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Member Briefing November 19, 2024

November 19, 2024

Posted By: Harold King in Daily Briefing,

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More on Last Week’s Federal Reserve Production and Capacity Utilization Report for October

Manufacturing output declined 0.5 percent in October and was 0.3 percent below its year-earlier level. The index of durable goods industries fell 1.2 percent, with widespread declines among its components. In addition to a drop of 5.8 percent in the output of aerospace and miscellaneous transportation equipment, declines of 1 percent or more were recorded for primary metals, for motor vehicles and parts, and for furniture and related products. The production of nondurable goods inched up, as gains in the indexes of chemicals, of paper, and of petroleum and coal products offset declines in the indexes of textile mills, of apparel and leather, of printing and support, and of plastics and rubber products.

Capacity utilization for manufacturing decreased 0.5 percentage point in October to 76.2 percent, a rate that is 2.1 percentage points below its long-run average. The operating rate for mining rose 0.3 percentage point to 88.7 percent, while the operating rate for utilities rose 0.3 percentage point to 71.4 percent. The rate for mining was 2.2 percentage points above its long-run average, while the rate for utilities remained substantially below its long-run average.

Read More at The Federal Reserve

Little Change in Regional Service Sector Activity According to NY Fed Survey

As has been the case for much of the past year, business activity held steady in the New York-Northern New Jersey region, according to the November survey. The headline business activity index edged up to -0.5. Twenty-eight percent of respondents reported that conditions improved over the month and 28 percent said that conditions worsened. The business climate index was slightly higher than last month but remained negative at -21.5, pointing to an ongoing worsening business climate.

The employment index held steady at 5.1, pointing to a small increase in employment levels. After falling to its lowest level in a year last month, the wages index was little changed at 29.7, indicating that wages increased at about the same pace as in October. The prices paid index edged down two points to 46.2, and the prices received index also fell two points to 16.8, suggesting price increases slowed slightly. The index for future business activity moved up six points to 23.7, and the index for the future business climate advanced thirteen points to 17.5, suggesting firms expect activity to improve and the business climate to be better than normal in six months. A modest increase in employment is also expected in the months ahead.

Read More at The NY Fed

Texas Court Strikes Down Federal Overtime Rule (Again)

For the second time in seven years, a federal court in Texas has struck down a U.S. Department of Labor (DOL) rule aimed at expanding the scope of overtime eligibility to workers across the country. On November 15, 2024, in State of Texas v. United States Dep’t of Labor, Judge Sean D. Jordan of the United States District Court for the Eastern District of Texas ruled that the DOL exceeded its rulemaking authority by raising the minimum salary for exemption as an executive, administrative, or professional (EAP) employee under the Fair Labor Standards Act. Judge Jordan’s ruling vacates the entire rule, including the increases that took effect in July 2024.

Under the DOL’s rule, which was published in April 2024, the minimum salary for exemption as an EAP employee, with limited exceptions, increased from $684 per week ($35,568 annualized) to $844 per week ($43,888 annualized) effective July 1, 2024. A second increase would have raised the salary threshold to $1,128 per week ($58,656 annualized) effective January 1, 2025. The rule also increased the minimum total annual compensation level for exemption as a “highly compensated employee” (HCE)—one who customarily and regularly performs any one or more of the exempt duties or responsibilities of an EAP employee—from $107,432 to $132,964 effective July 1, 2024 and to $151,164 effective January 1, 2025. The rule also provided for automatic triennial increases in the minimum salary for exemption as an EAP employee and the minimum annual compensation level for exemption as an HCE, tied to current earnings data, beginning on July 1, 2027.

Read More at National Law Review

Global Headlines

Middle East

Ukraine

Other Headlines

Policy and Politics

New York Judge Rejects State Efforts To Shutter Bitcoin Mine Over Climate Concerns

A cryptocurrency plant in central New York can continue operating after a court rejected the state’s effort to shutter the facility over concerns about its climate impact. The decision was hailed as a victory by Greenidge Generation, a large-scale crypto mine in the Finger Lakes region that has drawn the ire of environmental groups and watchdogs since it began mining bitcoin four years ago. In response to a lawsuit by the corporation, State Supreme Court Justice Vincent M. Dinolfo ruled Thursday that the agency had failed to give Greenidge an opportunity to justify its alleged violation, an “interpretative error” under the law.

Like other large-scale crypto-mining operations, Greenidge relies on thousands of electricity-guzzling computer servers that generate bitcoin by solving complex equations. To power those servers, Greenidge uses a former coal-burning plant that was converted to natural gas in 2017 after years of disuse. In 2022, the New York Department of Environmental Conservation denied a required air permit to the plant on the grounds that its greenhouse gas emissions ran afoul of the state’s ambitious climate goals.

Read more at NY State of Politics

FAA Announces It Aims To Streamline Commercial Space Launch Licensure

The Federal Aviation Administration (FAA) concluded Fiscal Year 2024 with a record 148 licensed commercial space operations, marking a more than 30% increase from the previous year. The agency forecasts that number could more than double by FY 2028 and is initiating a new Aerospace Rulemaking Committee to update its Part 450 licensing rules for space launches and reentries.

The newly formed committee - which will include representatives from the commercial space industry and academia - focuses on nine topics, including flight safety, system safety, and compliance methods. The committee is expected to submit a report with recommended changes by late summer 2025, which the FAA will use to guide future rulemaking efforts. An initial meeting of the committee is scheduled for the first week of December, with the FAA inviting stakeholders to participate.

Read more at Military Aerospace Electronics

Certain Criminal Records Will Be Automatically Sealed As Clean Slate Act Takes Effect

Certain criminal records will soon be sealed in New York, meaning those who've been incarcerated no longer have to ask their records be sealed and can freely seek employment, housing and educational opportunities. More than two million people will have their records sealed as the state has until November 2027 to seal records now eligible and set up an automatic process. That includes a waiting period of three years after a conviction or release from prison for a misdemeanor and eight years for a felony.

Murder, sex crimes and non-drug related Class A felonies will not be sealed under the law. Some opponents argue the law makes people less safe by preventing some employers and landlords from seeing records. Under the law, employers can still access sealed records for necessary and relevant purposes like when hiring people to work with children, older adults or vulnerable people. Law enforcement can also access criminal records during their hiring process.

Read more at NY State of Politics

Health and Wellness

COVID-19’s Surprising Effect on Cancer

Viruses don’t often come with silver linings, and infections don’t generally lead to positive health effects. But during the pandemic, some doctors anecdotally began noticing that some people with cancer who got very sick with COVID-19 saw their tumors shrink or grow more slowly. Ankit Bharat, chief of thoracic surgery at Northwestern University and his team decided to conduct a study to find out if the seeming “benefit” of COVID-19 for these cancer patients could teach them anything about a potential new way to fight cancer—or if it was simply a red herring. They published their findings Nov. 15 in the Journal of Clinical Investigation.

Using a combination of human cells and animal models, Bharat and his team found that in the presence of SARS-CoV-2, immune cells called monocytes act differently than they normally do. Typically, monocytes, as part of the immune system, cruise the bloodstream and alert other immune cells to the presence of foreign cells or pathogens; some monocytes can attract cancer-killing immune cells to tumors, but others aren't as effective in doing so. That's because in some cases, cancer cells can co-opt monocytes —“like a demon summoning forces,” says Bharat—and form an immune wall protecting the tumor from being discovered and attacked by additional immune defenses. But during a COVID-19 infection, SARS-CoV-2 attaches itself to these monocytes, and by doing so reverts them back to doing their original job: defending the body against cancer.

Read more at Time

Transition 2024

Industry News

New York Wildfire Breaks Through, 160 Homes Evacuated As Blazes Keep Northeast At Risk

Firefighters were operating under high risk that flames would spread Sunday as they took on a wildfire on the New York-New Jersey border that broke a containment line and prompted more than 160 homes to be evacuated the previous night. The voluntary evacuation allowed fire personnel to confront the Jennings Creek Wildfire uninterrupted overnight and will remain in place until Monday as those efforts continue, Jesse Dwyer, a supervisor in Warwick, New York, said in a Facebook post on Sunday. Officials have said the blaze, which began Nov. 8 and has burned more than 5,000 acres across both states, is about 90% contained. But the jump over the containment line required an emergency response that involved asking hundreds of Warwick residents to voluntarily leave their homes and opening a shelter at a local middle school.

“Efforts overnight by both local and regional firefighters to protect structures were successful and no structures are presently in danger,’’ Dwyer said. Residents had been allowed to return home. In an early-evening announcement, Warwick officials said the Orange County state of emergency was extended. They also asked those in the evacuation area to shelter in place so firefighters could continue doing their jobs.

Read more at USA Today

Auto Industry Braces for Whiplash as Trump Takes Power

President-elect Donald Trump will enter the White House with campaign promises that aim to reshape the American auto industry, such as vowing to attack Biden-era electric-vehicle policies and layer on tariffs to expand factory work in the U.S. In the campaign this year, Trump said he would use tariffs to reduce imports and create factory jobs. He also criticized government spending on electric vehicles, causing concern among auto executives about the fate of tens of billions of dollars in federal tax money earmarked to support EVs.

For car buyers, broader tariffs could lead to higher prices and a shift in the types of vehicles available at the new-car lot, analysts say. On the other hand, Trump has proposed making auto loans tax deductible to improve affordability. For auto executives, the lack of clarity about Trump’s plans weighs heavily. Ping-ponging between Democratic and Republican presidents over the past decade has forced automakers to grapple with shifting regulations on tailpipe emissions and fuel-efficiency rules.

Read more at The WSJ

Three Mile Island Restart Could Mark A Turning Point For Nuclear Energy As Big Tech Influence On Power Industry Grows

The owner of the Three Mile Island nuclear power plant is embarking on an ambitious plan to restart operations before the end of the decade, marking the latest chapter in the history of a plant that symbolizes the future promise, past struggles and lingering fears of nuclear energy in the United States. Constellation Energy, the plant’s current owner, plans to restart Unit 1 in 2028, subject to monitoring and approval by the Nuclear Regulatory Commission. Constellation, headquartered in Baltimore, spun off from Exelon in 2022; it has the nation’s largest fleet, or group, of nuclear power plants, operating 21 of the 94 reactors in the U.S.

Microsoft has made the restart of Unit 1 possible through an agreement to purchase the full electricity output from the plant for 20 years, a sign of the growing role the tech sector is playing in shaping the future of the U.S. power industry. Microsoft said the agreement is part of its strategy of meeting the growing electricity needs of its data centers with power that is free of carbon dioxide emissions in an effort to mitigate the impact of its business on the climate.

Read more at CNBC

NASA Assessing Options For Faster, Cheaper Mars Sample Return

NASA is aiming to complete reviews by year-end of 11 proposals from inside and outside the agency to cut costs and speed up the return of samples collected by the ongoing Perseverance rover mission on Mars. Returning a cache of scientifically selected rock, regolith and atmospheric samples from Mars could reveal whether life ever existed on another planet besides Earth, as well as provide insights into the evolution of the Solar System. The MSR program has consistently been the top goal of the U.S. National Academies of Sciences, Engineering and Medicine, whose decadal surveys identify the most important scientific questions in planetary science and other disciplines.

“We think we’re going to be able to come forward with a plan,” Jeff Gramling, director of the Mars Sample Return (MSR) Program at NASA headquarters, told a Mars Exploration Program Analysis Group (MEPAG) meeting on Nov. 6. “Some interesting things have come out through these studies, and I think we’re going to be able to help the [MSR] architecture . . . that hopefully results in our cost estimates coming down.

Read more at Aviation Week

Boeing To Lay Off Over 2,200 Workers In US States Of Washington And Oregon

Boeing will lay off more than 2,200 workers in the U.S. states of Washington and Oregon, according to filings posted on Monday, as part of the debt-heavy U.S. planemaker's plan to cut 17,000 jobs, or 10% of its global workforce. The aerospace giant started telling affected U.S. workers on Wednesday that they will stay on Boeing's payroll until Jan. 17, to comply with federal requirements to notify employees at least 60 days prior to ending their employment. News that Boeing would send out the Worker Adjustment and Retraining Notification (WARN) in mid-November was widely expected. Another round is expected in December. Industry watchers have been waiting for the WARNs for some indication of how the layoffs could affect workers in the company's key manufacturing hubs.

The Society of Professional Engineering Employees in Aerospace (SPEEA) said 438 of the union's members at Boeing received layoff notices last week, including 218 engineers and 220 technicians. The International Association of Machinists and Aerospace Workers (IAM) District Lodge 837 in St. Louis said Boeing sent notices to 111 members, most of whom made wing components for the 777X.

Read more at Reuters

Spirit Airlines Files for Bankruptcy Amid Mounting Losses and Debt

Spirit Airlines announced Monday it has filed for Chapter 11 bankruptcy protection, citing over $2.5 billion in losses since 2020 and more than $1 billion in upcoming debt payments. The move comes as the ultra-low-cost carrier struggles to recover from pandemic-related challenges and the collapse of a proposed merger with JetBlue Airways. Despite its financial troubles, Spirit plans to continue operating normally during the bankruptcy process. Customers can still book flights and travel without disruptions, the Miramar, Florida-based airline said.

Spirit's bankruptcy filing underscores a broader struggle to regain profitability. While passenger numbers rose two percent in the first half of 2024 compared to last year, revenue per mile from fares fell nearly 20 percent, reflecting reduced ticket prices. Compounding this, labor costs have surged, and a glut of flights has driven down leisure travel fares—Spirit's primary market.

Read more at Newsweek

Pentagon OKs Anti-ICBM System Expansion

Under a new U.S. Dept. of Defense award, Lockheed Martin has been authorized to increase production capacity for Patriot Advanced Capability- (PAC-3®) Missile Segment Enhancements (MSEs) to 650 units annually. The Patriot missile system is a mobile surface-to-air interceptor system for anti-ballistic missile defense manufactured by Lockheed, as well as Boeing and Raytheon. The PAC-3 is the latest version of the Patriot interceptor missile system developed for “direct body-to-body contact” with incoming ballistic threats; it “delivers exponentially more kinetic energy on the target than can be achieved with blast-fragmentation mechanisms,” according to the developer.

Lockheed called the new award “a vital step in significant efforts to meet the global demand for the world’s most advanced missile,” an apparent reference to the conflict between Ukraine and Russia. The value of the award is indeterminate but based on a reported unit cost of $4 million per PAC-3 MSE, the additional capacity could have an estimated value of $2.6 billion/year for the manufacturer. According to Lockheed, since March it has increased PAC-3 MSE output to record highs for missile production. In 2024, production has grown by more than 30% – more than 500 units will be produced this year, a new high – with another 20% growth planned for next year.

Read more at American Machinist

Competition Threatens Germany’s Global Supremacy—in Forklift Racing

Benjamin Danker climbed into a 5.5-ton forklift, buckled the seat belt over his lederhosen and sped off across the arena. His goal: to complete an obstacle course requiring his four-person team to build a tower made of foam pieces and move it across the finish line—within 9 minutes. Deliver the tower faster than the Chinese drivers and the Germans would move one step closer to winning the Stapler Cup, the most prestigious global forklift-racing event. “The Chinese team is calm, they are concentrated,” said German sports commentator Christian Strassburger. “They want to show us something here.”

Germans have long sat comfortably atop the world of competitive forklift driving, a point of national pride. There are songs, tattoos and fully functioning kid’s models dedicated to the humble industrial vehicle. The best drivers are treated like rockstars. Jörg Klössinger, a two-time Stapler Cup champion, chalks up his country’s success to a fundamental German trait. “We are pünktlich people,” he said, using a German word that means punctual and precise. But Germany’s supremacy is under threat from the same forces sparking existential angst in the national economy: competition from abroad. Underlining that new reality is a change to the Stapler Cup (‘stapler’ means forklift in German). Organizers announced ahead of this year’s competition in October that it would drop “German” from the name and allow foreigners into its primetime individual competitions. They promised the start of “a new era of forklift sports.”

Read more at The WSJ

How 1,000 Days Of Russia’s Invasion Of Ukraine Spurred An Automation Boom

When Yuriy Shelmuk co-founded a company last year making drone signal jammers, he said there was little interest in the devices. It now produces 2,500 a month and has a six-week waiting list. Demand shifted after the failure of a major Ukrainian counteroffensive in the summer of 2023 that was meant to put invading Russian forces on the back foot. Kyiv cited Russia's extensive use of unmanned aerial vehicles to spot and strike targets, as well as vast numbers of landmines and troops.

The vast majority of more than 800 companies in Ukraine's burgeoning defence production sector were founded after Russia's 2022 full-scale invasion that enters its 1,000th day on Tuesday. Many were set up in response to rapidly evolving battlefield conditions, including drones - first in the skies and then also on land and at sea - as well as anti-drone technology and, increasingly, artificial intelligence.

Read more at Reuters

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