Member Briefing October 25, 2022

Posted By: Harold King Daily Briefing,

The largest Education Department Analysis of Test Scores Since Covid-19 Pandemic Began Reveals Sweeping Declines

The nation’s schools recorded the largest drop in math scores ever this year, with fourth- and eighth-grade students in nearly every state showing significant declines, according to Education Department data released Monday. The 2022 National Assessment of Educational Progress, known as the Nation’s Report Card, also revealed a nationwide plunge in reading that wiped out three decades of gains.

Average math scores for eighth-graders in 2022 dropped to 274 out of a possible 500, falling 8 points from 2019. Reading scores declined 3 points, to 260. Prepandemic declines in academic achievement intensified nationwide, and many longstanding gaps in student achievement grew. Low-performing fourth-grade students saw larger declines in both math and reading scores compared with high-performing ones. Black and Hispanic students in fourth grade saw larger score drops in math than white students.

Read more at the WSJ

War in Ukraine Headlines

Eurozone PMI Falls Further Into Recessionary Territory

The eurozone composite PMI flash estimate fell to a lower-than-expected 47.1 in October, from 48.1 in September. This is not only a 23-month low but is also the fourth consecutive month that the PMI has been below the 50 boom-or-bust level, clearly suggesting negative GDP growth. The manufacturing PMI came out at 46.6, while the services sector PMI is now at 48.2. The steepest downturns were seen in the most energy-dependent industries, such as chemical and plastics and basic resource sectors. Industrial powerhouse Germany saw the fastest decline in activity, while in France growth merely stalled.

Forward-looking components of the survey don’t herald any improvement in the coming months – on the contrary. New orders for goods and services fell for the fourth month in a row. Excluding the Covid-19 pandemic, manufacturing orders saw the biggest drop since April 2009, while the decline in new business inflows into service sector companies was the strongest since June 2013.

Read more at ING

UK Manufacturing PMI Shows Falling Output, Weak Foreign Demand

The S&P Global manufacturing Purchasing Managers' Index (PMI) rose to 48.4 from August's 27-month low of 47.3 but remained below the 50-level that separates growth from contraction and was a fraction weaker than the initial 'flash' estimate of 48.5. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said: “October’s flash PMI data showed the pace of economic decline gathering momentum after the recent political and financial market upheavals… GDP therefore looks certain to fall in the fourth quarter after a likely third quarter contraction.

"September saw new export business contract at the quickest pace since May 2020, with reports of lower demand from the U.S., the EU and China," S&P Global said. "Manufacturers faced weak global market conditions, rising uncertainty, high transportation costs reducing competitiveness and longer lead times leading to cancelled orders," it added. Britain's economy is on the cusp of recession as households and businesses wrestle with rising energy costs, a jump in borrowing costs and a volatile currency which struck a record low against the U.S. dollar on Sept. 26.

Read more at Action Forex

US COVID – A 'Tripledemic'? Flu and Other Infections Return as COVID-19 Cases Rise.

With few to no restrictions in place and travel and socializing back in full swing, an expected winter rise in COVID-19 cases appears poised to collide with a resurgent influenza season, causing a so-called twindemic” — or even a tripledemic, with a third virus, respiratory syncytial virus, or RSV, in the mix. Cases of flu have begun to tick up earlier than usual and are expected to soar over the coming weeks. Children infected with RSV (which has symptoms similar to those of flu and COVID-19), rhinoviruses and enteroviruses are already straining pediatric hospitals in several states.

The vaccines for COVID-19 and flu, while they may not prevent infection, still offer the best protection against severe illness and death, experts said. They urged everyone, and especially those at high risk, to get their shots as soon as possible.

Read more at The Johns Hopkins Center for Health Security

2022 New York Voter Guide

With so much upheaval in the New York election calendar this year due to redistricting, it'll be more important than ever for New Yorkers to stay updated on the various election days and candidates. In November, there will be the race for governor, but a redrawn congressional map has changed the political landscape — and who will appear on your ballot — throughout Upstate New York.

Spectrum News has developed this 2022 Voter Guide which has information on registering to vote, absentee ballots and early voting in New York. The Voter Guide can also be found on the Spectrum News app.

Visit the Guide at Spectrum News

All Eyes Are on New York When it Comes to Control of Congress - City & State Breaks Down the Races

All eyes are on New York state when it comes to control of the House of Representatives, with as many as 10 competitive races out of the state’s 26 seats. And with Democrats holding a slim, eight-vote majority this session, every election could count. New district lines drawn by a special master after the Legislature’s map was deemed unconstitutional by the State’s highest court, prioritized competitiveness.

That redistricting process, tied to the 2020 census, left the state with 26 seats, down from 27, and placed a lot of New Yorkers in substantially redrawn districts. City & State looked at every district in the state to preview the general election. This information is updated as of Oct. 21.

Read more at City & State

Covid-19 Vaccines Will be on the 2023 Vaccine Schedule, But That Doesn’t Necessarily Mean They Will Be Required Schools

Covid-19 vaccines will be part of recommended immunization schedules in 2023 for both children and adults, after a unanimous vote by the US Centers for Disease Control and Prevention’s independent Advisory Committee on Immunization Practices. That doesn’t make the vaccines mandatory for anyone, a point that was emphasized in a discussion before Thursday’s vote. “We recognize that there is concern around this, but moving Covid-19 to the recommended immunization schedule does not impact what vaccines are required for school entrance, if any,” said Dr. Nirav Shah, a committee member and director of the Maine Center for Disease Control and Prevention.

Although the Covid-19 shot will not become mandatory for school, all 50 states do have laws requiring specific vaccines for students – most of which include shots for measles, mumps and rubella (MMR), diphtheria, tetanus and pertussis (DTaP) and varicella. Uptake for these vaccines, mandated by schools long before Covid-19, fell during the pandemic. In the 2020-21 school year, vaccination coverage for kindergarteners fell to less than 94%.

Read more at CNN

China Q3 GDP Growth Tops Forecasts But Meaningful Rebound Elusive

China's economy rebounded at a faster-than-anticipated clip in the third quarter. Helped by a raft of government measures, the world's second-biggest economy expanded 3.9% in July-September from a year earlier, official data showed on Monday, outstripping the 3.4% pace forecast in a Reuters poll and faster than the 0.4% growth in the second quarter. Final consumption accounted for 2.1 percentage points of the 3.9% GDP growth, while capital formation, or investment, and net exports accounted for 0.8 and 1.1 percentage points, respectively.

However, domestic demand waned towards the end of the quarter as a flare-up in coronavirus cases led to lockdowns, while export growth slowed and the key property sector further cooled, pointing to a fraught recovery. Further clouding the outlook, China looks set to continue with its ultra-strict COVID policies endorsed by the ruling Communist Party, which wrapped up its top leadership reshuffle on Sunday with Xi Jinping securing his third term at its helm.

Read more at Reuters

Europe Racks up Record Trade Deficit

Europe, the world's largest economic bloc, enjoyed stable trade surpluses for a decade but the war in Ukraine and the ensuing energy crisis have tipped the Continent into a spiraling external deficit unseen since the launch of the euro.  A breakdown of the trade figures shows that the EU's manufacturing trade surplus has nearly halved this year. The trade deficit for the EU as a whole spiraled to €64.7 billion.

The eurozone’s negative trade balance with the rest of the world in August stood at €50.9 billion, the highest deficit ever recorded, compared to a €2.8 billion surplus a year ago, according to the latest Eurostat numbers. The eurozone’s current account balance — the balance of all trade in goods and services as well as international transfers of capital, such as remittances — hit a €26.32 billion deficit in August, largely driven by the trade deficit in goods, the European Central Bank reported.

Read more at Politico

Rishi Sunak to Become British PM as Penny Mordaunt Bows Out

Rishi Sunak will become the UK's first British Asian prime minister after his only remaining rival pulled out of the Tory leadership contest. Nearly 200 Conservative MPs publicly backed the former chancellor ahead of the nomination deadline on Monday. Commons Leader Penny Mordaunt dropped out after failing to secure enough support among MPs. The new prime minister is expected to take office in the coming days now the result of the Tory leadership contest is known.

Conservative Party Chairman Jake Berry said it was time for the party to "unite four-square behind Rishi" after a period of intense political turmoil under Ms Truss's premiership. Opposition parties have been clamouring for a general election, arguing that Mr Sunak does not have a democratic mandate to become prime minister. Mr Sunak will be the fourth consecutive prime minister - after Theresa May, Boris Johnson and Ms Truss - to take power without a general election.

Read more at the BBC

Mortgage Rates Creep Closer to 7%, Spooking Homebuilders

Mortgage rates rose slightly this week, according to Freddie Mac, with the 30-year fixed rate creeping closer to the 7% threshold. High mortgage rates continue to have a tangible impact on homebuying affordability and the housing market as a whole.

As fixed mortgage rates put a strain on purchase budgets, more buyers are turning to adjustable-rate mortgages, according to the Mortgage Bankers Association. The share of ARM borrowers increased again to 12.8%, with demand for this type of mortgage at its highest point since 2008. Meanwhile, the average rate for the 5/1 ARM fell slightly over the past week. Here are the current mortgage interest rates, as of Oct. 20: 30-year fixed: 6.94% with 0.9 point (up from 6.92% a week ago, up from 3.09% a year ago). 15-year fixed: 6.23% with 1.1 points (up from 6.09% a week ago, up from 2.33% a year ago). 5/1-year adjustable: 5.71% with 0.4 point (down from 5.81% a week ago, up from 2.54% a year.

Read more at US News

Builders Say They’re Ready for This Housing Slowdown. ‘I’ve Learned My Lesson.’

After a pandemic-fueled buying spree that unleashed the most powerful U.S. housing boom in 15 years, demand has plummeted as mortgage rates have risen. Finished homes are sitting on the market, hundreds of thousands of new ones are expected to be completed in the coming months, and many builders are cutting prices. Existing-home prices are declining from their springtime peaks, and single-family home construction in September fell 18% from a year earlier.

During the earlier housing downturn, which was triggered in part by the collapse of the subprime-mortgage market, about half of all home builders disappeared. Home builders that lived through that said they learned some hard lessons, and that the current slowdown won’t lead to another industry implosion. Also, mortgage lenders have tightened underwriting standards in recent years, reducing the risk of a wave of foreclosures.

Read more at the WSJ

Concerns About Rail Strike Disruptions Ahead of Holiday Season Loom - Strike or No Strike

After last year's record cargo year, the Port of Los Angeles has made significant progress in clearing backlogs spurred by the pandemic-induced supply chain crunch. But concerns now loom among officials about possible disruptions stemming from a potential rail strike leading up to the holiday season. Last week, the country’s third largest rail union rejected the ratification of a labor contract brokered by President Joe Biden’s administration. A strike could occur as soon as Nov. 19 if a deal is not reached, stoking concerns about disruptions right before the holidays.

Jay Timmons, CEO of the National Association of Manufacturers, said Wednesday that manufacturers are “facing down disruption and delays” in domestic and international supply chains. He said the supply chain dysfunctions have impacted the cost of raw materials and increased transportation and logistics costs.

Read more at The Center Square

Biden’s Plan To Refill The SPR Is Unlikely To Boost U.S. Oil Output

Last week, President Biden announced that the Administration “intends to repurchase crude oil for the SPR when prices are at or below about $67-$72 per barrel, adding to global demand when prices are around that range.”  The Biden Administration is in the process of releasing 180 million barrels from the SPR by the end of this year, and is considering further releases in its efforts to bring down gasoline prices ahead of the midterm election on November 8.

Oil prices are unlikely to drop to the level the U.S. Administration has said would trigger purchases for refilling the Strategic Petroleum Reserve (SPR), U.S. oil executives and analysts say, suggesting that the shale patch will not boost production in response to President Biden’s plan to increase output in the short term. Nearly 80 percent of 49 respondents in a Twitter poll created by Matt Gallagher, chief executive at Greenlake Energy Ventures, responded last week that the prompt WTI Crude price would be higher than $72 per barrel in 2023.

Read more at OilPrice

Oil Giant Schlumberger Rebrands Itself as “SLB” for Low-Carbon Future

Schlumberger (SLB.N), the world's largest oilfield services provider, is rebranding itself with a new name, color scheme and logo that underscores its ambitions for a lower-carbon future, the company said on Monday. The rebranding is not a shift away from fossil fuels, Chief Executive Officer Olivier Le Peuch said in an interview. But it is a nod to how the renamed SLB can apply its skills to develop lower carbon businesses.

The nearly 100-year-old firm, originally named after its founding family, has become a giant in oilfield services and equipment such as drilling and subsurface analysis. But it has shed old line products and recast itself as a digital services provider and supporter of cleaner energies.

Read more at Reuters