GDP Fell at 0.9% Annual Rate in Second Quarter
The U.S. economy shrank at a 0.9% annual rate last quarter, the Commerce Department said Thursday. That marks a second straight quarterly decline in gross domestic product–a common definition of recession. Inflation hit a fresh four-decade high during the second quarter, hammering consumer sentiment and eroding Americans’ purchasing power. The Federal Reserve responded by aggressively raising interest rates, which in turn cooled the housing market, reducing brokers’ commissions and denting residential investment.
Economists say idiosyncratic factors weighed on the U.S. economy in the first half of the year, like the inventory buildup and swings in exports and imports. A shift in spending away from goods back toward services, and rising prices cutting into people’s buying power, left many companies with stockpiles of products they are now discounting to unload.
Manchin and Schumer Announce Deal for Energy and Health Care Bill
Senate Majority Leader Chuck Schumer and Sen. Joe Manchin on Wednesday announced a deal on an energy and health care bill, representing a breakthrough after more than a year of negotiations that have collapsed time and again. The deal is a major reversal for Manchin, and the health and climate bill stands a serious chance of becoming law as soon as August — assuming Democrats can pass the bill in the House and that it passes muster with the Senate parliamentarian to allow it to be approved along straight party lines in the budget process.
While many details have not been disclosed, the measure would invest $369 billion into energy and climate change programs, with the goal of reducing carbon emissions by 40% by 2030, according to a one-page fact sheet. For the first time, Medicare would be empowered to negotiate the prices of certain medications, and it would cap out-of-pocket costs at $2,000 for those enrolled in Medicare drug plans. It would also extend expiring enhanced subsidies for Affordable Care Act coverage for three years.
.75 – Fed Raises Key Interest Rate as Expected
The Federal Reserve raised its benchmark overnight interest rate by three-quarters of a percentage point on Wednesday, with “ongoing increases” in borrowing costs still ahead despite evidence of a slowing economy. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher food and energy prices, and broader price pressures,” the rate-setting Federal Open Market Committee said as it lifted the policy rate to a range of between 2.25% and 2.50% in a unanimous vote.
The FOMC added that it remains “highly attentive” to inflation risks. But while jobs gains have remained “robust,” officials noted in the new policy statement that “recent indicators of spending and production have softened,” a nod to the fact that the aggressive rate hikes they have put in place since March are beginning to bite.
War in Ukraine Headlines
- Ukraine and Russia: the Latest News – The Guardian
- Russia Cuts Gas Flows Further as Europe Makes Savings Plea – Reuters
- U.S., Europe Dig In for Long Economic Standoff With Russia – WSJ
- Ukrainian Armed Forces Confirm that Kherson Bridge Destroyed in High-Precision Strike – YahooNews
- Gas Prices Soar as Russia Cuts German Supply – BBC
- Ukraine to Pursue War-Crimes Charges Against leaders of Western Banks Over Russia Financing – Business Insider
- EU to Cut Russian Gas Use – YahooNews
- Russia Says it is Leaving the International Space Station Program. What Does That Mean? – USA Today
- Map – Tracking Russia’s Invasion of Ukraine – Live Universal Awareness Map
GDP: US Economy Seen Narrowly Averting Back-to-Back Contractions
We’ll know for sure tomorrow but the US economy may have eked out modest growth in the second quarter, skirting back-to-back quarterly contractions, but rising at a tepid enough pace to feed concerns of an eventual downturn. Economists expect gross domestic product grew an annualized 0.4% in the April-June period, which on the surface would be an improvement after the 1.6% drop in the first quarter.
Data released Wednesday prompted a few economists, including those at JPMorgan Chase & Co., to raise their second-quarter GDP forecasts. The merchandise trade deficit narrowed in June by more than expected and inventories at retailers and wholesalers both solidly increased. Core capital goods shipments also increased. However, cooler business investment, a weaker housing market and a slower pace of inventory growth are also seen taking a bite out of second-quarter GDP.
US Durable Goods Orders Post Surprise Gain On Defense Aircraft
Bookings for durable goods increased 1.9% in June after a 0.8% advance a month earlier. However, the figures aren’t adjusted for inflation. The value of core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, rose 0.5% for a second month. Shipments also advanced. Orders increased in June for motor vehicles, computers and electronic products, and fabricated metals. Bookings for primary metals, machinery and communications equipment fell.
Separate data out Wednesday showed the US merchandise trade deficit narrowed for a third month in June, reflecting both an increase in exports and a drop in imports. The report also showed firm advances in inventories at retailers and wholesalers. Core capital goods shipments, increased 0.7% in June after a 1% surge a month earlier. The pickup in orders suggests that firms are continuing to invest despite rising borrowing costs and greater economic uncertainty. T
U.S. COVID – BA.5’s Effect on Hospital Admissions Still Unclear, CDC Models Show
CDC predictions for how hospitalizations and deaths will change due to BA.5 are uncertain. A forecast of new hospitalizations from 16 modeling groups predicted that the increase could range from 3,100-13,800 new COVID-19 hospitalizations per day by August 12.
- Daily COVID-19 cases are projected to increase 9.9 percent in the next two weeks, a lower rate of increase than projected last week, according to modeling from Mayo Clinic. Forecasts suggest daily average cases will jump from 121,869.3 cases on July 22 to 133,921 by Aug. 5.
- COVID-19 deaths are projected to remain stable or have an uncertain trend over the next month, according to the CDC’s ensemble forecast from 17 modeling groups. The forecast projects 1,800 to 5,600 new deaths likely reported in the week ending Aug. 13, which translates to a daily total of 257.1 to 800 deaths.
NYS COVID Update
Editor’s Note: Given the small changes in vaccinations we will no longer track this information in the briefing. Instead we will provide a link to the NYS Vaccination Tracker below)
The Governor updated COVID data through July 22.
- Daily: 15
- Total Reported to CDC: 72.569
- Patients Currently in Hospital statewide: 2,629
- Patients Currently in ICU Statewide: 251
7 Day Average Positivity Rate – Cases per 100K population
- Statewide 9.22% – 36.22 positive cases per 100,00 population
- Mid-Hudson: 9.85% – 32.01 positive cases per 100,00 population
How Long is COVID Infectious? What Scientists Know so Far
(Nature) When the US CDC halved its recommended isolation time for people with COVID-19 to five days back in December, it said that the change was motivated by science. Specifically, the CDC said that most SARS-CoV-2 transmission occurs early in the course of the illness, in the one to two days before the onset of symptoms and for two to three days after.
Many scientists disputed that decision then and they continue to do so. Such dissent is bolstered by a series of studies confirming that many people with COVID-19 remain infectious well into the second week after they first experience symptoms. Reductions in the length of the recommended isolation period — now common around the world — are driven by politics, they say, rather than any reassuring new data.
EEOC Again Revises Workplace Testing Guidance
As the pandemic continues to evolve, so does the EEOC’s guidance. On July 12, 2022, the EEOC once again updated its COVID-19 guidance: What You Should Know About COVID-19 and the ADA, the Rehabilitation Act, and Other EEO Laws to reflect the pandemic’s changing state. The updated guidance follows CDC’s June 10, 2022 statements regarding the current state of the COVID-19 pandemic.
The EEOC also updated guidance about screening for COVID-19 generally, reminding employers that all disability-related inquiries and medical exams used for screening employees for COVID-19, must be “job related and consistent with business necessity.”
A Housing Recession is the First Step to a Fed-Induced Recession
Historically speaking, the Federal Reserve’s inflation fighting playbook always starts with housing. It goes like this. The central bank begins by applying upward pressure on mortgage rates. Not long afterwards, home sales sink and existing home inventory spikes. Then homebuilders begin to cut back. That causes demand for both commodities (like lumber and steel) and durable goods (like windows and refrigerators) to fall. Those economic contractions then quickly spread throughout the rest of the economy and, in theory, help to rein in runaway inflation.
While a housing recession is good news for the inflation fight, it also means a National Bureau of Economic Research declared recession could be drawing closer. One thing stands in the way: Homebuilding. On a year-over-year basis sales of new single-family homes is down 17.4% while single-family housing starts are down 15.7%. That said, homebuilders remain busy. A combination of supply chain constraints and an eagerness to cash in on the pandemic housing boom led homebuilders to ramp up production massively over the past year.
Xi, Biden to Speak as Possible Pelosi Taiwan Visit, Tariff Changes Loom
President Biden is expected to speak with Chinese President Xi Jinping this week in a bid to manage rising tensions over Taiwan, trade and a deadlocked bilateral diplomatic agenda.
Senior administration officials will pitch the call as a deliverable-free routine follow-up to a series of communications between Biden and Xi — they last spoke in March and had a virtual meeting in November — that senior administration officials say are to erect “guardrails” designed to ensure competition “doesn’t lead to conflict.” But Biden’s main objective will be to ensure the latest eruption of Chinese rage over House Speaker Nancy Pelosi’s planned trip to Taiwan doesn’t derail discussions for a long-awaited in-person meeting between Biden and Xi in November.
Is Remote Hiring Leading to More Candidate Fraud?
The sea of unfilled jobs on are forcing employers today to do as much as they can to ensure that they not only retain their best employees but also make the right decisions when hiring. That pressure could mean recruiters and HR professionals are making costly mistakes, according to Lindsey Zuloaga, chief data scientist at HireVue. One such risk arises when job candidates are less than honest in the application process—from exaggerated or blatantly fake job histories to fraudulent references to candidates who enlist assistance with assessments.
“Technology and remote work have changed the opportunities available for cheating in the hiring funnel,” Zuloaga says. “We’ve all heard horror stories of the wrong person showing up on day one after their camera stayed off for the interview process. Like any type of fraud, the cheaters continue to invent new techniques, and the victims of fraud must always keep up,” she adds.
CLCPA Renewable Energy Targets can be met only at Great Cost, Report Shows
In order to meet the clean energy goals laid out in the CLCPA, the state would have to spend currently-incalculable sums to overbuild intermittent energy sources according to a new Empire Center report. Wind and solar have incredibly low capacity factors in New York — 44 percent and 12 percent, respectively. This means that, for example, it would take more than seven gigawatts of nameplate solar capacity to equal the production of a one-gigawatt nuclear or natural gas plant.
“The goal is inexpensive, reliable and non-polluting electricity production. But we can’t have all three. The practical options are either inexpensive and reliable or reliable and non-polluting,” said James Hanley, author of the paper and senior policy analyst at the Empire Center. “Energy production that meets all three of these demands is not — for the foreseeable future — an available option.”
NEPA Revisions Will Further Slow Energy Permitting
The Biden administration’s new environmental permitting rules will harm small businesses, increase taxpayer costs and further tie up U.S. courts, according to the NAM. In April, the White House Council on Environmental Quality (CEQ) issued the National Environmental Policy Act (NEPA) Implementing Regulations Revisions, a rule that turns back some of the changes to the nation’s permitting laws.
Earlier this month, Republican Sens. Dan Sullivan of Alaska and Kevin Kramer of North Dakota introduced a resolution of disapproval to strike down the new permitting regulations. The CEQ’s policy of requiring agencies to assess the effects (including climate-related ones) of their projects was already creating delays. The new regulations will only further jeopardize and slow the pace of much-needed energy projects. “Modern permitting reforms and environmental protection are not mutually exclusive—we can grow our economy, strengthen our domestic manufacturing and maintain the highest environmental stewardship while updating an archaic permitting process that benefits both the public and private sector. It is long past due for Washington policymakers to seize this opportunity, and every year we kick the can means the permitting process becomes even more burdensome,” NAM Senior Director of Energy & Resources Policy Nile Elam said.
How does the EU plan to cut gas usage by 15% this winter?
From next month until the end of March 2023, all EU member states will strive for a voluntary 15% reduction in gas consumption. In the event of a major supply shock – a complete shutdown of Russian gas – the EU may declare an emergency and make the target mandatory with immediate effect. But almost any member state, especially those with little connection to the gas network, or those facing an electricity supply shock, would be entitled to apply for an opt-out.
Industrial users will feel the pinch first; factories could be given targets to reduce heating and cooling. Some could be spared, such as manufacturers of critical goods, or plants that are difficult to restart after switching off energy. While consumers are protected, they are expected to do their bit. EU authorities are urging governments to launch campaigns to encourage people to switch off lights and turn down thermostats and air conditioning.
Passenger Train Service to Stewart Back on the Radar
About a dozen years ago, officials floated the idea of building a spur off the West of Hudson Metro-North Railroad in Salisbury Mills directly into New York Stewart International Airport. That never got any traction because of the projected millions of dollars it would cost.
It may be back on track as it is being discussed by the MTA, said Harry Porr, deputy Orange County executive, who represents the county on the Stewart Airport Commission and the MTA Board. It is believed that a rail link from the airport to New York City would be a major asset for Stewart.
Boeing Profit Falls as Plane Maker Awaits Approval to Deliver Dreamliners
The company’s second-quarter results fell short of analysts estimates. Weakness in its defense unit dragged down results, but was partly offset by strength in its commercial airplane unit. Aircraft deliveries rose to 121 in the second quarter from 79 a year ago, while commercial aircraft revenue climbed 3% to more than $6.2 billion.
Production of the 737 MAX has reached 31 planes a month, up from 16 a year ago, as it deals with supply-chain challenges such as engine shortages that are also affecting rival Airbus SE. Executives have said they expect Boeing will soon receive regulatory approval to resume deliveries of its wide-body 787 Dreamliner. A series of production issues has kept the plane maker from handing over that jet to customers for much of the last two years, leaving it with more than $25 billion of the aircraft in inventory.
Airbus Trims Delivery Target, Slows Jet Output Hike
Airbus shaved its annual jet delivery forecast and slowed a planned increase in factory production while sticking to core financial goals on Wednesday, after disruption in the global supply chain put a brake on second-quarter profits. The plane maker lowered its 2022 delivery goal to 700 jets from 720 and said it would reach interim production of 65 narrow-body jets a month in early 2024 instead of summer 2023, on its way to an unchanged target of 75 a month in 2025.
The move comes after the world’s largest plane maker recorded flat deliveries for the first half as delayed engine deliveries compounded parts shortages and problems in hiring back staff to aerospace after lay-offs during the pandemic. Even so, Airbus reaffirmed its 2022 profit and cashflow forecasts after reporting second-quarter adjusted operating profit of 1.382 billion euros, down 31%, on revenues which fell 10% to 12.810 billion.