Member Briefing October 31, 2022
U.S. Wages Rose Rapidly in Third Quarter, Keeping Pressure on Inflation
The employment-cost index, a measure of worker wages and benefits, rose 5% in the third quarter from the same period a year earlier, the Labor Department said Friday, as employers competed for workers in a tight labor market. The gain marked a slight cooling from the second quarter when the index rose at its fastest annual pace in records dating to 2001.
The wage report doesn’t derail the prospects for slowing rate increases in December because it shows wage growth didn’t accelerate through the middle of the year. The report offers potential hints “that we are moving past the firmest period for wage inflation,” said Daniel Silver, an economist at JPMorgan Chase. But the compensation report also doesn’t do much to ease concerns about more persistent price pressures in the service sectors of the economy, which could keep the Fed raising interest rates slightly higher in 2023 than officials had anticipated at their meeting last month.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Russia’s Elite Begins to Ponder a Putinless Future - The Economist
- Ukraine Says Russia Grain Move Requires Strong International Response - Reuters
- U.N., Turkey Race to Save Ukraine Grain Deal - NYT
- Russia Suspends Ukraine Grain Deal Over Ship Attack Claim - AP
- Russia’s Black Sea Flagship Damaged in Crimea Drone Attack, Video Suggests - Guardian
- In Race to Lure Russian Talent and Capital, Serbia Emerges as Front-Runner - WSJ
- Putin Says There is ‘No Need’ to Use Nuclear Weapons in Ukraine - CNBC
- Iranian Drones in Ukraine Project Tehran’s Power Beyond Mideast, Testing U.S., Europe - WSJ
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
Threat of Rail Strike Rises as Second Union Rejects Proposed Labor Deal
Rank and file members of another railroad union have rejected a tentative labor deal, a move that further raises the odds that America’s freight railroad workers will go on strike sometime in November. The Brotherhood of Railroad Signalmen voted against the tentative agreement. The vote was 2,810, or 60.5%, against the proposed four-year deal, and 1,820, or 39.2%, for it. The union represents more than 6,000 employees who install, repair and maintain the signal systems used to direct trains.
Labor relations at railroads are subject to a different labor law than the one that governs workers at most US businesses. Railroad unions face limits for when they can strike and can’t take action during cooling off periods that follow a “no” vote by membership. Congress can also prevent or end a strike by extending a cooling-off period during which the unions can not strike, or by imposing a contract on union members.
PCE Key Inflation Gauge for the Fed Rose 0.5% in September
The core personal consumption expenditures price index increased 0.5% from the previous month and accelerated 5.1% over the past 12 months, the report showed. The monthly gain was in line with Dow Jones estimates, while the annual increase was slightly below the 5.2% forecast. Including food and energy, PCE inflation rose 0.3% for the month and 6.2% on a yearly basis, the same as in August. The personal saving rate, which measures savings as a share of disposable income, was 3.1% for the month, down from 3.4% in August.
The report comes as the Fed is prepared to enact its sixth interest rate increase of the year at its policy meeting next week. In an effort to combat inflation running at its fastest pace in nearly 40 years, the Fed has been raising rates, with increases totaling 3 percentage points thus far.
US COVID - Steady
The US CDC is reporting 97.1 million cumulative cases of COVID-19 and 1.07 million deaths. Incidence for the week ending October 19 remained steady over the previous week, at 260,808 reported cases. Weekly mortality also remained steady for the week ending October 19, at 2,566 reported deaths. New hospital admissions remained steady last week, increasing 1.1%, while current hospitalizations continued to exhibit a downward trend, decreasing 2.9% over the past week.
The BA.5 sublineage continues to be the dominant strain in the US, accounting for 62.2% of sequenced specimens; however, its estimated prevalence has decreased for 9 consecutive weeks. Several other Omicron sublineages continue to exhibit increasing trends, including BQ.1 (9.4%), BQ.1.1 (k7.2%), and BF.7 (6.7%). BA.2.75 (1.6%) and BA.2.75.2 (1.3%) and also show relative growth advantage over BA.5.
Read more at The Johns Hopkins Center for Health Security
NYS COVID Update
The Governor updated COVID data through September October 21.
- Daily: 19
- Total Reported to CDC: 74,919
- Patients Currently in Hospital statewide: 2,854
- Patients Currently in ICU Statewide: 277
7 Day Average Positivity Rate - Cases per 100K population
- Statewide 5.58% - 19.68 positive cases per 100,00 population
- Mid-Hudson: 4.95% - 19.26 positive cases per 100,00 population
Which Voters Will Show Up for the 2022 Midterms
While the recruitment of new supporters is important to Republican and Democratic strategies in the midterm elections, boosting turnout among base voters can be even more crucial to each party’s success. Balloting in contests between presidential elections typically draws fewer voters, and midterm elections historically skew white and older. But turnout rates in the past two elections are resetting expectations.
Those aged 60 and older are among the most reliable voters, but the turnout gap between older and younger Americans shrank in the last midterm election. Among 18- to 29-year-olds, turnout doubled from 2014 to 2018. And in the 2020 presidential year, turnout among those under 30 topped 50% for the first time on record.
Hochul, Zeldin Draw National Help in Campaign for Governor
Republican gubernatorial candidate Rep. Lee Zeldin is calling on two governors who have national name recognition — Florida's Ron DeSantis and Virginia's Glenn Youngkin — as he also seeks to boost turnout among Republican faithful.
Democratic Gov. Kathy Hochul next week is set to reportedly appear at a rally with former Secretary of State Hillary Clinton, drawing on a prominent party ally in the final days of the campaign. The events come as both candidates are locked in what appears to be an increasingly competitive race for New York governor, an office that was last occupied by a Republican 15 years ago in a deeply Democratic state.
Read more at State of Politics
The New Omicron Boosters May Not Work Any Better Than the Original
New Omicron boosters that were initially touted as offering better protection against more recent COVID strains may not be any more effective than the original jabs, according to two new studies published this week.
Those who received the new Omicron booster as their fourth COVID shot had a similar immune response to a variety of COVID variants as those who received a fourth shot of the original vaccine, according to a study from Columbia University and the University of Michigan, published Monday. A Harvard University–affiliated paper released Tuesday came to the same conclusion: that the original vaccine and updated booster performed very similarly. Both “markedly” increased antibody response, though not the response of T cells—the oft neglected other half of the immune system that doesn’t prevent infection, but can reduce the severity of it.
ECB Raises Rates by 0.75 Point to Highest in More Than a Decade
The European Central Bank raised interest rates by three-quarters of a percentage point for the second time in a row, moving briskly to quash record inflation even as the eurozone teeters close to recession. The bank said in a statement that it would increase its policy rate to 1.5%, the highest level in more than a decade, and said it expects to raise rates further over the coming meetings.
It also moved to limit payments it makes to eurozone banks that tapped its ultracheap loans during the Covid-19 pandemic, a move that is ultimately expected to raise borrowing costs for eurozone companies.
Orange Ulster BOCES Capital Project Approved by Voters
The $159 million capital project for the two Orange-Ulster BOCES campuses has been approved by a 110 vote margin.
Officials said that means the Board of Cooperative Educational Services will move forward on adding instructional areas, upgrading infrastructure and renovating dated environments on both the Gibson Hill and Arden Hill campuses, both in Goshen.
Getting Your Shipping Costs Down
After two years of COVID-related supply-chain snarls, manufacturers now encounter labor rates and industrial real estate costs much higher than those experienced pre-pandemic. These cost increases are now baked into supply chains. In an unpredictable marketplace, how can a manufacturer enhance supply-chain resilience while keeping costs in line? It’s time to get tactical and benefit from some of the great savings opportunities in today’s supply chain.
Today’s tough business environment is unpredictable. To successfully maneuver around supply chain challenges, couple a long-term strategy of being a shipper of choice with tactics that capitalize on today’s opportunities for savings
Large Premium Hikes for Families and Individuals Likely After Small Increases This Year
Employer-sponsored health insurance premiums for families and individuals increased only modestly this year compared with 2021 – but that likely will change in 2023. The change in premiums this year is unusual in that it is less than the increase in inflation (8%) or workers’ wages (6.7%) during the same period. Even with this year’s minimal change, average premiums for family coverage have risen 43% since 2012, more than the shift in inflation (25%) and a little more than wages (38%) over the same period.
The latest KFF Employer Health Benefits Survey finds that annual family premiums for employer-sponsored health insurance average $22,463 this year, similar to last year ($22,221). On average, workers this year are contributing $6,106 toward the cost of family premiums, with employers paying the rest. Among workers who face an annual deductible for single coverage, the average this year stands at $1,763, similar to last year ($1,669) but up 61% since 2012 ($1,097).
EU to Phase Out New Combustion Engine Cars by 2035
European legislators on Thursday evening reached an agreement to phase out the sale of new combustion engine cars and vans by 2035. The deal between representatives of the European Parliament and the European Council was struck at around 21:00 CET and represents the first made under the bloc's flagship Fit for 55 package to reduce net greenhouse gas emissions by at least 55% by 2030.
The new legislation plans for a 55% CO2 emission reduction target for new cars and 50% for new vans by 2030 compared to 2021 levels and for a 100% CO2 emission cut by 2035, effectively prohibiting the sale of new combustion engine cars.
Germany Dodges Recession
Germany staved off the threat of recession in the third quarter with unexpected growth but the economy remained in choppy waters as high inflation driven by a painful energy standoff with Russia surged, data showed on Friday. Consumer prices, harmonised to compare with other European Union countries, were up 11.6% on the year in October, the federal statistics office said. Analysts polled by Reuters had forecast 10.9%, unchanged on the previous month.
Despite the headwinds, gross domestic product posted unexpected growth of 0.3% in the third quarter compared to the second, the statistics office said. The reading took economists by surprise. After myriad warnings of a looming recession for Europe's largest economy, they had forecast a contraction of 0.2%, according to a Reuters poll of analysts.
Seriously low diesel supply threatens to worsen inflation
A seriously low U.S. and global diesel supply is likely to drive up fuel costs and worsen inflation, raising concerns as the cold weather months approach. The country has about 25 days worth of diesel left, a level that’s considered very low. Normally, the country’s supply is closer to the “low to mid 30s” in terms of the number of days remaining. Analysts say that a confluence of factors, long bubbling beneath the surface, are now coming to a head as colder temperatures bring more seasonal demand for diesel, a fuel that powers trucks and buses and is also used in heating.
“The rising costs of diesel fuel therefore impacts everybody, as diesel prices affect direct manufacturing, transportation and heating costs. As diesel prices rise, so do the costs of goods which in general are passed onto consumers,” said Suzanne Danforth, an analyst with Wood Mackenzie.