Personal Spending Up
The Commerce Department announced that personal spending in May rose by 0.4%, in line with the forecast by the economists surveyed by Bloomberg, “after a 1.1 percent jump a month earlier that was more than initially estimated,” and personal incomes “climbed a less-than-forecast 0.2 percent.”
Sales Cool
The National Association of Realtors show that pending sales of previously-owned homes in the US fell more than anticipated in May, indicating that “demand cooled after a robust start to the busiest selling season of the year.”
The Labor Department announced two weeks ago that initial jobless claims rose by 10,000 to 268,000, “a level that’s still consistent with steady improvement in the labor market.” The economists surveyed by Bloomberg had forecast 267,000 new claims. The less-volatile four-week average “held at 266,750.” Bloomberg points out, “For 69 consecutive weeks, claims have been below the 300,000 level typically consistent with an improving job market,” marking “the longest stretch since 1973.”
Japanese Output
Japan’s factory output fell 2.3 percent in May, falling at the fastest rate in three months to its lowest level since 2013 and “highlighting concerns about falling exports and weak consumer spending.” The drop “considerably exceeded” the 0.1 percent decline predicted by Reuters analysts. According to data from the Ministry of Economy, Trade and Industry, output fell due to declines in the production of construction equipment, chemicals, cosmetics, and semiconductors.
Regulations on Auto AC
Auto manufacturers are adopting new air conditioning technology to help them meet federal fuel-economy standards, with the EPA’s most recent data showing that changes to vehicle cooling accounted for 40% of the reported emissions credits in the US auto industry by 2014. The EPA has focused on AC units in cars for emissions credits over other features because the units emit hydroflourocarbons gasses, which are believed to be a significant contributor to global warming.
Market Thwarts Amazon Efforts
Amazon has controlled the warehouse robot industry through its 2012 acquisition of Kiva robots and subsequent decision to stop selling the robots to other companies, giving Amazon CEO Jeff Bezos “command of an entire industry.” But as happens in open markets, startups, such as Quiet Logistics, are emerging with products to replace Kiva and put robots in the world’s warehouses.
Regulation on Hand Sanitizers
The Food and Drug Administration asked manufacturers of antiseptic hand sanitizers to provide data concerning alcohol (ethanol or ethyl alcohol), isopropyl alcohol, and benzalkonium chloride to determine whether these ingredients “are safe, effective and reduce bacteria on skin.” The FDA “emphasized that it does not mean it believes the products are ineffective or unsafe, and it is not asking for any consumer hand sanitizer products to be removed from store shelves at this time.”
Regulation on Manufactured Homes
The Department of Energy (DOE) “is releasing a draft environmental assessment of proposed energy conservation standards for manufactured homes.” The assessment will help the DOE’s Office of Energy Efficiency and Renewable Energy “analyze the potential impacts on indoor air quality” from the rule that was released earlier this month. The public will have a chance to comment for the next 45 days.
Barriers – Sometimes Called the Market
“Only 30% of U.S. households are aware of where to buy smart home products or services,” a figure that “should cause concern” among the manufacturers who have been forced to develop to the regulatory standards. Consumer lack of interest in “smart” home products is due to what a survey company calls “barriers” which are “preventing consumers” from “adopting smart homes technology,” concludes the survey. Those barriers? Basically consumer choices – which are identified as “high device prices, limited consumer demand and long device replacement cycles.” But the biggest problem, concludes Park Associates, “is the technological fragmentation of the smart home ecosystem, in which consumers need multiple networking devices, apps and more to build and run their smart home.”
Surging US Natural Gas Makes Up For Coal Plant Closures.
Bloomberg News reports that when the Clean Power Plan was proposed five years ago, critics warned that the rules would close coal-burning plants and result in blackouts and surging electricity prices. Now in 2016, a record 346 coal-burning units have been retired, yet the price of electricity is 40 percent lower largely due to the emergence of “cheap and abundant natural gas” thanks to the US shale boom. Five years ago, the US government was still projecting the US would have no natural gas supplies. Not only has the increased natural gas supply “sped up the closure of coal-burning plants,” it has also “put the US on a surer path to meeting an international accord to slash global warming pollutants and to comply with a host of federal environmental mandates estimated to yield billions of dollars in health benefits,” says Bloomberg.
Enviros Should Back Natural Gas
Terry O’Sullivan, General President of the Laborers’ International Union of North America, writes “it’s time to put to rest the false choice between jobs and the environment” and have a “rational discussion about a common-sense path to a clean energy future.” Citing the Department of Energy’s National Renewable Energy Laboratory, O’Sullivan writes that it will be 2050 before the US sources 80 percent of its power from renewables, and while the Clean Power Plan is “worthwhile and ambitious,” it also “threatens to create a critical energy void.” The US faces a 21 percent power deficit by 2030, but O’Sullivan writes that added natural gas generation could close that gap and urges environmentalists to back natural gas projects.
NAM Files Suit To Block OSHA Rule
The National Association of Manufacturers filed a lawsuit blocking new requirements issued by the Labor Department’s Occupational Safety and Health Administration “for manufacturers to report all workplace injuries and illnesses.” Linda Kelly, Senior Vice President and General Counsel for The National Association of Manufacturers, said, “The Department of Labor is putting a target on nearly every manufacturer in this country by moving this regulation forward…Not only does OSHA lack statutory authority to enforce this rule, but the agency has also failed to recognize the infeasibility, costs and real-world impacts of what it preposterously suggests is just a mere tweak to a major regulation.” Manufacturers argue that releasing information on workplace injuries and illnesses “will lead others to make inaccurate conclusions, will open manufacturers up to retaliation and will sacrifice employee and employer privacy.” OSHA’s new requirements take effect Aug 10.
Drone Regulations
Aaviation regulators are struggling to keep up with developing new rules and procedures for rapidly expanding drone technology, potentially stifling economic potential and innovation within the industry. Policymakers are attempting to satisfy the drone industry by addressing some of the main concerns with safety and privacy. In a recent conference, Federal Aviation Administration Chief Michael Huerta said that the drone industry “moves at the speed of imagination” and that policymakers “need to do this in a way that doesn’t stifle the kind of innovation we are seeing.” These comments come on the heels of the FAA’s recent release of the first set of comprehensive rules for drones under 55 pounds.
Job Market Isn’t Working
In an article for Bloomberg View, Betsey Stevenson argued that “the strong June jobs report...illustrates a major challenge for the U.S. economy” because “too many people are still not working or not even trying to find work” – with only 62.7 percent of the population employed or actively seeking employment. Citing a recent report from the president’s Council of Economic Advisers, Stevenson explained that “people with less than a bachelor’s degree” who “leave or lose a job...struggle to reenter the labor force” – a problem Stevenson argued is made worse by public policies such as background check requirements and occupational licensing laws.”
China’s Seven-Year Low
A poll of 61 economists shows China’s economic growth likely fell to a new seven-year low of 6.6 percent in 2Q as the industrial sector lost steam and record credit expansion and infrastructure spending begins to fade. “Analysts expect the world’s second-largest economy to lose further momentum in the second half of the year, prompting the government and central bank to roll out more support measures even as they worry about fallout from Britain’s secession from the European Union.” (Reuters)

Market Update

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