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Declining world supply chain pressures are being challenged by new disruptions in China tied to the coronavirus pandemic, the New York Federal Reserve reported on Friday, Reuters reported. The regional Fed bank's December Global Supply Chain Pressure Index ticked down to 1.18 from November's revised 1.23 reading. According to the report, supply chain pressures have been easing notably since the spring of last year and bottomed in September, and have since then been bouncing around in a tight range. In a blog posting accompanying the report, bank economists said "while supply chain disruptions have significantly diminished over the course of 2022, the reversion of the index toward a normal historical range has paused over the past three months," adding that "our analysis attributes the recent pause largely to the pandemic in China amid an easing of 'Zero COVID' policies."
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In related news, the United States and Japan on Friday launched a new task force to promote human rights and international labor standards in supply chains and said they would invite other governments to join the initiative, Reuters reported. U.S. Trade Representative Katherine Tai signed a memorandum on the initiative in Washington with Japan's Minister of Economy, Trade and Industry Yasutoshi Nishimura. Japan's Yomiuri Shimbun newspaper this week cited Japanese officials as saying the move was spurred by issues such as alleged forced labor of minority Muslims in China's Xinjiang region and the new body will aim to promulgate within Japan regulations that Washington has strengthened to tackle such problems. Tai and Nishimura said they would invite other governments to join the effort. "The United States and Japan cannot do this alone," Tai said at the ceremony. "To make this work, we must partner with all relevant stakeholders — worker organizations, businesses, and civil society — to bring about lasting and meaningful change. We must also invite other governments to join us as we push ahead to safeguard the dignity of workers everywhere." The signing came ahead of a visit to Washington next week by Japanese Prime Minister Fumio Kishida for talks expected to focus on shared concerns about China's growing might and other pressing international issues.
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New data from JPMorgan Asset Management published Monday shows estimated "excess savings" from U.S. households now stand at $900 billion, down from a peak of $2.1 trillion in early 2021 and roughly $1.9 trillion at the beginning of last year, YahooFinance.com reported. These savings have been drawn down as the personal savings rate has fallen sharply from historic highs seen during the pandemic. The latest data on personal income and outlays from the BEA, released on December 23, showed the personal savings rate stood at 2.4% in November, down from a record high of 33.6% in March 2020. Stimulus programs rolled out during the pandemic saw a surge in the household savings rate, which typically floated in a range between 7% and 9% of income in the years before the pandemic. Households saved more than 10% of their income in each month between March 2020 and May 2021, building a multi-trillion dollar stockpile of savings to run down in the future. As has been chronicled over the past two years, these accumulated savings for consumers have powered robust spending, even in the face of 40-year highs in inflation and a softening labor market. But with no new stimulus programs imminent and the economy showing some signs of feeling the impact of the Federal Reserve's aggressive rate hikes, the ability for U.S. consumers to power unexpected growth will likely to come to an end.

A U.S. appeals court on Monday said the White House could not require federal contractors to ensure that their workers are vaccinated against COVID-19 as a condition of government contracts, Reuters reported. The U.S. government has contracts with thousands of companies, and courts have said the issue could affect up to 20% of U.S. workers. A panel of the 5th Circuit Court of Appeals voted 2-1 to uphold a lower court decision that blocked President Joe Biden's September 2021 contractor vaccine executive order in those states after Louisiana, Indiana, and Mississippi brought suit to seek invalidation of the mandate. The court said Biden wanted it "to ratify an exercise of proprietary authority that would permit him to unilaterally impose a healthcare decision on one-fifth of all employees in the United States. We decline to do so." The majority opinion written by Judge Kurt Engelhardt said a broad interpretation of the law could give Biden "nearly unlimited authority to introduce requirements into federal contracts." Illustrating that point, he added, "hypothetically, the president could mandate that all employees of federal contractors reduce their BMI (body mass index) below a certain number on the theory that obesity is a primary contributor to unhealthiness and absenteeism." The Justice Department defended the mandate in a court filing, saying Biden's order was justified under the Procurement Act. Judge James Graves' dissent noted this was the first executive order under the Procurement Act to be struck down.

Many small businesses that received federal pandemic aid are now on the hook for repayments, and some say the timing couldn’t be worse, the Wall Street Journal reported. WrightIMC, based in Allen, Texas, borrowed $150,000 from the Small Business Administration’s Covid-disaster loan program two years ago. The 20-person digital marketing agency made its first $1,600 loan payment this month, just as ad sales are softening. The disaster loan “has certainly helped us to survive and avoid layoffs,” said owner Tony Wright, who has frozen hiring and is cutting expenses as customers tighten their belts. “Ironically the payback is coming at a time when we are seeing a steeper decline in business than during the pandemic,” he said. “Maybe this isn’t the best time to have everyone start paying back.” The SBA issued roughly $390 billion in COVID-19 disaster loans to nearly four million small businesses and nonprofits. Unlike forgivable loans issued through the federal Paycheck Protection Program, the disaster loans were designed to be repaid. Now after several deferrals, the bills are coming due. For 1.2 million COVID-19 disaster loans, the first payments are due this month; another one million loans enter repayment in January. Borrowers began repaying 427,000 loans in October or November.

A commercial insurance policy doesn’t cover the income a business lost when the governor ordered a shutdown early in the COVID-19 pandemic, the Ohio Supreme Court said yesterday in a decision consistent with multiple court rulings nationally weighing similar questions, the Associated Press reported. The state’s high court found that the temporary presence of COVID-19 in a community or at a business and the temporary presence of an infected person don’t amount to a direct physical loss that might be covered. “Many other state and federal courts considering insurance claims for business losses due to COVID and related shutdown orders have concluded that the mere loss of use of a premises does not constitute a direct physical loss,” the Ohio court said. A northeastern Ohio audiology company, Neuro-Communication Services Inc., had argued that its “all-risk” policy should cover financial losses from the shutdown. It was closed for several weeks in the spring of 2020 and said it suffered “significant income losses,” according to a court filing that didn’t specify the amount.

Chinese hackers have stolen tens of millions of dollars worth of U.S. COVID relief benefits since 2020, the Secret Service said on Monday, Reuters reported. The Secret Service declined to provide any additional details but confirmed a report by NBC News that said that the Chinese hacking team that is reportedly responsible is known within the security research community as APT41 or Winnti. APT41 is a prolific cybercriminal group that had conducted a mix of government-backed cyber intrusions and financially motivated data breaches, according to experts. Several members of the hacking group were indicted in 2019 and 2020 by the U.S. Justice Department for spying on over 100 companies, including software development companies, telecommunications providers, social media firms, and video game developers.

Cineworld Group Plc said it intends to emerge from bankruptcy intact after senior lenders were said to be considering a sale process for its east European operations, Bloomberg News reported. The London-based company filed for chapter 11 bankruptcy in Texas in September to cut a near $9 billion pile of debt and leases. “Cineworld remains committed to working with its key stakeholders to develop a Chapter 11 reorganization plan that seeks to maximize value for the benefit of moviegoers and all other stakeholders,” a spokesperson said on Sunday. “Cineworld has not initiated, and does not intend to initiate, an individual auction for any of its US, U.K. or RoW [rest of world] businesses on an individual basis.” The statement follows a Bloomberg News report on Friday that Cineworld’s creditors had held talks about breaking up the chain and selling its eastern European operations. According to people familiar with the matter, who asked not to be identified discussing private deliberations, the company’s largest senior creditors were weighing the sale of Cinema City, Yes Planet and Rav-Chen, an Israeli operation. The eastern European operations include cinemas in Poland, Hungary and Romania.

Financial technology firms abdicated their responsibility to screen out fraud in applications for a federal program designed to help small businesses stay open and keep workers employed during the pandemic, a report by a House investigations panel said yesterday. The House Select Subcommittee on the Coronavirus Crisis launched its investigation of the firms in May 2021 after public reports that the firms were linked to disproportionate numbers of fraudulent loans issued under the Paycheck Protection Program. Former President Donald Trump rolled out the Paycheck Protection Program to help small businesses stay open and keep their workers employed. President Joe Biden maintained the program and directed money to more low-income and minority-owned companies. All told, $800 billion was spent on the program. The financial technology firms reviewed PPP applications for lenders, which would ultimately distribute PPP money to businesses. The report said two start-ups, Blueacorn PPP and Womply Inc. — which reviewed one in every three funded PPP loans in 2021 — were connected to significant percentages of PPP loan applications with indicators of fraud. It said the firms used questionable screening procedures and business practices in reviewing the loans, leading to “the needless loss of taxpayer dollars,” the report said. The firms “took billions in fees from taxpayers while becoming easy targets for those who sought to defraud the PPP.” The report said Womply’s fraud prevention practices were so lax that lenders describe its systems as “put together with duct tape and gum.” It said Womply’s software became a preferred product for criminal enterprises seeking to defraud the government of PPP loans. The firm also received over $5 million in PPP loans for itself, which the Small Business Administration later determined it was ineligible to receive.