Member Briefing October 12, 2022
IMF Cuts 2023 Global Growth Forecast, Citing Inflation, War and China Slowdown
The global economy will expand 2.7% in 2023, down from 3.2% this year and 6% in 2021, the multilateral lender said Tuesday in its latest World Economic Outlook. The new forecast represents a reduction of 0.2 percentage point from its July estimate. The IMF left unchanged its 2023 U.S. growth projection at 1%, but scaled back its 2022 forecast. The economy will expand 1.6% this year, the fund said, down from its 2.3% estimate in July, and down significantly from 5.7% last year.
“What we see perhaps is a fundamental shift from the world of the last decades that was relatively predictable with strong rules-based international order, low inflation, and low interest rates, to a world that is more volatile, more fragile, ” IMF Managing Director Kristalina Georgieva said Monday as she kicked off meetings of the fund and the World Bank in Washington this week.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Vladimir Putin’s Bloody Revenge - The Economist
- Sirens Sound Across Ukraine as Russia Strikes Cities Again - CNBC
- Rouble Hits Multi-Month Low Past 64 vs Dollar on Ukraine Escalation Fears - Reuters
- G-7 Leaders to Hold Emergency Meeting on Ukraine - CNBC
- European Weapons Manufacturers Scramble to Adapt to Wartime Demand - Reuters
- Belarus’s Lukashenko Announces Troop Deployments with Russia – The Hill
- The War in Ukraine has Battered the Reputation of Russian Spies – The Economist
- Nissan Takes $687M Loss Selling Russian Business for 1 Euro – Automotive News
- British Spy Chief Says Russian Military ‘Exhausted’ in Ukraine - Yahoo
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
New Survey of Consumer Expectations Measure Longer-Term Inflation Expectations
Inflation expectations and the outlook for household spending growth fell sharply in September as the Federal Reserve’s rate increases take hold in the U.S. economy. Consumers expect the inflation rate a year from now to be 5.4%, the lowest number in a year and a decline from 5.75% in August, according to the latest New York Fed Survey of Consumer Expectations. That level peaked at 6.8% in June and has been coming down since as the central bank has instituted a series of rate hikes totaling 3 percentage points.
While the near-term outlook for inflation was improving, respondents also indicated that they see household spending growth of 6% for the next year, a steep fall from August’s 7.8% projection. That’s the lowest level since January and the biggest one-month decline ever in a data series going back to June 2013.
Global LNG Prices to Hit NEPOOL
Boston and Kyiv are 4,478 miles apart, but the impact on The New England Power Pool Generation Information System (NEPOOL) and other system operators’ electricity prices seems immediate. FERC has approved a waiver to provide cost recovery for the 1,700 MW Mystic Generating Station in Boston, saying that it and an adjacent liquefied natural gas import facility are crucial to ensuring reliable power during winter. Each month, the ISO will send Retail Electric Suppliers a bill that represents the fuel cost of natural gas to Mystic. This cost is tied to LNG from the nearby LNG terminal, which is pegged to prices in Europe.
Energy retailers will likely pass through these charges to customers. Since the Ukraine conflict began, LNG prices have seen both record high prices and levels of volatility. These conditions make forecasting and budget certainty a challenge for many customers in NEPOOL.
US COVID – Biden Administration Scrambling to Get More People Boosted Before Winter
By the end of last week, the administration expected between 13 and 15 million people will have opted to get the updated Moderna or Pfizer jab ahead of what officials warn could be another deadly Covid winter. That’s just five percent of the eligible population — a sign of the stark challenge facing a Biden administration that has positioned October as a make-or-break month for the overall success of its booster campaign. Top health officials have downplayed the low takeup, saying the numbers are a good start.
But ahead of the critical stretch, doctors and advocates said people are burned out, tuned out and don’t understand why they need another booster. And even some administration officials privately acknowledge there’s little internal expectation they’ll see an explosion of interest.
Senate Debate Season Kicks Off
Candidates clashed at debates in North Carolina and Wisconsin Friday night, and in Ohio on Monday night—three critical races in the battle for control of the upper chamber. The candidates largely faced questions on the same issues: inflation, crime, and abortion. In Wisconsin Republican Sen. Ron Johnson and Democratic Lt. Gov. Mandela Barnes met at the first of two debates, with both candidates defending the attacks they’ve faced over the airwaves in one of the most bitterly contested Senate contests on the map this cycle.
In North Carolina Former state Supreme Court Chief Justice Cheri Beasley and Republican Rep. Ted Budd met at their first and only debate on Friday night, hosted by Spectrum News. Neither Beasley nor Budd debated in their respective primaries, and while they criticized each other’s records, the event was not combativeAnd in Ohio Democratic Rep. Tim Ryan and author J.D. Vance sparred in a fiery debate Monday night that got personal. Ryan has made this race competitive in a state that Trump won by 8 points twice and is probably past its bellwether days, and both candidates were relentless in their attacks against one another. Monday’s showdown in Ohio may have been the most combative, largely thanks to the format. Moderators poised questions to both candidates, who then had 5 minutes between the two to respond.
Hochul Holds Cash Lead Heading into Final Month of Campaigning as Zeldin Makes up Some Ground
Governor Kathy Hochul continues to hold a large fundraising advantage going into the final month of campaigning before the Nov. 8 general election, but her GOP rival Rep. Lee Zeldin has made up some ground according to campaign finance filings released last Friday.
Between the last campaign finance disclosure period in mid-July and last week, Hochul raised roughly $11.1 million, bringing the total amount of cash she’s raised since taking office last year to $45 million. Hochul is entering the final stretch of the race for her first full term in office with nearly $11 million at her disposal. Meanwhile, Zeldin brought in $6.4 million since mid-July, which brings his total cash-on-hand to $4.5 million. The Long Island congress member has now raised a total of $19.6 million since launching his bid for governor earlier this year, making him the best funded GOP candidate in state history, according to a release from his campaign.
Omicron BA.4.6 is slowly rising and Evusheld won’t work, FDA warns
Although the Omicron subvariant BA.5 is currently causing most new COVID-19 cases in the United States. BA.5 accounts for nearly 81 percent of the genetically sequenced samples collected in the U.S. between September 25 and October 1, but the number of cases caused by another Omicron subvariant called BA.4.6–which is capable of evading immunity from vaccination and previous infection—is steadily rising. It currently accounts for 13 percent of the sequenced samples.
The growing number of BA.4.6 cases led the U.S. Food and Drug Administration to issue a warning indicating that Evusheld—the only monoclonal antibody authorized for COVID-19 prevention in immunocompromised individuals and people who can’t take the COVID-19 vaccine—may be completely ineffective against subvariants like BA.4.6.
Labor Department Proposes Changes to Independent Contractor Rules
The Labor Department said it would revisit rules that designate whether workers are classified as employees or independent contractors, a move that could affect millions of gig and contract workers in healthcare, restaurants, ride-share transportation and many other industries. The department released a rule proposal Tuesday that would change how labor laws define independent contractors. The new rule, if approved, would rely on a “multifactor economic reality test” to determine whether a worker is truly in business by themselves and controls aspects of their employment like whether they perform managerial duties, how they are supervised and whether they are able to set prices.
The new rule would replace a Trump-era rule and return to an approach favored by the Obama administration. The Trump administration rule made it more difficult for a gig worker, such as an Uber or DoorDash driver, to be counted as an employee under federal law. The Biden administration changes would make it easier for those workers to be covered by federal minimum-wage and overtime laws.
U.S. Aims to Cripple China’s Ability to Make Advanced Chips
The Biden administration expanded its export curbs to Chinese semiconductor companies on Friday, as part of its drive to stop China from developing advanced computer chips. The new export controls are the broadest imposed in years. The Biden administration will bar companies that use U.S. chipmaking equipment from selling chips used in supercomputers to China, and will block the sale of an even broader array of chips to almost 30 Chinese companies.
Also on Friday, the Biden administration said it could not adequately inspect operations at dozens of Chinese companies.. Once the U.S. Department of Commerce puts a company on its so-called unverified list, the company has 60 days to allow inspections before U.S. officials impose export controls.
Imports Levels are Low, But Retailers Are Well Stocked for Holidays
By the end of 2022, imports at the nation’s major container ports are expected to fall to their lowest level in nearly two years even though retail sales continue to grow, according to the monthly Global Port Tracker report from the National Retail Federation and Hackett Associates.
The first half of the year totaled 13.5 million TEU, a 5.5% increase year over year. The forecast for the remainder of the year would bring the second half to 12.5 million TEU, down 4% year over year. For the full year, 2022 US Ports are expected to 26 million Twenty-Foot Equivalent Units (TEU), up 0.7% from last year’s annual record of 25.8 million TEU. Imports are expected to bounce back briefly in January 2023, which is forecast at 2.06 million TEU, but that would be down 4.9% from January 2022.
Read more at Material Handling & Logistics
Supply Chain Officers Can Take Action to Navigate Macro and Micro Disruption
During a panel discussion at the recent Gartner Supply Chain Symposium/Xpo, experts discussed how companies can navigate global supply chain disruptions. “There are many types of macro supply chain disruptions, including natural disasters, trade wars, political unrest, cybersecurity breaches, and other events,” said Chris Poole, practice vice president with the Gartner Supply Chain practice, in a statement. “In addition to managing those macro disruptions, chief supply chain officers(CSCOs) must also pay close attention to micro disruptions, such as new entrants to the market, emerging technologies and internal organizational changes.”
Gartner suggests three actions for CSCOs to be prepared for upcoming macro and micro risk events.
Read more at Material Handling & Logistics
Interactive Map - Odds of Falling Home Prices in Your Local Housing Market
Across the country, builders and agents alike are watching the U.S. housing market—which got priced to 3% mortgage rates—work toward equilibrium in the face of 7% mortgage rates. To better understand where home prices might be headed, Fortune reached out to CoreLogic to see if the firm would provide us with its updated October assessment of the nation’s largest regional housing markets.
To determine the likelihood of regional home prices dropping, CoreLogic assessed factors like income growth projections, unemployment forecasts, consumer confidence, debt-to-income ratios, affordability, mortgage rates, and inventory levels. Then CoreLogic put regional housing markets into one of five categories, grouped by the likelihood that home prices in that particular market will fall between August 2022 and August 2023.
View the Map and read more at Fortune
Mortgage Rates Step Back from the Brink, But Hesitation is Still at a 25-Year High
The interest rate on the most popular home loan in America has fallen for the first time in seven weeks, ending a streak that pushed borrowing costs to their highest point since 2007. Yet even with the decline, the average 30-year fixed mortgage rate is still more than double what it was last year.
Unfortunately for borrowers, this week’s dip was just a small step back after a headlong sprint forward. Consumers taking out loans today are spending hundreds of dollars more on their monthly mortgage payments than they would have if they bought just last month, when the 30-year rate was more than a full percentage point lower.
Health Care Industry Prepares for a Big Hit from Delayed Medical Care of Chronic Diseases
The pandemic produced no end of health care anomalies, not the least of which was the rate at which people with multiple chronic conditions avoided care for nearly three years. Unfortunately, those who needed ongoing care avoided it more than any other group.
As we emerge from the heart of the pandemic, physicians are finding that this trend toward delayed medical care (DMC) had serious consequences. Instances of pre-pandemic treatable/curable cancers that went undiagnosed exploded, while the health of those with multiple chronic conditions who avoided regular checkups got much worse.
Boeing Orders, Deliveries Rise in September
Boeing Co said Tuesday deliveries rose in September to 51 airplanes, while orders rose by 90 as the planemaker continues to see strong demand for new aircraft. Boeing deliveries last month tied its 51 deliveries in June, when it exceeded the 50-plane threshold for the first time since March 2019. In August, Boeing deliveries rose to 35 airplanes after it resumed handovers of its 787 Dreamliner after a 15-month delay.
Last month, Boeing had 51 new 737 MAX airplane orders and 45 widebody airplanes, including 14 777s. In September, Boeing delivered 14 widebody planes, including 7 787s, including three 787-8s to American Airlines. American Airlines told Reuters Friday that since August it has received four 787s from Boeing and all are in service. Boeing's commercial order backlog now stands at 4,354 planes. Boeing has delivered 328 airplanes in the first nine months of 2022, including 267 737 MAXs.