Member Briefing November 23, 2022
OECD Revises Growth Forecast Lower, Europe Hit Hardest
The global economy should avoid a recession next year but the worst energy crisis since the 1970s will trigger a sharp slowdown, with Europe hit hardest, the OECD said, adding that fighting inflation should be policymakers' top priority. The Organization for Economic Cooperation and Development said on Tuesday. It forecast that world economic growth would slow from 3.1% this year - slightly more than the OECD foresaw in its September projections - to 2.2% next year, before accelerating to 2.7% in 2024.
It forecast that the 19-country euro zone economy would grow 3.3% this year then slow to 0.5% in 2023 before recovering to expand by 1.4% in 2024. That was slightly better than in the OECD's September outlook, when it estimated 3.1% growth this year and 0.3% in 2023. The U.S. economy was set to hold up better, with growth expected to slow from 1.8% this year to 0.5% in 2023 before rising to 1.0% in 2024. The OECD had previously expected growth of only 1.5% this year in the world's biggest economy and its estimate for 2023 was unchanged. China, which is not an OECD member, was one of the few major economies expected to see growth pick up next year, after a wave of COVID lockdowns. Growth there was seen rising from 3.3% this year to 4.6% in 2023 and 4.1% in 2024, compared with previous forecasts of 3.2% in 2022 and 4.7% for 2023.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Ukraine Strikes at Sevastopol and Pushes to Reclaim Key Black Sea Peninsula - WSJ
- Ukraine to Civilians: Leave Liberated Areas Before Winter - AP
- Western Allies Aim to Agree on Russian Oil Price Cap Wednesday - WSJ
- Ukraine Grid Operator: Damage From Russian Attacks 'Colossal' - Reuters
- Klitschko’s Big Fight: Keeping 3 Million People in Kyiv Over Winter – Politico
- Senators Urge Biden Administration to Provide Ukraine With Armed Drones - WSJ
- Ukraine Civilian Death Toll from War Tops 6,500 - CNBC
- Brussels’ Uphill Battle to Confiscate Russian Assets - Politico
- How “Offshore Journalists” Challenge Vladimir Putin’s Empire of Lies – The Economist
- Disbursement of $4.5 Bln in U.S. Aid for Ukraine to Begin in Coming Weeks, Yellen Says - Reuters
- Cold and Dark: Kyiv Readies for ‘Worst Winter of Our Lives’ - AP
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
U.S. Consumers Propel Thanksgiving Air Travel to Highest Level in 3 Years
U.S. airlines and airports are preparing for a surge in passengers over the Thanksgiving holiday, with the number of travelers expected to hit the highest level in three years. Nearly 55 million Americans will take to the roads, skies and rails for the holiday, with air travel recovering to about 99% of the 2019 levels before the COVID-19 pandemic, travel group AAA estimates.
Thanksgiving Eve on Wednesday tends to be the busiest day for travel. However, the option to work remotely has allowed many Americans to stretch out their trips and avoid the last-day rush. The new travel pattern is also expected to ease the pressure on airline operations, said Sharon Pinkerton, a senior vice president at Airlines for America (A4A), an industry trade group. Yet A4A and analysts are advising travelers to pack their patience and arrive early to allow extra time for security.
Best Buy, Dick’s Ease Fears About Holiday Spending
Best Buy Co. and Dick’s Sporting Goods Inc. reported mixed quarterly results but said sales wouldn’t fall as much as previously expected signs that consumers are feeling the pinch of high inflation but still buying some electronics and sporting goods. Executives said the health of the consumer is uncertain, but that many, especially lower-income consumers, are trading down to less expensive products, looking for deals or pulling back some spending.
“We assume those consumers are going to continue to make trade-offs. We think it will happen through the holiday and we think it will happen probably as we head into next year,” Best Buy Chief Executive Corie Barry said Tuesday. There is “no simple way to describe consumers. It’s uneven and unsettled,” she said. Retailers are heading into an uncertain holiday season, with high prices for food and fuel weighing on consumer sentiment.
U.S. COVID – The “Tridemic” and the Holidays: How to Celebrate Safely
Over the past few weeks, many experts have been warning about the possibility of a “tridemic” this winter. The term refers to three viruses, specifically COVID-19, influenza (flu) and respiratory syncytial virus (RSV), happening around the same time period. But what does this mean for the upcoming holiday season?
Dr. Gonzalo Bearman, VCU Health’s infectious disease expert, weighs in on some common questions on how to celebrate safely with friends and family.
Fauci Makes Final Appearance in White House Briefing Room
Chief medical adviser to the president Anthony Fauci made his final appearance in the White House briefing room Tuesday as he retires from his role in the administration. “I’ll let other people judge the value or not of my accomplishments, but what I would like people to remember about what I’ve done, is that every day, for all of those years, I’ve given it everything that I have and I’ve never left anything on the field,” Fauci said of his legacy.
The longtime health official has worked under seven presidents, serving 54 years with the National Institutes of Health and 38 years as the director of the National Institute of Allergy and Infectious Disease. But he surged to popularity as one of the leaders of the pandemic response during the Trump administration. However, his guidance on masks and vaccines has drawn criticism and attacks from lawmakers and officials including Sen. Rand Paul (R-Ky.), who he frequently sparred with during Senate hearings.
The End of Vaccines at ‘Warp Speed’
Operation Warp Speed, the Trump-era program that poured billions of dollars into developing Covid shots, seemed to signal a new dawn of American vaccine making, demonstrating how decades of scientific grunt work could be turned into lifesaving medicine in a matter of months. But as a third pandemic winter begins in the United States, its vaccine-making effort has lost steam.
Efforts to test and produce next-generation Covid vaccines are bogged down by bureaucratic problems and funding shortfalls. Foreign rivals have raced ahead in approving long-awaited nasal-spray vaccines, including one invented in St. Louis, creating a scenario in which Americans would have to travel abroad for the latest in American vaccine technology.
Investor Home Purchases Drop 30% as Rising Rates, High Prices Cool Housing Market
Investor buying of homes tumbled 30% in the third quarter, a sign that the rise in borrowing rates and high home prices that pushed traditional buyers to the sidelines are causing these firms to pull back, too. The investor pullback represents a turnaround from months ago when their purchases were still rising fast. These firms bought homes in record numbers last year and earlier this year, helping to supercharge the housing market.
Companies bought around 66,000 homes in the 40 markets tracked by real-estate brokerage Redfin during the third quarter, compared with 94,000 homes during the same quarter a year ago. The percentage decline in investor purchases was the largest in a quarter since the subprime crisis, save for the second quarter of 2020 when the pandemic shut down most home buying.
Six Years After Buffalo Billion Scandal, SUNY Poly Still Looking for Leader
SUNY Polytechnic Institute is saying goodbye to the third person tapped to temporarily lead the college after its founding president resigned and was convicted on federal charges. It’s been six years since Alain Kaloyeros resigned. He was later convicted of wire fraud to rig construction bids in favor of campaign donors of former Gov. Andrew M. Cuomo and others. The U.S. Supreme Court will hear an appeal on whether the case involved too broad a definition of wire fraud. SUNY Polytechnic is a small school with two sites, in Albany and Utica. It specializes in research and development, and may be best known for its College of Nanoscale Science and Engineering in Albany.
Since his resignation, acting presidents have taken over for about two years each. There has been no public update on the search for a new permanent leader, and each acting president has left when they got a job elsewhere. The search is ongoing, said SUNY spokeswoman Holly Liapis, who added that another acting president will be announced "in the coming weeks."
Read more at The Albany Times Union
ECB Must Narrow Interest-Rate Gap With Fed, OECD Says
The European Central Bank will have to raise its key interest rate much further if it is to bring down persistently high inflation, the Organization for Economic Cooperation and Development warned Tuesday. Inflation rates have surged since Russia’s invasion of Ukraine pushed energy and food prices sharply higher. While there have been some recent signs that these rates are at or close to their peaks, the Paris-based research group said inflation is unlikely to fall back quickly to the 2% level targeted by many central banks.
The OECD said the eurozone’s central bank should raise its key interest rate from 1.5% to between 4% and 4.25% by the middle of next year, a much higher peak than that widely anticipated by investors. In its latest report on the global economic outlook, BNP Paribas said it expects the ECB’s deposit rate to peak at 3%.
Junk Carbon Offsets Are What Make These Big Companies ‘Carbon Neutral’
Offsets are designed to allow companies to pay a small sum in exchange for removing carbon from their balance sheets. For years, researchers have been raising concerns that these transactions are letting polluters off the hook. Rather than actually reducing planet-heating emissions, they say, these offsets function like an accounting maneuver that allows more greenhouse gas to enter the atmosphere. Purchasing credits tied to support of solar or wind projects sounds good for the climate. But experts consider these offsets largely bogus.
A Bloomberg Green analysis of more than 215,000 offset transactions in public datasets over the past decade reveals for the first time that dozens of global brands have rely heavily on the cheapest and most suspect type of offset — those tied to renewable-energy projects. Most of these renewable-energy offset purchases are not credible, according to Julio Friedmann, chief scientist at consultancy Carbon Direct and one of six researchers who reviewed the data. “I would consider these to be low-quality credits that did not avoid or reduce greenhouse-gas emissions,” he said.
87% of Companies to Increase Sustainability Investment Over Next Two Years
A new Gartner, Inc. survey revealed that 87% of business leaders expect to increase their organization’s investment in sustainability over the next two years. And where are companies feeling the pressure for this investment? Customers are the primary stakeholder group creating pressure for organizations to invest or act on sustainability issues, selected by 80% of executives, followed by investors (60%) and regulators (55%).
“Sustainability enables businesses to cope with disruption,” said Kristin Moyer, distinguished VP analyst, Gartner, in a statement. “Economic uncertainty, geopolitical conflict and escalating materials and energy costs are forcing businesses to reexamine all expenditure forms. This focus on essentialism, in combination with increasing stakeholder desire to see progress on environmental, social and governance (ESG) goals, creates new opportunities for enterprises to grow while mitigating cost and risk.”
Read more at Materials Handling and Logistics
Retiring Baby Boomers are Getting Wiped Out by Inflation and a Volatile Stock Market: ‘It’s Extremely Scary’
Retirement balances dipped for the third consecutive quarter this year. During the third quarter, the average 401(k) balance at Fidelity dropped an average of 23% from a year ago, according to recent Fidelity Investments research, which handles about 35 million retirement accounts. IRA balances dropped nearly 25% year-over-year and 403(b) account holdings—retirement plans typically used by nonprofits—were down 21%.
While these dips are merely paper losses until investors make withdrawals, the psychological effects are already hitting recent and pre-retirees. The recent market downturn and rising inflation have given many older Americans pause. Nearly half (49%) of those ages 50 and older report they have already reduced their spending, or plan to do so, as a result of these factors, according to Janus Henderson Investors’ recent Janus 2022 Retirement Confidence Report.
Pratt & Whitney Completing New Airfoil Plant
Pratt & Whitney staged a ribbon-cutting event for its new turbine airfoil plant in Asheville, NC, a $650-million project announced November 2020. Much of the exterior construction is completed for the 1.2-million-sq.ft. plant, and the engine builder indicated the first parts will be produced during Q2 2023. Pratt noted its new plant has met or exceeded its goals for greenhouse gas, water and waste goals, and achieves LEED certification and zero liquid-waste discharge. It is forecast to create 800 new jobs through 2027, and 150 positions already have been filled
Described as an “advanced casting foundry,” the plant will have investment-casting capability for airfoil structures for Pratt & Whitney’s GTF™ geared turbofan engine and F135 high-pressure jet engines, along with onsite machining, coating, and finishing capabilities. Investment casting is the preferred manufacturing process for airfoils because it can be used to produce specialty alloy parts with directionally solidified (DS) and single-crystal oriented structures, which are necessary for maintaining the thermal and mechanical endurance required for aircraft engine reliability.
Read more at Foundry Management & Technology
Proposition 65 Hits Manufacturers Far and Wide
For companies in the supply chain for consumer products sold in California, paying attention to the California law known as Proposition 65 is important. Private enforcement of the law is so widespread that many companies have been forced to learn about it. For those still unaware of the law and those aware but hoping they will not be targeted, taking proactive steps to address the law is likely the most economical path forward, both financially and in terms of company resource drain and stress.
Proposition 65 was adopted in California in 1986 through California’s ballot initiative process. Despite its age, it has not been duplicated in other states. The basic structure of its product warning provisions is: no company shall “knowingly and intentionally” supply to Californians any consumer product that could expose them to a listed carcinogen or reproductive toxin, without providing clear and reasonable warning.