Member Briefing May 16, 2022
Rise in COVID Cases Puts Most of New York State Counties on CDC “High” Alert List
New coronavirus cases surged in most counties in New York State this week, putting them on “high” alert under Centers for Disease Control and Prevention guidelines and triggering recommendations for indoor masking, including inside schools. The state refrained from imposing an indoor mask mandate, but health officials on Friday afternoon did urge residents living in counties that have been placed on “high” alert to wear masks in indoor spaces, regardless of vaccination status.
As of Thursday, the average of new cases stood at more than 10,000 a day, according to a New York Times database. New cases have increased 47 percent over the past two weeks, and hospitalizations have increased 28 percent over that time period, to an average of more than 2,600 a day. (New York State and Hudson Valley COVID Data including high risk counties are reported below).
Invasion of Ukraine Headlines
- Ukraine and Russia: the Latest News – Reuters
- Russia Threatens to Retaliate as Finland Seeks NATO Membership ‘Without Delay’ – Reuters
- Turkey’s Leader Opposes Letting Finland, Sweden Join NATO
- Russia has Likely Lost One-Third of its Combat Forces in Ukraine, UK Defense Ministry Says – Fox
- Ukrainian Band Kalush Orchestra Wins Eurovision Contest Amid War – Article at AP, Watch on Youtube
- McConnell Leads Congressional Delegation to Ukraine, Meets With Zelensky – The Hill
- Why Ukraine’s Army Still Uses a 100-Year-Old Machinegun – The Economist
- Rising Ukraine Casualties Prompt Alarm from Officials – The AP
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Consumer Sentiment Hits Ten-Year Low Amid High Prices, University of Michigan Survey Finds
Stocks down + gasoline up = people not happy. The University of Michigan’s gauge of consumer sentiment fell to 59.1 in May from a final April reading of 65.2, its lowest level in more than 10 years. Americans’ expectations for overall inflation over the next year fell held steady at 5.4% in April, while expectations for inflation over the next 5 years remained at 3%. A gauge of consumer’s views of current conditions fell to 63.6 in May from 69.4 in April, while an indicator of expectations for the next six months declined to 56.3 from 62.5 in the previous month.
The decline in consumer attitudes from April “were broad based” and “visible across income, age, education geography and political affiliation” according to Joanne Hsu, director of the survey. “Consumers’ assessment of their current financial situation relative to a year ago is at its lowest reading since 2013, with 36% of consumers attributing their negative assessment to inflation,” Hsu added. “Buying conditions for durables reached its lowest reading since the question began appearing on the monthly surveys in 1978, again primarily due to high prices.”
11.0% – Producer Price Gains Slowed in April but Remain Elevated
The Labor Department on Thursday said the producer-price index, which generally reflects supply conditions in the economy, increased 11% on a 12-month basis in April. That marked its fifth consecutive double-digit gain and a decline from an upwardly revised 11.5% increase the prior month. The March gain was the highest since records began in 2010, pushed up by surging energy prices after Russia invaded Ukraine.
On a one-month basis, producer prices rose a seasonally adjusted 0.5% in April from the prior month. That marks a deceleration from the upwardly revised 1.6% gain in March. April’s rate of increase was the lowest since September 2021, but was higher than the average monthly gain of 0.2% in the two years before the pandemic. The so-called core price index—which excludes the often-volatile categories of food, energy and supplier margins—slipped slightly, climbing 0.6% in April from a month earlier, after jumping 0.9% in March.
US COVID – Cases Up – Mortality Stable
The US CDC is reporting 81.9 million cumulative cases of COVID-19 and 995,747 deaths. The average daily incidence has more than tripled over the past 2 weeks, up from 25,292 new cases per day on March 28 to 78,236 on May 10. The daily mortality is remaining fairly stable, at an average of 326 deaths per day on May 10. If daily mortality continues at this pace, the cumulative mortality will reach 1 million deaths within the next 12-13 days.
The US has administered 580 million cumulative doses of SARS-CoV-2 vaccines. A total of 258 million individuals have received at least 1 vaccine dose, which corresponds to 77.8% of the entire US population. A total of 220.3 million individuals are fully vaccinated, which corresponds to 66.3% of the total population. Only 49.4% of individuals eligible for a first booster dose have received one.
NYS Vaccine and COVID Update –
Vaccine Stats as of May 13:
One Vaccine Dose
- 90.3% of all New Yorkers – 16,593,794
- In the Hudson Valley 1,729,212
- 77.1% of all New Yorkers – 14,871,669
- In the Hudson Valley – 1,518,700
- All New Yorkers – 8,275,376
- In the Hudson Valley – 1,000,229
The Governor updated COVID data through May 13. There were 25 COVID related deaths for a total reported of 71,111
- Patients Currently in Hospital statewide: 2,340
- Patients Currently in ICU Statewide: 248
7 Day Average Positivity Rate – Cases per 100K population
- Statewide 7.09% – 49.26 positive cases per 100,00 population
- Mid-Hudson: 7.87% – 51.22 positive cases per 100,00 population
Breakthrough Cases of COVID-19 are beginning to rise again in the United States, and hospitalizations also are on the rise. Previous surges have been characterized by much higher rates of hospitalization and death among unvaccinated populations when compared to the vaccinated. However, the gap between these 2 groups is narrowing. Breakthrough infections among the vaccinated have become increasingly common, and elderly populations seem to be bearing the brunt of this trend. Many US residents aged 65 and older received their first 2 primary series vaccine doses approximately 1 year ago in the summer of 2021, and nearly one-third have yet to receive their first booster dose. As a result this year’s Omicron surge was marked by a shift back toward elderly populations once again being at a higher risk.
However, elderly populations will not be the only group at risk for breakthrough infections if a new surge occurs later this year. Vaccine uptake has slowed in the US, and less than half of all eligible US residents have received their first booster dose. Waning immunity, slow vaccine and booster uptake, increasingly transmissible SARS-CoV-2 variants, and a lack of pandemic funding in the US could put nearly 100 million individuals at risk of COVID-19 later this year.
Read more at the Johns Hopkins Center For Health Security
CBO Revises Federal Tax Revenues Upward following April’s Report
The federal budget deficit was $360 billion in the first seven months of fiscal year 2022 (that is, from October 2021 through April 2022), the Congressional Budget Office estimates. That amount is about one-fifth of the $1.9 trillion shortfall recorded during the same period in 2021. Revenues were $843 billion (or 39 percent) higher and outlays were $729 billion (or 18 percent) lower than during the same period a year ago.
Receipts collected through April 2022 were significantly greater than CBO estimated when it last published baseline projections in July 2021 and revenues in 2022 are likely to total between $400 billion and $500 billion more than CBO anticipated last summer. That increase stems mainly from larger-than-anticipated payments of individual income taxes, payroll taxes, and corporate income taxes for calendar year 2021.
China’s Latest Lockdowns Bring Shipping Headaches…
The Chinese government’s zero-COVID policy continues to wreak havoc on its citizens and on the global supply chain. The largest impacts today are in Shanghai and Beijing. Shanghai, a city of 25 million, has been in lockdown since early April. For companies selling in the Chinese market, these restrictions mean lost sales because Chinese consumers can’t shop.
For importers of items produced in the Shanghai or Beijing areas, the quarantine restrictions severely impact product availability. Even if a supplier’s plant is open and operating, trucking restrictions are in effect. Driver restrictions impact cross-border deliveries of components. According to Maersk Lines, there has been a “significant reduction of cross-province trucks.” Less cargo arriving at the port means less cargo is available to be shipped. The ocean carriers have responded to the drop-off in volume by cancelling upcoming vessel sailings. Over the next four weeks, 6% of transpacific sailings to Los Angeles/Long Beach are cancelled. This will keep ocean freight rates high, while giving the ocean carriers time to get their fleets back on schedule.
… And a Silver Lining
There is one silver lining to this drop in shipping volume: U.S. port and inland freight delays have eased. Vessel delays into L.A./Long Beach, while still high, are half of what they were late last year. The chassis shortage is easing, and rail moves are fluid again. Unfortunately, this is likely to be a short-lived improvement. There is a large volume of backlogged cargo. Once restrictions in China are lifted, importers should anticipate a return to port congestion and delivery delays on all imported merchandise.
To combat these disruptions, companies importing from Asia should prioritize their critical shipments and customers, use alternate ports and routes whenever possible, and work closely with supply-chain partners to collaborate and reset expectations.
Natural-Gas Prices Soar in Europe After Russia Sanctions Energy Companies
Natural-gas prices in Europe shot higher Thursday, a day after Russia unveiled a set of sanctions on energy companies operating on the Continent that could further threaten supply. Among the companies sanctioned by Moscow were former subsidiaries of Russian state gas giant Gazprom PJSC in the European Union and the Polish owner of a key stretch of pipeline. The restrictions could reduce Europe’s flexibility to import Russian gas through routes beyond Ukraine, though the full implications on gas supplies weren’t yet clear, analysts said.
The Russian move cuts gas deliveries to Germany by 10 million cubic meters a day, or around 3% of annual Russian gas deliveries to the country, Mr. Habeck said. These volumes can be sourced from alternative suppliers on the gas market, he said.
U.S. Chamber Calls for Focus on Workforce, Tariffs, and Energy Production to Combat Historic Inflation
Following the release of April’s CPI data, Neil Bradley, Executive Vice President and Chief Policy Officer at the U.S. Chamber of Commerce, released the below statement: “Inflation is happening because too much money is chasing too few goods – it’s economics 101. While the Federal Reserve focuses on the demand side through raising rates to cool the economy, only the administration and Congress can address the policy sides affecting inflation – workforce, energy, and tariffs are three key places to start.
“The U.S. economy has 11.5 million open jobs, but three million fewer workers than if labor force participation was equal to the pre-pandemic level. Getting people back to work and expanding legal immigration are key to taming inflation…. We need additional U.S. energy production, but that requires investment that is possible only if the administration sends clear signals that they will support domestic production not just in the near-term, but over the medium term.
U.S. Labor Market Still Tightening
The number of Americans filing new claims for unemployment benefits unexpectedly rose last week, touching the highest level in three months, but there is no material shift in labor market conditions amid strong demand for workers. The report from the Labor Department on Thursday also showed that the number of people on state unemployment rolls was the smallest in more than 52 years at the end of April. Companies, scrambling to fill record job openings, are boosting wages, contributing to keeping inflation elevated.
Initial claims for state unemployment benefits increased 1,000 to a seasonally adjusted 203,000 for the week ended May 7, the highest level since mid-February. The number of people receiving benefits after an initial week of aid dropped 44,000 to 1.343 million during the week ending April 30. That was the lowest level for the so-called continuing claims since January 1970.
Senate Confirms Jerome Powell to Second Term Leading Federal Reserve
The Senate confirmed Federal Reserve Chairman Jerome Powell to a second four-year term that is shaping up to be every bit as trying as his first term as the central bank faces the highest inflation in 40 years. Mr. Powell’s nomination, approved Thursday on an 80-19 vote, has been on track for months to win bipartisan approval despite unease over inflation and aggressive interest-rate increases that the Fed has urgently commenced to cool price pressures.
Separately, Mr. Powell said Thursday the Fed was prepared to act aggressively to bring down inflation to its 2% goal even if it created a short-term hit to the economy, his most explicit acknowledgment of the risks posed by a sequence of rapid rate rises.
Lordstown Motors, Foxconn Seal 18 Month Contract
Executives of Lordstown Motors Corp. and Hon Hai Technology Group, the parent company of Foxconn, on May 11 signed agreements to have Foxconn buy Lordstown’s large Ohio manufacturing complex and take over the manufacturing of the Endurance electric pickup truck. The companies also have sealed a joint venture deal to design, develop and build other commercial EVs based on Foxconn platform technology.
Per the companies’ agreements, Foxconn now owns the Lordstown factory—which was in the past owned by General Motors Corp. and which spans 6.2 million square feet—and has taken on 400 Lordstown workers as part of a contract manufacturing commitment of at least 18 months. The company has paid Lordstown the $30 million it still owed per the companies November preliminary agreement as well as roughly $27.5 million in estimated cost reimbursements.