to the public just as a trade war develops between the two countries. The Gordie Howe International Bridge, which spans the Detroit River from Michigan to Ontario, will be the longest cable-stayed bridge in the country when it opens in late 2025, just a few months after relations between Canada and the U.S. took a turn for the worse in the wake of President Donald Trump's trade policy. It is a cable-stayed bridge, meaning the supporting cables are connected directly to the bridge's towers rather than the larger overhead cables seen on conventional suspension bridges.

The Gordie Howe bridge was first pitched by Canadian lawmakers in 2009, with approval from Michigan's leadership and the Obama administration coming in 2013. Construction began in 2018, and the project was billed as mutually beneficial for Canadians and Americans, with contractors on both sides of the river used on the project. The Windsor-Detroit Bridge Authority estimates that the structure will be fully operational around October or November as the first year of Trump's second administration draws to a close. The bridge was funded entirely by the Canadian government, with authorities planning for the $6.4 billion price tag to be funded by the crossing toll, which is expected to raise more than $70 million a year. However, people crossing from Michigan will not pay a toll; only those crossing from Canada will.

Read more at Newsweek

Member Briefing May 13, 2025May 13, 2025