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Joe Biden is set to enact more than $52 billion in incentives designed to lure chipmakers to the United States – “exactly what we need to do to grow our economy right now,” he said. said last week.
But the president’s dream lacks a key ingredient, write our Brendan Bordelon and Eleanor Mueller – a small but essential core of highly skilled workers.
From Ben and Eleanor: “From electrical engineering to computer science, the United States currently does not produce enough doctoral and master’s degrees in science, technology, engineering, and math that can continue to work in US-based microchip factories. Decades of declining investment in STEM education means the United States is now producing fewer native-born advanced STEM degree holders than most of its international rivals.
“Foreign nationals, many of whom were educated in the United States, have traditionally filled this gap. But a baffling and anachronistic immigration system, historic backlogs in visa processing, and growing anti-immigrant sentiment have combined to stifle the flow of foreign STEM talent precisely when a new wave is needed.
The administration hopes the chip subsidies will turn the United States into a chip manufacturing hub — part of a national effort to avert another chip shortage, shore up the Western world’s advanced industrial base facing a booming China and recovering thousands of high-end manufacturing jobs in Asia, write Brendan and Eleanor.
But all the chip subsidies in the world will fall flat without enough highly skilled STEM workers.
“These investments in semiconductors won’t pay off if Congress doesn’t address the talent bottleneck,” Jeremy Neufeld, senior immigration fellow at the Institute for Progress think tank, told Ben and Eleanor.
Beyond STEM – The United States is grappling with a labor shortage that has kept vacancies at record highs for months, which experts have attributed in part to the drop in legal immigration that has been exacerbated by the pandemic and other policy changes.
Goldman Sachs researchers said a slowdown in immigration from 2019 to 2021 reduced the labor force by about 1.6 million workers to what it would have been had it remained on its pre-pandemic trend . “And while the issuance of green cards and temporary work visas have recently rebounded to around their previous levels, immigration rates are expected to increase further to compensate for the shortfall,” they wrote in a report from the May 31st.
Federal Reserve officials have suggested that greater immigration could also make their jobs easier, as they try to ease labor market pressures to help bring down inflation, which has been high for decades.
We’ll get a fresh reading of the health of the labor market this week when we get new data on job vacancies and quit rates tomorrow, as well as a July jobs report on Friday. Economists expect employers added just 250,000 jobs last month, a marked slowdown from the 372,000 jobs added in June.
Manufacturing and construction spending data released Monday…Job vacancies and labor turnover survey released Tuesday…Senate banking hearing on tenants in current housing market Tuesday…Committee hearing Small Business Senate Speaker on SBA’s Covid Disaster Loan Program Tuesday…St. Louis Fed President James Bullard speaks Tuesday…Services and factory orders data released Wednesday…Trade data released Thursday … Cleveland Fed President Loretta Mester speaks Thursday… Monthly jobs report and consumer credit data released Friday.
WATCHING RESULTS — WSJ’s Dean Seal: “CVS Health Corp., Starbucks Corp.” and Uber Technologies Inc. are among the companies headlining another busy week of results as investors look for signs of recession after a second quarter of contraction in the US economy.
ACT ON THE (POTENTIAL) REDUCTION OF INFLATION – The Democrats’ latest Build Back Better reboot, specifically marketed to fight inflation, won’t actually do so until after the 2024 presidential election, according to budget experts at the University of Pennsylvania Business School , writes our Jennifer Scholtes.
FIRST IN MM: LUDWIG ON THE ARC – Former Comptroller of the Currency Gene Ludwig urges federal regulators to use their authority under the Community Reinvestment Act to give banks more tools to extend credit to low- and middle-income people during a downturn economic. The Fed, FDIC and Office of the Comptroller of the Currency are currently accepting public comment on a proposed overhaul of the Anti-Redlining Act of 1977.
In a letter to agencies, Ludwig – who helped lead the last overhaul of the ARC during the Clinton administration – also doubled down on previous calls calls to extend the law non-bank lenders and fintechs. “This asymmetry – banks provide less than half of the country’s loans, but are the only entities obliged to ensure that their lending (and deposit) activities meet the convenience and needs of their communities – must be corrected. “, wrote Ludwig, who now chairs the Ludwig Institute for Shared Economic Prosperity.
YELLEN’S GLOBAL TAX PLAN DOESN’T GET LOVE FROM MANCHIN-SCHUMER CASE — Bloomberg’s Christopher Condon: “Tax changes included in the bill fail to bring the United States into line with a global agreement championed by Yellen and backed last year by nearly 140 countries, which aims to reshape the way multinational corporations are taxed around the world. If the United States does not get on board with the specific change – a global minimum corporate tax of 15% – it risks losing billions in tax revenue and frustrating one of President Joe Biden’s and of Yelen.
BANK OF AMERICA IN SETTLEMENT TALKS — Elizabeth Dilts Marshall of Reuters: “Bank of America said on Friday that it was entered into settlement talks with the United States Securities and Exchange Commission and the Commodity Futures Trading Commission on staff communications on unapproved devices.
KASHKARI: FEED “A LONG WAY” TO BACKWARDS — NYT’s Jeanna Smialek: “Neel Kashkari, the president of the Federal Reserve Bank of Minneapolis, suggested on Friday that the markets had taken the lead anticipating that the central bank – which has raised interest rates rapidly this year – would soon start to pull back.
CONSUMERS HAVE PROPELLED THROUGH PANDEMIC, INFLATION, SO FAR – Annie Gasparro and Theo Francis of the WSJ: “Last week revealed new evidence from companies and government that household spending is increasingly strained. Families are cutting back on purchases of items such as electronics and furniture as prices for essentials like food and gasoline have become more expensive.
—The fall in the prices of basic products such as wheat or corn is should slow the rise in consumer food prices, also reports David Harrison of the WSJ. “But economists warn it’s too early to declare victory.”
ARE WE ALREADY THERE? — WaPo’s Gerrit De Vynck, Rachel Lerman and Caroline O’Donovan: “Over the past few days, the leaders of the biggest technology, retail and consumer products companies have all attempted to answer questions about the state of the economy, which is on the verge of recession. It is complicated.”
NOWHERE TO RUN — Bloomberg’s Shubham Saharan: “The last time inflation burned, consumers could put money in the bank and watch it rise like prices on store shelves, easing much of the pain. Not this time – and it’s fueling profits for US lenders… The gap between what banks pay depositors and what they earn lending money to borrowers has not been so wide in the last half centurythe average savings account paying just 0.06%.”
DO NOT DO THAT — Marketing materials from bankrupt crypto lending company Voyager Digital included language assuring customers that their deposits were FDIC-insured in the event of the company’s bankruptcy. They were not. Both the FDIC and the Federal Reserve last week directed Voyager to “cease and desist from making false and misleading statements regarding the company’s FDIC deposit insurance status and to take immediate corrective action to remedy such misrepresentations.”
The FDIC followed the cease and desist from travel with a public warning to banks about the risks to partner with a non-bank crypto issuer that plays fast and free with marketing materials.
CHILL — According new research published by CB Insights.
BUT ARE THEY TITLES? — From Bloomberg’s Andy Hoffman: “The cryptocurrency collapse is facilitate the supply of the most sought-after watches on the second-hand market, driving down the prices of hard-to-obtain Patek Philippe and Rolex models.
A nascent two-month recovery in China home sales completed in July, as a widespread mortgage revolt sparked by fears that struggling property developers may not be able to deliver apartments that are still unfinished weighed on demand. —Cao Li of the WSJ
Foreign investors withdrew funds from emerging markets for five consecutive months in longest withdrawal streak on record, highlighting how recession fears and rising interest rates are rocking developing economies. —Jonathan Wheatley of FT
Ukraine’s president said on Sunday that the harvest of the country could be half of his usual amount this year due to the Russian invasion of Ukraine. —Reuters