Federal Reserve Now Projects Rate Increases in 2023
Fed policymakers expect to make two interest rate increases by the end of 2023, the central bank’s updated summary of economic projections showed Wednesday. Previously, the median official had anticipated that rates would stay near zero — where they have been since March 2020 — at least into 2024. The Fed now sees rates rising to 0.6 percent by the end of 2023, up from 0.1 percent.
Inflation data have come in faster than officials had expected, and consumer and market expectations for future inflation have climbed. Employers have been hiring more slowly than they were this spring, as job openings abound but it takes workers time to flow into them. The Fed continued to call that inflation increase largely “transitory” in its new statement. It has consistently pledged to take a patient approach to monetary policy as the economic backdrop rapidly shifts.
China to Release Metal Reserves in Effort to Tame Commodities Rally
China said it would begin to sell major industrial metals from state stockpiles, an effort to squelch factory-gate price increases that have hit a 13-year high and are stoking fears of global inflation. China’s latest move targets copper, aluminum and zinc, among other metals, and outlines a program of public auctions to domestic metal processors and manufacturers, the National Food and Strategic Reserves Administration said Wednesday.
As the world’s biggest buyer of a range of industrial commodities, China is using its market heft to try to quell the sharp rise in global metal prices over the past 12 months, including a 67% surge in copper, a bellwether for macroeconomic health. Economic stimulus measures and a broad resumption of global economic activity from pandemic lows have spurred a spree of buying in China and elsewhere. Much of the effectiveness of Beijing’s metal auctions will depend on the amount of metals it releases—or that it is able to release—into the market. The government doesn’t disclose its holdings.
Liberal Unrest Threatens Bipartisan Infrastructure Talks
Senate Majority Leader Chuck Schumer set out an aggressive timetable on Tuesday, promising to try and pass both a budget resolution setting up a party-line spending bill and a bipartisan infrastructure bill in July, hoping to satisfy his diverse coalition of 50 Democrats.
Though centrists have dominated the last few weeks of infrastructure discussions, progressive members are flexing their muscles. Senate Budget Chair Bernie Sanders (I-Vt.) announced his opposition on Monday, and other liberals are threatening to join him. Sens. Jeff Merkley (D-Ore.) and Ed Markey (D-Mass.) are vowing to oppose any infrastructure accord that lacks major policies to tackle climate change. Rep. Pramila Jayapal (D-Wash.), who leads the Congressional Progressive Caucus, says her members will oppose a deal unless Democrats also commit to a broader, separate bill.
U.S. Housing Market Needs 5.5 Million More Units, Says New Report
Construction of new housing in the past 20 years fell 5.5 million units short of long-term historical levels, according to a new National Association of Realtors report, which is calling for a “once-in-a-generation” policy response. U.S. builders added 1.225 million new housing units, on average, each year from 2001 to 2020, according to the report, which was prepared for NAR by Rosen Consulting Group LLC. That figure is down from an annual average of 1.5 million new units from 1968 to 2000.
The 5.5 million-unit deficit includes about two million single-family homes, 1.1 million units in buildings with two to four units and 2.4 million units in buildings of at least five units, the report says.
NYS Vaccine and COVID Update
The 7-day average positivity is 0.40% Vaccine Stats as of Wednesday morning:
One Vaccine Dose
- 58.1% of all New Yorkers – 11,200,556 (plus 33,425 from a day earlier)
- In the Hudson Valley 1,191,686 (plus 2,892)
- 50.6% of all New Yorkers – 9,941,713 are fully vaccinated (Plus 54,590)
- In the Hudson Valley – 1,053,459 (plus 6,453) are fully vaccinated.
The Governor updated COVID data through Tuesday June 15th. There were 9 COVID related deaths for a total of 42,891.
- Patients Currently in Hospital statewide: 650
Seven Day Average Positivity Rate:
- Statewide 0.40%
- Mid-Hudson: 0.38%
- Read the press release
- Visit the vaccine tracker site
- See the School Districts Dashboard
- See the SUNY Dashboard
- State Vaccine Information Site
US COVID Update – US Buying Additional 200M Moderna Doses
The U.S. government is buying another 200 million doses of Moderna’s COVID-19 vaccine, the company said Wednesday, which could be used for vaccinating children or to address variants of the virus if necessary. The deal allows the Biden administration to receive different versions of the vaccine if necessary, for example if a modified vaccine is needed to fight a variant of the virus. The purchase is exercising an option for additional doses from the original contract with Moderna.
“Importantly, the agreement gives the United States flexibility to choose which type of vaccine we will receive from Moderna if Moderna adjusts its formulation, for example, for pediatric vaccines or to address variants,” an administration official said.
Do Incentives of Cash or Gifts for COVID-19 Vaccines Work?
To encourage greater vaccinations, some governments and employers have begun to sweeten the deal with cash or gifts for those who get inoculated. But will these kinds of incentives convince the sceptics? Similar incentives can work in health care. Small fees are common in medical trials and money has been shown to nudge people to donate blood, quit smoking, lose weight and monitor their blood-glucose levels. It can work for vaccination too.
A study of teenage girls in England found those who were offered £45 ($64) were more likely to be inoculated against human papillomavirus. For one group, uptake more than doubled with the cash offer. Intravenous drug users in America were more likely to receive hepatitis B shots if offered an incentive. Cash also boosted tetanus-vaccination rates in Nigeria. But there are ethical considerations. People who need the money might be more swayed by covid-19 vaccine incentives than their richer peers.
Aflac CEO: Expects Cancer Diagnosis Spike Post-COVID
Dan Amos, chairman and CEO of Aflac (NYSE:AFL), said Wednesday that low interest rates have forced the insurer to reprice new policies in order to make up for lost investment income. In an interview with CNBC, Amos also explained that the company has taken additional reserves in anticipation of increased doctor’s visits now that COVID restrictions are easing.
The Aflac CEO said that people have been slow to go to the doctor amid pandemic worries, meaning that the diagnosis of some diseases, like cancer, has been delayed. The company has put additional money aside, anticipating a new wave of medical visits post-COVID.
NY Fed Survey: Businesses Expect a Strong Second Half of 2021
Supplemental survey questions to the June 2021 Empire State Manufacturing Survey
and Business Leaders Survey focused on how sales compared to normal pre-pandemic levels, current and desired employment counts, and the extent of recent and expected remote working arrangements.
- On average, manufacturers report that sales were 1 percent above normal in the first half of the year and expect a 4% increase in the second half.
- On average, employment was down 9 percent among manufacturers. However, when asked about desired employment levels, on average, manufacturers would
employ about 9 percent more than current levels, which would bring employment back in line with pre-pandemic levels.
- Manufacturers report that before the pandemic, only about 5 percent of workers worked. Once conditions return to normal, manufacturers expect remote working arrangements to be only slightly more common than before the pandemic.
Senate Passes Juneteenth as the 11th National Holiday
The Senate passed a bill Tuesday to establish Juneteenth, the day marking the end of slavery in the United States, as a national holiday. After passing by unanimous consent, the bill now heads to the House of Representatives, where its passage is all but assured, then on to President Biden’s desk for signature into law. If the bill is passed in the House and signed by the president, Juneteenth would become the 11th annual federal holiday.
Celebrated on June 19, Juneteenth, or Freedom Day, recognizes and marks the emancipation of formerly enslaved African Americans, commemorating the date in 1865 when slaves in Galveston, Texas, learned of their freedom.
China Ends Renewable Subsidies
China will stop subsidizing new solar and wind power projects. According to China’s chief central planning authority, the country’s government will no longer subsidize any new solar farm projects, distributed solar projects for commercial users or onshore wind farms. The change will go into effect on Aug. 1.
According to OilPrice, “The motivation behind the cut was that Beijing wanted to ensure the local solar industry was sustainable in the original sense of the word over the long term. Yet, the reasons for the cut—and this year’s end of subsidies—were not exactly altruistic. China has amassed a massive debt pile in subsidies owed to wind and solar companies as a result of its previously generous support for new projects. The pile, according to a Bloomberg report from July last year, is worth about $42 billion.”
GM Ups its Planned Investment in EVs, Will Build Two New Battery Plants
In a wide-sweeping announcement Wednesday, GM said it will increase its investment in EV and autonomous vehicle technologies to $35 billion through 2025, a 75% boost from its initial commitment in early 2020.
GM also said it will build two new battery cell manufacturing plants in the United States by mid-decade but declined to disclose the locations. The battery plants will be in an “optimal location to achieve volume,” GM CFO Paul Jacobson told the media Wednesday. GM is presently building an Ultium Cells LLC battery plant in northeast Ohio near its former Lordstown Assembly plant and one in Tennessee near its Spring Hill Assembly plant, where it will build the Cadillac Lyriq electric SUV.
After Shake Up Lordstown Motors On Track for Pall Production
Embattled electric truck company Lordstown Motors has enough funding to operate through May 2022 and remains on track to begin limited production of its Endurance pickup in late September following an executive shake-up that ousted the start-up’s CEO and chairman, executives said Tuesday.
The company’s new chairwoman, Angela Strand, called it a “new day” for the aspiring automaker, which raised bankruptcy concerns after warning investors last week that it had “substantial doubt” about its ability to continue as a going concern in the next year.