Member Briefing May 8, 2025
Fed Warns of Rising Economic Risks as It Leaves Rates Steady
As widely expected, the Federal Reserve left the central bank's key interest rate unchanged Wednesday, staying firmly in "wait and see" mode. The Fed's policy committee voted unanimously to keep the fed funds rate at a range of 4.25% to 4.5%, the same as it's been since December. After cutting interest rates three times late last year, the Fed has held its rate flat to see how President Donald Trump's policies, especially the tariffs that mostly went into effect in April, will change the economy.
In an official statement released with the policy decision, Fed officials gave little indication of when rate cuts might resume. In recent speeches, policymakers have said tariffs risk pushing up the cost of living and hurting employment, which would be setbacks to both sides of the central bank's "dual mandate" to keep inflation and unemployment low. Economic data could force the Fed's hand before too much longer. Many economists expect the tariffs to take their toll on the job market in the next few months. Business leaders have said in surveys that they are cutting back on hiring and investment because of the added costs of tariffs and the uncertainty about whether or not they'll be lifted.
The High-School Juniors With $70,000-a-Year Job Offers
Elijah Rios won’t graduate from high school until next year, but he already has a job offer—one that pays $68,000 a year. Rios, 17 years old, is a junior taking welding classes at Father Judge, a Catholic high school in Philadelphia that works closely with companies looking for workers in the skilled trades. Employers are dealing with a shortage of such workers as baby boomers retire. They have increasingly begun courting high-school students like Rios—a hiring strategy they say is likely to become even more crucial in the coming years.
Employers ranging from the local transit system to submarine manufacturers make regular visits to Father Judge’s welding classrooms every year, bringing branded swag and pitching students on their workplaces. When Rios graduates next year, he plans to work as a fabricator at a local equipment maker for nuclear, recycling and other sectors, a job that pays $24 an hour, plus regular overtime and paid vacations. “Sometimes it’s a little overwhelming—like, this company wants you, that company wants you,” says Rios, who grew up in the Philadelphia neighborhood of Kensington around drug addicts and homelessness, and says he was determined to build a better life for himself. “It honestly feels like I’m an athlete getting all this attention from all these pro teams.”
Manufacturing Still Leads Other Industries in Total Cybersecurity Incidents
Don’t get lulled into a false sense of cybersecurity just because you’re not hearing about manufacturers hammered with production losses or paying out massive ransomware demands. Threat actors are out there and waiting for you to lower your guard. Last year appeared quiet when it came to manufacturing and cybercrime. If you head over to BleepingComputer and check out the list of biggest cyberattack stories last year, the closest you get to a manufacturing-related incident was the CDK Global attack upon car dealerships that affected dealers for Stellantis, Ford and BMW.
But that’s because we only hear about the big attacks. Two recently-released annual cybersecurity reports, IBM’s X-Force Threat Intelligence Index and Verizon’s Data Breach Investigations Report (DBIR), repeated warnings about the dangers manufacturers face from cybercriminals. Erich Kron, security awareness advocate at KnowBe4, says the noise in the media only comes from attacks on the biggest manufacturers and over 90% of manufacturing companies have fewer than 100 employees. “The small size of these organizations is going to impact the reporting statistics greatly. With small organizations being the norm, there are going to be far less regulatory requirements for reporting than there are for the larger organizations.
Global Headlines
Middle East
- Trump Declares Truce With Houthis But Israel Still At Risk - WSJ
- Houthis Say US 'Backed Down' And Israel Not Covered By Ceasefire - BBC
- Trump Ceasefire Won't Stop Houthis Attacking Israel - Newsweek
- Iran Warns Trump Renaming Persian Gulf Will ‘Bring The Wrath Of All Iranians’ - Forbes
- Hamas Says Gaza Talks Pointless While Israel Continues 'Starvation War' - BBC
- Macron Asks Syria’s Interim President al-Sharaa To Protect All Syrians During Elysée Visit – France 24
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Vance Says Russia ‘Asking For Too Much’ To End War With Ukraine – Yahoo
- Xi Jinping Arrives In Moscow As Putin’s ‘Guest Of Honor’ Ahead Of Victory Day Military Parade - CNN
- A Jam-Proof Russian Drone Just Blew Up A Ukrainian HIMARS - Forbes
- Russia Says 60,000 Air Passengers Stranded After Ukrainian Drone Attacks - BBC
- Russian Drones Strike Ukraine's HIMARS Launcher In War's First: Video - Newsweek
- Von Der Leyen: Bad Ukraine Deal Risks More Aggression From Putin - Politico
- 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
Other Headlines
- Pakistan Issues India Ultimatum Following Airstrikes – Newsweek
- Indian Air Strikes - How Will Pakistan Respond? Four Key Questions - BBC
- The Conclave Begins: Here Are the Front-Runners, Kingmakers and Disputes - WSJ
- Black Smoke From Sistine Chapel Chimney Signals No New Pope – France 24
- Merz Is Weakened From Day 1. Europe Will Pay The Price. - Politico
- Chinese Warship Shows Up Amid Rising US-Iran Threat of War - Newsweek
- Peru Kidnapping Leaves 13 Dead In Gold Mine - BBC
- Venezuelan Opposition Activists Freed After Hiding From Maduro Regime – WSJ
Policy and Politics
Appeals Court Rules New York's New Even-Year Election Law Is Constitutional, Reversing Lower Ruling
A New York state appeals court has ruled the new state law that will move many local elections to line up with state and federal elections in even-numbered years is constitutional, reversing a lower court judge's decision last fall. The court on Wednesday ruled against Republican-led challenges to the law in that it conflicts individual county charters. The court ruled that the state constitution gives local govermments the right to a “a legislative body elective by the people” and to adopt alternative forms of county government, "but neither of those provisions gives a county exclusive local control over the manner in which local elections will be held or the specific details of each office."
At issue is a law passed by the New York state Legislature and signed by Gov. Kathy Hochul in December 2023 that moves several local elections outside of New York City to even-numbered years starting this year, with the exception of some city or village elections, and races for county clerk, sheriff, district attorneys, local judges and others protected in the state Constitution. Advocates for the law argued the change will boost voter turnout in local elections. Opponents have feared the change will mean local interests will have to compete for attention with more widely covered state and national issues.
Read more at NY State of Politics
New York State Budget Process Winds Down As Hochul Defends Unemployment Insurance Plan
State lawmakers began a marathon day of voting on budget bills Wednesday that ran well into the evening. They are considering the $254 billion in state spending that Gov. Kathy Hochul announced more than a week ago, plus an additional $6.2 billion from the state’s reserves to pay off New York’s unemployment insurance debt. Sources say to expect a few billion more on top of that in other additional funding for a total price tag north of $260 billion— easily the highest ever. Bills continued to appear throughout the night and into the day on Wednesday. The Senate could finish voting by Wednesday night or Thursday. The Assembly will likely take longer, but a conclusion before the end of the week is well within reach. When the legislature does begin voting on budget bills Wednesday.
That outcome will only be possible with a message of necessity from Hochul, which circumvents the normal three-day aging process. Ortt and Republican state Senators called on Hochul to let the three days pass. “There has been no urgency this entire time, the governor and Democratic leaders have shown no urgency, so don’t let them fool you that there is urgency now,” Ortt said. In a moment of bipartisanship, State Sen. Liz Krueger took to the Senate floor earlier Tuesday to make her opposition of using a message of necessity clear.
House Republicans Eye Scaled Back Tax Cut Amid Fights Over Spending
House GOP tax writers are eyeing a scaled-back $4 trillion tax cut amid concerns their colleagues will not be able to come up with the full slate of spending cuts required under their budget plan, people familiar with their internal deliberations say. Nothing is final, and Republicans are still hoping for a full $4.5 trillion tax cut, but they’re making contingency plans as colleagues struggle to find agreement on how to cut Medicaid and a slew of other government initiatives.
It’s unclear what changes Republicans would make to shrink their plan — even members of the tax-writing House Ways and Means Committee are not entirely sure what Chair Jason Smith (R-Mo.) is planning. But one obvious possibility is reducing the number of years that some or all the provisions would be extended. A $4.5 trillion tax cut costs an average of $450 billion per year. The debate comes as Smith prepares to unveil his much-anticipated draft of a plan to extend a raft of provisions that lapse at the end of the year and enact new tax cuts proposed by President Donald Trump. The tax panel aims to formally approve the measure next week. Meantime, blue-state Republicans hoping for a much-expanded deduction for state and local taxes are set to plead their case this afternoon at a closed-door lunch with the tax panel.
NAM: Drug Price Controls Undercut Innovation, Harm Patients
Sens. Josh Hawley (R-MO) and Peter Welch (D-VT) introduced the Fair Prescription Drug Prices for Americans Act, which would impose price controls on biopharmaceutical companies in the U.S. The NAM has long opposed such misguided measures as government price controls would devastate research and development and result in fewer lifesaving treatments for patients. This bill dropped Monday amid congressional Republicans’ efforts to produce a legislative package of tax reforms, spending cuts, border security and much more. “A serious manufacturing strategy doesn’t rely on government price-setting. It embraces free enterprise, rewards innovation and delivers real results for Americans.” The NAM said in a statement
In addition to prohibiting pharmaceutical companies from selling drugs within the United States at a higher price than the international average, [the Hawley–Welch bill] also would impose a penalty if companies violate the prohibition. The NAM has urged policymakers to take an alternative tack that would reduce drug prices for patients without threatening innovation: reforming pharmacy benefit managers, underregulated middlemen that drive up the cost of medicines. The NAM’s policy recommendations to Congress include: Increase transparency into PBMs’ business models and the factors that contribute to a drug’s cost and formulary placement, as well as PBMs’ compensation. Ensure full rebate passthrough so 100% of negotiated pharmaceutical savings are passed from PBMs to health plan sponsors and workers. Delink PBM compensation from the list price of medications to reverse PBMs’ incentives to drive up prescription list prices.
Political Headlines
- SALT Deal Elusive As Moderates, Hardliners Dig In– The Hill
- Trump Administration Will Rescind Biden-Era AI Chip Export Curbs, Commerce Department Says - Yahoo
- State Budgets Land In GOP Crosshairs Amid Struggle To Fund Megabill - Politico
- Trump’s Pick for Washington’s Top Prosecutor Faces Long Confirmation Odds - WSJ
- Trump Declares National Holidays To Celebrate WWI, WWII Victories – The Hill
- Intense Illinois Senate Primary Set To Take Shape As Rep. Krishnamoorthi Announces Bid - CNN
- Biden Defends Waiting Until Last Minute To Drop Out Of 2024 US Election - Politico
- Danish Foreign Minister Summoning US Ambassador After Greenland Spying Report – The Hill
- Trump Tracker: Keep Tabs On The Latest Announcements And Executive Orders - WSJ
Health and Wellness
N.Y. Flu Season Saw Highest Ever Influenza-Associated Deaths In Children, Health Officials Say
The 2024-25 influenza season was a challenging one for young children, New York state Department of Health Commissioner Dr. James McDonald said Wednesday, with 25 influenza-associated pediatric deaths in the state, the highest amount ever. Nationwide, 216 pediatric deaths related to the flu were reported during the season, according to the Centers For Disease Control and Prevention, which was the highest in 15 years.
"Children need to be at least 6 months old to receive a flu vaccine, some of these young New Yorkers we lost were too young for the vaccine,” McDonald said in a statement Wednesday. “The best protection for these little ones is for all those around them to be up to date with the flu vaccine, which usually becomes available in September. Of the 25 deaths we saw among children this year, only one was vaccinated and five were too young to receive the vaccine.” McDonald said misinformation around vaccines in recent years has contributed to rising vaccine hesitancy and declining vaccination rates.
Read more at NY State of Politics
Industry News
Trade War Updates
- China Says U.S. Asked For Trade Meeting In Switzerland – CNBC
- Businesses Struggle To Navigate As Trump’s Tariff Fallout Hits West Coast Ports - Politico
- Trump Declines To Soften Tariffs With US-China Trade Talks Set To Begin – Yahoo Finance
- China’s Trade Tsar He Lifeng Takes Center Stage In U.S. Tariff Talks - CNBC
- Poll Shows Manufacturing Sector Split On Tariff Strategy – Plant Services
- Donald Trump Vs. James Bond? Britain Shrugs Off US Threat To Tariff Movies - Politico
- US Considering Exempting Car Seats, Strollers From Chinese Tariffs – Yahoo Finance
- Ford Hikes Prices On Mexico-Produced Models, Citing Tariffs – Nikkei Asia
Used Vehicle Pricing Barometer Jumps To Highest Level Since 2023 Amid Auto Tariffs
A closely watched barometer for used vehicle pricing jumped last month to its highest level since October 2023 as consumers rushed purchases amid fears of price hikes due to auto tariffs. Cox Automotive’s Manheim Used Vehicle Value Index — which tracks prices of used vehicles sold at its U.S. wholesale auctions — increased 4.9% last month compared with a year earlier to a level of 208.2. It also marked a 2.7% increase from March. That’s a significant rise compared with a historically typical month-to-month index move of 0.2%, according to the auto data and logistics firm.
While the tariffs of 25% on new imported vehicles and many parts do not directly impact used car sales, changes in new vehicle prices, production and demand affect the used car market, which is how the majority of Americans purchase a vehicle. Retail prices for consumers traditionally follow changes in wholesale prices, but they have not fallen as quickly as wholesale prices in recent years.
RTX, GE Aerospace Brace For Potential Multi-Million Tariff Impacts
The World Trade Organization’s Agreement on Trade in Civil Aircraft, signed by 33 countries, including the U.S., Mexico, Canada, the European Union and China eliminates tariffs on all aircraft and their components in an effort to promote competition. As a result of the WTO agreement, the U.S. aerospace industry sees a trade surplus of nearly $75 billion, with exports exceeding $135 million, according to an Aerospace Industries Association May 1 press release. While some companies will still use this regulation and other trade policies, the aerospace sector is not totally immune to tariffs.
“Like many companies in the industry, our supply chain and customer base are global, and we import raw materials, parts and modules from around the world,” RTX President and CEO Chris Calio said in an April 22 earnings call. “In light of this, we would be impacted if the current environment were to stay in place, because not all regulatory and operational mitigations would address our tariff exposure.” GE Aerospace expects to see $500 million in tariff-related impacts, Chairman and CEO Larry Culp said on an April 25 earnings call. The Company announced plans in March to spend nearly $1 billion on its U.S. manufacturing and supply chain in an effort to strengthen production.
Read more at Manufacturing Dive
U.S. Advances in Hypersonic Weapons Race
The U.S. military has completed successful test flights of a reusable hypersonic rocket-powered aircraft, its first such accomplishment in more than a half century. The win is a sign of the Pentagon’s progress in a wartime technology race in which China has a sizable lead. Two startups conducted the test flights of a vessel called the Talon-A: Stratolaunch, the company making the hypersonic test aircraft and based in the Mojave Desert, and Ursa Major, a Colorado-based builder of liquid rocket engines. The fully autonomous flights occurred in December and March, the Defense Department said on Monday, and exceeded five times the speed of sound.
The U.S. military has completed successful test flights of a reusable hypersonic rocket-powered aircraft, its first such accomplishment in more than a half century. The win is a sign of the Pentagon’s progress in a wartime technology race in which China has a sizable lead. Two startups conducted the test flights of a vessel called the Talon-A: Stratolaunch, the company making the hypersonic test aircraft and based in the Mojave Desert, and Ursa Major, a Colorado-based builder of liquid rocket engines. The fully autonomous flights occurred in December and March, the Defense Department said on Monday, and exceeded five times the speed of sound—the generally accepted designation of hypersonic speed.
Arm Forecasts First-Quarter Revenue Below Estimates
While Arm's fourth-quarter revenue slightly beat analysts' estimates, companies across the board have provided cautious quarterly forecasts as sweeping global tariffs announced by U.S. President Donald Trump and tighter U.S. curbs on the export of advanced semiconductors to key chip market China have clouded the outlook for semiconductor firms. Arm's chip technology powers nearly every smartphone in the world, and the UK-based company has attempted to make inroads in data centers and other markets.
The company forecast first-quarter revenue of $1.00 billion to $1.10 billion, with a midpoint below analysts' average estimate of $1.10 billion. "Why are we guiding slightly below consensus - it's really down to licensing," Haas said. "We just want to be prudent relative to some large deals that we have visibility on." Apple, a major customer, flagged the addition of $900 million to costs this quarter from supply chain shifts to minimize the impact of the ongoing trade war. Arm makes money via licensing deals for its intellectual property and a royalty charged for each chip sold that uses its technology.
EV Sales Streak Grinds to a Sudden Halt
Sales of EVs in the U.S. fell by around 5% during the month, according to estimates from the research firm Motor Intelligence, while the broader car market grew by 10%. Monthly EV sales in the U.S. have only declined three times since 2021. The declines were across most brands, from Kia and Hyundai to Ford. Tesla, which has accounted for around half of EV sales in the U.S., reported that sales dropped nearly 13%. Sales of Rivian’s R1T pickup and R1S SUV declined by half.
On Tuesday, Rivian cut its sales outlook for the year by around 5,000 units, citing the impact of President Trump’s trade policy on EV demand. “The challenge is consumers are more price-sensitive than they typically have been and are looking for lower-price alternatives,” said Rivian Chief Executive Officer RJ Scaringe. Rivian vehicles sell for around $88,000, on average, limiting potential buyers, he said. Dealers cited several factors for the drop, from cooling customer interest to fewer promotions and discounts that juiced sales in the past.
U.S. to Overhaul Curbs on AI Chip Exports After Industry Backlash
The Trump administration plans to overhaul controversial regulations that would limit how many artificial-intelligence chips individual countries can buy, giving companies such as Nvidia NVDA 3.10%increase; green up pointing triangle a potential reprieve from tight export controls.
The Commerce Department plans to rescind the rule, which imposed caps on how many chips could go to countries like India, Switzerland, Mexico and Israel, a spokeswoman said. “The Biden AI rule is overly complex, overly bureaucratic and would stymie American innovation,” she said.
Elon Musk’s Megarocket Gets Green Light To Launch 25 Times A Year
Elon Musk’s SpaceX can launch its Starship rocket up to 25 times each year from its Boca Chica facility near Brownsville, Texas, after an environmental assessment from the Federal Aviation Administration. It could mean a rapid uptick in Starship testing as preparation continues for a NASA mission to the moon and a possible private mission to Mars. At 403 feet (123 meters) tall at launch, SpaceX’s Starship is one of the most enormous rockets ever made. It has two stages, with the Starship spacecraft atop the Super Heavy booster rocket. SpaceX states that it’s the world’s most powerful launch vehicle ever developed.
In addition to allowing up to 25 Starship launches per annum, the FAA's report also permits up to 25 landings at the site. The super heavy-lift launch vehicle is ultimately designed to be fully reusable. Super Heavy can return to the launch pad; it was caught in “chopsticks” for the first time during its fifth test flight on October 13, 2024. Starship is also designed to land, though that has not been tested yet. Built for missions to Mars but also due to be used by NASA for its Artemis III mission to land two astronauts on the moon, Starship will be able to carry 100 tons to Mars or up to 100 people on long-duration, interplanetary flights, according to SpaceX. It could also be used for point-to-point flights, with most international trips taking 30 minutes or less.
The Future of Manufacturing Might Be in Space
Scientists have long suggested that the microgravity environment of Earth’s orbit could enable the production of higher-quality products than it is possible to make on Earth. Astronauts experimented with crystals—a crucial component of electronic circuitry—as early as 1973, on NASA’s Skylab space station. But progress was slow. For decades, in-space manufacturing has been experimental rather than commercial.
That is all set to change. A host of new companies like Astral are making use of the lower costs of launching into space, coupled with emerging ways to return things to Earth, to reignite in-space manufacturing. The field is getting “massively” busier, says Mike Curtis-Rouse, head of in-orbit servicing, assembly, and manufacturing at the UK-based research organization Satellite Applications Catapult. He adds that by 2035 “the anticipation is that the global space economy is going to be a multitrillion-dollar industry, of which in-space manufacturing is probably in the region of about $100 billion.”