Comments Off on Inflation hits another 40-year high. What does that mean for shoppers and the next Fed rate hike?
Inflation jumped again in June on a persistent climb in gas, food and rent costs, notching another 40-year high and likely solidifying the Federal Reserve’s plans for another big rate hike this month.
Prices increased 9.1% from a year earlier, up from anannual rate of 8.6% the prior month and the largest gain since November 1981, the Labor Department’s Consumer Price Index showed Wednesday. Economists surveyed by Bloomberg had estimated inflation would rise to 8.8%.
On a monthly basis, consumer prices increased 1.3%, the largest such leap since 2005, compared with a 1% rise in May.
“Ouch,” Ian Shepherdson, chief economist of Pantheon Macroeconomics, wrote in a research note of the latest surge in prices.
Amid signs that inflation is poised to gradually ease, he, along with other economists, noted June likely marked its peak, though a similar pronouncement in the spring proved premature.
Stock market reaction
The report bolsters the Federal Reserve’s plans to raise its key interest rate by a hefty three-quarters of a percentage point for a second straight month as part of an aggressive campaign to curtail inflation.
The development disappointed already dour investors. After the latest figures were released, the Dow Jones Industrial Average sank by more than 300 points. The S&P 500 fell by 37 points, roughly 1%. And yields on 10-year notes popped. In midmorning trading, they hovered at 3.03%.
What is causing inflation?
June’s surge again was led by gasoline prices, which increased 11.2% from the prior month and 59.9% annually. The good news is unleaded regular averaged $4.65 Tuesday, down from $5 a month ago.
Grocery prices rose by 1% from May and 12.2% over the past 12 months. Both gas and food costs have been elevated largely because Russia’s war in Ukraine has disrupted global supplies of oil, wheat, corn and other commodities.
In June, cereal prices rose 2.5% from the prior month and 14.2% from a year ago. Bread was up 1.6% monthly and 10.8% annually. Chicken costs increased by 1.5% from May and 17.3% yearly.
There were some encouraging signs. Bacon prices fell 1.9%, its second straight large monthly decline. And beef and veal prices decreased 2.3%.
Will food prices go down?
Commodity prices have tumbled recently amid recession fearsand ebbing consumer demand. That already has pushed down gas prices and set the stage for more moderate food price increases within months, says Wells Fargo economist Sam Bullard.
Barclays economist Pooja Sriram, however, believes higher fertilizer costs for farmers could keep grocery prices fairly high throughout the year. Russia is the leading exporter of fertilizer and the Ukraine war has driven up the cost of that commodity as well as its chief ingredient, natural gas.
Core prices, which exclude volatile food and energy items, increased 0.7% in June following a 0.6% rise the prior month, That nudged down the annual rise to 5.9% from 6% in May, teh third straight monthly decline.
What is rent inflation?
Rent climbed 0.8% monthly and 5.8% over the past year as people who hunkered down with family members during the pandemic moved into their own apartments.
There were some positive developments for summer travelers. Despite surging demand, airline fares fell 1.8% while hotel rates declined 2.8% but they’re still up 34.1% and 10% from a year earlier, respectively.
There are hints that inflation will likely soften in the months ahead. Besides falling commodity prices, supply chain troubles are abating, wage increases may be moderating and retailers’ bloated inventories are triggering big discounts for shoppers.
Also, consumer purchases have started shifting from goods to services, such as dining out and traveling, now that the pandemic is broadly easing.
“This will be the last big increase,” Shepherdson of Pantheon Macroeconomics says.
Does the report raise recession risks?
Yes, at least to some extent. Higher inflation leads consumers to rein in spending, which makes up about 70% of economic activity, and could mean bigger Fed rate hikes, which would hurt borrowing. Bank of America says the report is consistent with its call for a recession in the second half of the year.
Is this close to the worst inflation since World War II?
Not really. In March 1947, inflation hit a dizzying 19.7%. The spike was rooted in effects from the end of the war — the elimination of price controls, supply shortages and pent-up demand, according to a White House blog.
Original Article by Paul Davidson on usatoday.com, June 13, 2022
Comments Off on Korean Drug Maker Pledges to Build Plant in Morgantown
MORGANTOWN W.V. – South Korean drug manufacturer UNDBIO has signed a Memorandum of Understanding pledging to manufacture insulin in West Virginia. The letter indicates there are plans to locate the facility at the West Virginia University Research Park in Morgantown.
Mitch Carmichael, the Secretary of State for Economic Development of West Virginia and Yong Soo Jun, Chairman of UNDBIO, Inc. signed an MOU on May 17, 2022, with the state agreeing to provide fiscal, tax, and other incentives to promote the company’s production of insulin.
“I am happy to establish our relationship with the State of West Virginia to manufacture affordable insulin and insulin analogues for the diabetic population around the globe,” said UNDBIO’s Chairman Jun. in a press release. “We would welcome other partners and investors into our global insulin project,” he said.
The announcement comes with the hope that UNDBIO’s plans will come to fruition, resulting in 1,200 new manufacturing jobs in Monongalia County. UNDBIO plans to begin construction on the manufacturing plant during the second half of 2022, complete the plant in 2023 and manufacture clinical drugs for human clinical trials in 2024.
Company officials met with U.S. Senators Joe Manchin and Shelly Moore Capito who both have expressed support for the project.
“UNDBIO has showcased their commitment to bringing long-term, good-paying jobs to West Virginia and as UNDBIO, WVU and state officials continue discussions, my staff and I are prepared to support these efforts to bring manufacturing opportunities to the Mountain State,” said Manchin.
“The news of this agreement between UNDBIO and the State of West Virginia is a positive step forward in UNDBIO’s quest to manufacture insulin right here in West Virginia. While there is still more work to do to finalize this new facility, I stand ready to help to make sure this becomes a reality. I congratulate UNDBIO on this advancement and look forward to supporting them in their investment that could lead to creating more than 1,000 jobs in West Virginia.”
Original Article by Dave Wilson on wvmetronews.com, June 8, 2022
Comments Off on State’s Four Legislative Leaders Join Coalition to Bring Hydrogen Hub to West Virginia
MORGANTOWN — West Virginia’s four legislative leaders joined the West Virginia Hydrogen Hub Coalition on Thursday, adding their voices to those working to bring a hub to West Virginia.
The U.S. Department of Energy aims to establish four regional hydrogen hubs using Infrastructure Investment and Jobs Act money, and one of them will be in Appalachia, the nation’s largest natural gas-producing region. The West Virginia Hydrogen Hub Coalition submitted its official response to DOE’s first step in the process to select winning hydrogen hubs on March 21.
President Craig Blair (legislator photos submitted)
On Thursday, Sens. Joe Manchin and Shelley Moore Capito and Rep. David McKinley jointly announced that Senate President Craig Blair, Minority Leader Stephen Baldwin, House Speaker Roger Hanshaw and Minority Leader Doug Skaff joined the coalition.
Manchin, who chairs the Senate Energy and Natural Resources Committee, said, “We are thrilled to have the West Virginia legislative leadership join us in our efforts. With our abundant energy sources and strong partnerships, our state is uniquely situated to compete to develop a hydrogen hub. Our proposal showcases how West Virginia can continue to lead the country — and the world — in advancing energy technologies and bring good-paying jobs to the state.”
Capito said, “West Virginia’s leaders — Democrat and Republican — are united around the potential we know is ready to be unleashed right here in our state when it comes to investing in and developing a hydrogen hub.”
She told The Dominion Post on Thursday that DOE will likely have news on the selection process this summer. A presentation from Manchin’s office says hub selection is due in May 2023.
Capito told The Dominion Post, “The best way to handle what we see in terms of the climate and the climate changing is to innovate and research. … A hydrogen hub would be one of those innovative avenues to a cleaner, greener and more powerful future.”
Speaker Roger Hanshaw
McKinley said in the announcement, “The Infrastructure Bill has given us a once-in-a-lifetime opportunity to modernize infrastructure that will support a regional hydrogen hub. Which means West Virginia, one of the country’s largest coal, gas and oil producers, can lead an all-of-the-above energy strategy that leverages the state’s existing resources while developing next generation technologies that support good jobs and energy security for the U.S. into the future.”
The other two members of West Virginia’s Congressional delegation, Republicans Alex Mooney and Carol Miller, voted against the infrastructure bill and did not participate in the announcement.
The four legislative leaders also issued comments.
Hanshaw said, “We are creating a new economy here in West Virginia, and we stand ready to do what we can to be sure the state is attractive to this project, as well as many others.”
Leader Doug Skaff
Skaff said, “West Virginia has a long history of powering this country and bringing a hydrogen hub to the Mountain State will allow our hard-working families to be a part of powering our great nation far into the future.”
Blair commented, “As we look to expand our strategy and portfolio into the next generation, I look forward to us being leaders in energy technology.”
And Baldwin said, “For the sake of our future, we need to be a more diverse and cleaner energy state. Expanding the hydrogen market here would allow us to create jobs, produce energy for our own citizens to use, and build a more-sustainable economy.”
Blue hydrogen is produced by steam methane reforming, which requires burning natural gas to reform methane into hydrogen and carbon dioxide, from which they capture and sequester the CO2. A possible alternate, cleaner way to produce blue hydrogen is microwaves; it can produce hydrogen faster with less energy.
Grey and brown hydrogen also use steam to produce the gas, but don’t sequester it. Green hydrogen produces the gas from water.
A hub, according to the presentation by Manchin’s office, is a network of clean hydrogen producers, potential consumer and connective infrastructure. At least one hub will produce hydrogen from fossil fuels, one from renewables and one from nuclear energy (pink hydrogen).
At least one hub will demonstrate clean hydrogen use for electric generation, one for industrial applications, one for residential and commercial heating and one for transportation.
The infrastructure act included $9.5 billion for hydrogen, including $8 billion for Regional Clean Hydrogen Hubs that will jump-start the production, transport, and use of clean hydrogen across the U.S. economy; $1 billion for a Clean Hydrogen Electrolysis Program to reduce costs of hydrogen produced from clean electricity; and $500 million for Clean Hydrogen Manufacturing and Recycling initiatives to support equipment manufacturing and strong domestic supply chains.
On Feb. 15, Manchin, Capito, McKinley and Gov. Jim Justice announced the launch of the West Virginia Hydrogen Hub Coalition. On Feb. 25, they convened the initial organizing meeting. GO-WV, the Gas and Oil Association of West Virginia, is also a member.
Original Article by David Beard on dominionpost.com, April 28, 2022
Comments Off on Capito, Manchin, McKinley Offer support of Harmony Grove Interchange Project
MORGANTOWN — The push for approval of the new Harmony Grove interchange has gone federal.
In an April 27 letter to U.S. Transportation Secretary Pete Buttigieg, Senators Joe Manchin and Shelley Moore Capito and Congressman David McKinley requested the review and approval of the Interchange Justification Report that will allow the project to move forward.
The letter explains the interchange would allow direct interstate access to the Morgantown Industrial Park and references, without naming it, the Mountaintop Beverage facility currently under construction.
That facility, which is expected to be operational in November, brings with it more than $200 million in clean manufacturing investments and several hundred jobs, according to the letter. It’s also expected to bring up to 100 trucks to the park on a daily basis.
But that, Monongalia County Commission President Tom Bloom explained, is just the beginning.
“What the public needs to understand is, we have two companies that want to expand and other companies that want to move in, and all they need to hear is this major project is moving forward,” Bloom said. “We’re thrilled that not only our federal representatives, but also the governor and the state, are working with us to request this interchange.”
Capito followed up on the letter Thursday when she asked Buttigieg about the interchange specifically during a subcommittee hearing to review the U.S. Department of Transportation’s 2023 budget request.
“If safety’s your priority, this is a safety issue because of the business park that is associated, which is growing, and you know, that’s been difficult for us to be able to grow in our state,” Capito told Buttigieg. “We’re excited about the possibilities here, but it would take a lot of truck traffic out of those local areas. So, I just want to put that on your radar screen again and hope you can take a look at that.”
The current working price estimate for the interchange is $41.6 million, though that number is believed to be on the high side. The actual cost in state and/or federal dollars would be $10 million, with the new Morgantown Industrial Park TIF district paying down the rest.
Bloom said the local investment in the project coupled with the amount of economic development it promises to deliver make it a “win, win” in terms of federal infrastructure dollars.
“We’re just very, very excited about this project,” he said.
Original Article by Ben Conley on dominionpost.com, April 28, 2022
Comments Off on Nucor deal is example of how development incentives should work
While there is always reason to scrutinize economic development deals that involve government money, the pending deal to bring Nucor’s steel mill plant to Mason County looks to be a great example of sound policy.
Because government money is ultimately taxpayer money, there remains the age-old argument of whether government should be involved with private-sector development, hence the proverbial “choosing winners and losers” debate.
But in reality, government is ultimately involved in most major development efforts because private investors want some assurances of that level of support.
While the public aspect of the Nucor deal has only recently come to the surface, the work behind the scenes has been ongoing for at least six months, and we applaud the efforts of Gov. Jim Justice, Economic Development Secretary Mitch Carmichael, Commerce Secretary Ed Launch and their staffs for putting together a package that should reap benefits for all West Virginians.
What we like best about the deal, besides the obvious tremendous potential, is the structuring that requires Nucor to spend money before any incentives kick in.
As Senior Staff Writer Charles Young reports, the Memorandum of Understanding between the state and Nucor calls for the company to invest an initial $500 million in the Mason County site before West Virginia will contribute $125 million for site preparation activities, Carmichael said.
When the company invests another $250 million, West Virginia will kick in an additional $150 million.
“They must adhere to their employment thresholds and their capital expenditure thresholds,” Carmichael said, “so West Virginia is protected very well with a world-class company in this regard.”
The MOU also says that if Nucor fails to live up to its end of the deal, the state can recoup “some” funds, said Deputy Economic Development Secretary Mike Graney.
“If they don’t perform, there are clawbacks,” Graney said. “We’ll take some of that initial funding back. We don’t expect that to ever happen. These guys are serious, and they are going to do what they said they are going to do. But we still wanted to protect the taxpayer dollars.”
Carmichael and his team, as well as the West Virginia Legislature, which ultimately had to pass legislation to allow for some of the financial structuring, have done a great job of protecting the state’s investment.
And it is truly an investment that needed to be made because of the potential economic impact the plant will bring.
The mill is estimated to be a $2.7 billion project. It is projected to create about 800 manufacturing jobs, and those jobs will pay 200% of the prevailing wage, with most in the $70,000-$80,000 and upwards range.
Construction of the steel mill, which is expected to begin in 2022, is estimated to create an additional 1,000 jobs.
Nucor Corp. is a Fortune 150 company and the largest steel producer in the United States. It is based in North Carolina and produces steel by recycling scrap metal. This steelmaking process makes Nucor one of the cleanest steel producers in the world and a lead in sustainable steel production, according to press reports.
“We are incredibly excited to be building this new steel mill in West Virginia. This will be the world’s most advanced sheet steel mill, producing the most sustainable steel that will build our nation’s modern 21st-century economy,” said Leon Topalian, president and CEO of Nucor Corp. “This is a transformational project that will have a significant economic impact in Mason County and surrounding areas. We look forward to being part of the community for decade to come.”
West Virginia is fortunate that the work of Carmichael, Justice and others helped to place the Mountain State at the top of Nucor’s list after a very competitive process.
“What’s really inspiring about it is those other states felt like West Virginia really could not complete for this type of an enormous investment,” Carmichael said. “We had so many advantages once we started articulating those to the company, and they just felt very, very comfortable.”
As Gov. Justice likes to say, West Virginia has been a diamond in the rough for far too long.
Ans the long-held secret is getting out: The Mountain State can be “Wild and Wonderful,” “Almost Heaven” and “Open for Business,” to play on some of the state’s economic engine and prime it for an even brighter future.
“Nucor’s brand new facility is going to be a key part of West Virginia’s DNA long into the future. It’s going to change lives by bringing hundreds of great-paying jobs to Mason County, and the economic ripple effects will bring even more goodness to our state,” the governor said.
The Nucor deal is a great step toward that future. And the deal that’s been made is a great example of government leaders working for the greater good.
