Member Briefing May 15, 2023
PPI = 2.3% - Producer Prices Rise Slightly
U.S. producer prices rebounded modestly in April, leading to the smallest annual increase in producer inflation in more than two years, further evidence that inflation pressures were subsiding. The producer price index for final demand rose 0.2% last month, the Labor Department said on Thursday. Data for March was revised slightly to show the PPI dropping 0.4% instead of 0.5% as previously reported.
In the 12 months through April, the PPI increased 2.3%. That was the smallest year-on-year rise since January 2021 and followed a 2.7% advance in March. The annual PPI rate is slowing as last year's large increases fall out of the calculation. A 0.3% increase in the cost of services accounted for 80% of the rise in the monthly PPI. Services where boosted by a 4.1% advance in portfolio management fees.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Zelenskiy Says Counteroffensive Yet to Begin Despite Kyiv's Gains at Front - Reuters
- Kyiv To Get Long Range Missiles From UK - VOA
- Ukraine's Zelenskiy Thanks Germany for 'Fantastic Solidarity' in Visit - Reuters
- Why Fighters from Post-Soviet World Flock to Ukraine’s Banner – CS Monitor
- Ukraine Drives Back Russian Forces Around Bakhmut - NBC
- Russia Denies Reports of Ukrainian Breakthroughs Along Front Lines - Reuters
- How European Trainers Have Transformed Kyiv’s Army and Changed the War – Foreign Affairs
- South Africa Supplied Arms to Russia Says US Ambassador Reuben Brigety - BBC
- This 20-Year-Old French Jet Fighter Is Suddenly Outselling Rivals - WSJ
- Why the Boss of Wagner Group is Feuding with Russia’s Military Leaders – The Economist
- 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
Consumer Sentiment Falls in May on Recession, Debt Ceiling Standoff Worries
Consumers appear concerned about the political standoff over the debt ceiling now underway in Washington, prompting a sharp drop in sentiment in May, according to the preliminary estimate from the University of Michigan released on Friday. The overall index fell 9.1% to 57.7 from April’s reading of 63.5. That was way below expectations of a small decline. The current conditions index fell to 64.5 from April's 68.2 while the expectations index fell to 53.4 from 63.5, an 11.7% drop.
“While current incoming macroeconomic data show no sign of recession, consumers’ worries about the economy escalated in May alongside the proliferation of negative news about the economy, including the debt crisis standoff,” said survey director Joanne Hsu. “But with the job market remaining strong and incomes rising, albeit faced with inflation, consumers have maintained their spending habits.”
Inflation for Services Remains Stubbornly High
If you look at the detailed breakdown of April’s consumer price index released Wednesday, you’ll see lots of numbers. But let’s just focus on two for now.The first is at the very top, which shows the price change for all items since last year — up 4.9%. Then, if you scroll way down past all the goods, you’ll get to “services less energy services.” That’s the price of everything you buy that’s not a physical good, excluding purchases of things like electricity.
That number is significantly higher than the first — up 6.8% since last year. Veterinary services were up 10%. Motor vehicle insurance was up more than 15%. Inflation for all services tends to be slow to change, UBS Economist Alan Detmeister said, partly because they’re related to how much we pay exterminators, insurers and vet technicians. “Wages are a big part of services prices,” he said. “And wages often change usually only once a year. Services prices are changed much less frequently than goods prices.”
COVID News - For People With Long Covid, the Struggles Aren’t Over
According to federal survey data collected in March, 15.5% of Americans reported experiencing long Covid—defined as symptoms lasting three months or longer—at some point, with 6% saying they are currently experiencing it. More than 80% of people with long Covid say they have activity limitations, with 25% reporting significant activity limitations.
Scientists are still trying to understand the root cause of long Covid. Most believe that there are probably several causes, producing different symptoms. One theory is that the virus lingers after an infection, triggering long-term symptoms. Other research is testing the idea that Covid causes an abnormal immune response in some people. Scientists are also studying whether Covid produces tiny clots in blood vessels that deprive the body’s tissues and cells of oxygen. No treatment exists to target a root cause. Instead, patients must cobble together a patchwork of remedies to treat wide-ranging symptoms, according to interviews with dozens of patients and doctors
NYS COVID Update
The Governor updated COVID data for the week ending May 12.
Deaths:
- Weekly: 32
- Total Reported to CDC: 79,569
Hospitalizations:
- Average Daily Patients in Hospital statewide: 576
- Average Daily Patients in ICU Statewide: 61
7 Day Average Cases per 100K population
- 59 positive cases per 100,00 population, Statewide
- 74 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Biden Says Debt Talks Move Along as Parties Discuss Changes
President Joe Biden said that progress is being made on resolving the debt ceiling impasse Saturday but noted that any deal based on negotiations was "not there yet."“We’re moving along; it’s hard to tell. We’ve not reached the crunch point yet. There’s real discussion about some changes we all could make. We’re not there yet," he said during a brief gaggle ahead of his departure to Delaware, according to a pool reporter.
Biden declined to answer questions about when he plans to meet with the "big four" congressional leaders again. He last convened a meeting with them Tuesday and was slated to hold another one Friday, but that was called off and postponed until sometime this week. When pressed about how confident he was about a breakthrough before the June 1 Date Treasury Secretary Janet Yellen gave for the government running out of cash to foot all its bills, Biden replied that there "has to be."
Read more at Washington Examiner
National Defense Authorization Act on Hold While Congress Grapples With Debt Limit
The House is postponing consideration of the fiscal 2024 defense authorization bill while Congress works to resolve an impasse over the debt ceiling, lawmakers said Wednesday.House Armed Services Chairman Mike D. Rogers, R-Ala., abruptly announced Tuesday evening that the markup of the National Defense Authorization Act, or NDAA, had been postponed indefinitely. The committee’s seven subcommittees had planned to mark up their sections of the bill Thursday and Friday, with the full committee markup planned for May 23.
But that schedule coincided with ongoing leadership negotiations ahead of a June 1 deadline to lift the debt ceiling. Those negotiations remain stalled, with Democrats demanding a clean increase while Republicans want steep spending cuts. “For now, we're going to wait and see how that process plays out before starting the NDAA,” House Majority Leader Steve Scalise, R-La., said on Wednesday. “But we've already been doing work on what those policies would look like on a National Defense Authorization Act.”
Biden Administration Targets Power-Plant Emissions in New Climate Initiative
The Biden administration proposed new rules Thursday to drastically reduce greenhouse gases from coal- and gas-fired power plants—measures that will cost billions of dollars but that officials say will curb emissions that are warming the atmosphere and harming human health. The proposed rules by the Environmental Protection Agency will raise average utility bills by 2% by 2030, declining to less than 1% by 2040, officials estimate.
“We feel really good that we have a negligible impact on electricity prices, but a significant impact on public health and climate benefits,” EPA Administrator Michael Regan told reporters at a briefing. Critics say the proposed rules are too draconian, and will hurt coal-mining areas such as West Virginia where the economy is tied to fossil fuels. Utility-industry officials gave a measured response, saying utilities need flexibility in both the timing and the choice of technology for each plant to comply with the proposed rules
Bank of England Raises Rates and Promises to "Stay the Course"
The Bank of England raised its key interest rate by a quarter of a percentage point to 4.5% on Thursday and Governor Andrew Bailey said the British central bank would "stay the course" as it seeks to curb the fastest inflation of any major economy. The BoE is no longer predicting a recession after it made the biggest improvement to its growth projections since it first published forecasts in 1997. But it now expects inflation - which remained above 10% in March - to fall more slowly than it had hoped, mostly due to unexpectedly big and persistent rises in food prices. It also saw stronger wage growth than it previously thought.
Last week, the U.S. Federal Reserve and the European Central Bank both raised their benchmark borrowing rates by 25 basis points. While Fed Chair Jerome Powell hinted at a pause, ECB President Christine Lagarde said it was too soon to stop.
UK Economy Makes Slow Start to 2023, Grows 0.1% in First Quarter
Britain's economy grew sluggishly in early 2023, better than the shallow recession once expected, but an unexpectedly sharp drop in output in March underscored how fragile its recovery remains. Gross domestic product (GDP) edged up 0.1% in the first three months of the year, official data showed on Friday, the same tepid pace as in the final quarter of 2022 and in line with economists' forecast in a Reuters poll.
Output was 0.2% higher than a year earlier, the Office for National Statistics said. But GDP in March alone dropped 0.3%, compared with poll forecasts for it to hold steady. While industrial output and construction grew, the much larger services sector dropped 0.4%, reflecting weak car sales and retail, hurt by unusually rainy weather and high inflation. Widespread industrial action also weighed on economic activity in the first quarter, the statistics office said.
OPEC Grapples with Sliding Oil Prices, Keeps Demand Forecast Steady
OPEC's global oil demand forecast for 2023 was held steady for a third month on Thursday, with the producer group citing the potential Chinese growth to be offset by downside economic risks elsewhere such as the U.S. debt ceiling. World oil demand in 2023 will rise by 2.33 million barrels per day (bpd), or 2.3%, the Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report. This was virtually unchanged from 2.32 million bpd forecast last month.
"Minor upward adjustments were made due to the better than expected performance in China's economy, while other regions are expected to see slight declines due to economic challenges that are likely to weigh on oil demand," OPEC said in the report. A new round of oil output cuts announced on April 2 by some members of OPEC+, which comprises OPEC, Russia and other allies, has failed to boost oil prices that have been hit by further interest rate hikes and concern over the U.S. debt ceiling.
Frontier to End Stewart Service
Frontier Airlines, a low-cost carrier that began service from New York Stewart International Airport to three Florida cities in October 2021, will be ending its flights from the Newburgh area facility this summer. When the airline introduced its Hudson Valley travel, it flew three routes – Tampa, Orlando, and Miami. It currently only flies to Orlando a couple of times a week. Representatives from Frontier and the Port Authority, which operates Stewart, did not return several phone calls and emails for comment.
When Frontier leaves, the only airlines serving Stewart will be Allegiant with flights to Florida and season service to Myrtle Beach and Play Airways to Iceland with connecting flights to several European cities. In August, Atlantic Airways will operate a once-weekly service to the Faroe Islands on a seasonal basis.
Weekly Initial Jobless Claims Jump to 264K
Initial Jobless claims totaled 264,000 in the week ending May 6, the weekly data published by the US Department of Labor (DOL) showed on Thursday. The print follows the previous week’s unrevised 242,000 and came in above market expectations of 245,000. The reading was the highest since October 2021. The 4-week moving average was 245,250, an increase of 6,000 from the previous week's unrevised average of 239,250. This is the highest level for this average since November 20, 2021 when it was 249,250.
Continuing Claims increased by 12,000 in the week ended April 29 to 1.813 million, below the 1.82 million of market consensus. It is the lowest level in three weeks. The 4-week moving average was 1,829,500, an increase of 2,250 from the previous week's revised average. The previous week's average was revised down by 1,000 from 1,828,250 to 1,827,250.
Messaging Matters to Make New Parents Feel More Welcome Back at Work
Mindful Return conducted a study on the first 1,000 participants in its program, finding that, over a five-year period after their return from parental leave, 85% were still with the same employer and 93% were still in the workforce. “We know it makes a difference when employers say to their employees, ‘Hey, we want you to come back, and we’re going to give you the tools to help you do that,’ ” said Lori Mihalich-Levin, founder of Mindful Return and author of Back to Work After Baby, at the HBLC session.
Proactively offering support to returning parents is something more employers need to consider doing, she says, noting that 40% of American households include children under 18 and, in 2021, 62% of two-parent households had both parents working. However, only 64% of working women return to work after having a baby—meaning a full one-third of the female workforce is consistently leaving.
DOD Looks to Build "Defense Innovation Ecosystem"
The National Defense, Science and Technology Strategy (NDSTS) was announced on 9 May 2023, it articulates the science and technology priorities, goals, and investments of the Department and makes recommendations on the future of the defense research and engineering enterprise. DoD Chief Technology Officer Heidi Shyu stated: “To achieve the objectives of the NDSTS we must leverage critical emerging technologies. This Strategy helps us make carefully crafted decisions that bolster our comparative advantages rather than engaging in wasteful technology races.
The strategy encompasses an array of policies including “fostering a vibrant defense innovation ecosystem”, “communicating effectively inside and outside the department”, as well as efforts to “recruit, retain and cultivate talent” and “revitalizing our physical infrastructure” among others. The DoD has already changed the structure of its defense innovation unit with a new director and reports directly to the Secretary of Defense. The structural realignment will enable the unit to work more effectively with recurring reviews of commercial solutions driving military innovation.
New 737 MAX Order Worth Up to $20 Billion
Boeing Commercial Airplanes has drawn an order worth as much as $20 billion from Ryanair, the European budget airline that is one of the OEM’s top customers. It is the largest aircraft purchase in the 37-year history for Ryanair, which is replacing older jets and seeking to gain more market share. And the order could grow to total 300 new jets if all the options are exercised. According to Ryanair's Group CEO Michael O'Leary, the new aircraft are intended to replace older 737 Next Generation aircraft in its fleet.
The new order also apparently resolves a pricing dispute between Boeing and Ryanair, which in 2021 backed out of a reported 250-jet contract before it was finalized. "The Boeing-Ryanair partnership is one of the most productive in commercial aviation history, enabling both companies to succeed and expand affordable travel to hundreds of millions of people," stated Boeing President and CEO Dave Calhoun. "Nearly a quarter century after our companies signed our first direct airplane purchase, this landmark deal will further strengthen our partnership. We are committed to delivering for Ryanair and helping the airline group achieve its goals."