Member Briefing January 31, 2024
IMF Says Global 'Soft Landing' in Sight, Raises 2024 Economic Growth Outlook
The International Monetary Fund on Tuesday edged its forecast for global economic growth higher, upgrading the outlook for both the United States and China - the world's two largest economies - and citing faster-than-expected easing of inflation. The IMF forecast global growth of 3.1% in 2024, up two-tenths of a percentage point from its October forecast, and said it expected unchanged growth of 3.2% in 2025. The historical average for the 2000-2019 period was 3.8%. It forecast global trade growth of 3.3% in 2024 and 3.6% in 2025, well below the historical average of 4.9%, with gains weighed down by some 3,000 trade restrictions that were imposed in 2023.
- The United States got one of the biggest upgrades in the January update of the IMF outlook, with its GDP now forecast to expand by 2.1% in 2024 versus the 1.5% forecast in October. Growth was expected to ease to 1.7% in 2025.
- The euro area got a downgrade, and was now expected to grow just 0.9% in 2024 and 1.7% in 2025, with the biggest European economy - Germany - expected to see minimal GDP growth of 0.5% in 2024 instead of the 0.9% forecast in October.
- China's GDP was expected to grow by 4.6% in 2024, an upward revision of four-tenths of a percentage point from October, and 4.1% in 2025. Gourinchas said the boost reflected significant fiscal support from the authorities, and a less-severe-than-expected slowdown stemming from the property sector.
- Growth in emerging market and developing economies overall was expected to come in at 4.1% in 2024, with emerging and developing Europe getting an upgrade due to stronger than expected growth in Russia on the back of high military spending related to the ongoing war in Ukraine.
- Russia's GDP was expected to grow 2.6% in 2024, 1.5 percentage points more than expected in October, with growth seen easing to 1.1% in 2025. The IMF said there could be further revisions since the numbers were preliminary and there were questions about the extent of Russia's fiscal stimulus.
- Negative growth in Argentina dragged the forecast for the Latin America and Caribbean region lower, with growth likely to decline to 1.9% in 2024, four-tenths of a percentage point lower than in October. Growth should edge higher to 2.5% in 2025, the IMF said.
JOLTS: Job Openings Rise, Quits Fall
The number of available jobs in the United States unexpectedly rose last month, according to Bureau of Labor Statistics data released Tuesday. However, despite the uptick, the labor market remains in the throes of a cooldown amid the Federal Reserve’s aggressive actions to curb inflation. The United States had an estimated 9.026 million job openings in December, according to seasonally adjusted data released as part of the BLS’ monthly Job Openings and Labor Turnover Survey (JOLTS) report. That total is higher than the upwardly revised 8.925 million available jobs estimated for November.
Other metrics in the JOLTS report “changed little” from the month before, the BLS noted. The number of new hires bounced up to 5.621 million after having fallen the month before to some of the lowest levels seen in years. In December, layoffs increased to 1.616 million from 1.531 million the month before and remain still well below pre-pandemic averages. However, employees appear to be growing less confident in the labor market and less willing to take risks: The number of quits dropped to 3.392 million, the lowest level since January 2021.
Global Headlines
Gaza
- Israel and Hamas: The Latest News – The Guardian
- Israel Military Sees It Taking All of 2024 to Eliminate Hamas Threat, Or Longer - Bloomberg
- Hamas Studies New Gaza Ceasefire Proposal – Reuters
- Israeli Forces Dressed as Women and Medics Kill 3 Militants in West Bank Hospital – US News
- Netanyahu Rules Out Ceasefire Deal that Would Mean Gaza Withdrawal – Guardian
- At Least Half of Gaza's Buildings Damaged or Destroyed, New Analysis Shows - BBC
- What We Know About The Dossier Accusing 190 U.N. Employees Of Ties To Hamas - Forbes
- Palestinians in Gaza See UNRWA Funding Cuts as 'Death Sentence' – Reuters
- 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
- EU Moves Slowly Toward Using Profits from Frozen Russian Assets to Help Ukraine - ABC
- Volodymyr Zelenskyy Prepares to Replace Ukraine’s Top General - FT
- Former NATO Commander Says the Ukraine War Could End Just Like the Korean War - Insider
- Nothing But Rubble in Shattered Ghost Town Avdiivka - BBC
- Ukraine Hopes to Avoid Economic Doomsday of Not Getting Western Financial Aid - Politico
- World Court to Rule on Jurisdiction in Russia-Ukraine Genocide Case – Reuters
- Anti-War Russians Can’t Beat Putin But Still Feel They’ve Won – Politico
- 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
- Why is the World's Humanitarian Aid Gap Getting Bigger? - Context
- America Is Subsidizing Iran’s Fight Against America - Bloomberg
- Biden Says He Has Decided US Response to Jordan Attack - BBC
- Pakistan’s Ex-Prime Minister Imran Khan Handed 10-Year Prison Sentence Days Before Elections - Forbes
- Mali, Niger and Burkina Faso Withdraw from West Africa Regional Bloc ECOWAS as Tensions Deepen - AP
- In German Trade, US May Surpass China in 2024 Amid Geopolitical Tensions and Weak Investments - SCMP
- How the US Can Strike Back at Iran - Bloomberg
- Spanish Parliament Rejects Amnesty Bill for Catalan Separatists – US News
- Hong Kong to Make Sweeping Changes in Article 23 Targeting Foreign Influence, State Secrets - SCMP
Policy and Politics
GOP Border Showdown Looms Between Senate, House
The Senate is poised for a border showdown with the House as it gets ready to move ahead with legislation, despite Speaker Mike Johnson’s (R-La.) warning that it is likely dead on arrival in the lower chamber. Senate Republican Leader Mitch McConnell (Ky.) and his allies aren’t ignoring Johnson, but they’re betting if the legislation passes the Senate with strong Republican support, Johnson will come under heavy pressure to put it up for a vote in the lower chamber.
McConnell and his top deputy, Senate GOP Whip John Thune (S.D.), argue that Democrats have made major concessions on reforming asylum law, and this is a unique opportunity to toughen the nation’s immigration laws that might not be available if Republicans win back control of the White House and Senate. They reason that under unified GOP control of Washington, Democrats would block any reforms from moving through the Senate, where most bills need 60 votes to move.
Across the Political Spectrum, Lawmakers are Peeved About Hochul’s Plan for Education Funding
The push to protect public school funding in New York is crossing party lines ahead of a joint budget hearing on education Thursday. Teachers, lawmakers and education advocates have decried Gov. Kathy Hochul’s proposed changes to school aid, which would lead to cuts in funding for many districts, especially in rural parts of the state. In response, Hochul has insisted that she is increasing, not cutting, school funding.
New York State United Teachers President Melinda Person has spoken about how Hochul’s proposed increase hides cuts in funding to school districts, some of which are already at risk financially. Hochul’s proposed budget would see an additional $825 million go toward education in the new fiscal year. Person and others concerned about the level of funding for public schools point to proposed changes in the Foundation Aid formula. Hochul wants to do away with a budget stipulation that prevents a school's funding from being less than the year before. She also wants to change how the consumer price index is calculated, switching to a 10-year average, rather than calculating based on the previous year.
Health and Wellness
Psychological Safety and the Silent Crisis of Workplace Mental Health
Psychological safety at work allows employees to express themselves without fear of reprisal or disdain. It is more than just a buzzword; psychological safety is crucial for fostering innovation, delivering high-quality products and valuing employee wellbeing. When employees’ emotional wellbeing and mental health suffer, it directly impacts psychological safety. The APA survey highlights alarming figures, with 31% of respondents reporting emotional exhaustion, 26% experiencing decreased motivation and 25% desiring to withdraw from social interactions.
Lack of transparency, biases, discrimination, fear-based management styles and external events like financial insecurity, family issues, trauma and societal tensions all contribute to an unsafe work environment. Leaders play a crucial role in setting the tone; they must lead by example to empower and inspire their teams and avoid micromanagement and neglect. Leaders can cultivate a caring ecosystem that values employee concerns by embracing a learning mindset and promoting solution-based attitudes for their teams.
Election 2024
- Haley Taps Wall Street and Main Street to Keep Anti-Trump Bid Funded - WSJ
- Biden Reportedly Plans To Use Trump Attacks, Abortion—And Hopefully Taylor Swift—To Win 2024 Election - Forbes
- Real Clear Politics Latest GOP Primary Polls – Real Clear Politics
- Real Clear Politics Latest General Election Polls – Real Clear Politics
- Latest Polls - FiveThirtyEight
Industry News
US Consumer Confidence Hits Highest Level Since Dec. 2021
American consumers, fresh off strong holiday spending, are feeling more confident than they have in two years. The Conference Board, a business research group, said Tuesday that its consumer confidence index rose for the third straight month, to 114.8 in January from 108 in December. January’s reading came in just slightly higher than the 114 that analysts were expecting.
The index, which measures both Americans’ assessment of current economic conditions and their outlook for the next six months, is at its highest level since December of 2021. Anxiety over the possibility of an economic recession in the next 12 months continued to fade for most Americans. Consumer spending accounts for about 70% of U.S. economic activity, so economists pay close attention to consumer behavior as they take measure of the broader economy.
China’s Industrial Profits Set for Rebound in 2024 Due to Improved US Export Outlook
Profits at China’s largest industrial enterprises, having suffered their second straight yearly decline in 2023, are expected to see a moderate rise this year thanks to an improved export outlook and Beijing’s supportive policies. Total profits at industrial enterprises with annual revenues of at least 20 million yuan (US$2.8 million) from their main operations fell by 2.3 per cent last year, the National Bureau of Statistics (NBS) confirmed on Saturday, following a 4 per cent year-on-year drop in 2022.
An improvement in external demand led by stock replenishment from the United States would partly help drive further recovery of industrial profits in the world’s second-largest economy in 2024, analysts said. Industrial profits have been gaining recovery momentum since the summer, and December marked the fifth month of year-on-year increases, despite the overall figure for 2023 falling again. A series of challenges, though, remain for Beijing to tackle this year, including a continued property market crisis, mounting deflationary risks and slowing global growth.
Read more at South China Morning Post
Credit Card Debt Continues to Rise
We learned recently that the overall U.S. economy continued to grow at a strong rate at the end of last year. Part of that growth was fueled by consumer spending, which rose .7% in December, according to the Commerce Department. Meanwhile, separate data from the Federal Reserve shows that over the last year, consumers have been charging more of that spending to their credit cards. According to Q3 data released by the Federal Reserve, credit card balances rose by 4.7%—a $48 billion increase—to a high of $1.08 trillion.
Back in 2020 and 2021, credit card debt fell below its pre-pandemic level. Kathy Bostjancic, chief economist at Nationwide, said even though credit card debt has been rising ever since, it’s not all bad news. “The recovery you saw in credit card usage, at least through the end of 2022, was really just getting back to that previous trend,” she said. But Bostjancic said at some point last year, credit card debt started moving beyond recovery mode, in large part because the excess savings people built up during the pandemic have largely been drawn down. “And consumers needed to rely more on credit cards to be able to fund their purchases,” she said.
GM Net income Rises 5.2% in Q4 Despite UAW Strike, Larger Cruise Loss
General Motors (GM) reported a top and bottom line beat for the fourth quarter, and issued 2024 full-year profit guidance that matched its initial forecast for 2023 on Tuesday. The upbeat earnings report comes as GM looks to shake off the effects of the UAW strike and recalibrate its electric vehicle rollout, which the company admits has "created some uncertainty."
For the quarter, GM reported topline revenue of $42.98 billion, beating the $39.53 billion consensus Bloomberg estimate, although this figure was down compared with the $43.1 billion the company reported in Q4 2022. On the profitability front, GM reported adjusted earnings per share of $1.24 versus $1.16 estimated, on adjusted EBIT (earnings before interest and taxes) of $1.757 billion, though that figure dropped 53.8% versus a year ago. For the year, GM earned $12.4 billion in adjusted EBIT. GM reinstated its full-year outlook, expecting adjusted EBIT of $11.7 billion to $12.7 billion, compared with its previous outlook of $12 billion to $14 billion.
UPS to Cut 12,000 Jobs, Explores Options for Truckload Freight Business
United Parcel Service is to cut 12,000 jobs and explore strategic options for Coyote, its truckload freight brokerage business, after the company forecast full-year revenue below estimates. Shares in the world's largest parcel delivery company fell 6.3% in early trading. UPS plans to cut $1 billion in costs as it comes off a "difficult and disappointing" year, when volume, revenue and operating profit declined in all of its business segments, Chief Executive Carol Tome said on a conference call with analysts.
The Atlanta-based company is being squeezed by higher labor costs from its new contract with the Teamsters union and declining average daily volume. It expects to report its lowest consolidated operating margin of the year in the first quarter, Chief Financial Officer Brian Newman said on the analyst call. UPS expects average daily volume to be weak in the first half of the year before recovering in the latter half. But even then, growth will be constrained.
Toyota Remains The Biggest Car Company After 2023 Record Sales
The numbers are in, and as expected, the Japanese juggernaut has managed to comfortably beat VW, its German rival. With a record-breaking 11,233,039 vehicles shipped last year, an increase of 7.2 percent year-over-year, Toyota is the best-selling automaker for the fourth year in a row. Sales outside of Japan reached an all-time high last year when Toyota and its subsidiaries shipped 8,928,230 cars, an increase of 4.1 percent compared to the previous year.
A closer look at the numbers shows the Toyota and Lexus brands delivered 10,307,395 cars in 2023, or 7.7 percent more than the year before and a new record. The Daihatsu subsidiary also posted solid results as shipments grew by 3.2 percent to 790,441 units. The last 12 months haven't been kind to the Hino division in charge of commercial vehicles as sales declined by 9.8 percent to 135,203 units.
Foreign Military Sales Sets New Record, Up 55.9 Percent in 2023
The U.S. transferred a record $80.9 billion worth of military equipment and services to other countries in fiscal 2023, a 55.9 percent increase over the fiscal 2022 level of $50.9 billion, according to the U.S. State Department. “This is the highest annual total of sales and assistance provided to our allies and partners,” a State Department release said. The total marks progress in State’s goal of accelerating FMS cases after an internal review last year of how the process could be sped up.
Of the overall figure, $62.25 billion was funded by “U.S. ally and partner nations,” while the rest was financed by the U.S. The roughly $18 billion remainder includes about $4 billion through the foreign military financing program and $14.68 billion for State Department programs such as anti-narcotics trafficking enforcement and de-mining operations, as well as the Pentagon Defense Building Capacity programs such as the Ukraine Security Assistance Initiative. From 2021-23, FMS sales averaged $55.9 billion per year, a 21.9 percent increase over the 2020-22 average of $45.8 billion per year.
Read more at Air and Space Forces Magazine
Elon Musk Teases First Neuralink Products After Company Implants First Brain Chip In Human
Elon Musk’s brain implant company Neuralink will offer its first customers the ability to control computers with their minds, the tech billionaire said Monday after announcing the company has installed a chip in a human for the first time, adding later products will be geared towards restoring sight to the blind followed by more futuristic hopes of enhancing cognitive abilities like memory and melding human minds with artificial intelligence.
Neuralink’s first product will be “Telepathy,” Musk said in an X post. Telepathy will allow users to control a computer or phone “just by thinking,” Musk said, adding that, through these, people could control “almost any device.” The details come after Musk said Neuralink had implanted its very first brain chip in a human on Sunday, which the company hopes will be used as a wireless interface between brain and computer. Musk said initial results from the procedure are “promising” and that the patient is “recovering well.” Musk said Telepathy’s first target audience will be people “who have lost the use of their limbs.”
Robots Get Lost and Confused, Creating Work for Humans
Androids of various shapes, sizes and functions are now employed doing everything from autonomously ferrying goods around warehouses to delivering food on college campuses. About 21% of warehouses used some form of robotics in 2023, up from 15% in 2018, according to research firm Interact Analysis. But far from replacing humans entirely, companies are finding cyborgs need a little hand-holding to learn how to function in the real world.
Caroline Rutenberg, a robot technician and trainer at Amazon, is among a new class of workers responsible for corralling and managing the robots, fixing minor maintenance issues and keeping tabs on their locations. The professionals say the machines they work with tend to perform their tasks with precision but often also a little naiveté. Some devices get a reputation, Rutenberg said. One autonomous robot she works with—a device called a drive that she named Blinky for the lights it flashes when it needs help—has become known for its misbehavior.