Member Briefing May 30, 2023
Conservative Defections, Wary Progressives Make Fate of Debt Ceiling Deal Uncertain in Votes This Week
Congress headed into a pivotal week that will test whether President Biden and House Speaker Kevin McCarthy (R., Calif.) can win enough support from their respective parties for a deal to raise the $31.4 trillion debt ceiling before June 5, when the government is projected to exhaust its ability to meet all of its financial obligations. he agreement, which Biden and McCarthy made final on Sunday, would raise the borrowing limit for two years, past the 2024 election.
The House was emerging as the main obstacle to passage, as opposition from the two wings of each party was building to the point that passage in an expected Wednesday vote was uncertain. Conservatives were complaining that the budget cuts don’t go far enough, while progressives said the pact shortchanges the neediest citizens. Some progressives were working to scuttle the deal, which among other things breaks a longstanding agreement between Democrats and Republicans to ensure parity in the percentage increases for defense and nondefense discretionary spending.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- From Russia With Gold: UAE Cashes in as Sanctions Bite - Reuters
- More Russian Troops Going AWOL as Military Struggles With Discipline - Euronews
- Russia’s Private Military Companies Expand at the Front as Moscow Seeks More Soldiers - WSJ
- Kyiv Day - Russia Launched ‘Largest Drone attack’ on Ukrainian Capital; 1 killed - AP
- Russia Launches 16th Air Strike on Kyiv this Month – Reuters
- Russia Hits a Dead End in Bakhmut -WSJ
- Zelenksy Praises Air Force After Russia's Largest Drone Attack Yet - BBC
- Russia Moves Ahead With Deployment of Tactical Nukes in Belarus – Reuters
- 36 Hours in Bakhmut: One Unit’s Desperate Battle to Hold Back the Russians - WSJ
- Arms Flow 30% Faster to Ukraine as US Relearns Cold-War Skills – Defense News
- French Open Crowd Boos Ukraine’s Marta Kostyuk as She Refuses to Shake Hands with Belarusian Aryna Sabalenka - CNN
- Satellite Data Show Ukraine’s Forces are Testing Russia’s Defences - 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
Oil & Gas Production Dominate Industry Week’s Top Manufacturing Performers
The Top 5 performers on the 2023 IndustryWeek U.S. 500 list of the nation’s largest publicly held manufacturing companies (ranked by revenue) were all oil and gas producers. ExxonMobil, Chevron, Marathon, Valero and Phillips 66 all remained in the IW U.S. 500. Without those energy producers, manufacturing profits would have fallen $27.3 billion last year, about 4.9%. With those five included, earnings climbed $77.6 billion or 8.3%.
IndustryWeek changed their data collection criteria this year, eliminating names such as Apple, Microsoft and Nike from our list as those companies don’t manufacture products. Without that change, Apple would have been No. 2 and ConocoPhillips (eliminated because it only drills for gas and has no chemicals or refining businesses, unlike ExxonMobil and Chevron) would have been in the low 20s, between Tesla Inc. and Procter & Gamble.
Supreme Court Rules Against EPA in WOTUS Case
The U.S. Supreme Court sided with an Idaho couple in a significant environmental case against the Environmental Protection Agency. This decision has national implications for water quality, ag, development and the Waters of the U.S. (WOTUS) rule. The court was unanimous in finding that the land owned by the Idaho family was not subject to the Clean Water Act. The court was split 5-4 on the court's new “test”, which stated that only wetlands with a continuous surface connection to a body of water are covered by the law.
Court Justice Samuel Alito, joined by four conservative justices, wrote the opinion stating that the federal government could regulate water that has a "continuous surface connection" to major bodies of water. This ruling overturns a previous decision by a federal appeals court that supported the EPA. “We hold that the Clean Water Act extends to only those wetlands with a continuous surface connection to bodies that are ‘waters of the United States’ in their own right, so that they are ‘indistinguishable’ from those waters,” Alito wrote, quoting from past court opinions.
COVID News: COVID Hospitalizations Reach New Record Low Nationwide, CDC Says
The number of Americans hospitalized with COVID-19 has fallen to a new record low nationwide, the Centers for Disease Control and Prevention reports. For the first time, preliminary figures from the CDC totaled just 8,256 COVID-19 hospitalizations for the past week, marking a record low for this key remaining indicator to track the threat posed by the virus.
The CDC's data, updated late Thursday, has never before fallen below 9,000 weekly admissions of COVID-19 patients, since it first began tracking this metric over the summer of 2020, early during the pandemic. COVID-19 hospital admissions are one of the few remaining metrics the CDC is relying on to track the spread of the virus and make recommendations, in the wake of the public health emergency's end earlier this month. Hospitals are still required to report a slimmed down list of COVID-19 metrics at least weekly to the CDC until April 2024, though recent changes in hospital testing practices recommendations mean fewer infections might be counted by some health care systems.
NYS COVID Update
The Governor updated COVID data for the week ending May 26.
Deaths:
- Weekly: 34
- Total Reported to CDC: 79,628
Hospitalizations:
- Average Daily Patients in Hospital statewide: 581
- Average Daily Patients in ICU Statewide: 55
7 Day Average Cases per 100K population
- 2.2 positive cases per 100,00 population, Statewide
- 2.4 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
- Read the Press Release (no press release this week)
- Visit the NYS COVID-19 Data Hub
- NYS Vaccination Tracker
Here’s What’s in the Debt Ceiling Deal
After several weeks of tense negotiations, President Joe Biden and House Republicans have reached an agreement in principle to address the debt limit and cap spending. The drama is by no means over. Congressional leaders in both parties have to convince enough of their members to vote for the agreement, which contains provisions that lawmakers on each side of the aisle don’t support.
The bill text was released on Sunday evening, and both parties are trying to cast the provisions as favorable for their side. Here’s what we know about the deal, based on the bill text, White House sources and a fact sheet circulated by House Republicans.
NAM, Other Business Groups Endorse Deal
Major business groups are lining up behind Speaker Kevin McCarthy’s (R-Calif.) deal with President Biden to raise the debt limit, giving more political momentum to the legislation as McCarthy urges skeptical members of the House GOP conference to back the bill. The National Association of Manufacturers on Monday congratulated Biden and McCarthy for reaching a deal and highlighted the importance of the permitting reform provisions in the legislation.
“Congress should act quickly to pass this agreement and to demonstrate to Americans and to the world the continued strength of our institutions and our democracy,” said National Association of Manufacturers President and CEO Jay Timmons. “Manufacturers have been a leading voice for permitting reform, so we are encouraged that this legislation takes critical steps to improve our broken permitting system, helping us more fully leverage our domestic energy sources and expand manufacturing in the United States,” he said.
U.S. Consumer Spending Jumped in April and Core PCE Inflation Accelerated
U.S. consumer spending increased more than expected in April, boosting the economy's growth prospects for the second quarter, and inflation picked up, which could prompt the Federal Reserve to raise interest rates again next month. U.S. consumer spending increased more than expected in April, boosting the economy's growth prospects for the second quarter, and inflation picked up, which could prompt the Federal Reserve to raise interest rates again next month.
The personal consumption expenditures (PCE) price index increased 0.4% in April after rising 0.1% in March. In the 12 months through April, the PCE price index increased 4.4% after advancing 4.2% in March. Food prices were unchanged, while the cost of energy goods and services jumped 0.7%. Excluding the volatile food and energy components, the PCE price index was up 0.4% after a 0.3% rise in March. The so-called core PCE price index jumped 4.7% on a year-on-year basis in April after gaining 4.6% in the 12 months through March. The Fed tracks the PCE price indexes for its 2% inflation target.
Germany Enters Recession in Blow to Europe’s Economy
Germany fell into recession in the first quarter of 2023, putting Europe's largest economy out of step with the rest of the continent. The seasonally adjusted figures from the national statistics institute, Destatis, meet the technical definition of a recession: two consecutive quarters of economic contraction. This puts Germany in recession for the first time since the decline in GDP in the first and second quarters of 2020, when the Covid-19 pandemic began to bite.
The downturn is due in particular to the fall in domestic consumption as a result of inflation. People are simply belt-tightening, with skyrocketing prices meaning there is less cash to splash. The country's trading partners imported fewer "made in Germany" products than usual. The cause: "geopolitical turbulence, high inflation rates and loss of purchasing power", according to the DIHK economic institute. Despite this slowdown, the German government remains optimistic, with a growth forecast of 0.4% in 2023.
Q1 GDP Growth Revised Higher to 1.3%
The U.S. economy grew at a lackluster 1.3% annual rate from January through March as businesses wary of an economic slowdown trimmed their inventories, the government said Thursday in a slight upgrade from its initial estimate. The government had previously estimated that the economy grew at a 1.1% annual rate last quarter. A cutback in business inventories shaved 2.1 percentage points off January-March growth.
The Commerce Department’s revised measure of growth in the nation’s gross domestic product — the economy’s total output of goods and services — marked a deceleration from 3.2% annual growth from July through September and 2.6% from October through December. The economy’s slowdown is widely expected to lead to a recession later this year. In addition to higher borrowing rates, the economy’s other obstacles include a cutback in lending as banks conserve cash after three big bank failures in recent months.
Freight Volume Shows Modest Growth in Q1
After declining freight volume for successive quarters beginning in Q1 2022, volumes grew at a modest 0.5% pace, according to a report from Transporation Intermediaries Association (TIA) Though the portion of the economy linked to freight is expected to remain weak for the rest of 2023, growth is expected to return in 2024, according to the latest data from the group's report, 3PL Market Report, First Quarter 2023.
TIA Members saw significant year-over-year declines in shipments, revenue, and invoice amount per shipment during the quarter. These metrics, however, suffered in comparison to an exceptionally strong first quarter of 2022. Quarter-over-quarter drop offs were more modest. In terms of sector performance, truckload experienced its first quarter-over-quarter decrease in shipments in a year, though shipments for this segment tend to be weaker in the first quarter. Less-than-truckload (LTL) recorded a smaller quarter-over-quarter loss in shipment volumes than in the fourth quarter of 2022. The intermodal sector reported barely any change quarter-over-quarter, owing to low import activity and continued weakness.
Read more at Material Handling & Logistics
GE Updating Schenectady Plant for Wind Turbine Manufacturing
General Electric has pledged $50 million to establish a new assembly line in New York for its on-shore wind business, GE Vernova. The plant in Schenectady currently manufactures steam turbines and generators, but will be converted soon to assembling three components for GE Vernova’s 6.1-MW turbine. Earlier this year GE committed $11 million in capital improvements for the Schenectady plant, for capacity expansion, maintenance, and new equipment and tooling.
Specifically, the plant will assemble the machine heads, hubs, and drive trains for its 6.1-158 onshore wind turbine, which is designed to convert low-to-medium speed wind into electrical energy. The turbine includes a two-piece, carbon-fiber blade design, which simplifies logistics for manufacturing and installation in “hard-to-reach sites.” It claims to have logged orders for nearly 10 GW of generating capacity for this turbine model.
Read more at American Machinist
Ford’s EV Customers Getting Access To Tesla Charging Network In 2024
Jim Farley, CEO of Dearborn, Michigan-based Ford, said owners of its F-150 Lightning pickup, Mustang Mach-E sports car and E-Transit vans will be able to start using Tesla’s charging network once a new adapter they’ll need goes into production in 2024. That gives customers more than double the charger access they have with Ford’s current charging network. Tesla operates more than 40,000 EV chargers globally, including 17,000 in the U.S., which only its owners can use. Ford said its BlueOval Charge Network has become North America’s largest public charging network, with more than 84,000 chargers. Its dealers plan to add 1,800 more DC fast-chargers and locations by next year.
The deal with Ford comes after Tesla said in February that it intended to make at least 7,500 chargers in its network available to competitors to help hit the Biden Administration’s goal of having 500,000 charging stations available to owners of any EV by 2030. Depending on location, Tesla customers pay between 25 cents and 50 cents per kilowatt to use its Supercharger stations. Farley and Musk didn’t say whether Ford owners would be charged a higher rate to use the Tesla stations.
Survey: 72% of US Execs Expect AI to Boost Productivity
72% of respondents in a 225 U.S. executives survey recently conducted by KPMG LLP said that generative AI could play an important role in increasing productivity. In addition, 66% of the respondents felt that there would be a change in the way people work in the future, while 62% also felt that it could end up encouraging innovation and help in creating more products and services.
However, with the implementation of generative AI, survey participants are mindful of potential negative implications, with 47% expecting decreased job security, and 41% being concerned with reduced opportunities for overall development. Almost two-fifths (39%) also believe that there could be an increased antisocial behavior in the office setup as they expect generative AI to reduce social interactions.
Boeing Looks to Sell at Least 150 737 Max Jets to Riyadh Air
Boeing Co is working on a deal to sell at least 150 737 Max jetliners to Saudi Arabian startup Riyadh Air, Bloomberg News reported on Sunday. The new carrier, wholly owned by Saudi Arabia's Public Investment Fund (PIF), is looking for about 300 to 400 single-aisle jets in total, the report said, citing people familiar with the matter. Airbus SE could also claim a part of the order, the report added.
Boeing previously won another order by state-owned airline Saudia and Riyadh Air for a combined 78 Boeing 787 Dreamliners, the fifth-largest commercial order by value in the plane maker's history.