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Member Briefing November 14, 2024

November 14, 2024

Posted By: Harold King in Daily Briefing,

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CPI = 2.6% - Inflation Picked Up in October

The Labor Department on Wednesday reported that consumer prices in October rose 2.6% from a year earlier. That marks a pickup in the pace of inflation from September, when prices were up 2.4% on the year. Core prices, which exclude food and energy items in an effort to better reflect inflation’s underlying trend, were up 3.3% from a year earlier. The month-over-month price increase in overall prices was a seasonally adjusted 0.2%. Core prices were up 0.3% on the month.

Despite signs of inflation moderating elsewhere, shelter prices continued to be a major contributor to the CPI move.
Energy costs, which had been declining in recent months, were flat in October but up 4.9% on year on year.
The food index increased 0.2%. On a year-over-year basis food was up 2.1%. Eggs tumbled 6.4% but were still 30.4% higher from a year ago.
Used vehicle costs also rose, up 2.7% on the month while motor vehicle insurance declined 0.1% but was still higher by 14% for the 12-month period.
Airline fares jumped 3.2%.
Inflation-adjusted average hourly earnings for workers increased 0.1% for the month and 1.4% from a year ago.

Read More at CNBC

Average Salary Increases Are Sloping Downward, Survey Shows

While the median salary increase stayed at 4% in 2024, average increases dropped from 4.3% to 3.9%, according to survey results collected by Salary.com from more than 1,000 HR professionals in the U.S. and Canada. The drop is due to fewer companies doling out higher raises, Salary.com found; only 14% of companies gave out raises between 5% and 6.9%, compared with 25% of companies in the previous survey. Additionally, more companies — 38% in 2024, compared to 25% in 2023 — returned to “typical” salary increases in the 3% to 3.9% range.

While the median increase did stay at 4% this year — a rate it has been at since 2022 — a drop in average increases suggests that companies aren’t afraid to ride the slope down to pre-pandemic levels in the 3-3.9% range. Salary.com’s data tracks with WTW’s findings from July, which showed employers planned a median salary increase of 3.9% for 2025. Some employers may be relieved by the leveling out in the salary budget, but workers still have high expectations set by the past few years — and HR is feeling the pain.

Read More at Automotive Dive

US East Coast, Gulf Coast Ports Employer Says No Significant Progress On Key Contract Issue

The union representing 45,000 East Coast and Gulf Coast dockworkers and a group representing employers held a new round of contract talks this week but failed to make significant progress on some key issues, the employers group said on Wednesday. The International Longshoremen's Association union agreed to end a three-day strike on Oct. 3 after it won agreement for a 62% wage hike over six years with the United States Maritime Alliance (USMX) employer group.

"While we had positive progress on a number of issues, we were unable to make significant progress on our discussions that focused on a range of technology issues," USMX said. "Unfortunately, the ILA is insisting on an agreement that would move our industry backward by restricting future use of technology that has existed in some of our ports for nearly two decades, making it impossible to evolve to meet the nation’s future supply chain demands," the employers group said. The ILA declined to comment. The union earlier demanded the employer group stop port automation projects that it says threaten jobs.

Read more at Yahoo Finance

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Policy and Politics

U.S. October Budget Deficit Jumps To $257 Billion, Handing Hole To Trump

The U.S. budget deficit jumped nearly four-fold to $257 billion in October, a figure inflated by several one-off factors, the Treasury Department said on Wednesday but starting a new fiscal year with a big hole that will be turned over to President-elect Donald Trump in January. The Treasury said the October deficit was up 287% from the $67 billion deficit in October 2023, but calendar adjustments in benefit payments had cut that month's deficit nearly in half. The budget results for October, the first month of the 2025 fiscal year, come after President Joe Biden's administration turned in a full-year fiscal 2024 deficit of $1.83 trillion, the largest outside the COVID-19 era.

October federal receipts were down 19% or $77 billion to $327 billion compared with October 2023, while October outlays were up 24%, or $114 billion to $584 billion. Outlays for Social Security, Medicare and military spending rose, but one bright spot was a $7 billion or 8% decline in the Treasury's public debt service costs to $82 billion, the first year-on-year decline since August 2023.

Read more at Yahoo Finance

New York State Reparations Commission Holds First Public Hearing

Tuesday night, the New York State Community Commission on Reparations Remedies began its public hearing series in Buffalo explaining the region and the state's complicated history. Commissioner Tim Hogues said it's an important part of the process as the state considers reparations. "Part of our thing is we have to educate the public on this and then we can continue to have further dialogue," Hogues said.

The commission has held three business meetings since late July, but the hearing in Buffalo was the first of a series focused on listening to the community. Commission Chair Seanelle Hawkins said the hearings will inform recommendations it will make to the state Legislature. "We're going to define what reparations should look like, if it's in the form of money or if it's in the form of policy change, but we haven't defined that and this is the process that we're going through, this year-long process of really understanding what it should look like," Hawkins said.

Read more at NY State of Politics

Board Rules Captive-Audience Meetings Unlawful

Mandatory “captive audience” meetings in which companies argue against unionization are illegal, the National Labor Relations Board ruled in a case involving Amazon.com Inc., prohibiting one of employers’ most potent weapons against labor organizing campaigns. Requiring workers to attend anti-union gatherings violates federal labor law protections that allow workers to freely choose whether, when, and how to participate in a debate about union representation, the NLRB’s Democratic majority held in its Wednesday ruling. While the board majority handed unions a major victory with its captive audience ban, that win may be fleeting as the incoming Trump administration’s NLRB appointees will likely restore employers’ power to force workers to attend those gatherings.

“Ensuring that workers can make a truly free choice about whether they want union representation is one of the fundamental goals of the National Labor Relations Act,” Chair Lauren McFerran (D) said in a statement. “Captive audience meetings—which give employers near-unfettered freedom to force their message about unionization on workers under threat of discipline or discharge—undermine this important goal.”

Read more at Bloomberg Law

Health and Wellness

Cannabis In 2024: A Year In Review

Historically, an election year presents special challenges and opportunities for the cannabis industry. Although cannabis was not been a significant issue this election cycle, several states had ballot questions seeking to codify legalization and included psilocybin among others in addition to cannabis.

From legislative changes to market trends, 2024 highlighted both the challenges and opportunities within this rapidly growing sector. In this article, Reuters focuses on some of the most significant developments of the past year and how they might affect the industry in the coming years under a new administration whose president-elect has hedged on the issue in the past.

Read more at Reuters

Transition 2024

Industry News

Tariffs: How Manufacturers Can Prepare

Should the tariff hikes happen, they would have wide-ranging ramifications on manufacturers, making it more expensive to produce goods that use foreign components. And if other countries hit back with retaliatory tariffs, it could also make it more expensive for manufacturers to export goods to foreign markets. All of this potential sets up manufacturers and the wider economy for a “messy” situation, said Willy Shih, an economist at Harvard Business School. “People generally don’t understand how dependent the global economy is for those kinds of intermediate goods, raw materials, that we sort of take for granted,” Shih said.

In the short term, manufacturers may opt to frontload commodity and component imports as a way to bring in goods before tariffs are enacted. The move, while effective in avoiding higher import costs, may also drive up freight rates amid demand spikes. Looking further afield, manufacturers will likely need to start diversifying their supply chains outside of China, Shih said. “People who haven’t diversified out of China, and some companies don’t have much choice, you got a lot of work ahead of you,” the economist said. And while Trump has often said tariffs are meant to spur domestic manufacturing, Shih said this scenario is largely unrealistic for factories that have high labor needs, given the higher cost of wages in the U.S. compared to places like China.

Read More at Manufacturing Dive

Banks Are Reporting A Ten-Fold Surge In Digital Scams, Cybersecurity Firm Biocatch Says

U.S. and Canadian banks reported a ten-fold surge in digital scams this year as criminals flock to techniques that rely on duping customers into sending them money, according to cybersecurity firm BioCatch. The sharp rise in reported scams from the first three quarters of 2023 comes as banks have put in place more controls to prevent account takeovers and other forms of fraud, according to BioCatch Director of Global Fraud Intelligence Tom Peacock.

“Fraudsters have realized that the humans are the weakest link,” Peacock said. “It’s easier to convince a human to do something through manipulation than it is to try and circumvent a technological control.” The rise of “social engineering scams,” in which criminals use persuasive tactics to convince victims to send them money, began around five years ago, but “really started to take off” in the past 18 months or so, Peacock said. BioCatch, a Tel Aviv-based firm that uses behavioral data from mobile apps and websites to help banks distinguish between real users and criminals, provided its findings to CNBC ahead of a report that culled information from 170 U.S. and Canadian institutions.

Read more at CNBC

Spirit Aero Gets Help From Boeing, Airbus To Prop Up Weak Finances

Spirit AeroSystems said on Tuesday it would receive up to $350 million in advance payments from its largest customer Boeing and up to $107 million from Airbus giving the struggling supplier a lifeline as it burns cash after four consecutive years of losses. Plans for a funding agreement with Boeing, first reported last week by Reuters, came days after Spirit issued a "going concern" warning - effectively putting investors on notice that it may be unable to pay its bills within the next 12 months.

A key supplier to both Boeing and Airbus, as well as smaller jetmakers like Bombardier (BBDb.TO), opens new tab, Spirit Aero has seen inventory pile up and deliveries slump in recent weeks following a recently settled strike at Boeing. Airbus agreed to give Spirit up to $107 million in advanced payments in connection with deliveries of parts for the European planemaker. Boeing, which plans to buy back its one-time subsidiary, needs Spirit Aero to remain on its feet as it seeks to revive jet production following the 53-day strike by most of its machinists, who are set to return to their jobs Tuesday.

Read more at Reuters

Global EV Sales Up 35% In October, Europe Ekes Out A Gain

Global sales of fully electric and plug-in hybrid vehicles rose 35% in October from the same month last year, led by a 54% jump in sales in China, market research firm Rho Motion said on Wednesday. European sales rose just 0.8%, but were up in annual terms for the second straight month and the research firm expects a good end to the year in the region, data manager Charles Lester told Reuters. The European auto sector is facing challenges including high production costs, managing the shift to EVs, and an influx of lower-cost vehicles from Chinese rivals.

Sales of EVs - whether fully electric or plug-in hybrids - reached 1.72 million worldwide in October, Rho Motion data showed. Sales in China hit a record high 1.2 million vehicles. In the United States and Canada, EV sales were up 11.4% to 0.16 million, while in Europe, they reached 0.26 million, up slightly on the year but down 14% from September.

Read more at Reuters

Inside VW and Rivian’s $5.8 Billion Bet to Rescue Each Other

In August, a small team of Volkswagen executives and engineers flew from Germany to Palo Alto, Calif., to take a top-secret vehicle for a spin. Originally built as an electric Audi, the vehicle had been shipped to the U.S. startup Rivian Automotive RIVN 14.88%increase; green up pointing triangle earlier in the year in an experiment to see if it could fuse Silicon Valley tech prowess with German engineering. The Germans were impressed by what they found in California: a car that had been retrofitted so that the controls for everything from air conditioning to rear-axle steering could be updated wirelessly through a laptop.

VW had spent years and billions of dollars trying to build a digital-first car like this, and Rivian had produced a promising prototype in less than three months. “To get this up and running in the car within such a short time, even if you work day and night, this is really great,” said Michael Steiner, VW’s head of research and development, in a recent interview at the company headquarters in Wolfsburg. Now the two companies are taking the partnership to the next level, in a deal that aims to address a core weakness for each: VW gets much-needed technology and Rivian gets much-needed cash.

Read more at The WSJ

OPEC Slashes Oil Demand Growth Estimate Again

For a fourth consecutive month, OPEC on Tuesday slashed its estimate of global oil demand growth for both this year and next, citing downward revisions in China and other Asian markets after seeing actual consumption data year to date. OPEC now expects global oil demand to grow by 1.82 million barrels per day (bpd) this year, down by 107,000 bpd from last month’s assessment, the cartel said in its closely-watched Monthly Oil Market Report. OPEC’s latest downward revision of demand forecasts follows its decision from earlier this month to delay the beginning of the reversal of the production cuts to January 2025 from December 202

Total world oil demand is anticipated to reach 104.0 million bpd in 2024, bolstered by strong transportation fuel demand and ongoing healthy economic growth, particularly in a number of non-OECD countries, said OPEC. However, OPEC cut China’s demand growth forecast to 450,000 bpd this year, down from 580,000 bpd growth expected last month. The assessment of Chinese oil demand growth in 2025 was also cut by around 100,000 bpd and OPEC now sees Chinese demand growing by just 310,000 bpd in 2025, down from a previous projection of 410,000 bpd growth. 4.

Read more at Oil Price

Small Businesses Fear DOD Cybersecurity Program Costs

Next year a long-delayed DOD enforcement mechanism, the Cybersecurity Maturity Model Certification program, or CMMC, starts to show up in DOD contracts. The first part became final last month, and the second part will start to kick in next year.

CMMC will require contractors to validate their compliance with the security controls in NIST, albeit at different levels depending on their size and over the course of seven years:
Just over 103,000 companies will be required to self-attest their compliance with a set of 15 basic security controls for CMMC Level 1.
56,000 small businesses will need to get a third-party assessment of their compliance with the 110 NIST controls for CMMC Level 2.
Fewer than 1,500 businesses of all sizes, whose contracts deal with more sensitive data, will have their compliance with a beefed-up set of 134 security controls assessed by government audit teams under CMMC Level 3.

For companies at Levels 2 and 3, there is a huge administrative burden involved in compliance with the NIST standards. Every one of those 110 controls had to be written into a company policy, with personnel to carry it out and a manager assigned responsibility and everybody had to be trained. Many contractors are asking if it is worth it.

Read more at Air & Space

Contact the Council of Industry for resources to help you comply

AMD To Lay Off 4% Of Workforce, Or About 1,000 Employees

AMD said on Wednesday that it will lay off 4% of its global staff as the longtime computer chipmaker seeks to gain a stronger foothold in the growing artificial intelligence chip space dominated by Nvidia. ″As a part of aligning our resources with our largest growth opportunities, we are taking a number of targeted steps that will unfortunately result in reducing our global workforce by approximately 4%,” an AMD representative said in a statement. “We are committed to treating impacted employees with respect and helping them through this transition.”

AMD had 26,000 employees at the end of last year, according to a U.S. Securities and Exchange Commission filing. AMD is the second-biggest producer of graphics processing units, or GPUs, behind Nvidia. The company has said AI represents one of its largest growth opportunities. AMD stock is down 5% in 2024 while Nvidia shares are up 200%, making it the most valuable publicly traded company in the world. AMD produces powerful AI accelerators for data centers, including the MI300X, which companies such as Meta and Microsoft purchase as an alternative to Nvidia-based systems. But Nvidia dominates the market for powerful AI chips, with over 80% market share, partially because it developed the core software that AI engineers use to develop programs such as OpenAI’s ChatGPT.

Read more at CNBC

Verizon’s Takeover of Frontier Communications Wins Shareholder Support

Frontier Communications shareholders approved a $9.6 billion sale to Verizon Communications thwarting a campaign led by some disgruntled investors to seek a higher price. The transaction, which awaits regulatory approval, would expand Verizon’s fiber network to a size that would rival major competitors like AT&T and Comcast by adding back lines in states such as California and Texas. Frontier serves more than two million fiber-optic connections across 25 states, including California, Texas and Florida—three markets that Verizon sold to it in 2016. The internet provider filed for bankruptcy protection in April 2020 and emerged a year later with private-equity firms Cerberus Capital Management and Ares Management as major shareholders.

Most merger votes are formalities, especially when they offer shareholders a hefty premium, but some Frontier investors had voiced displeasure with the deal. Proxy advisers Institutional Shareholder Services and Glass Lewis earlier this month advised their clients to abstain—which counts the same as a no vote—to provide investors more time to mull the transaction. In the end, about 63% of stockholders ended up approving the all-cash takeover, according to Frontier. The broadband provider said 10 of its top 12 shareholders approved the transaction. Verizon is paying $38.50 a share to Frontier holders and is set to absorb about $10 billion of Frontier’s debt. The merger is expected to close in the first quarter of 2026.

Read more at The WSJ

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