Member Briefing May 22, 2023
G7 vs China: US, Europe Unite in Tough Messaging Against Beijing
China on Saturday faced a strong pushback from the Group of Seven countries over its stances on Russia, Taiwan, trade bullying, economic monopoly and domestic interference, with the G7 leaders' statement reflecting a broad convergence of the U.S., Europe and Japan on a need to change tack.
Crucially, the U.S. and Europe — the two main constituents of the G7 — came round to a common set of language on China. For France and Germany, in particular, their focus on a conciliatory attitude to China was reflected in the final statement, which began the China section by stating "We stand prepared to build constructive and stable relations with China." The G7's repeated emphasis of "de-risking, not decoupling" is a nod to the EU approach to China, as European member countries are wary of completely cutting off business ties with Beijing.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Bowing to Pressure, Biden Relents on F-16s to Ukraine – Washington Post
- U.S. and its Allies Plan to Provide Ukraine With F-16 fighter Jets, Official Says - NBC
- Ukraine’s Zelensky and India’s Modi Hold First Face-to-Face Since Russian Invasion - CNN
- Zelenskyy Tells ‘Swing States’ India and Brazil it’s Time to Take Sides - Politico
- Russia Says Wagner Private Army, With Help from Russian Troops, Seized Bakhmut - Yahoo
- Putin’s Troops Redeployed to Bakhmut as Kyiv Makes ‘Tactical Gains’ – The Independent
- Ukraine Authorities Expose Piles of Cash in Supreme Court Corruption Probe - Reuters
- Addressing Arab Leaders in Saudi Arabia, Zelensky Vows Ukraine ‘Will Never Submit’ – Times of Israel
- Russia Bans 500 U.S. Citizens including, Obama, Over Sanctions – The Hill
- It’s Not Enough for Ukraine to Win. Russia Has to Lose. – The Atlantic
- 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
Tokyo Meeting Highlights Democracies’ Push to Secure Chip Supplies
Top executives from the biggest chip makers in the U.S., Taiwan and South Korea met the Japanese prime minister on Thursday as the world’s industrial democracies look to deepen cooperation in the production of components they increasingly see as central to national security. Japan’s Fumio Kishida met representatives of Intel, TSMC, Samsung and other chip companies, part of Tokyo’s push to step up its domestic manufacturing of computer chips.
The meeting featuring business executives and officials from what are sometimes called the “Fab Four” chip-making powers—the U.S., Taiwan, South Korea and Japan—came on the eve of a summit of leaders of the Group of Seven nations in Hiroshima, Japan, where bolstering strategies to contain China is a top agenda item. Washington is trying to keep chip technology out of China’s hands and encourage the production of chips, critical components in communications and weapons technologies, in friendly nations.
DiNapoli Releases Analysis of 2023-24 Enacted State Budget
Preliminary estimates show All Funds spending will grow nearly 4% year-over-year amid a projected drop in revenues and as temporary federal aid is spent down, according to an analysis by State Comptroller Thomas P. DiNapoli. Earlier in the week, DiNapoli reported that state tax collections in April totaled just over $10.9 billion, a $7.2 billion, or 39.9%, decrease from last April, and $4.4 billion lower than projections in the Division of the Budget’s (DOB) 2024 Updated Executive Budget Financial Plan, the most recent plan available. The decline was primarily in the Personal Income Tax (PIT).
Although only a month into the new fiscal year, April tax collections may be a cause for concern, particularly the PIT. April PIT collections totaled $7.5 billion, 49.4% below last year. While a year-over-year decline was anticipated, these revenues were 39.1% lower than DOB cash flow projections for April contained in its most recent Financial Plan. According to reports from the Department of Taxation and Finance, the net settlement for the 2022 tax year totaled $3.6 billion, 66.3% lower than that for 2021.
COVID News - COVID Emergency Orders Are Among `Greatest Intrusions on Civil Liberties,′ Justice Gorsuch Writes
Justice Neil Gorsuch had a lot more to say, leveling harsh criticism of how governments, from small towns to the nation’s capital, responded to the gravest public health threat in a century. The justice called emergency measures taken during the COVID-19 crisis that killed more than 1 million Americans perhaps “the greatest intrusions on civil liberties in the peacetime history of this country.”
He pointed to orders closing schools, restricting church services, mandating vaccines and prohibiting evictions. His broadside was aimed at local, state and federal officials — even his colleagues. “Executive officials across the country issued emergency decrees on a breathtaking scale,” Gorsuch wrote in an eight-page statement Thursday that accompanied an expected Supreme Court order formally dismissing a case involving the use of the Title 42 policy to prevent asylum seekers from entering the United States.
NYS COVID Update
The Governor updated COVID data for the week ending May 19.
- Weekly: 25
- Total Reported to CDC: 79,594
- Average Daily Patients in Hospital statewide: 546
- Average Daily Patients in ICU Statewide: 58
7 Day Average Cases per 100K population
- 3 positive cases per 100,00 population, Statewide
- 5 positive cases per 100,00 population, Mid-Hudson
- Read the Press Release (no press release this week)
- Visit the NYS COVID-19 Data Hub
- NYS Vaccination Tracker
Biden and McCarthy to Meet on Today as Debt Ceiling Talks Resume
U.S. President Joe Biden and House Republican Speaker Kevin McCarthy will meet to discuss the debt ceiling on today, after a "productive" phone call as the president headed back to Washington, the two sides said on Sunday. McCarthy, speaking to reporters at the U.S. Capitol following the call, said there were positive discussions on solving the crisis and that staff-level talks were set to resume later on Sunday.
After Sunday's call, McCarthy said while there was still no final deal, there was an understanding to get negotiators on both sides back together before the two leaders met: "There's no agreement. We're still apart." McCarthy said Republicans backed an increase in the defense budget while cutting overall spending, and that debt ceiling talks have not included discussions about tax cuts passed under former President Donald Trump. A source familiar with the negotiations said the Biden administration had proposed keeping non-defense discretionary spending flat for the next year.
NY School Spending Again led US, Hitting All-Time High in 2020-21
Public elementary and secondary school spending in New York rose to $26,571 per pupil in 2020-21, according to the latest Census Bureau data—setting a new record high even as pupil performance was falling amid the disruption of in-person learning due to pandemic restrictions. New York’s K-12 spending once again topped that of all states and the District of Columbia—fully 85 percent above the national average of $14,347 per pupil.
New York’s high spending level was driven primarily by instructional salaries and benefits—which, at $18,402 per pupil, were 111 percent above the national average of $8,728, the census data show. New York’s spending in this category (i.e., money in the classroom) exceeded the total per-pupil school spending of all but six other states and the District of Columbia.
Proposed New York Law Puts Big Oil on Hook for Climate Change
New York state estimates already this year taxpayers are spending more than $800 million for projects related to climate change-caused damages and resiliency projects. State Sen. Liz Krueger, a Democrat from Manhattan, sponsors legislation that would hold the world's biggest oil and gas companies responsible for at least some of those costs moving forward. The bill establishing a Climate Change Superfund is modeled after the federal Toxic Superfund that collects from companies that pollute land and water. It would apply to companies responsible for at least one billion tons of greenhouse gas emissions between 2000 and 2018, roughly 30 companies total.
The legislation would require the companies to account for roughly $3 billion annually, proportional to their emissions, for 25 years totaling about $75 billion. The l$75 billion. It's a drop in the bucket compared to the up to $340 billion the CLCPA will cost over the next 28 years.
China Puts Spymaster in Charge of U.S. Corporate Crackdown
China’s crackdown on overseas firms has made clear that leader Xi Jinping values security over economic growth. To eradicate any doubt, according to people familiar with the matter, he has put state-security czar Chen Yixin in charge. The campaign, which has included raids on Chinese offices of U.S. due-diligence firms and questioning of staff at the Bain consulting firm, is sending shock waves across global businesses.
As news about investigations emerged in recent weeks, some international business executives were surprised that no one in Xi’s leadership came out to try to calm foreign investors, as was the case in the recent past. Such a role was traditionally played by technocrats such as Liu He, Xi’s longtime economic adviser, who negotiated a trade deal with the Trump administration and retired in March. This time, economic officials stayed silent as the crackdown intensified.
U.S. to Speed Sales of Military Gear to Foreign Allies, Partners
The war in Ukraine has brought tensions between government and industry to the fore. Although the U.S. has provided tens of billions of dollars in arms to Ukraine, drawing from American stocks, the provision of all the weaponry has pointed to weaknesses in the defense supply chain and the inability of the government to respond quickly. The threat of a conflict in the Indo-Pacific, should China decide to invade Taiwan, looms large.
In remarks to the Aerospace Industries Association in Virginia, Wendy Sherman, deputy secretary of State, on Thursday morning invoked Franklin Delano Roosevelt’s direction to infuse government and industry with an urgency before World War II. “A strategic, deep and robust partnership between our government and your industry is an absolutely essential asset to our national defense and a critical bedrock of international security,” she said.
Apple Restricts Employee Use of ChatGPT, Joining Other Companies Wary of Leaks
Apple AAPL 0.06%increase; green up pointing triangle has restricted the use of ChatGPT and other external artificial intelligence tools for some employees as it develops its own similar technology, according to a document reviewed by The Wall Street Journal and people familiar with the matter. Apple is concerned workers who use these types of programs could release confidential data, according to the document. Apple also told its employees not to use Microsoft-owned GitHub’s Copilot, which automates the writing of software code, the document said.
Apple is known for its rigorous security measures to guard information about future products and consumer data. A number of organizations have also grown wary of the technology as its workers have begun using it for everything from writing emails and marketing material to coding software. JPMorgan Chase and Verizon have barred use. David Banks, chancellor of New York City schools, said in an opinion column published Thursday that it rescinded its ChatGPT ban.
Top Toyota Scientist Warns Against Ditching Gasoline Too Soon
Toyota Motor Corp.’s top scientist warned that transitioning to electric vehicles too quickly could lead drivers to hold on to old gas guzzlers and called for hybrids to be given a longer leash ahead of a Group of Seven leaders summit in Japan. Subsidies and restrictions targeting certain powertrains could make EVs attractive for customers who can afford it, but for others it might have the opposite effect, Gill Pratt, Toyota’s chief scientist and chief executive officer of the Toyota Research Institute, told reporters in Hiroshima on Thursday.
“Eventually, resource limitations will end, but for many years we will not have enough battery material and renewable recharging resources for a BEV-only solution,” Pratt said. “Battery materials and renewable charging infrastructure will eventually be plentiful,” he said. “But it will take decades for battery material mines, renewable power generation facilities, transmission lines and seasonal energy storage facilities to scale up.”
Hudson Valley Region Sees Employment Gains In April
For the 12-month period ending April 2023, the private sector job count in the Hudson Valley rose by 11,900, or 1.5 percent, to 798,000. Gains were centered in leisure and hospitality (+6,600), private education and health services (+5,700), natural resources, mining and construction (+2,300) and other services (+800). Employment losses were focused in professional and business services (-1,000), information (-800), trade, transportation and utilities (-800),
Manufacturing lost 700 jobs year on year. The region’s 798,000 private sector job was the highest April employment count since 2019. Two sectors posted over-the-year growth of at least 4.0 percent. Job growth in the region’s natural resources, mining and construction sector continued to trend upward. Year-over-year in April 2023, the sector grew by 4.0 percent, to reach 59,700 – its highest April employment count on record.
Read the report from the NYS DOL
US Jobless Claims Tumbled Last Week After Fraud-Inflated Jump
The Labor Department said Thursday that initial jobless claims fell to 242,000 in the week ended May 13, a decline of 22,000 from the prior week. Economists expected claims of 255,000, according to FactSet. The four-week moving average for claims was 244,250, down 1,000 from the prior week. Continuing claims fell by 8,000 to 1.799 million. Economists expected continuing claims of 1.829 million. This is the first time continuing claims came in below 1.8 million since the first week of March.
Some economists have warned that it's difficult to get a clear picture of what's happening in the labor market after Massachusetts state officials acknowledged they are "experiencing an increase in fraudulent claim activities" involving unemployment benefits. For months, the labor market remained a strong point in the slowing economy, despite an aggressive interest-rate hike campaign by the Federal Reserve. But there are signs it is beginning to cool, even when excluding the noise from the fraudulent Massachusetts data.
Debt Limit Default 'Will Have Substantial Ramifications' on Economy, Markets: Strategist
A “protracted” default, lasting longer than three months, would trigger a Great Recession type of scenario in which as many as 8.3 million people could lose their jobs. In that situation, the stock market could fall by 45%, hurting the accounts of those saving for retirement. Those still working would be squeezed by even higher interest rates. Mortgage rates, for example, might rise further after already spiking from about 3% in December 2021 to 6.4% this month.
Economists say those scenarios loom over a U.S. already at risk of recession. Failing to pay the bills would erode trust in U.S. government debt, seen up to date as largely “risk-free” due to the nation’s track record of paying its debts on time and in full. A default could lead to a dramatic decline in the value of U.S. government bills, notes and bonds (thus raising the “yield” that their coupons pay out as a percentage of their value).