Federal Reserve Tees Up March Interest-Rate Increase
The Federal Reserve held short-term interest rates steady on Wednesday and signaled intentions to raise them in mid-March. “It will soon be appropriate to raise the target range for the federal-funds rate,” the Fed said in its post-meeting statement. They also approved one final round of asset purchases, which will bring that stimulus program to a conclusion by March and continued deliberations over how and when to shrink the Fed’s $9 trillion securities portfolio, which has more than doubled since March 2020.
Fed officials face a tricky task of responding to high inflation with two different policy instruments, which could provide more ammunition to slow the economy, but which have in the past caused confusion with markets. The Fed said Wednesday that it wants adjustments of its short-term benchmark interest rate, the federal-funds rate, to be the primary way that it responds to changes in the economic outlook.
IMF Cuts 2022 Global Growth Forecast as U.S., China Recovery Wanes
In its delayed World Economic Outlook report, published Tuesday, the IMF said it expects global gross domestic product to weaken from 5.9% in 2021 to 4.4% in 2022 — with this year’s figure being half a percentage point lower than previously estimated. The revised outlook is led by growth markdowns in the world’s two largest economies; the U.S. and China.
The U.S. is expected to grow 4.0% in 2022, 1.2 percentage points lower than previously forecast as the Federal Reserve moves to withdraw its monetary stimulus, even as supply chain disruptions weigh on the economy. China, meanwhile, is predicted to grow 4.8% this year, down 0.8 percentage points from earlier estimates amid disruptions caused by its zero-Covid policy, as well as “projected financial stress” among its property developers.
Markit Flash PMI: US Manufacturing Slows
The IHS Markit Flash U.S. Manufacturing PMI slowed for the sixth straight month, down from 57.7 in December to 55.0 in January, the slowest pace of growth since October 2020. Growth in new orders (down from 56.3 to 53.0) and output (down from 53.6 to 50.3) both expanded at the weakest paces since the summer of 2020, with exports (down from 51.3 to 50.4) slowing to near neutral. Hiring (down from 53.9 to 49.6) declined for the first time since July 2020. More encouragingly, survey respondents felt more optimistic about future production over the next six months, with the forward-looking index up from 75.8 to 77.6.
Manufacturers in the U.S. continued to cite supply chain bottlenecks and workforce shortages as significant challenges to growth, with the spread of the omicron variant also likely impacting these data. Supplier delivery times (down from 23.2 to 23.1) remained near historic levels, speaking to the supply chain bottlenecks described above. Measures for input (down from 81.8 to 80.1) and output (down from 69.5 to 68.5) prices both decelerated in January but remained very elevated and not far from recent record highs.”
Markit Flash PMI: Euro Zone Recovery Slows
The euro zone economic recovery weakened this month, despite an upturn in Germany where factories benefited from an easing in supply chain bottlenecks, as renewed restrictions put a dent in the bloc’s dominant services industry, a survey showed. IHS Markit’s Flash Composite Purchasing Managers’ Index, seen as good gauge of overall economic health, dropped to 52.4 in January from 53.3 in December, its lowest since February and below the 52.6 predicted in a Reuters poll.
Businesses in Germany, Europe’s largest economy, expanded at their fastest pace in four months, earlier data showed, as factories enjoyed an easing in supply chain bottlenecks. But in France, the only other euro zone country to report preliminary numbers, business growth dipped more than forecast as the impact of COVID-19 and inflationary pressures weighed on activity. In Britain, outside the euro zone and the European Union, activity cooled unexpectedly to an 11-month low but cost pressures stayed high.
US COVID – Deaths Accelerate Even as Cases Subside
Covid-19 deaths in the U.S. reached the highest level since early last year as the Omicron variant’s spread eclipsed daily averages from the Delta-fueled surge and prompted record case counts. The seven-day average for newly reported Covid-19 deaths reached 2,191 a day by Monday, up about 1,000 from daily death counts two months ago, before Omicron was first detected, data from Johns Hopkins University show.
While emerging evidence shows Omicron is less likely to kill the people it infects, it spreads so quickly that the avalanche of cases can overwhelm any mitigating factors. “You can have a disease that is for any particular person less deadly than another, like Omicron, but if it is more infectious and reaches more people, then you’re more likely to have a lot of deaths,” said Robert Anderson, chief of the mortality-statistics branch at the National Center for Health Statistics, which is part of the Centers for Disease Control and Prevention.
NYS Vaccine and COVID Update – Hospitalizations Drop by More Than 500 in Past 24 Hours
Vaccine Stats as of January 26:
One Vaccine Dose
- 87.1% of all New Yorkers – 16,138,993 (plus 13,562 from a day earlier).
- In the Hudson Valley 1,676,700 (plus 1,503).
- 73.7% of all New Yorkers – 14,317,954 (plus 15,092).
- In the Hudson Valley – 1,459,784 (plus 1,433).
- All New Yorkers – 5,763,171
- In the Hudson Valley – 688,375
The Governor updated COVID data through January 26. There were 158 COVID related deaths for a total reported of 65,250.
- Patients Currently in Hospital statewide: 9,335.
7 Day Average Positivity Rate – Cases per 100K population
- Statewide 9.11% – 107.47 positive cases per 100,00 population
- Mid-Hudson: 8.92% – 89.57 positive cases per 100,00 population
Study Offers Clues to Who Will Get Long COVID
The study, published Tuesday in the journal Nature Communications, found that people who go on to develop long Covid have lower levels of certain antibodies in their blood soon after they are infected with the coronavirus.
The research began in early 2020, during the first wave of the pandemic. The team followed patients through the acute phase of infection, then for six months and then for a year as the phenomenon of long Covid became apparent. Comparing more than 500 Covid patients — some of whom went on to have long Covid and others whose symptoms resolved — several key differences emerged. The most glaring was how immune systems in patients who went on to develop long Covid initially reacted to the virus.
Long COVID – State Workers’ Comp Board Launches Free Webinar Series and Webpage to Educate Workers on Their Rights, Will Assist With Filing Claims
Governor Kathy Hochul yesterday announced that New York State will help workers who believe they contracted COVID-19 due to an exposure at work, especially those suffering from ongoing long-haul symptoms. A new series of webinars – offered through the New York State Workers’ Compensation Board – will provide information on workers’ rights when it comes to filing a workers’ compensation claim and the cash and/or medical benefits they may be eligible to receive.
Those with a work-related injury or illness have two years from the date of becoming injured or ill to file a workers’ compensation claim, so the deadline is approaching for workers who contracted COVID-19 due to their employment in the early days of the pandemic. Filing a claim is important because workers’ compensation benefits in an established claim include lifetime medical care for the treatment of the work-related injury or illness.
U.S. Goods Trade Deficit Hits Record High; Retail Inventories Surge
The U.S. trade deficit in goods widened to a record high in December as imports increased for a fifth straight month amid strong domestic demand, suggesting that trade likely remained a drag on economic growth in the fourth quarter. The goods trade deficit rose 3.0% to an all-time high of $101.0 billion last month. It was also the first time that the deficit breached the $100 billion threshold. The rebuilding for inventories could keep the goods trade deficit wide at least through the first half of this year.
But imports are helping to replenish depleted inventories, with the report from the Commerce Department on Wednesday showing strong restocking at retailers and wholesalers last month. Solid inventory accumulation likely offset the impact on gross domestic product from the larger trade gap, prompting some economists to raise their growth estimates for the last quarter.
After Omicron – WHO Gives Us More to Worry About
In the short time since it was first detected in South Africa last November, Omicron has quickly usurped Delta as the world’s dominant variant of COVID-19. Omicron’s rapid spread has sparked record waves of infection in the U.S., Europe, and Asia. Yet despite its high transmissibility, Omicron has appeared less deadly than its predecessor, with hospitalization rates among vaccinated people remaining relatively low. But on Tuesday, the WHO warned the world might not get so lucky with the next variant.
“There is a natural selection that the virus will become less virulent to become more transmissible… A virus is a parasite. It requires a host to survive. The worst thing for the virus is to kill off its host,” Shiu-Wan Chan, lecturer and principal investigator in molecular virology at the University of Manchester told Fortune last week. However, not everyone agrees. Zeynep Tufekci, a sociologist and pandemic expert, told the New York Times it is “purely luck” if a virus becomes weaker as it evolves, and that viruses “don’t care if you eventually die as long as they transmit through you.”
Compulsory Vaccination in Germany
Refusing to get vaccinated against covid-19 is anti-social, but should it be illegal? On Wednesday the Bundestag, Germany’s lower house, will begin debating that question. One-quarter of Germans remain unjabbed, making the country one of western Europe’s laggards. So far in Europe only Austria has imposed compulsory vaccination for all. Italy has passed a law for the over-50s and Greece the over-60s.
The outcome in Germany is unclear. MPs will discuss several mandate proposals. One would cover all adults; another only those over 50 years old. Fines, rather than prison terms, are envisaged for breaches. As Germany has no central vaccine registry, employers may be asked to check their workers’ vaccination status. The Bundestag aims to hold a vote by the end of March. If a majority can be found, a mandate could bite by summer. That would be too late to tackle the Omicron wave now sweeping Germany. But it could make for an easier autumn and winter.
Building Responsible AI – Business Roundtable Weighs In
The Business Roundtable released guidelines for companies to develop “responsible A.I.,” along with guidance for the U.S. government to develop policies and regulations for A.I. The second piece—advising government on policies and regulations—has long been part of the BRT’s remit. But the first piece—advising companies how to adopt artificial intelligence in a way that maximizes positive social impact and minimizes negative—is new. The guidelines focus, among other things, on:
- Ensuring A.I. systems are developed by diverse teams, with diverse oversight;
- Employing safeguards to ensure unfair biases aren’t built into A.I. systems, and building A.I. systems that mitigate human bias;
- Designing A.I. systems that are transparent, explainable and interpretable;
- Ensuring A.I. systems are constantly evaluated; that data is collected and used responsibly; that companies have culture and governance systems to support responsible A.I.; and that security safeguards exist from the outset;
- Investing in an A.I.-ready workforce.
GM to Spend Nearly $7B on EV, Battery Plants in Michigan
General Motors is making the largest investment in company history in its home state of Michigan, announcing plans to spend nearly $7 billion to convert a factory to make electric pickup trucks and to build a new battery cell plant.
The moves, announced Tuesday in the state capital of Lansing, will create up to 4,000 jobs and keep another 1,000 already employed at an underutilized assembly plant north of Detroit. The automaker plans to spend up to $4 billion converting and expanding its Orion Township assembly factory to make electric pickups and $1.5 billion to $2.5 billion building a third U.S. battery cell plant with a joint-venture partner in Lansing.
Holiday Bookings Jump as UK COVID Travel Tests Will End February 11
Vacation bookings have jumped with “notable increases” in trips planned for February half-term and Easter ahead of Covid travel tests being scrapped. Jet2 said bookings had increased by 30% on last week after the announcements that rules would be relaxed for people arriving in the UK. The rule changes mean fully-vaccinated people arriving in those countries from abroad do not need to take Covid tests. The change will come into effect from 04:00 GMT on 11 February.
Steve Heapy, chief executive of Jet2, told the BBC the removal of testing was “game-changer” for the travel industry. He said demand was “already strong” before the rule changes for England and Scotland were announced on Monday, but said bookings had since risen further.
COVID-19 Fuels Sunbelt Commercial Real-Estate Sales
Real-estate buyers loaded up on warehouses, which serve as fulfillment centers for the e-commerce boom. They bought apartment buildings to capitalize on record high rents. Overall, commercial-property sales totaled a record $809 billion in 2021, according to data firm Real Capital Analytics. That was nearly double 2020’s total, and it exceeded the previous record of about $600 billion in 2019.
Investors last year snubbed properties that had been favorites for years but started to look less reliable during Covid-19. Buyers had limited interest in most urban office towers and retail in coastal cities such as New York and San Francisco. Instead, investors looked to Sunbelt states where companies have been attracted by lower taxes, warmer weather and cheaper housing costs. Dallas, which had sales of $48.9 billion and Atlanta, with $37.1 billion, were the top two volume leaders. Suburban office buildings in states like Florida and North Carolina also drew a greater percentage of investor capital than in the past.
Finally, A Flying Car
Slovakia’s Transport Authority on Tuesday said it had issued a certificate of airworthiness for flying car model AirCar, a first step towards commercial production of the invention. “AirCar certification opens the door for mass production of very efficient flying cars,” said Stefan Klein, founder and chief executive of KleinVision, a company that designed and manufactured the prototype of the dual-mode car-aircraft vehicle. Before certification, the Slovak flying car had to complete 70 hours of flight testing, with more than 200 take-offs and landings, KleinVision said.
It has a flight speed of up to 170 kilometers per hour and a flying distance of 1,000 kilometers. The process of transforming from car to plane takes less than three minutes. Everything is automated, so a single button command is all it takes to change it.