Member Briefing October 16, 2023
Layoffs at Automakers, Suppliers Mount as UAW Strike Continues
The “Big Three” carmakers are being forced to keep laying off workers as the United Auto Workers union continues its strike, according to CBS News. To date, since the strike began, General Motors, Ford and Stellantis have had to lay off a total of 4,835 employees. “While we are doing what we can to avoid layoffs, we have no choice but to reduce production of parts that would be destined for a plant that is on strike,” Ford Vice President for Americas Manufacturing and Labor Affairs Bryce Currie said in a statement last week. In addition, many auto suppliers have suspended the employment of hundreds of workers because of the strike.
Economic losses to the auto industry through the first three weeks of the strike totaled approximately $5.5 billion, Michigan-based economic consultancy Anderson Economic Group estimates. That figure includes $2.68 billion in lost revenue for the carmakers, $579 million in direct wages for workers, supplier losses of $1.6 billion and dealer and customer losses of $1.26 billion. “The strike is causing tremendous economic harm throughout the economy,” said NAM Vice President of Economic Policy Brandon Farris. “It isn’t just the automakers, but every employee that has been laid off and many of the small and medium manufacturers that supply them.”
War in Israel Headlines
- Israel and Hamas: The Latest News – CNBC
- Clashes Intensify Along Israel’s Northern Border as It Prepares Gaza Invasion - WSJ
- Israel Vows to Demolish Hamas as Troops Prepare to Move on Shattered Gaza – Reuters
- U.S. Will Start Charter Flights for Americans Stuck in Israel – Politico
- Blinken Says the Crossing to Egypt Will Open to Aid as Israel Prepares to Strike Gaza - NPR
- Diplomats Race to Ease Crisis as Israel Plans Gaza Invasion - NYT
- Supplemental Funding Request for Aid to Israel and Ukraine Could Come This Week - NBC
- U.S. Airlines Suspend Flights, Issue Waivers Amid Israel Conflict – Travel & Leisure
- U.S. to Hold Off on Disbursing $6 Billion in Iran Oil Revenue Unfrozen in Prisoner Deal - WSJ
- Map – Tracking Hamas’ Attack on Israel – Live Universal Awareness Map
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Democrats Are at Odds on Israel. Republicans Can’t Agree on Ukraine - WSJ
- U.S. Sanctions Two Tankers Accused of Violating Russian Oil-Price Cap - WSJ
- Russia Will Survive a Defeat in Ukraine. It’s Time to Prepare for What Comes Next. – Politico
- Poland’s Goodwill Toward Ukraine is Eroding - CNN
- Germany, Nine Other Nations Push Ahead with Joint Air Defence Procurement - Reuters
- France Investigates Suspected Poisoning Of Russian Journalist, Who Protested Ukraine War On-Air - NDTV
- Ukraine’s Next Target: Russian Supply Lines – WSJ
- ‘Fierce and Non-Stop Fighting’ as Russia Attacks Avdiivka in Eastern Ukraine - CNN
- Interactive Map: Assessed Control of Terrain in Ukraine – Institute for the Study of War
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
September CPI: Core Rises, but Moderating Trend Still in Place
In September, the Consumer Price Index rose slightly more than expected, coming in at 0.4% compared to expectations for a 0.3% rise. That kept the year-over-year rate of CPI at 3.7% in a sign that, while inroads have been made in reining inflation over the past year, progress recently has been slower to come by. In September, prices excluding food and energy rose 0.3%. On a year-over-year basis, the core index is up 4.1%, the smallest gain in two years.
Energy played a smaller role in September's gain compared to August, advancing 1.5%. However, prices over the past three months are still up at an annualized rate of 33%. The sharp retreat in retail gasoline prices since the end of September should offer some relief to consumers in the near term, but the drag on annual inflation from energy has nonetheless eased considerably. Meanwhile, the disinflationary force from food has also steadied, with food prices up 0.2% for a third consecutive month. Over the past year, food costs have increased 3.7%, a marked improvement from 11.2% last September, but still more than double the pace of the 2010s as consumers continue to contend with elevated inflation for everyday necessities.
Wage Gains Keep Pressure on Inflation
With unemployment below 4% and layoffs not showing a noticeable uptick, workers haven’t lost all the leverage they gained throughout the pandemic recovery period. Strikes by the United Auto Workers members and Kaiser-Permanente healthcare employees, and recent significant wage gains in other union contracts, could push worker pay higher throughout the economy. “That could keep pressure on the prices of basic services, which are one of the last things that are still not behaving as well as we would like,” said Carl Tannenbaum, chief economist at Northern Trust.
Columbia Machine Works, a Tennessee manufacturer, raised pay significantly the past two years to keep and attract the skilled employees to build and repair industrial machinery. While other expenses have risen, including utility bills, it is labor costs that weigh most on the nearly century-old company’s pricing, said Jake Langsdon, 28, a vice president at the company and great-grandson of its founder. Langsdon estimates that Columbia’s labor costs, with the same head count of around 70, grew 20%-25% in the past couple of years, through raises and more expensive benefits.
COVID Update - Operation Warp Speed: The Untold Story of the COVID-19 Vaccine
On a chilly day in mid-April 2020, Moncef Slaoui, the retired head of the vaccine department at the pharmaceutical giant GlaxoSmithKline, was sitting by his unopened pool in Gladwyne, Pennsylvania, when his phone rang. The hopeful hint of spring in the air belied the dark desperation that suffused the world as the COVID-19 pandemic raged and the world’s wealthiest country struggled to figure out a way forward.
The caller was Jim Greenwood, a former Republican congressman from Pennsylvania who, since 2005, had served as the CEO of the trade association BIO, short for the Biotechnology Innovation Organization. Greenwood was reaching out after getting a call from Secretary of Health and Human Services Alex Azar. He had an urgent question for Slaoui: “Do you think that if you had unlimited resources, money, and people that we could have a vaccine against COVID-19 widely available by the end of the year?”
NYS COVID Update
The Governor updated COVID data for the week ending September 29th.
Deaths:
- Weekly: 91
- Total Reported to CDC: 80,569
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,463
- Average Daily Patients in ICU Statewide: No Data
7 Day Average Cases per 100K population
- 10.1 positive cases per 100,00 population, Statewide
- 11.2 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Republicans Still Searching for a House Speaker as Bipartisan Solutions are Floated
Centrists are signaling they’re open to a deal. Democrats are outlining terms. With no speaker in sight yet, House Republicans are ramping up their discussions about a way to reopen the chamber. A bipartisan solution to the GOP’s leadership chaos still sounds farfetched to most on the Hill — but then, so does the idea that Rep. Jim Jordan (R-Ohio) might overcome his dozens of skeptics and win a floor vote early next week.
Unless Jordan can overcome his skeptics and push to victory on the floor in the next several days, the only way forward might be with Democrats. A group of centrist Democrats wrote to Acting Speaker Patrick McHenry (R-N.C.) on Friday to propose a limited agenda and some perks for the opposing party in exchange for temporarily restarting House business during a time of global crisis. Some self-described GOP pragmatists have suggested that if Republicans can’t chart a course on their own, they could cut a deal with Democrats to break the 10-day impasse.
Lawsuit to Block New York's Ban on Gas Stoves is Filed by Gas and Construction Groups
Gas and construction trade groups are suing to block New York's controversial state ban on gas stoves and furnaces in new buildings. The organizations argue the law violates the federal government's rules around how gas appliances are regulated, and filed the case against New York on Thursday in federal court. The case was filed by the National Association of Home Builders and the National Propane Gas Association, among others. It alleges that New York does not have the legal ability to enforce its rule because a preexisting federal law called the Energy Policy and Conservation Act already regulates energy use policies.
Gov. Kathy Hochul, a Democrat, approved the ban this spring on the installation of fossil-fuel equipment in new buildings. It's set to take effect in 2026 for structures of seven stories or less and in 2029 for larger buildings. The law would not apply to existing buildings. The suit asks the judge to rule that the state's ban is unenforceable under federal law and for it to be blocked before it takes effect. The New York Department of State, which is named as a defendant, declined to comment on the lawsuit.
Read more at New York State of Politics
Consumer Sentiment Weakens in October
The preliminary October University of Michigan consumer sentiment survey showed a steep falloff in views about the economy. The index fell to 63, from 68.1 in September. It reached a recent high of 71.6 in July. The falloff was driven by drops in both survey respondents' assessment of current economic conditions and their expectations for the future. Perhaps most worrying, survey respondents' expectations for inflation over the next year soared, to 3.8% from 3.2% in September. Long-run inflation expectations edged up to 3%, from 2.8%.
This may reflect a lagged impact of a surge in gasoline prices in late summer (prices have receded some so far in October) and a recent bumpy ride on Wall Street that has sent interest rates soaring. Consumer sentiment was even lower for much of 2022, when inflation was at modern highs, but remains far below the levels that were the norm in the 2010s.
LinkedIn: Year on Year Hiring Rates Decline Globally
A new Linkedin Talent Solutions survey notes that hiring around the world continues to decline. In a sample of 20 countries, hiring has decreased from August 2022 to August 2023. The sharpest decline is taking place in places like Singapore and Sweden with a hiring drop of 28% but the UK, US and Canada are also high on that list with 24% for all three countries. The areas with the lowest year-over-year in hiring rates were the UAE at 9%, and Indonesia at 5%.
“While we’re still seeing a year-over-year decline in hiring, the rate of decline is slowing in certain regions and countries, which we can take as a sign of stabilization,” says Linkedin Chief Economist, Karin Kimbrough. “I’m looking at this period as a gentle rebalancing in the labor market – meaning employers are hiring, but at a more cautious pace, and employees are staying put for longer.” She adds, “Leaders taking a more cautious approach to talent acquisition now have the chance to focus on better understanding and developing their internal talent, thereby setting up their organizations to withstand future labor-market and macroeconomic fluctuations.”
US jobless claims remain at historically low 209K, sign of labor market strength
The number of Americans applying for unemployment benefits was unchanged last week, remaining at historically low levels in another sign that the U.S. job market remains strong in the face of higher interest rates. Unemployment claims stayed at 209,000 for the week ending Oct. 7, the Labor Department reported Thursday. The four-week moving average of claims, which strips out week-to-week volatility, fell by 3,000 to 206,250.
The numbers, a proxy for layoffs, continue to show that American workers enjoy extraordinary job security.
Vertical Takeoff: Archer Receives Financing for Air Taxi Production Plant
Before electric vertical takeoff and landing (eVTOL) manufacturer Archer Aviation flies air taxi routes in partnership with United Airlines, starting in Chicago and the NYC metro area, it will first need to produce aircraft. The good news is the company now has the funding to do it. Archer on Wednesday closed financing and development agreements with Synovus Bank and Evans General Contractors, respectively, providing an influx of $65 million in fresh capital. Archer said the funding covers a “substantial majority” of costs associated with the construction of its first scaled manufacturing facility in Covington, Georgia, which began in March.
Both partnerships were previously announced last November when Archer selected Covington for the plant’s location. The $65 million from Synovus adds to $150 million in equity capital provided by Stellantis, which the eVTOL manufacturer can draw from as needed this year and next. Archer and Stellantis announced an exclusive mass production partnership in January. “Phase 1” of the site’s construction will support the build-out of a 350,000-square-foot facility intended to produce up to 650 aircraft per year.
Social Security Benefits Will Increase by 3.2% in 2024 as Inflation Moderates
Millions of Social Security recipients will get a 3.2% increase in their benefits in 2024, far less than this year’s historic boost and reflecting moderating consumer prices. The cost-of-living adjustment, or COLA, means the average recipient will receive more than $50 more every month beginning in January, the Social Security Administration said Thursday. The AARP estimated that increase at $59 per month.
About 71 million people — including retirees, disabled people and children — receive Social Security benefits. Thursday’s announcement follows this year’s 8.7% benefit increase, brought on by record 40-year-high inflation, which pushed up the price of consumer goods. The COLA is calculated according to the Bureau of Labor Statistics’ Consumer Price Index, or CPI. But there are calls for the agency to instead use a different index, the CPI-E, which measures price changes based on the spending patterns of the elderly, like health care, food and medicine costs.
Mental Health Issues Soar To Number 1 Workplace Injury
A new Atticus study found that mental health issues such as stress and anxiety are now the number one most common workplace injury, making up 52% of all workplace injury cases. And it’s not just employees. A total of 43% of middle managers also report burnout—more than any other worker group. As mental health issues are now the number one most common workplace injury, the team at Atticus surveyed 1,000 employees and collected recent data from OSHA, BLS and Google Trends to explore professionals’ mental health decline. Here are some of the key findings:
One in 10 workers experience mental health issues due to their work.
The highest workplace injuries (52%) are related to stress and anxiety.
Mental health issues are 10 times more common work-related injury than chemical exposure and 8.6 times more common than head injuries.
For comparison, 19% of employees have been physically injured at work, and 26% of them filed workers’ compensation as a result.
House Lawmakers Unveil Supply Chain Bill
Legislation designed to strengthen operations along domestic supply chains was recently introduced in the U.S. House of Representatives.Sponsored by Reps. Jim Banks (R-Ind.) and Rosa DeLauro (D-Conn.), the Strategic Homeland Investment in Economic and Logistical Defense (SHIELD) Act would establish an Office of Economic and Security Preparedness and Resilience.
According to the bill, the new office would “determine requirements, set priorities and coordinate efforts among federal agencies and industry to continuously map, monitor and analyze supply chains that are critical to the national security of the United States.”