Member Briefing November 15, 2022
IMF Says Global Economic Outlook Getting 'Gloomier', Risks Abound
The global economic outlook is even gloomier than projected last month, the International Monetary Fund said on Sunday, citing a steady worsening in purchasing manager surveys in recent months. It blamed the darker outlook on tightening monetary policy triggered by persistently high and broad-based inflation, weak growth momentum in China, and ongoing supply disruptions and food insecurity caused by Russia’s invasion of Ukraine.
In a blog prepared for a summit of G20 leaders in Indonesia, the IMF said recent high-frequency indicators "confirm that the outlook is gloomier," particularly in Europe. It said recent purchasing manager indices that gauge manufacturing and services activity signaled weakness in most Group of 20 major economies, with economic activity set to contract while inflation remained stubbornly high.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine’s Zelensky Visits Newly Recaptured Kherson - WSJ
- Zelenskyy Accuses Russia of Committing War Crimes in Kherson - Politico
- G20 Host Indonesia Lobbies West to Soften Russia Criticism in Communiqué - Politico
- Zelensky Sees ‘Beginning of the End’ of War With Russia During Kherson Tour – The Hill
- Russia Eyes Gains in Ukraine’s East After Kherson Withdrawal - WSJ
- UN General Assembly Calls for Russia to Pay Ukraine War Reparations - Axios
- CIA Chief Meets Putin's Spy Chief, Warns Against Nuclear Weapons - Reuters
- President Biden, Xi Jinping Underscore Opposition to Use of Nuclear Weapons in Ukraine - WSJ
- The Russian Army’s Trouble Runs Deep – The Hill
- Imagining Peace in Ukraine – The Economist
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
World Population Reaches 8 Billion Today
The world’s population will reach 8 billion today – a testament to scientific breakthroughs and improvements in nutrition, public health and sanitation. From the 19th century on, the population began to explode, due largely to the development of modern medicine and the industrialization of agriculture, which boosted global food supplies.
Since 1800, the world's population has jumped eight-fold, from an estimated 1 billion to 8 billion. The development of vaccines was key, with the smallpox jab particularly helping zap one of history's biggest killers. The 1970s and 1980s brought another small revolution, in the form of treatment for heart disease, which helped reduce mortality among over-60s.
Top Takeaways From the Biden-Xi Meeting in Bali
U.S. President Joe Biden and Chinese leader Xi Jinping held their first in-person talks since 2017 on the sidelines of the G20 summit in Bali, Indonesia, on Monday. Referring to U.S. sanctions on Chinese firms, Xi said China opposed politicizing and weaponizing economic and trade ties as well as exchanges in science and technology. He said starting a trade or technology war, building walls and barriers, and pushing for decoupling and severing supply chains ran counter to the principles of market economy and undermine international trade rules. Biden told reporters after the meeting there was no need for concerns about a new Cold War between the United States and China.
Here are some takeaways from the three-and-a-half hour meeting on Taiwan, North Korea, Ukraine and Keeping Lines of Communication Open:
U.S. COVID – New Subvariants Now Dominant in the U.S., Raising Fears of a Winter Surge
The subvariants — called BQ.1 and BQ.1.1 -- appear to be among the most adept yet at evading immunity from vaccination and previous infection, and have now overtaken the BA.5 omicron subvariant that has dominated in the U.S. since the summer. On Friday, they officially overtook BA.5, accounting for an estimated 44% of all new infections nationwide and nearly 60% in some parts of the country, such as New York and New Jersey, according to the CDC's estimates. BA.5 now accounts for an estimated 30% of all new infections nationwide.
But even if the new subvariants do surge this winter, most experts think any uptick in infections won't hit as hard as the first two winter surges of the pandemic. "We are hoping that the amount of immunity that has been induced either by prior infection or by vaccination" will protect most people from getting severely ill or dying, Dr. Anthony Fauci, the White House medical advisor, told NPR.
NYS COVID Update
The Governor updated COVID data through September October 21.
- Daily: 24
- Total Reported to CDC: 75,317
- Patients Currently in Hospital statewide: 2,822
- Patients Currently in ICU Statewide: 286
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 6.08% - 20.99 positive cases per 100,00 population
- Mid-Hudson: 5.75% - 20.08 positive cases per 100,00 population
Moderna Says New COVID Booster Effective Against Subvariants
Moderna on Monday announced its updated, bivalent booster shot creates “significantly higher” antibody levels to defend against the omicron BA.4 and BA.5 subvariants compared to the biotechnology company’s original shot formula. The subvariants until recent weeks made up the majority of cases nationwide, but the Centers for Disease Control and Prevention (CDC) indicates that share has now fallen to roughly one-third of cases.
The company said it found the updated boosters also showed evidence of neutralizing BQ.1.1, an emerging subvariant that currently accounts for about 24 percent of cases but is rising each week, although Moderna cautioned those findings were from an exploratory analysis.
Control of House May Hinge on New York State GOP's Early Challenge of Reapportionment
Former Rep. John J. Faso acknowledges that he never envisioned any far-reaching impact from the lawsuit he and other Republicans filed in February challenging the Democratic plan to reapportion New York's congressional districts. He was simply intent on assuring adherence to a 2014 amendment to the State Constitution guarding against partisan gerrymandering. Never did he think, he says now, that their successful effort would eventually elect 11 Republican members of Congress from ultra-Democratic New York.
Faso – the former Kinderhook congressman, Assembly minority leader and 2006 GOP candidate for governor – said he was part of a Republican group that monitored the redistricting process working to assure that the state follow provisions of a 2014 amendment to the state Constitution establishing an Independent Redistricting Commission to draw non-partisan lines. But when the bipartisan panel deadlocked and new lines were ultimately rammed through the Democratic State Legislature, Faso and company filed the suit on Feb. 3 immediately after Gov. Kathy Hochul signed the new plan.
G-20 Discord Likely to Thwart Efforts to Boost Sagging Global Economy
With the specter of recession looming over the global economy, reviving flagging growth will be near the top of the agenda at a summit for the leaders of the Group of 20 advanced and developing economies. The problem: Discord among G-20 members is a big reason for the slowdown. The G-20 has responded forcefully to economic downturns in the past. After the financial crisis, the world’s major economies agreed on a plan to recapitalize sinking banks and stimulate their economies with fiscal and monetary support.
Global tensions, however, mean expectations for any coordinated economic response to the world’s challenges from this week’s G-20 summit are next to zero. With central banks focused on inflation, economists say it is up to governments to manage the fallout from rising interest rates, especially when problems spill over borders to poor countries from richer
Labor Market Mystery: Where Are the Older Gen Z Workers?
The exodus from the labor force in the pandemic’s early months has mostly reversed, but one group remains oddly absent: people in their early 20s. For people over age 15, the labor-force participation rate—the share of people employed or actively seeking a job—dropped from an average of 63.1% in 2019 to 61.7% in 2021, and recovered to 62.2% in October. But for people ages 20 to 24, participation that averaged 72.1% in 2019 stood at just 70.8% in October. That equals a shortfall of about half a million workers in their early 20s when comparing the current size of that workforce with 2019 levels.
In the past, a decline in labor-force participation among younger people has usually coincided with an increase in their school enrollment, generally reflecting higher relative demand for educated or highly skilled workers, especially in a weak labor market, economists said. That’s what happened during the 2007-09 recession—but it hasn’t been the case this time around.
The Great Remorse: Workers Who Quit Their Job are Having a Hard Time Finding a New One
The latest workers to join the Great Resignation aren’t having as easy a time finding a new job as they thought it would be, and it’s leading to the Great Remorse. A new Harris Poll, as first reported by Bloomberg, surveyed over 2,000 U.S. job seekers’ recent experiences with the labor market. Over 70% of them said it has been harder than they’d hoped to lock down a good role.
While businesses report robust hiring increases last month, unemployment is slowly creeping back up. Just look at the rash of layoffs—some numbering in the tens of thousands—at companies like Meta, Peloton, Twitter, and Lyft. These unstable conditions may come as a shock to the millions of workers who, last year, had become accustomed to having the firm upper hand.
KPMG: The Pandemic Housing Bubble is Bursting—U.S. Home Prices Falling 15% Looks ‘Conservative’
The Pandemic Housing Boom coincided with a staggering 42% jump in U.S. home prices between March 2020 and June 2022. At least 60% of that appreciation, researchers at the Federal Reserve bank of San Francisco estimate, can be attributed to the elevated demand for “space” that occurred during the pandemic.
Of course, that demand boom hasn’t just fizzled out—it’s doing a 180: On a year-over-year basis, mortgage purchase applications are down 41%. We’ve already seen home price growth rollover on a national basis. Between June and August, the Case-Shiller National Home Index showed a 1.3% drop in U.S. home prices. That marks the first decline since 2012. “Once you start the process of prices falling nationally, there is a self-fulfilling momentum to it because no one wants to catch a falling knife,” Swonk says. “We’re easily going to see large double-digits declines. I think 15% next year is very conservative. We’re already turning.”
Post Xi-Biden Talks Blinken Will Visit China in Push for Open Lines of Communication
Top US diplomat Antony Blinken will make his first trip to China, the White House announced on Monday following the first face-to-face meeting between the presidents of China and the United States.
The US said the 3½-hour meeting between Xi Jinping and Joe Biden on the Indonesian island of Bali was candid and covered a wide range of thorny issues facing the two nations. While Xi told Biden that the present state of China-US relations was not in either country’s interest, both sides stressed the importance of maintaining communication.
OPEC Oil Production Fell In October As Members Missed Targets
OPEC’s crude oil production dropped by 210,000 barrels per day (bpd) in October compared to the previous month after the cartel and the wider OPEC+ group reversed the small output increase in September. The crude oil production of all 13 OPEC members, including those exempt from the OPEC+ pact - Venezuela, Iran, and Libya - averaged 29.49 million bpd in October, according to secondary sources in the organization’s closely-watched Monthly Oil Market Report (MOMR) published on Monday.
Over the coming months, OPEC’s production is set to decline further after the OPEC+ alliance decided to reduce its collective target by 2 million bpd for November. Although the actual cut is expected to be around half that number, at 1.1 million bpd, it still is the biggest cut since the record production reduction announced in April 2020 when oil demand plunged at the start of the pandemic.
Morgan Stanley: U.S. May Skirt Recession in 2023, Europe Not so Lucky
Britain and the euro zone economies are likely to tip into recession next year, Morgan Stanley said, but the United States might make a narrow escape thanks to a resilient job market. At the same time, China's expected reopening after almost three years of COVID-19 curbs is set to lead a recovery in its own economy and other emerging Asian markets, the investment bank's analysts said in a series of reports published on Sunday.
Next year, Morgan Stanley predicts a sharp split between developed economies "in or near recession" while emerging economies "recover modestly" but said an overall global pickup would likely remain elusive. China's economy was predicted to grow 5% in 2023, outpacing the average 3.7% growth expected for emerging markets, while the average growth in the Group of 10 developed countries was forecast at just 0.3%.
Electric Vehicle Makers Burning Cash, Slammed by Sky-High Costs
Quarterly reports from electric vehicle (EV) makers from the past two weeks show them struggling to hit delivery targets and rapidly burning through cash. Lucid's cost of revenue surged to $492.5 million in the July-September quarter from $3.3 million a year earlier, and its losses widened as customers canceled orders fearing long wait times. The company said it had enough cash to sustain itself at least into the fourth quarter of next year and is looking to raise about $1.5 billion through a stock sale.
Many EV startups recorded huge losses in the September quarter and warned that high costs were here to stay due to surging inflation and a global supply chain crisis. Just a year earlier, several listed their stocks at heady valuations, lured by the success of Tesla, now the world's most valuable automaker. Tesla survived what its boss Elon Musk then called "production hell", overcoming supply bottlenecks with battery deals with key suppliers, and ramping production for the smash hit Model 3.