Member Briefing May 11, 2023
CPI = 4.9% - U.S. Consumer Prices Increase Solidly in April
The Consumer Price Index (CPI) rose 0.4% last month after gaining 0.1% in March, the Labor Department said on Wednesday. In the 12 months through April, the CPI increased 4.9% after advancing 5.0% on a year-on-year basis in March. Excluding the volatile food and energy components, the CPI increased 0.4% last month, matching March's gain. The so-called core CPI was lifted by used cars and trucks, which increased for the first time since last June. In the 12 months through April, the core CPI gained 5.5% after advancing by 5.6% in March.
Though rents continued to put upward pressure on the core CPI, rental inflation is poised to ease. The government reported last week that the rental vacancy rate increased to a two-year high in the first quarter. Also, independent measures have been showing rents on a downward trend and rent measures in the CPI tend to lag the independent gauges. The annual CPI peaked at 9.1% last June, which was the biggest increase since November 1981, and is subsiding as last year's initial surge in energy prices following Russia's invasion of Ukraine drops out of the calculation.
War in Ukraine Headlines
- Ukraine and Russia: The Latest News – The Guardian
- Putin’s ‘One-Tank’ Military Parade Was an Embarrassment for Russia, Analysts Say - CNBC
- Ukraine Flags Block Russian Ambassador’s Path on Victory Day – AP News
- Inside the Fight for the Last Streets of Bakhmut - BBC
- Ukraine Unit Says Russian Brigade Flees Outskirts of Bakhmut - Reuters
- “Krolewiec:”Poland Reverts to Historic Name for Russia’s Kaliningrad – The Hill
- Wagner Mercenary Group Could be Labeled Terrorists in Europe - CNBC
- New Claims that Russian Units Fled Bakhmut - DW
- Ukraine’s Holiest Site Is Battleground in Campaign to Erase Russian Influence - WSJ
- Russia's Version of NATO is Crumbling, With Even Some of its Closest Allies Frustrated by Putin's War in Ukraine – Insider
- 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
Output Per Goods Producing Worker “Unusually Low” at the End of 2022
Productivity, measured by GDP per worker, was flat for the whole economy in 2021 as both payrolls and the economy grew at fast rates. Specifically, output rose 6 percent over the four quarters and payrolls rose 5 percent over the same period. By sector, services output was up 8 percent versus payrolls up 6 percent (higher productivity), goods-producing output was up 1 percent versus payrolls increasing 3 percent (lower), and government output was up 1 percent versus payrolls up 2 percent (lower).
In 2022, overall productivity finally fell as GDP growth slowed to 1 percent while payrolls rose 3 percent. With 2022’s retreat, overall productivity at the end of last year was near or modestly above its trend path, with a positive gap in services offsetting a large negative gap for the goods-producing sector. In services, the gap was largely due to health care, professional and business, and leisure and hospitality services industries, while the depressed productivity for the goods-producing sectors was broad based, with low readings for mining, construction, and manufacturing.
Biden Says He’s Considering 14th Amendment as Debt Ceiling Option
President Biden on Tuesday said he has been looking at the 14th Amendment as a way to unilaterally work around the debt ceiling, though he acknowledged it will not be a viable short-term solution with the nation on track to default without congressional action by June. Ratified in 1868, the 14th Amendment to the U.S. Constitution is best known for its equal protection clause extending the liberties enshrined in the Bill of Rights to former slaves — but it also includes a section mentioning the debt.
The amendment’s Section Four reads in part: “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned….” The amendment likely referenced debt due to concerns around the government’s obligations after the Civil War but has been interpreted by some to imply a broader meaning — though it’s not been heavily addressed by the courts.
COVID News - The End of the State of Emergency What You Need to Know
The end of the federal government’s health emergency that began in March 2020 will shift who pays for the testing kits and some COVID-19 treatments. The White House announced in late January that it would end the public health emergency and national health emergency designations in May, which sets off policy changes.
President Biden signed a GOP-led resolution into law on April 10 to end the COVID national emergency early. The date to end the public health emergency is set for May 11. From COVID tests to treatment options, here is what you need to know about how the end of the public health emergency may affect you.
Mortgage Demand Surged After Fed Signaled Potential Pause in Rate Hikes
Mortgage rates fell slightly last week after the chairman of the Federal Reserve suggested a potential end to a historic string of interest rate hikes. The drop wasn’t substantial, but it was enough to boost demand from current homeowners hoping to refinance their mortgages to lower rates. Applications to refinance a home loan jumped 10% last week, compared with the previous week, seasonally adjusted. Refinance demand, however, was still 44% lower year over year.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased last week to 6.48% from 6.50% in the previous week, with points declining to 0.61 from 0.63 (including the origination fee) for loans with a 20% down payment, according to the Mortgage Bankers Association’s weekly survey. The rate was 5.53% for the same week one year ago. Mortgage rates for all surveyed loan types decreased over the week.
Why Are Rents Still Sky-High? Because People Ditched Their Roommates
When remote workers fled big cities during the COVID-19 pandemic's initial wave, the country's priciest places suddenly found themselves reeling from a dramatic increase in the number of empty apartments. Almost as quickly as rents fell, though, they began soaring again. Tenants who got a taste of the good life watched their rents double the next year, lines to view apartments swelled up to 80 people, at least one snaking around a city block, and landlords once again had the upper hand.
If so many people left, why is my rent still so expensive? The answer isn't that more people are moving back to big cities. While places like New York City have seen a rebound from pandemic lows, there hasn't been a flood of people returning to urban centers. And the idea of landlords conspiring to keep rents elevated, while partly true, doesn't offer a complete explanation. Instead, new research suggests one driving factor: People got sick of living with each other.
NAM: New Air Regulations Threaten Manufacturers’ Investment in Innovation and Jobs
The EPA has proposed imposing stricter air regulations on U.S. that would not only hurt existing manufacturing facilities but could also jeopardize both American manufacturing competitiveness and current and future investments in innovation, including new clean energy manufacturing, that are critical to addressing climate change. The NAM is rallying manufacturers to urge EPA to reconsider its proposal and urging Congress, if given the opportunity, to oppose these harmful tightened regulations.
Analysis conducted by Oxford Economics and commissioned by the NAM warns that these new regulations are projected to threaten $162.4 billion to $197.4 billion of economic activity and put 852,100 to 973,900 current jobs at risk, both directly from manufacturing and indirectly from supply chain spending. In addition, growth in restricted areas may be constrained, limiting investment and expansion over the coming years. Due to these limited opportunities for expansion or investment, these areas in nonattainment could lose out on an additional $138.4 billion in output and 501,000 jobs through 2027.
Manchin Says He Will Vote Against Biden’s EPA Nominees
Sen. Joe Manchin (D-W.Va.) said Wednesday he will oppose all of President Biden’s nominees for positions at the Environmental Protection Agency (EPA) over energy policy disagreements. Manchin’s dissension creates a difficult pathway for Biden’s EPA nominees. If no Republicans cross the aisle, they will need the support of every Democrat, including Sen. Dianne Feinstein (D-Calif.) who has been absent but was expected to return to the Capitol this week.
“I fear that this Administration’s commitment to their extreme ideology overshadows their responsibility to ensure long-lasting energy and economic security and I will oppose all EPA nominees until they halt their government overreach,” Manchin said in a written statement. “If the reports are true, the pending EPA proposal would impact nearly all fossil-fueled power plants in the United States, which generate about 60 percent of our electricity, without an adequate plan to replace the lost baseload generation. This piles on top of a broader regulatory agenda being rolled out designed to kill the fossil industry by a thousand cuts,” he added.
Republicans Push To Expand E-Verify Program
E-Verify is a website operated by the Department of Homeland Security that allows employers to confirm the immigration status of their employees using information from federal I-9 forms, ensuring that an employee is allowed to work under immigration rules. The system was introduced as a voluntary pilot program in six states in 1996 through the Illegal Immigration Reform and Immigrant Responsibility Act, and it was expanded in 2007.
E-Verify is already required for either public or private employers in 22 states, including 14 with Republican governors—though it’s been widely criticized by immigration groups and by some congressional Republicans, who argue it could weaken the agricultural industry, which relies heavily on migrant labor. Republican lawmakers last month also proposed a bill called the Secure the Border Act, which aims to codify a group of Trump-era policies, including by resuming construction on a southern border wall and making the E-Verify program mandatory—though the bill faces long-shot odds in the Democratic-controlled House, and President Joe Biden vowed to veto it.
Nuclear Power Makes a Comeback Underpinned by Russian Uranium
Nuclear power in the West is having a long-awaited revival, with new reactors opening in the U.S. and Europe and fresh momentum toward building more soon. A gaping hole in the plan: The West doesn’t have enough nuclear fuel—and lacks the capacity to swiftly ramp up production. Even more vexing, the biggest source of critical ingredients is Russia and its state monopoly, Rosatom, which is implicated in supporting the war in Ukraine.
Nuclear power supplies nearly 20% of U.S. electricity, and roughly 25% of European electricity, but in recent decades has struggled to gain traction in most of the West as a green alternative to fossil fuels, for reasons ranging from cost to waste disposal and an erosion of expertise in building reactors. In the U.S., after years of delays and billions in cost overruns, a nuclear reactor in Georgia in March began splitting atoms for the first time, a crucial step toward reaching commercial operation. Another reactor at the facility, owned by a unit of Atlanta-based Southern, is scheduled to be operational next year.
VW Annual Meeting Rocked by Cake Attack, Protests on China Record
Volkswagen Group's annual meeting in Berlin on Wednesday was disrupted inside the venue by activists who claimed the automaker's plant in Xinjiang, China, builds cars with forced labor and outside by green activists who said VW is "making climate-damaging decisions." About 10 activists, including one topless woman with 'Dirty Money' painted on her back, interrupted VW Group CEO Oliver Blume's speech. They waved banners that read: 'End Uyghur Forced Labor.'
One threw a piece of cake at Wolfgang Porsche, 80, chairman of Porsche SE, VW Group's majority shareholder, but missed, with crumbs flying in the direction of VW Group Chairman Hans Dieter Poetsch. The protestors were rapidly escorted out by security staff. VW Group China chief Ralf Brandstaetter said: "We do not see any evidence of human rights abuses at the plant." Brandstaetter visited the Xinjiang plant earlier this year and said on Wednesday: "I have no reason to doubt my impressions or the information available to me."
New Pentagon Science and Technology Strategy Emphasizes Collaboration with Allies
The Pentagon on May 9 released its 2023 National Defense Science and Technology Strategy, which puts a high priority on delivering new capabilities useful to the joint force and developed collaboratively between the military services, the Office of the Secretary of Defense, and foreign partners and allies. “We will focus on the joint mission, create and field capabilities at speed and scale, and ensure the foundations for research and development,” the 12-page document states.
“What I really like about this S&T strategy is its clear commitment to collaboration, not just domestically but internationally,” said Nina Kollars—an advisor to undersecretary of defense for research and engineering Heidi Shyu—during a call with reporters. That emphasis on international collaboration matches the 2022 National Defense Strategy, which highlighted the importance of “mutually-beneficial alliances and partnerships.”
Read more at Air & Space Forces
Texas Startup Recycles Rare-Earth Magnets, Bypassing China
At a factory in San Marcos, Texas, workers gather Bird scooters, computer hard drives, MRI machines and motors from hybrid cars in order to separate out the old rare-earth magnets so they can be ground down and shaped into new ones. These strong permanent magnets are everywhere, even if most people know nothing about them. They go into everything from electric vehicles to wind turbines to consumer electronics to missile guidance systems. Yet for years, the U.S. has been largely dependent on China for rare-earth processing. Noveon Magnetics, the startup behind this recycling effort, has a grand plan — and some patented technology — to make a dent in that dependance.
“We didn’t realize till the last decade how big the potential shortfalls were,” says Scott Dunn, Noveon’s cofounder and chief executive. “You don’t just get to turn on the spigot and produce these. They’re not a commodity.”
Biden Revokes COVID Travel, Federal Employee Vaccine Requirements
President Joe Biden on Tuesday revoked requirements that most international visitors to the United States be vaccinated against COVID-19 as well as similar rules for federal employees and contractors. Biden's orders take effect at 12:01 a.m. ET May 12 with the expiration of the U.S. COVID public health emergency. The Biden administration's rules imposed in September 2021 requiring about 3.5 million federal employees and contractors to be vaccinated or face firing or disciplinary action have not been enforced for over a year after a series of court rulings.
White House COVID-19 response coordinator Ashish Jha told reporters on Tuesday that the administration had made a public health determination that the vaccination requirements for foreign visitors, federal employees and contractors "were no longer necessary to protect Americans." The Homeland Security Department will also no longer require non-U.S. travelers entering the United States via land ports of entry and ferries to be vaccinated against COVID-19 and provide proof upon request.
EV Startups Face Cash Crunch
Electric-vehicle startup Rivian reported narrower losses in the first quarter as it slashed spending to conserve cash and stood by its vehicle production target for the year. The adjusted per-share loss beat analysts’ expectations, helping to send shares up 5% after hours. At the same time, its cash burn accelerated, underlining a key challenge facing young auto companies like Rivian. Absent new funding, they face a limited timeline in which to turn a profit before running out of money.
Rivian, along with two other EV startups, and Fisker that reported earnings this week, are straining to ramp up factory operations and get more vehicles into the hands of customers. Lucid, Fisker and Rivian were among a host of EV startups to go public over the last two years, as investors placed bets on finding the next Tesla. Now, their share prices continue to get hammered as cash reserves dwindle and larger legacy automakers join the EV race.
MLB Food and Beer Prices by Team: See Where Drinks, Hot Dogs are Cheapest at Stadiums Across League
USA TODAY obtained hot dog and beer prices at 28 MLB stadiums, highlighting which stadiums have the cheapest and most expensive value options. Prices were obtained via teams, food management companies or independent verification. Only two teams were not involved in the data; the Chicago Cubs and their food management company, Levy Restaurants, did not provide pricing information after multiple requests. The Tampa Bay Rays, also represented by Levy Restaurants, declined to participate.
The Miami Marlins have the cheapest hot dog prices in the league, costing $3. On the opposite side, the Baltimore Orioles have the most expensive hot dog in baseball at $8.25. Beer prices differ by stadium not only because of where the alcohol is being sold, but also because the sizes can range from 12-ounce cans to 16 and 24-ounce drinks. By price per ounce, the Mariners have the cheapest option at 33 cents per ounce for their 12-ounce cans, which cost $4. The Los Angeles Dodgers have the most expensive beer at 99 cents per ounce for 16-ounce cans, which cost $15.99.