Member Briefing September 25, 2024
Conference Board: September Consumer Confidence Falls The Most In Three Years
Consumers’ view on the economy tumbled in September, falling by the largest level in more than three years as fears grew about jobs and business conditions, the Conference Board reported Tuesday. The board’s Consumer Confidence Index slid to 98.7, down from 105.6 in August, the biggest one-month decline since August 2021. By contrast, the index had a reading of 132.6 in February 2020, a month before the Covid pandemic hit.
Each of the five components the organization samples fared worse on the month, with the biggest fall coming among those aged 35-54 and earning less than $50,000.
The Present Situation measure worsened by 10.3 points to 124.3.
The Expectations Index was off 4.6 points to 81.7. On the expectations measure, a reading below 80 is consistent with a recession.
Those saying jobs are plentiful continued to decline, falling to 30.9% from 32.7% in August, while the jobs “hard to get” measure rose to 18.3%, up from 16.8%.
On inflation, the 12-month outlook rose to 5.2%, with concerns over price increases topping the list of economic concerns.
US Manufacturing Activity Remained Sluggish in September
U.S. business activity was steady in September, but average prices charged for goods and services rose at the fastest pace in six months, potentially hinting at a pickup in inflation in the coming months. S&P Global said on Monday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, was little changed at 54.4 this month compared to a final reading of 54.6 in August. A reading above 50 indicates expansion in the private sector.
September's reading aligns with reports this month, including retail sales, that have suggested the economy maintained its solid growth momentum in the third quarter. The services sector continued to expand at a steady pace, though manufacturing slumped to a 15-month low. The survey's measure of prices paid by businesses for inputs increased to a one-year high of 59.1 from 57.8 last month. Its gauge of prices charged rose to 54.7 from 52.9 in August. Average prices charged for goods and services rose at their quickest pace since March, marking the first acceleration of selling price inflation in four months.
China Tries to Jolt Ailing Economy
China’s central bank announced a blitz of measures to support the country’s weakening economy and energize its moribund stock market, an unusually broad package that signals growing unease in Beijing after a run of downbeat numbers on jobs, spending and inflation. Economists said that while the blast of support is welcome, it won’t be enough to pull China’s economy out of a low-growth rut marked by falling prices, a festering real-estate crisis and spiraling tensions over trade.
The People’s Bank of China said Tuesday that it would cut its benchmark interest rate and lower the amount of cash that banks need to hold in reserve—a bid to free up more resources for lending. It also said it would cut the interest rate payable on existing mortgages and lower down payments for second homes. The central bank also announced it would offer 500 billion yuan in loans, equivalent to roughly $70 billion, to funds, brokers and insurers to buy Chinese stocks as part of an effort to lift the country’s ailing stock market. It said it would put up another 300 billion yuan to finance share buybacks by listed companies.
Global Headlines
Middle East
- Israel And Hamas: The Latest News – The Guardian
- Israel Kills Hezbollah Commander In Airstrike On Beirut, Security Sources Say - Reuters
- The Vast Hezbollah Arsenal Awaiting Israel in Lebanon - WSJ
- ‘Tens Of Thousands’ Have Fled Southern Lebanon Amid Israeli Strikes, UN Says – France 24
- Israel air strikes named 'Operation Northern Arrows' - Newsweek
- Israel Orders 45-Day Closure Of Al Jazeera West Bank Office - BBC
- Sweden: Iran Behind Text Messages Calling for Quran Burning Revenge - Newsweek
- Interactive Map- Israel’s Operation In Gaza – Institute For The Study Of War
- Map – Tracking Hamas’ Attack On Israel – Live Universal Awareness Map
Ukraine
- Ukraine And Russia: The Latest News – The Guardian
- Russia Issues Update After Missile Carriers Flew Near Alaska - Newsweek
- War With Russia Closer To End Than We Think – Zelensky - BBC
- Ukraine’s Allies Play Down Hopes for Zelenskiy’s ‘Victory Plan’ Breakthrough - BBC
- Russia Says 56 Civilians Killed In Ukraine's 7-Week Incursion In Kursk Region - Reuters
- Putin Will Likely Control Part Of Ukraine When War Ends, Czech President Says - Politico
- Satellite Images Show Russian Setbacks: Arms Depots Hit By Ukraine And A Failed Missile Test - NBC
- 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
Other Headlines
- Argentina Scrapped Its Rent Controls. Now the Market Is Thriving. - WSJ
- Biden In Farewell UN Address Says Peace Still Possible In Mideast And Ukraine – France 24
- Samsung Defends Indian Wages As Strike At Plant Enters Third Week - Reuters
- Brazil's Lula to Talk Climate at U.N. but Amazon Wildfires Undermine Message - Newsweek
- France's New Govt Convenes For First Time And Sets Budget, Migrant Issues As Top Priorities – France 24
- The EU Was Built On Red Tape. Now It Wants To Slash It. - Politico
- Japan CEOs Bullish On Economy As Consumer Spending Gears Up – Nikkei Asia
Policy and Politics
Speaker Johnson Says House Will Not Approve ‘Christmas Omnibus’
Speaker Mike Johnson (R-La.) is promising that the House will not approve a single, massive bill to fund the entire government in December — a scenario feared by conservatives — despite a stopgap that’s expected to clear the House this week expiring on Dec. 20. “There won’t be a Christmas omnibus,” Johnson said in a press conference Tuesday, reiterating a message he relayed privately to members in a House GOP conference meeting that morning.
Conservatives have aimed to avoid that scenario, fearing Democrats and a lame-duck President Biden would load the bill with their own priorities. They had pushed for a stopgap spending bill that extended funding through March 2025, but it failed on the House floor. The House is expected to vote today (Wednesday) on a continuing resolution (CR) to extend government funding until Dec. 20 in order to avoid a government shutdown on Oct. 1. While many conservatives opposed to any kind of stopgap are expected to vote against the bill, it is likely to pass due to support from Democrats.
FAA Intensifies Hiring In 2024 To Combat Controller Shortage
The United States Federal Aviation Administration (FAA) has announced today that the agency has hired 1,811 new air traffic controllers this fiscal year, thus exceeding its original target of 1,800 new controllers. This feat marks a milestone as it is the largest number of new hires the agency has had in a year for over a decade. Overall, this brings the total number of air traffic controllers currently under the FAA to over 14,000, of which around 3,400 are currently in various stages of training.
Despite hitting their target for this year, there is still a shortage of controllers at various airspaces across the country, as such, the FAA aims to hold another application period next month in order to better facilitate the intake of new controllers. Two other additional actions taken by the FAA include: Year-round hiring opportunity for experienced controllers from the military and private industry. Enhancing training for controllers by utilizing modernized simulators, thereby increasing training efficiency.
The U.S. Is Turning To Shipyards In South Korea And Japan To Help It Close The Shipbuilding Gap With China
Having fallen far behind China in shipbuilding, the U.S. is turning to allies in South Korea and Japan for the turnaround strategy. Key to that effort is attracting companies such as Hyundai that go head-to-head with the Chinese and can do everything America lacks: making ships quickly at low costs with modern techniques. China’s naval battle-force ship fleet now outnumbers the U.S.’s, having ramped up production at state-subsidized shipyards that build all types of vessels.
A majority of the world’s ship output last year came from China. Coming in at No. 2 was South Korea, with roughly a quarter of global deliveries. The U.S. barely registers on the global rankings. The few American shipyards left build American ships—and pretty much nothing else, since the labor costs are higher and the turnaround times longer. That is where South Korea’s shipbuilding giants like Hyundai can step in to help.
Health and Wellness
Person With Eastern Equine Encephalitis In Ulster County Dies
The first human case of eastern equine encephalitis in New York since 2015 has died in Ulster County. The state health department confirmed the case on September 20. The virus, which is transmitted to horses by infected mosquitoes, cannot be transferred from horses to humans, but humans can catch it if bitten by an infected mosquito. As a result of the case, State Health Commissioner Dr. James McDonald issued a declaration of an imminent threat to public health from EEE. The declaration makes available resources to help support EEE prevention response and activities by local health departments, including ongoing mosquito spraying efforts from September 30 to November 30, 2024.
Eastern equine encephalitis is a rare but severe viral disease that can affect people and horses. People of all ages are susceptible to infection, but people over 50 and younger than 15 are at a high risk of acquiring the virus. While most people bitten by an infected mosquito will not develop symptoms, severe cases may begin with the sudden onset of headache, high fever, chills and vomiting. The illness may progress into disorientation, seizures, encephalitis and coma. Approximately one-third of patients who develop EEE die, while many patients who survive EEE experience neurologic impairment. There is no commercially available human vaccine for EEE and the best protection is to prevent mosquito bites, health officials said.
Election 2024
- Trump Issues Fresh Trade Threats, Targeting Deere - WSJ
- Harris Backs Ending Filibuster For Abortion Rights Legislation - Politico
- Trump Slams Senator Who Prevented Nebraska Changing Its Electoral Voting System - Forbes
- OPINION: The Biden Manufacturing Boom That Isn’t - WSJ
- Trump Says Tariffs Will Help Fuel ‘Manufacturing Boom’ – The Hill
- Gillibrand’s New Ad Has A Very Moderate Vibe – City & State
- ‘It’s A Minefield’: Top Political Cartoonists On The Challenges Of Caricaturing Kamala Harris - Politico
- Trump Tells Supporters To Vote Early Even As He Still Criticizes The Practice - Politico
- Trump Plans to Personally Recruit Manufacturers to Move to U.S. - WSJ
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Real Clear Politics Electoral Map
- Latest Polls - FiveThirtyEight
Industry News
Hurricane Expected To Strike Florida This Week—Tampa Bay Faces Hurricane Watch
A storm system in the Caribbean Sea is expected to become Tropical Storm Helene Tuesday and reach hurricane status Wednesday before continuing to strengthen into a possible Category 3 by the time it reaches the Florida Gulf Coast on Thursday, the National Hurricane Center warns. A system called Potential Tropical Cyclone Ninehas prompted a hurricane watch for parts of Mexico, Cuba, the Gulf Coast of Florida and Tampa Bay; a tropical storm warning in Grand Cayman, Mexico and Cuba; and a tropical storm watch for the lower Florida Keys and other parts of the state.
Forecasters predict the storm will be near hurricane strength when it reaches the far northwestern Caribbean Sea early Wednesday. The system is expected to be a major hurricane by the time it reaches the U.S. on Thursday with flooding likely across parts of Florida and across the Southeast, Southern Appalachians and the Tennessee Valley Wednesday through Friday.
Hurricane Threat Prompts U.S. Gulf Coast Energy Facilities To Scale Back Operations
Energy companies operating in the U.S. Gulf Coast have started to scale back operations and evacuate production locations in anticipation of the major hurricane this week, which is forecasted to sweep through offshore oil-producing areas. The U.S. National Hurricane Center said a Potential Tropical Cyclone Nine was expected to rapidly intensify over the Gulf of Mexico and could become a hurricane by Wednesday, strengthening into a major hurricane on Thursday.
Offshore production in the U.S. Gulf of Mexico accounts for approximately 1.8 million barrels per day or about 15% of the nation's total crude output. Disruptions have the potential to affect U.S. oil supplies, leading to upward pressure on prices for domestic oil and offshore crude grades. U.S. natural gas futures jumped and oil prices followed suit due to concerns that oil and gas producers along the Gulf Coast might scale back production in anticipation of a potential hurricane.
New US Rule Would Require GM, Ford To Halt Imports Of Cars They Build In China, Official Says
Washington — General Motors and Ford Motor would need to stop importing vehicles to the US from China under a proposed rule cracking down on Chinese software and hardware, a US Commerce Department official told Reuters Monday. The rule would also affect other manufacturers selling or building vehicles in the US, such as Volvo Cars and BYD. GM sells the Buick Envision and Ford sells the Lincoln Nautilus — both assembled in China — in the US market. Ford did not comment. In the first six months of 2024, GM sold about 22,000 Envisions and Ford sold 17,500 Nautilus SUVs in the US.
Commerce said it would allow companies to seek a “specific authorization” to continue sales of vehicles or components. China’s BYD North America, a unit of BYD, which builds electric buses in Lancaster, California could be affected. The company did not immediately comment. “We will have to work with them to better understand their supply chain,” Liz Cannon, who heads the commerce department’s information and communications technology office said. “They will have to come in for a specific authorization.” For example, software would likely be prohibited if it were developed by a team of Chinese employees in that country for a Chinese automaker. But software would likely be allowed if it were developed by Chinese employees working in another country for a non-Chinese company.
Nippon Steel Reapplies For U.S. Steel Buyout Review
Nippon Steel Corp has reapplied to the U.S. committee on foreign investment for a review of its planned acquisition of United States Steel Corp, sources familiar with the matter said Tuesday, with U.S. President Joe Biden reportedly preparing to block the deal. The reapplication will prolong the committee's review period by 90 days, likely pushing back its decision on the deal until after the U.S. presidential election in November.
The buyout plan, announced in December, has sparked stiff criticism from the powerful United Steelworkers union, which is headquartered in Pennsylvania, a key battleground state in the November election, making it a highly political issue. The reapplication follows Nippon Steel Vice President Takahiro Mori's visit to Washington earlier this month to hold talks with members of the U.S. committee.
Stellantis Is Searching For A New CEO
Struggling Jeep and Ram maker Stellantis is looking for a CEO to succeed Carlos Tavares, but the company says it’s just part of a normal leadership succession plan. Tavares has been under fire from U.S. dealers and the United Auto Workers union after a dismal first-half financial performance when the company was caught off guard with too much high-priced inventory on dealer lots. As head of PSA Peugeot, Tavares took control of the Netherlands-based company in January of 2021 when it merged with Fiat Chrysler Automobiles. Its North American operations had been the company’s main source of profits, but have struggled this year amid larger market changes.
In a statement Monday, Stellantis said Tavares’ five-year contract is a little over a year from its expiration date in 2026. “It is normal for a board to look into the subject with the necessary anticipation given the importance of the position, without this having an impact on future discussions,” the statement said.
Boeing Union Hits Out Over 'Final' 30% Pay Rise Offer
The union representing thousands of striking Boeing workers has hit out at what the aircraft manufacturing giant called its "best and final" pay offer, which proposed a 30% rise over four years. The new offer also included the reinstatement of a performance bonus and improved retirement benefits. However, the International Association of Machinists and Aerospace Workers (IAM) said the offer was not negotiated with the union and that "it was thrown at us without any discussion" - a claim Boeing denies.
The proposal doubles the value of a one-off bonus for signing a new pay deal to $6,000. The company said the offer is dependent on it being ratified by union members by midnight pacific time on Friday 27 September. But IAM said Boeing sent the new offer directly to union members and the media without telling the union's representatives. "This tactic is a blatant show of disrespect to you - our members - and the bargaining process," IAM said in a post on X, formerly known as Twitter. The union also said it would not hold a vote of its membership ahead of Boeing's deadline.
'A Perfect Storm': Supply Chains Brace for Looming Strike at U.S. Ports
The U.S. is barreling toward a strike at East and Gulf Coast ports, ahead of a looming October 1 deadline for the International Longshoremen's Association (ILA) and the U.S. Maritime Alliance (USMX) to reach a new collective bargaining agreement. Impacts from a potential strike would also be magnified by ongoing issues in the Red Sea and Panama Canal, says Mike DeAngelis, the senior director of international solutions for freight visibility platform FourKites. “We're facing a perfect storm — with the Red Sea disruptions preventing normal access to the Suez Canal and the Panama Canal’s still-reduced capacity, an ILA strike would effectively choke off major arteries of global trade," DeAngelis says.
In the meantime, shippers have been preparing for a strike in a number of ways, with many having pulled scheduled shipments forward to get ahead of any potential shutdowns, while others have already started diverting vessels to West Coast ports. Even so, DeAngelis warns that "frontloading can only get you so far," given the sheer volume of cargo that moves through East and Gulf Coast ports. According to data from the National Association of Manufacturers (NAM), those ports account for roughly 56% of the country's containerized imports, as well as 68% of exports, spread across a wide swathe of industries.
Read more at Supply Chain Brain
AI and the Labor Market: NY Fed Asks Will Firms Hire, Fire, or Retrain?
The rapid rise in Artificial Intelligence (AI) has the potential to dramatically change the labor market, and indeed possibly even the nature of work itself. However, how firms are adjusting their workforces to accommodate this emerging technology is not yet clear. Our August regional business surveys asked manufacturing and service firms special topical questions about their use of AI, and how it is changing their workforces. Most firms that report expected AI use in the next six months plan to retrain their workforces, with far fewer reporting adjustments to planned headcounts.
Among businesses using AI over the past six months, 10 percent of service firms had reduced worker counts in response to AI and 5 percent had increased them, while no manufacturers had made such changes. Among those planning to use AI over the next six months, firms expect to hire more workers than fire workers to accommodate its use, and about half plan to retrain current staff to use it. These results are consistent with economic arguments than downplay alarmism about AI’s potential to displace workers and instead point to its potential to augment employment and fill labor shortages.