Daily Briefing – 341
Producer Prices Plus 7.3 % in June
The producer price index for final demand increased 1.0% last month after rising 0.8% in May, the Labor Department said on Wednesday. In the 12 months through June, the PPI surged 7.3%. That was the biggest year-on-year rise since in November 2010 and followed a 6.6% advance in May. Economists believe inflation has peaked or is close to doing so, noting that some prices of services depressed by the pandemic are nearing their pre-pandemic levels.
Higher commodity prices and increased labor costs due to a shortage of willing workers are boosting inflation at the factory gate. With inventories at very low levels because of supply chain issues, producers are easily passing on the higher cost to consumers.
Powell Says Inflation Will Likely Remain High in Coming Months.
Jerome H. Powell, the Federal Reserve chair, told House lawmakers that inflation has increased “notably” and is poised to remain higher in coming months before moderating — but he will made no indication that the recent jump in prices is pushing central bankers to rush to change policy. He attributes high inflation numbers to factors tied to the economy’s reopening from the pandemic.
Mr. Powell’s testimony before the House Financial Services Committee on Wednesday, comes at a fraught moment politically and economically when it comes to inflation. The Consumer Price Index spiked by 5.4 percent in June, the biggest jump since 2008 and a larger move than economists had expected. Price pressures appear to be poised to last longer than policymakers at the White House or Fed had expected.
Read more at the New York Times
Larry Summers, White House officials Meet to Discuss Biden Agenda
Maybe Larry Summers was right. The former Treasury secretary has been warning since February that President Joe Biden’s big-spending agenda was creating the risk of an inflation spike this year, potentially cutting into the economic recovery from the Covid-19 pandemic.
Summers has been among the loudest voices in Democratic circles in cautioning about the risk of a prolonged spike in prices. The White House has mostly dismissed his concerns, saying prices will ease later this year, a view shared by Fed Chair Jerome Powell, who will testify before Congress this week. Powell will likely be asked about a recent Fed survey suggesting that Americans expect inflation to surge, generally a worrying sign for central bankers.
Senate Democrats Agree to $3.5 Trillion “Social Infrastructure” Plan
Democrats on the Senate Budget Committee agreed to roughly $3.5 trillion in spending for their broad healthcare and antipoverty plan, determining the scope of the party’s expected efforts on education, climate change, child care and a host of other issues while it has control of Congress and the White House.
Democrats are pursuing a process tied to the budget called reconciliation to advance the bill through the 50-50 Senate without GOP support and avoid the 60-vote threshold typically needed in the chamber. With the top-line figures set, lawmakers will still need to craft the details of the policy provisions in the $3.5 trillion agreement
NYS Vaccine and COVID Update –
Vaccine Stats as of Wednesday morning:
One Vaccine Dose
- 61.2% of all New Yorkers – 11,767,479 (plus 18,962 from a day earlier)
- In the Hudson Valley 1,249,011 (plus 2,366)
Fully Vaccinated
- 55.5% of all New Yorkers – 10,803,073 are fully vaccinated (Plus 19,848)
- In the Hudson Valley – 1,134,501 (plus 2,191) are fully vaccinated.
The Governor updated COVID data through Tuesday July 12th. There were 2 COVID related deaths for a total of 43,020.
Hospitalizations:
- Patients Currently in Hospital statewide: 349
Seven Day Average Positivity Rate:
- Statewide 0.95%
- Mid-Hudson: 0.82%
Useful Websites:
- 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 – Cases Rising Again
The US CDC reported 33.7 million cumulative COVID-19 cases and 604,710 deaths. The US reported 17,753 new cases per day on July 9—a 55% increase from the low of 11,455 new cases per day on June 20—before decreasing to 15,497 on July 11.
Daily mortality also “peaked” on July 9—increasing from 150 on July 6 to 167 (+11%)—before falling slightly to 156 on July 11. These fluctuations could still be a result of delayed reporting over the US Independence Day holiday weekend. Reporting should return to normal by later this week, but it could be another week before we have a clearer picture of the longer-term trends.
Read more at the Johns Hopkins Center For Health Security
Survey: Why Some Vaccine Skeptics Changed Their Minds and Got COVID Vaccination
A Kaiser Family Foundation poll released Tuesday found that 21% of people who said in January that they were waiting to get shots, would only get vaccinated if required or definitely wouldn’t are now vaccinated. The survey was conducted June 15-23 with a sample size of 878 adults and a margin of error of plus or minus four percentage points.
Seventeen percent of those who are now vaccinated despite expressing hesitancy in January said they were convinced to do so by a family member, 10% said they were persuaded by a health care provider or doctor and 5% said they were convinced by a close friend.
Survey: The Skilled Labor Shortage Threatens Manufacturing’s Full Recovery
“The Resilience of Manufacturing: Strengthening people operations and bridging the talent gap amid crisis,” a study from the Workforce Institute at UKG based on a survey of more than 300 hiring decision-makers, found that while more than half, 54%, of manufacturers have achieved year-over-year growth workforce issues have escalated. The study found that finding talent with the right skills has been more difficult since the pandemic hit. Before the pandemic, 38% of manufacturers faced this issue and today that number has increased to 54%.
What’s more, turnover is up 15% over the prior year: Nearly three in five manufacturers (59%) experienced “higher-than-average” turnover from March 2020 to March 2021, compared with 44% from March 2019 to March 2020. Among multinationals, 71% said turnover was up during the first year of the pandemic vs. 52% of U.S.-only manufacturers.
New Outbreaks Cause More Global Supply Chain Disruptions
A recent COVID-19 outbreak at the Port of Yantian in South China is holding up goods in Europe, Asia and North America, according to Dun & Bradstreet’s Brian Alster. Audiovisual equipment; furniture and bedding; plastics; steel and other metals; and mechanical appliances were among the top materials found on shipments bound for the US and Canada.
“In each region, major materials that are already experiencing shortages will continue to be impacted including metals, plastic, and food – further stalling the movement of goods and impacting prices,” he says.
Read more at Supply Chain Management Review
US Manufacturing Productivity Is Falling
According to the Bureau of Labor Statistics (BLS), from 2010 to 2019, labor productivity growth in U.S. manufacturing fell. It was the first time since the BLS started measuring this in 1988 and likely the first time in American history. Not only did manufacturing productivity not grow over 10 years, but it actually declined. This means that more workers were needed to produce the same amount of output. The result is higher prices, lower wage growth, and less U.S. global manufacturing competitiveness.
This decline was across most industries. Out of 19 major sectors, only five saw increased productivity. And for all but apparel and leather products, the increases were minimal. The other 14 sectors saw declines in labor productivity; for example, primary metal products were 6% less productive and chemical products 12 percent less productive.
Boeing to Reduce 787 Production after Identifying New Jet Issue
The Boeing Co. (IW500/19) will temporarily reduce production of the 787 Dreamliner plane after identifying a new issue with the jet during inspections, the company announced Tuesday. The latest 787 problem adds to the headwinds facing Boeing even as the travel industry begins to rebound from a deep downturn caused by Covid-19, and commercial airlines announce significant new plane orders.
The aviation giant has been working with regulators at the Federal Aviation Administration (FAA) on a system of 787 inspections after earlier production problems on the plane. The FAA described the problem as a “manufacturing quality issue near the nose on certain 787 Dreamliners in the company’s inventory of undelivered airplanes,” an agency spokeswoman said. “Although the issue poses no immediate threat to flight safety, Boeing has committed to fix these airplanes before resuming deliveries. Based on data, the FAA will determine whether similar modifications should be made on 787s already in commercial service.”
OPEC Reaches Compromise With U.A.E. Over Oil Production
OPEC reached a compromise with the United Arab Emirates, agreeing to lift the amount of oil the cartel member can eventually pump as part of a wider agreement with Russia-led producers to boost global supplies, according to people familiar with the matter. Early this month, most delegates agreed to a deal that would call for OPEC+ to increase production by 400,000 barrels a day each month through late 2022, which would undo the remaining curbs. But over several days of talks, the U.A.E. refused to sign on.
Crude prices fell immediately after news of the deal, though they quickly recovered and were little changed in early New York trading. Brent, the international benchmark, was essentially flat at about $76.50 a barrel. West Texas Intermediate was trading around $75.10 per barrel.
