Member Briefing October 2, 2023
PCE Rises Slightly in August on Energy Prices
An economic indicator the Federal Reserve favors as an inflation gauge rose less than expected in August, showing that the central bank’s fight against higher prices is making progress The personal consumption expenditures price index excluding food and energy increased 0.1% for the month, lower than the expected 0.2% gain from the Dow Jones consensus of economists, the Commerce Department reported Friday. On a 12-month basis, the annual increase for core PCE was 3.9%, matching the forecast. That was the smallest monthly increase since November 2020.
Along with the modest inflation gain, consumer spending rose 0.4% on a current-dollar basis. That was down sharply from 0.9% in July. In real terms, spending was up just 0.1% after rising 0.6% in July. Including food and energy, headline PCE increased 0.4% on the month and 3.5% from a year ago. The core PCE was the first sub-4% year-over-year reading in nearly two years and a decrease from the 4.3% July reading. Inflation on the month was largely driven by energy costs, which accelerated 6.1%, according to Friday’s reading. Food prices increased 0.2%. On an annual basis, energy was down 3.6% while food increased 3.1%.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Senators Press for Evan Gershkovich’s Release After Six Months in Custody - WSJ
- Putin Orders Former Wagner Commander to Take Charge of ‘Volunteer Units’ in Ukraine - AP
- Congress Avoids Government Shutdown, Drops Ukraine Aid
- Combat in Ukraine Appears to be at its Most Intense Yet – The Economist
- How the Technological Revolution on Ukraine Battlefields Is Reshaping Modern Warfare - WSJ
- Killer Who Used Meatgrinder to Dispose of Body of Strangled Lover is Freed by Putin… Because He Fought in Ukraine – The Sun
- Ukraine Finds Itself at the Center of the U.S. Government Shutdown Fight - NBC
- Four Seconds to Impact: On the Front Line With Ukraine's Snipers - NYT
- Anger Grows Over Ukraine's Largest Orthodox Church, Aligned with Moscow Despite War - NPR
- 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
More CFOs Pull Back Spending Plans Due to Higher Interest Rates
More finance chiefs are cutting spending plans as higher interest rates squeeze their bottom lines, according to a survey published Wednesday by Duke University’s Fuqua School of Business and the Federal Reserve Banks of Atlanta and Richmond. In the survey, 41% of finance chiefs said current rates have forced them to pull back capital spending, while 42% said they have cut costs in other areas such as travel or advertising. The poll, conducted between Aug. 21 and Sept. 8, included CFOs from 320 companies.
The quarterly survey shows that CFOs are growing more concerned about higher borrowing costs. The last time the survey included the same question, in the fourth quarter of 2022, 32% of finance chiefs said they had pulled back on capital investments, while 29% said they had reduced other expenses. Still, most finance chiefs have a positive outlook on the U.S. economy. When asked to rate their optimism about the economy on a scale of 0 to 100, CFOs on average provided a ranking of 56, up from 53 a year earlier.
US GDP Growth Unrevised at 2.1% in Second Quarter as Economy Shows Resilience
The U.S. economy maintained a fairly solid pace of growth in the second quarter and activity appears to have accelerated this quarter, but a looming government shutdown and an ongoing strike by auto workers are dimming the outlook for the rest of 2023. Inflation also remains elevated and tight labor market conditions continue to prevail, with the number of Americans filing new claims for unemployment benefits rising slightly last week, the reports showed on Thursday. Some economists believe the economy's resilience combined with high inflation could give the Federal Reserve ammunition to raise interest rates again in November. Others, however, expect the darkening cloud over the economy would discourage the U.S. central bank from tightening monetary policy further.
Gross domestic product increased at an unrevised 2.1% annualized rate last quarter, the government said in its third estimate of GDP for the April-June period. That was in line with economists' expectations. A downgrade to growth in consumer spending to a lackluster 0.8% rate from the previously reported 1.7% pace was offset by a sharp upward revision to business investment in factories amid a push by the Biden administration to bring semiconductor manufacturing back to the United States.
COVID Update - A Blood Test for Long Covid is Possible, a Study Suggests
Scientists have found clear differences in the blood of people with long Covid — a key first step in the development of a test to diagnose the illness. The findings, published Monday in the journal Nature, also offer clues into what could be causing the elusive condition that has perplexed doctors worldwide and left millions with ongoing fatigue, trouble with memory and other debilitating symptoms. The research is among the first to prove that "long Covid is, in fact, a biological illness," said David Putrino, principal investigator of the new study and a professor of rehabilitation and human performance at the Icahn School of Medicine at Mount Sinai in New York.
"We were looking for signals, and we found them," said Akiko Iwasaki, one of the researchers and a professor of immunobiology and molecular, cellular and developmental biology at the Yale School of Medicine. "Now what we need to do is home in on each of these signals and understand better how the disease has been driven by these signals." The investigators did not find significant evidence that long Covid is the result of an autoimmune disorder, in which the body attacks itself.
NYS COVID Update
The Governor updated COVID data for the week ending September 29th.
Deaths:
- Weekly: 84
- Total Reported to CDC: 80,372
Hospitalizations:
- Average Daily Patients in Hospital statewide: 1,625
- Average Daily Patients in ICU Statewide: 164
7 Day Average Cases per 100K population
- 16.5 positive cases per 100,00 population, Statewide
- 18.2 positive cases per 100,00 population, Mid-Hudson
Useful Websites:
Congress Averts Government Shutdown in Surprise Breakthrough
Lawmakers averted a government shutdown in a dramatic Saturday on Capitol Hill, passing legislation with bipartisan backing to extend funding through mid-November, after House Speaker Kevin McCarthy broke with his conservative wing and Democrats ultimately agreed to get on board. The House voted 335-91 for the measure, exceeding the two-thirds majority needed to clear the bill, which was considered under special procedures requiring a supermajority of votes. All but one Democrat voted in favor of the measure, while nearly half of Republicans voted against it. Several hours later, the Senate voted 88-9 to pass the legislation. Late Saturday night, President Biden signed the measure, according to the White House, averting a government shutdown just hours before it was set to occur.
The measure includes $16 billion in disaster relief while omitting the assistance for Ukraine. It excluded border-security measures sought by Republicans. The bill renews the expiring flood-insurance program through Nov. 17 and reauthorizes the Federal Aviation Administration through the end of December.
Local Representatives Vote “Yes” on Federal Funding Deal, Share Reasons
Congressman Mike Lawler (R, NY-17) also voted in favor of the continuing resolution (CR), stating, “The House did our jobs and just passed a CR on a broad bipartisan basis that now heads to the Senate, where it is expected to pass as well, and the President will sign the legislation by midnight, averting a government shutdown. This CR is not the end of the conversation, but it gives us 45 days to continue going through the appropriations bills to find ways to responsibly reduce government spending and secure our border.”
Congressman Pat Ryan (D, NY-18) supported the spending plan, calling it a temporary measure. “For weeks, far-right MAGA extremists have threatened a government shutdown unless we accept cuts to critical programs that Hudson Valley veterans, seniors, and children rely on. Today, I voted alongside a bipartisan coalition to prevent those cuts and pass a bill that keeps the government open,” said Ryan.
Congressman Marc Molinaro (R, NY-19) cast a vote in favor of the plan and shared his thoughts about the compromised bill on social media. “I’m a yes on the short-term government funding extension. We can do both. We can keep our government running while finishing our work to rein in inflation & secure the border,” said Molinaro.
Congressman Jamaal Bowman (D, NY-16) Pulled a fire alarm disrupting proceedings. He issued an official statement on the incident Saturday evening. “Today, as I was rushing to make a vote, I came to a door that is usually open for votes but today would not open. I am embarrassed to admit that I activated the fire alarm, mistakenly thinking it would open the door. I regret this and sincerely apologize for any confusion this caused.” Capitol Police are investigating the incident.
GM, Ford Chiefs Clash with UAW as Union Expands Strikes
The chief executives of GM and Ford blasted United Auto Workers leaders on Friday, and UAW chief Shawn Fain responded in kind, hours after the union escalated the strike that is now in its third week. Fain on Friday expanded the first-ever simultaneous strike against the Detroit Three, ordering workers to walk off the job at Ford's Chicago assembly plant and GM's Lansing, Michigan, assembly plant. He said Stellantis was spared after last-minute concessions by the Chrysler parent.
"It’s clear that there is no real intent to get to an agreement," GM CEO Mary Barra said late Friday, while Ford CEO Jim Farley said the union was holding a deal "hostage" over a dispute over future electric vehicle battery plants. The UAW responded on social media that neither CEO had attended bargaining this week. The union and the companies remain far apart on key economic issues and the CEO statements suggested they are not close to resolving many sticking points. Fain has stuck with a demand for 40% pay hikes over a four-year contract, a position supported this week by President Joe Biden. The companies have offered pay hikes of about 20%.
Consumer Sentiment Declines in Both Conference Board and Michigan Surveys
Consumer sentiment in September declined slightly from August amid a looming government shutdown and strikes in the automotive industry. According to the University of Michigan survey's final reading, sentiment dropped to 68.1 in September from 69.5 in August. Despite this decline, sentiment was 16% higher than the same time last year. The 12-month inflation expectation dropped to 3.2% in September from 3.5% in August, which was the lowest reading since March 2021. Long-run inflation expectations came in at 2.8%, falling below the 2.9% to 3.1% range for only the second time in the last 26 months.
The Conference Board’s confidence index clocked in at 103 in September, below economists’ consensus for a reading of 105, and August’s upwardly revised 108.7 reading. “Write-in responses showed that consumers continued to be preoccupied with rising prices in general, and for groceries and gasoline in particular,” said Dana Peterson, chief economist at the Conference Board. “Consumers also expressed concerns about the political situation and higher interest rates.”
Euro Zone Inflation Fell to 4.3% in September, 2 Year Low
Annual inflation in the euro zone cooled to its lowest level since October 2021, falling to 4.3% in September, flash figures showed Friday. That was down from a 5.2% annual reading in August, while month-on-month inflation dipped from 0.5% to 0.3%. Core inflation — which excludes energy, food, alcohol and tobacco, and is closely watched by monetary policymakers — dropped to 4.5% year on year in September from 5.3% in August.
The inflationary picture remains highly divergent between European nations. Annual price rises in Germany, the biggest euro zone economy, remain well above target at 4.3%, as it also struggles with an economic contraction. Estimates from Eurostat, the EU’s statistics agency, put headline inflation harmonized across euro zone nations at 5.6% in France and 3.2% in Spain for September, as Slovakia and Slovenia suffer with inflation of 8.9% and 7.1%.
Logistics Companies Grow Cautious on Holiday Hiring
Despite a big hiring push at Amazon, Logistics companies and fulfillment specialists generally are keeping their hiring flat this year compared with last year, moving cautiously with their traditional seasonal staffing in an uncertain retail economy that has seen tepid growth in sales of goods. Consulting firm Deloitte projects holiday spending this year will grow between 3.5% and 4.6% from last year, a sharp pullback from the 7.6% year-over-year expansion in 2022 and 15.1% growth in 2021.
Companies are waiting to get clearer direction on retail demand close to the holidays, said Laura Ritchey, chief executive of e-commerce logistics provider Radial, effectively standing pat with last year’s plans “unless something changes from a macroeconomic perspective or there’s suddenly even more inventory in the supply chain.”
Read more at Supply Chain Brain
Future of Zinc8’s Plan for a $68M Plant in Kingston Unclear
Zinc8 Energy Solutions, the Canadian company that has been planning to build a $68 million manufacturing plant at iPark 87 in Kingston, has raised the possibility that it may be forced to go out of business. In a public document, Zinc8 revealed that “the company does not generate revenue, and its ability to continue as a going concern is dependent on the company being able to secure debt or equity financing in short order.”
More than a decade after its founding, Zinc8 still wasn’t profitable and hadn’t yet begun major production. The biggest loser appears to have been the Ulster County Industrial Development Agency. The IDA in March let Zinc8 borrow up to $10 million for “acquisition of machinery, equipment, fit-up and improvements to the facility.” It’s not clear how much of that had gone out the door. By comparison, Zinc8’s market cap today stands at $1.4 million. It’s also unclear whether the company will be able to support the handful of demonstration projects for which it received public funding through NYSERDA, the state energy agency, and the state Power Authority.
Read more at Westfair Business Journal
Pratt & Whitney Expanding GTF MRO Capacity
Pratt & Whitney plans to expand the capacity of Eagle Services Asia, the turbine-engine maintenance, repair, and operations center (MRO) it operations in Singapore. The 48,000-sq.ft. expansion will accommodate a two-thirds increase in service capacity at that site, according to P&W. The GTF engine is Pratt’s geared-turbofan engine, approximately 1,600 of which have been installed on commercial aircraft for over 60 operators worldwide. Pratt & Whitney also holds orders for nearly 10,000 future GTF engines from over 90 customers.
Eagle Services Asia is part of the GTF MRO global network of engine centers operated by Pratt & Whitney, MTU Aero Engines, Japanese Aero Engines Corp., Lufthansa Technik, and Delta TechOps, that provides commercial-aircraft engine operators with various aftermarket services and improve fleet availability. With 13 GTF MRO engine centers operating on three continents, the joint-venture partners have more than doubled the network’s size since 2019, and six more are planned by 2025.
Read more at American Machinist
OSHA Launches Initiative to Protect Workers from Silica Exposure
On Sept. 25, OHSA launched a new initiative focused on enhancing enforcement and providing compliance assistance to protect workers in the engineered stone fabrication and installation industries. Supplementing OSHA’s current National Emphasis Program for Respirable Crystalline Silica, this initiative will focus enforcement efforts on industry employers to make sure they’re following required safety standards and providing workers with the protections required to keep them healthy. It establishes procedures for prioritizing federal OSHA inspections to identify and ensure prompt abatement of hazards in covered industries where workers face exposure to high levels of silica dust.
Industries subject to the prioritized programmed inspections include those engaged in Cut Stone and Stone Product Manufacturing as well as Brick, Stone and Related Construction Material Merchant Wholesalers. Outreach efforts will continue to include additional industries that may work with engineered stone.
Hyundai, Kia Recall 3 Million Cars in US Over Fire Risk
South Korean car manufacturers Hyundai and Kia are issuing recalls for 3.3 million vehicles in the United States due to their risk of suddenly catching fire, regulators announced Wednesday. "Until these recalled vehicles have been repaired... the safest place to park them is outside and away from homes and other structures," the National Highway Traffic Safety Administration (NHTSA) said in a statement. "Fires can occur whether the vehicle is parked and turned off or while driving."
The vehicles in question include 1.64 million from Hyundai and Genesis, concerning 2010 to 2015 models, and 1.73 million Kias, ranging from 2010 to 2017. The problem comes from an issue with the vehicles' anti-lock brake systems (ABS), "which could leak brake fluid internally and cause an electrical short," the NHTSA said." Hyundai plans to notify owners to bring their vehicles to the nearest dealership to replace the ABS module fuse," the agency said. "Kia is still working on a remedy."