Member Briefing November 21, 2022
Report: Rail Strike Could Cost Economy $160B in a Month
A new economic analysis released by the American Chemistry Council estimates that a rail strike would impact approximately $2.8 billion in chemical cargo that is moved weekly, with a month-long strike resulting in an overall hit to the economy of $160 billion, or one percentage point of GDP. The ACC represents companies across industrial, energy and pharmaceutical sectors, among other manufacturing niches, including 3M, Dow, Dupont, Exxon Mobil, Chevron, BP and Eli Lilly.
Chemicals are among the most sensitive cargo moved by freight rail companies, and the first to be dealt with when there is risk of a strike. Strike preparation plans released by the railroads back in September when a looming work stoppage was averted indicated that the freight companies would start securing critical chemicals like chlorine for drinking water over regular cargo seven days prior to the strike date. Ninety-six hours before a strike deadline, all chemical shipments are no longer moved. The start of rail strike preparation will depend on the voting results from some of the largest rail unions yet to ratify the labor deal recommended by President Biden’s Presidential Emergency Board.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Zelenskyy Rejects Russia’s Desire for ‘Short Truce’ in Halifax Address – Politico
- Russia Agrees to Renew Ukraine Grain Deal, U.N. Says - WSJ
- Ukraine Will Help Kherson Residents Leave Before Winter - NYT
- Iran to Help Russia Build Drones for Ukraine War, Post Says - Reuters
- Russia’s Invasion of Ukraine Could Start a Race for Nukes, Austin Says - Politico
- UK PM Sunak Makes Surprise Trip to Kyiv, Boosts Defense Aid – ABC News
- Ukraine Nuclear Plant Shelled, U.N. Warns: ‘You’re Playing With Fire!’ - Reuters
- Russian Soldiers Are Surrendering to Ukrainian Drones, Ukraine Says - Yahoo
- GOP Tiptoes on Biden Request for More Ukraine Aid – The Hill
- Video: How Russia Depicts its Fight in Ukraine – Sky News
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Rising Interest Rates Put Small Business Owners’ Plans on Hold
Some small businesses are cutting back on borrowing, paying down debt or delaying expansion plans as interest rates rise. Others worry that rising rates will boost prices charged by suppliers and crimp customer demand. The Federal Reserve raised its benchmark federal-funds rate by 0.75 four times this year. For small businesses, those rate increases translate to higher costs on everything from credit cards to lines of credit to variable-rate small business loans. New financing has also gotten more costly.
Forty-six percent of small-business owners said higher interest rates are affecting their business, according to an November survey of roughly 600 small businesses for The Wall Street Journal by Vistage Worldwide Inc., a business coaching and peer advisory firm. Another 25% of those surveyed said rising rates hadn’t yet had an effect, but anticipated they would.
New York State Democrats Likely to Keep Legislative Supermajorities
The Democrats are on the brink of retaining their supermajorities in both the state Assembly and Senate, despite Republicans flipping several seats and coming closer to victory in the governor’s race than they have in decades.
Republicans unseated three Democratic incumbents in Southern Brooklyn while flipping several more Senate districts on Long Island — but the Dems have nevertheless secured the 100 seats they need for a veto-proof majority in the Assembly, and they are just waiting on the results of one last race to know if they will do the same in the Senate. As of Friday the only Senate seat left to be decided was the Syracuse-area race between State Sen. John Mannion and Republican challenger Rebecca Shiroff.
U.S. COVID – Stable Numbers
The US CDC is reporting 97.9 million cumulative cases of COVID-19 and 1.07 million deaths. Incidence for the week ending November 2 rose slightly over the previous week, rising to 288,989 from 273,021 for the week ending November 2. Weekly mortality remained relatively steady for the week ending November 9, down slightly to 2,344 reported deaths from 2,489 deaths the week ending November 2. Both new hospital admissions and current hospitalizations remained stable, falling slightly by 0.9% and 0.8%, respectively.
The BA.5 sublineage is expected to lose dominance in the US over the next week. BA.5 now accounts for 29.7% of sequenced specimens. The Omicron sublineages BQ.1.1 (24.1%) and BQ.1 (20.1%) are exhibiting growth advantages over other sublineages, including BF.7 (7.8%) and BA.4.6 (5.5%). The CDC is now tracking the Omicron sublineage BN.1, which is now responsible for 4.3% of cases. Other Omicron sublineages appear to be declining in prevalence, including BA.5.2.6 (2.9%), BA.2.75 (1.2%), and BA.2.75.2 (0.9%).
NYS COVID Update
The Governor updated COVID data through November 18
- Daily: 18
- Total Reported to CDC: 75,522
- Patients Currently in Hospital statewide: 2,629
- Patients Currently in ICU Statewide: 263
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 5.83% - 18.30 positive cases per 100,00 population
- Mid-Hudson: 6.08% - 17.41 positive cases per 100,00 population
Biden Expected to Keep COVID Health Emergency in Place Through the Spring
The Biden administration is expected to keep in place the public health emergency status of the COVID-19 pandemic through spring 2023 to address a potential winter surge in cases and provide more time to transition vaccines and treatments to the private market, according to 2 unnamed officials. This week, the White House requested the US Congress authorize an additional $9.25 billion in pandemic funding for this year. According to officials, about $8.25 billion would go toward purchasing treatments and vaccines ahead of a possible winter surge, efforts to accelerate research into next-generation vaccines and treatments, and long COVID research, with an additional $1 billion going toward global vaccination and response efforts.
Though the need remains for additional spending for COVID-19 and general pandemic preparedness and response, public and congressional interest is waning. On November 15, the US Senate voted 62-36 to end the emergency declaration, with support from 12 Democrats. In response, the Office of Management and Budget said abruptly ending the emergency would be “a reckless and costly mistake” and noted US President Joe Biden would veto the measure if passed by Congress. It is unclear whether the US House will take up the resolution.
What an Economic Downturn Could Mean for New York's Budget — and New Yorkers
New York is potentially on the doorstep of another economic downturn. The causes are different than previous recessions, but the debate is fundamentally the same: Fiscal hawks are pushing for slower spending and urging against raising taxes; progressives want to maintain a strong social safety net for vulnerable people. In the middle of this will be Gov. Kathy Hochul, a Democrat elected to a full term whose first budget was flush with cash, thanks to federal pandemic relief and tax hikes on the richest New Yorkers. Hochul has repeatedly insisted she's positioned the state to be ready, pointing to the billions of dollars stuffed away to offset a loss of tax revenue.
Peter Warren of the Empire Center does not believe it will be if there is a sharp drop in tax revenue as New York is already on shaky economic ground more than two years since the start of the pandemic. Hochul's office last week released an update on the state budget, a report that showed its economy remained on track despite challenges from inflation. The report was released on a holiday and had missed a legally required deadline. Warren believes the report may be painting too rosy a picture for a state overly reliant on Wall Street and tax revenue. Prior efforts for a broad-based increase on taxes to ease budget cuts have been deeply unpopular.
What Public-Company Leaders Expect From Q4, Early ‘23
Its earnings season and CEOs and CFOs are reporting their Q3 numbers. On earnings calls with investors and reporters most would not be drawn into giving analysts much in the way of definitive guidance of 2023. And yet, this is the time of year when thoughts begin to turn in earnest to the upcoming year. “How much will you spend on raw materials?” those analysts want to know. “What are you hearing from customers?” “Can you find workers?”
To try to get at those questions in a more strategic way, IndustryWeek combed through the conference call transcripts of a 50-member cross-section of thier IndustryWeek U.S. 500 list of publicly traded companies. It’s the same cohort they analyzed early last month before earnings season kicked off and it comprises the five largest companies in 10 subsectors. They surveyed those call transcripts for forward-looking sentiments about four key factors: inflation, labor, supply chains and demand. They classified executives’ comments into one of five buckets: fully positive, slightly positive, neutral, slightly negative and fully negative. Some of those comments centered on fourth-quarter dynamics while some provided first glimpses into 2023.
DiNapoli: Local Sales Tax Collections Grew by 14% in October
Local sales tax collections in New York state increased by 14.1% in October compared to the same month in 2021, according to an analysis released today by State Comptroller Thomas P. DiNapoli. Overall, local collections totaled $1.75 billion, up $217 million compared to the same time last year.
New York City’s collections totaled almost $789 million, an increase of 17.3% – or $116 million – over October of 2021. Nearly all counties saw some year-over-year growth in October collections, with Yates County experiencing the largest increase at 173%. However, this growth was mostly the result of a large technical adjustment made to the county’s collections. Allegany and Rockland counties saw the next largest growth at 29.8% and 21.2%, respectively. Chenango County had the steepest decline (-16.1%).
Jobless Claims Fall Despite Tech Layoffs
The number of Americans filing new claims for unemployment benefits fell last week, showing widespread layoffs remain low despite a surge in technology-sector job cuts that has raised fears of an imminent recession. Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 222,000 for the week ended Nov. 12. There has been an increase in layoffs in the technology sector, with Twitter, Amazon (AMZN.O) and Meta (META.O), the parent of Facebook, announcing thousands of job cuts this month. Companies in interest-rate sensitive sectors like housing and finance are also letting workers go.
The 4 week moving average of initial jobless claims 221K vs 219K last week. Continuing claims were 1.507 Million and the prior week revised to 1.494M vs 1.493M previously reported The 4 week moving average of continuing claims 1.481M vs 1.450M last week.
Hudson Valley Sees 32,300 more Jobs in the 12 Months Ending in October, Manufacturing Virtually Unchanged
For the 12-month period ending October 2022, the private sector job count in the Hudson Valley rose by 32,300, or 4.2 percent, to 799,700. Gains were largest in professional and business services (+9,100), educational and health services (+8,300), leisure and hospitality (+7,600), natural resources, mining and construction (+5,200), other services (+2,700) and trade, transportation and utilities (+900). Employment losses were centered in financial activities (-1,600). The Manufacturing Sector added 100 jobs during the time period.
Job growth in the region’s private employment sector continued to be broad-based with seven of nine sectors adding jobs for the 12 months through October 2022. Two sectors posted year-over-year job gains of more than 9.0 percent. The region’s natural resources, mining, and construction sector grew the fastest, year-over-year, up 9.3 percent – fastest October growth since 1999.
Report: COVID Learning Losses Could Equate to 1.6% Loss in Lifetime Earnings
The full cost of the Covid-19 school shutdowns will take years to understand, but here’s another estimate that will make many parents livid: If the recent learning loss can’t be reversed, it would equate to a 1.6% drop in lifetime earnings for the average K-12 student, or a nationwide total of some $900 billion. That’s according to a recent study from researchers at Harvard and Dartmouth, which is based on census data and historical changes in performance on the National Assessment of Educational Progress (NAEP), also known as the nation’s report card. The researchers sought to predict how this year’s deplorable test results could affect students over their lifetimes if they can’t catch up.
The most recent NAEP results showed a record drop in learning. Not a single state or large school district managed to improve math performance among fourth and eighth graders between 2019 and 2022. “A 1.6 percent decline in earnings may seem like a modest impact per student, but it adds up,” the researchers write. It’s an average loss, in present value, of $19,400 per student. Then multiply by the public K-12 enrollment of 48 million.
DOE's "Better Plants" Program Recharges Energy Efficiency Efforts
The U.S. Department of Energy (DOE) Better Plants program challenges manufacturers to set aggressive energy intensity reduction goals and provides resources to help participants achieve them. This year, Better Plants highlighted the accomplishments of electrical and network infrastructure provider Legrand, brewer Deschutes and packaging products and systems manufacturer Intertape Polymer Group [a two-time IndustryWeek Best Plants winner].
All three companies met and exceeded their energy reduction goals and spoke with IndustryWeek about how the Better Plants program works and what participants may expect in the way of support and encouragement to achieve their goals.
Summit Yields ‘Historic Win’ for Climate Payments, Surprise Push for Natural Gas
Countries meeting in Egypt clinched a deal early Sunday that could send billions of dollars from wealthy countries to help developing nations treat the symptoms of climate change. But the agreement’s final text also offered its tacit blessing to natural gas, a fossil fuel that’s worsening the underlying disease. That surprise last-minute addition dulled the sense of triumph for activists who had hailed the major achievement of this two-week U.N. climate summit
More broadly, the agreement includes few provisions that would hasten countries’ efforts to cut greenhouse gas pollution or shift away from fossil fuels. That’s another disappointment for climate advocates.
Governor Hochul Announces More Than $3.7 Million To Bring Climate Tech Manufacturing And Products To New York State Through M-Corps Program
Governor Kathy Hochul last week announced more than $3.7 million to bring innovative climate technology or climate tech manufacturing and products to New York State. The M-Corps program will connect startups scaling goods that lower greenhouse gases or reduce energy consumption with local supply chain partners, manufacturers, and suppliers while prioritizing connections in underserved communities. This announcement supports the State's nation-leading Climate Leadership and Community Protection Act goal of reducing carbon emissions 85 percent from 1990 levels by 2050.
The New York State Energy Research and Development Authority (NYSERDA) will competitively select a program administrator to work with NYSERDA to guide start-ups through key decisions related to the manufacturing development process. The administrator will facilitate supply chain relationships and partnerships, provide operational and programming support to climate tech startups and connect them with local resources. The program administrator will be awarded up to $3.7 million in funding to assist in successfully bringing new products to market.