Despite incredible headwinds the manufacturing industry in the US continues to produce and to set records.

Manufacturing employment jumped by 60,000 in October, and total employment in the sector has risen 298,000 year to date in 2021, putting it on track for the best annual job growth since 1997.

The average hourly earnings of production and nonsupervisory workers in manufacturing rose to $24.22 in October, with a 5.4% increase over the past year, the fastest wage growth since August 1982.

Nonfarm payroll employment increased by 531,000 in October, and the unemployment rate dropped to 4.6% 

Demand cooled somewhat but remained solid. Supply chain disruptions, logistics challenges, workforce shortages and soaring costs have dampened demand.

New orders for manufactured goods rose 0.2% to a record $515.9 billion in September, albeit at a slower pace. Excluding transportation equipment, manufacturing orders increased 0.7% in September. Overall, the manufacturing sector continues to expand strongly—despite significant challenges—with new orders soaring 10.2% year to date.

Private manufacturing construction spending declined 1.6% to $72.42 billion in September, falling to a five-month low. While construction activity in the manufacturing sector has risen 4.7% year-over-year, spending remains 4.9% below the $76.16 billion in activity recorded in February 2020.

The U.S. trade deficit rose from $72.81 billion in August to a record $80.93 billion in September. Goods exports fell sharply for the month, with goods imports rising. The volatility in the September data likely stemmed from ongoing supply chain difficulties, including the chip shortage. Growth in goods imports has outpaced the increase in goods exports year to date.

More positively, U.S.-manufactured goods exports totaled $831.87 billion through the first nine months of 2021, soaring 18.80% from $700.24 billion year to date in 2020.

As expected, the Federal Open Market Committee has decided to start tapering its asset purchases later this month. The Federal Reserve has been purchasing as much as $80 billion in Treasury securities and $40 billion in agency mortgage-backed securities each month since the beginning of the pandemic. It will start scaling that back by $15 billion in November, another $15 billion in December, and so on, likely ending these purchases entirely by mid-2022.

The FOMC kept the federal funds range of zero to 25 basis points, also as predicted. It is not likely to shift its interest rate policy until mid-2022, contingent on incoming economic data.

County Commissioners seemed to be in general agreement to move forward with the County Auditor’s suggestion to consolidate or reduce the hours of his office.

About a month ago, County Auditor Scott Turner brought forward the idea of consolidating or reducing to part-time the office of County Auditor. As the year ends and since next year would be a re-election year for the position, the commissioners want to initiate the process of changing the position before candidates can begin filing for election to county offices.

Duties performed by the county auditor could be accomplished on a part time basis and reducing the office from a full-time elected position could save the county as much as $100,000, said Turner, who has served in the office since 2017.

Prior to that Turner was Yellowstone County’s Director of Finance for 26 year.

Turner suggests that a 1.5 FTE would be adequate to perform the duties of the office and provide back-up. There are only a couple of processes that would require some oversight of an elected official, he said, and suggested that could be either the County Attorney or the Clerk & Recorder.

Only 13 counties have a large enough population to be required constitutionally  to have an auditor in Montana, according to Turner. Of those, seven have consolidated the position. Turner said that a survey of other counties such as Cascade, Flathead and Lewis & Clark who have consolidated the position indicates that they have been satisfied with the decision.

The commissioners asked Chief In-House Counsel for Yellowstone County Jeana Lervick to investigate the legal process and provide the necessary documents to proceed with the process.

Banks continue to face the challenge of managing excess deposits while their customers are seeking fewer loans, reports the Federal Reserve Bank of Minneapolis.

Commercial banks in the Ninth District of the Federal Reserve Bank, have experienced unprecedented deposit growth and reduced demand for loans since the onset of the COVID-19 pandemic.1 These two forces caused considerable changes in the composition of assets on bank balance sheets, driven by cautious spending by depositors as well as pandemic-related relief efforts. Montana is part of the Ninth District.

The growth in deposits at Ninth District commercial banks has significantly outpaced growth in loans since the beginning of 2020. Pandemic relief efforts starting in the second quarter of 2020 contributed to the excess deposits, while pandemic-mitigating efforts and cautious consumer behavior curbed economic activity and lowered loan demand.

Excluding PPP loans, median year-over-year loan volume throughout the pandemic was largely unchanged. The PPP loan program allowed commercial banks to originate forgivable loans for businesses during the pandemic. Banks deposited the PPP disbursements directly into customer accounts. This contributed to the large increases in excess deposits in the second quarter of 2020 and again in the first quarter of 2021, when Congress made additional PPP loan funds available.

Regardless of growth in PPP loans, deposit growth since the fourth quarter of 2019 is significant across most banks. The median deposit growth rate continues to rise across different PPP proportions even as PPP loan volume has declined significantly. Besides PPP loans, other pandemic-related relief efforts and more cautious spending habits contributed to deposit growth.

The rate of deposit growth is more pronounced at banks with a higher percentage of PPP loans to total loans. Banks with a ratio of PPP loans to total loans that is greater than 10 percent report a median growth rate of 37 percent in total deposits since the fourth quarter of 2019, compared with 23 percent growth at banks with a ratio of PPP loans to total loans of 5 percent or less.

The rate of deposit growth moderated in the second quarter of 2021 for all PPP loan proportions because the program ended in the second quarter and the volume of PPP loans declined from approximately $30 billion to $19 billion quarter over quarter in the Ninth District (approximately $400 billion to $300 billion nationwide).4

The combination of relief efforts, shifts in spending by consumers and businesses, and the search for profitability in a low-interest-rate environment has led to significant changes in bank balance sheets in the district.

As expected, given deposit growth from bank customers, the amount of cash held by banks has grown significantly; recently, however, the trend has shifted to an increase in purchases of investment securities and a decrease in other borrowings. Banks have fewer options for deploying cash, given the limited demand for loans by their customers, so they have opted to increase securities and rely less on borrowings.

To fund loans during the pandemic, Ninth District commercial banks used more liquid sources—such as excess cash—while reducing borrowings. Shifting cash into securities improved revenue, and lowered borrowings reduced expenses. While the shift in assets and liabilities has improved liquidity risk at these banks, the more liquid assets are less profitable than loans.

Surprisingly, or perhaps not, Oregon and Washington D.C. started out the month with unemployment claims were worse than the same week last year.  

WalletHub reported on new unemployment claims comparing week-over-week on October 25, with many states, including Montana, 96 percent below the peak during the COVID-19 pandemic.

23 states had unemployment claims that were lower than before the pandemic: Arkansas, Virginia, North Dakota, West Virginia, South Carolina, Delaware, Montana, Vermont, Colorado, Arizona, Pennsylvania, South Dakota, Wyoming, Kansas, Georgia, Iowa, Illinois, Washington, New Hampshire, Connecticut, Ohio, Maryland, and New Jersey.

Least recovered were Hawaii, Louisiana, Oregon, Alabama, California, Michigan, Tennessee, New Mexico, and Kentucky.

The Center Square

The costs of goods and services rose at above-normal rates again in October, as new federal economic data released, Nov. 9, show inflation continuing to impact the U.S. economy.

The Bureau of Labor Statistics reported that the producer price index, a figure that measures wholesale prices, grew another 0.6% in October, after increasing 0.7% in August and 0.5% in September. Overall, the figures show that inflation has grown 8.6% in the past 12 months ending in October, tying a record set earlier this year.

That rise in inflation means everyday goods and services are more expensive for Americans. BLS said gasoline and food helped drive this latest increase.

“One-third of the October advance in the index for final demand goods can be traced to prices for gasoline, which rose 6.7 percent,” BLS said. “The indexes for diesel fuel, fresh and dry vegetables, gas fuels, jet fuel, and plastic resins and materials also moved higher. In contrast, prices for beef and veal decreased 10.3 percent.”

Construction, in particular, became much more expensive.

“Over 60 percent of the October increase in the index for final demand can be traced to a 1.2-percent rise in prices for final demand goods,” BLS said. “The index for final demand services moved up 0.2 percent, and prices for final demand construction advanced 6.6 percent.”

The Biden administration has said the inflation is only temporary, but many economists have said it could continue well into 2023. The report came just days after promising jobs data. The Department of Labor reported that in the month of October, payroll employment increased by 531,000, surpassing expectations.

Republicans quickly laid the blame for the rising prices at the feet of President Joe Biden and pointed to inflation as a reason to stand up to Biden’s several trillion dollars in proposed new spending. Debt spending contributes to inflation since printed money helps fund federal debts.

By Evelyn Pyburn

Last week,  the regular meeting of the Board of County Commissioners was anything but typical as the commissioners considered an agenda item for requests for proposals (RFP) for the private management of Metra Park.

The public hearing was punctuated by loud voices, dissention among county commissioners, shouted outbursts from the crowded room, and standing applause.

Most of those in attendance were either opposed to the idea or were asking that more information be gathered before making a decision. Following public comment, the RFP request passed in a 2-1 vote. Commission John Ostlund voted in opposition.

Prior to voting against the RFP, Ostlund made a motion to table the issue until further information could be gathered. It failed for lack of a second.

Most of the public seemed to conclude that the RFP would finalize the decision, which both Commissioners Denis Pitman and Don Jones said was not the case.

Ostlund said that he was disappointed in what they were doing because they were “totally ignoring 100 percent of the user group asking them to slow down. We need a third-party evaluation.” He said that the commissioners sprang the idea on everyone… “they didn’t even notify users.”

He vowed to completely vet the idea which is the obligation of the commissioners, he said. “…and I’m going to see that we do that.” Ostlund said that if it was not vetted, his support for the Master Plan “is gone.” “I’m not interested in asking taxpayers to support it,” he continued without thoroughly knowing what it is they are supporting.

His comments elicited standing applause from the packed house and people from the audience began to shout comments to the commissioners such as “You should be ashamed of yourselves.”

Chairman Jones called for the audience to quiet and said he would dismiss everyone from the room if they did not.

Pitman said that requesting RFPs was part of the process that they needed to pursue in order to gather the necessary information, which is what the public was asking them to do.

Jones actually reworded the motion to be more specific that what they were voting upon was to include investigating the current management structure of Metra Park, employee skills, finances etc. Jones said that the Metra Park Advisory Board was completing a Master Plan that would take the county-owned facility into the next 50 years – “We need to make sure we have the best management structure to take us into the next 50 years.”

The request passed by the commissioners for RFPs requires that interested companies submit their qualifications by November 23, and that following a review and a public comment period, the commissioners would make a final vote on the proposal on December 7.

Pitman disagreed that this was “thrust upon people.” He said, “The vote we take today is to get information….You are coming to conclusions before the process even starts.” To do it any other way would be to not pursue the process of an RFP, which Pitman said would violate the commissioners’ policies and procedures.

Ostlund attempted to interrupt Pitman, but was chastised by Jones who said that Ostlund didn’t have the floor. When he was allowed to speak, Ostlund said ,“”I’ve never heard so much B.S. from Denis Pitman’s mouth.” Ostlund likened the RFP process to trying to get objective information from a sales person trying to sell something. “This is no process this is a railroad job,” he declared.

Jones reiterated a statement he had made before that they are not going to turn the issue over to a third party. He said that they were elected as commissioners to get information “from all sides and determine what is best course of action for the public” and to get public input. He conceded that while they had gathered some positive input about the benefits of privatizing the administration, they still don’t know the negatives.

He went on to explain that they would be talking and working with Metra Park administrators and employees to gather information. When he mentioned working with Manager Bill Dutcher, who has been at Metra Park for 40 years, Dutcher, who will retire on Dec. 31, pushed back saying that that he would have nothing to do with the process, that he would be gone. Dutcher said that he was at Metra Park for the people, pointing at those in the audience, for the employees and the users of the facility.

There were several speakers who expressed concern about what the controversy was going to do to the support for the Master Plan, which has been worked upon by the Advisory Board for two years. They pointed out that many people spent a lot of time building public support for the project and many had contributed hundreds of thousands of dollars to help promote a levy to build the structures that will be recommended in an announcement expected in the next few weeks.

One speaker threatened that if Jones and Pitman continued on this track there would be a recall petition.

By Chris Talgo, From Center Square

Several groups representing American truckers are pleading with the Biden administration to claw back its vaccine mandate and a new regulation that will make it more difficult to hire new drivers, which is scheduled to go into effect in early 2022.

According to a letter from the American Trucking Associations, Truckload Carriers Association, and others, “We are concerned a mandate will cripple an already strained supply chain.”

The letter goes on to state, “We estimate companies covered by the mandate could lose 37% of drivers at a time when the nation is already short 80,000 truck drivers. … We ask for flexibility for transportation and supply chain essential workers, particularly truck drivers who spend most of their time in their trucks and have minimal contact with colleagues and customers.”

The letter comes in response to the recent unveiling of President Biden’s federal vaccine mandate rule, released by OSHA. Per the rule, all private companies with more than 100 employees are required to have all employees vaccinated by Jan. 4, 2022. Under the rule, employers can be fined $14,000 per violation and a whopping $136,532 for those deemed “willful” violations.

Unfortunately, as the Truckload Carriers Association (TCA) explains, “TCA repeatedly called on the Administration to heed our warnings regarding this mandate’s impact on the already constrained supply chain, yet they chose to proceed with a disastrous mandate which will undoubtedly ensure the trucking industry loses a substantial number of drivers.”

TCA also issued this ominous warning, “These are the drivers the country is relying upon to deliver food, fuel, and presents for the upcoming holiday season, yet our national leadership has decided these needs must go unmet.” Over the past 18 months, the U.S. supply chain has been upended by economic disruptions due to government-mandated shutdowns, persistent inflation, and policies that have made energy and fuel costs skyrocket

Federal mandates that federal contractors require their workers to be vaccinated violates Montana law and is therefore unenforceable.

President Biden has directed new or renewed federal contracts to require COVID-19 vaccination for contractor or subcontractor employees, to which Gov. Gianforte has responded that it violates Montana law prohibiting discrimination based on a person’s vaccination status.

Recognizing that the mandate has created confusion for Montana employers and employees, the Governor issued guidance to Montanans regarding compliance and recommended reasonable accommodations for health care facilities and special rules for licensed nursing homes and long-term care and assisted living facilities.

Issued September 9, Pres. Biden’s Executive Order 14042 directs new or renewed federal contracts to require COVID-19 vaccination for contractor or subcontractor employees.

The governor wrote, “As outlined in concurrent guidance from my administration, President Biden’s executive order violates Montana law. COVID-19 vaccine mandates, including as a condition of employment, are illegal in Montana, and state law makes clear that contract terms that violate Montana public policy are unenforceable. As such, President Biden’s order is unenforceable.”

The governor also wrote, “While I encourage Montanans to consult with their health care provider and get vaccinated, doing so is voluntary and no individual should face discrimination based on their vaccination status.”

The governor’s guidance clarifies to whom the president’s executive order applies, as well as the effect of the executive order on new or renewed contracts.

Gov. Greg Gianforte announced the state is expanding access to life-saving monoclonal antibody (mAb) treatments with the opening of a new state-sponsored clinic in Missoula. This is the second state-sponsored mAb clinic in Montana – one was opened in Butte earlier.

“A life-saving tool for Montanans who contract COVID-19, monoclonal antibody treatments help reduce the strain on our hospital systems and open up ICU beds for the most critical patients,” Gov. Gianforte said. The new clinic at Providence St. Patrick Hospital in Missoula will use staff and resources through Jogan Health Solutions, a third party with which the state contracted to alleviate the strain on hospital resources. The monoclonal antibody treatment center is open to eligible, at-risk Montanans with a referral from their medical provider.

“While monoclonal antibodies are an important piece of the COVID-19 toolkit, they are only given with physician prescription once a person has contracted the virus. COVID vaccination remains the key measure in preventing a patient’s possible hospitalization and death,” Joyce Dombrouski, Chief Executive, Providence Montana said. “Partnering with the State of Montana for staffing was integral in our ability to offer this treatment locally.”

Last week, the Biden administration asked a federal appeals court in New Orleans to lift a temporary order halting a federal COVID-19 vaccination mandate on private businesses, while warning employers that they should comply with the mandate despite the “stay.”

The Fifth U.S. Circuit Court of Appeals, on Saturday, temporarily halted the mandate on private sector businesses with 100 employers or more, citing “grave” constitutional issues. Ruling on lawsuits filed by Texas, Louisiana and Mississippi, as well as a Louisiana businessman seeking to prevent the mandate from taking effect, the appeals court issued the stay saying, “Because the petitions give cause to believe there are grave statutory and constitutional issues with the Mandate, the Mandate is hereby stayed pending further action by the court.

The mandate, which could affect an estimated 100 million American workers, includes a Jan. 4 deadline for vaccination. The policy also imposes nearly $14,000 in fines per employee if businesses are caught letting their workers skirt the mandate. “Willful violations” could result in fines up to $136,000.

Republican-led states filed multiple lawsuits last week challenging the mandate’s legality. Louisiana businessman Brandon Trosclair with assistance from the Liberty Justice Center, a public interest law firm, and the New Orleans-based Pelican Institute for Public Policy, also filed suit.

Other lawsuits are pending, including an 11-state coalition, which includes Montana, filed in the 8th U.S. Circuit Court of Appeals against OSHA. Montana is joined by Alaska, Arizona, Arkansas, Iowa, Missouri, Nebraska, New Hampshire, North Dakota, South Dakota, and Wyoming.

A similar lawsuit was filed in the 6th U.S. Circuit Court of Appeals by the attorneys general of Tennessee, Idaho, Kansas, Kentucky, Ohio, Oklahoma and West Virginia.

Georgia, Florida, and Alabama have also filed a lawsuit in the 11th U.S. Circuit Court of Appeals arguing the new rules exceed the Department of Labor’s “statutory authority, fails to comply with the standards for issuing an [Emergency Temporary Standard], and conflicts with the First Amendment and the Religious Freedom Restoration Act.”

“I am confident that the courts will see this mandate for what it truly is: An attempt to make laws while bypassing Congress,” Sarah Harbison, general counsel at the Pelican Institute, said in a statement.

The administration’s 28-page legal request to lift the stay, included OSHA’s claims that a stay would likely cost dozens or even hundreds of lives per day.”

The administration claimed the OSHA’s authority is grounded in its traditional role of protecting workers from workplace dangers, such as exposure to “substances or agents” that are determined to be toxic.

“The COVID-19 virus is both a physically harmful agent and a new hazard,” the court filing said.

“We think people should not wait,” White House Deputy Press Secretary Karine Jean-Pierre was quoted by media. “We say, do not wait to take actions that will keep your workplace safe. It is important and critical to do and waiting to get more people vaccinated will lead to more outbreaks and sickness.”

A final ruling could come as early as Wednesday. If the Fifth Circuit permanently blocks the mandate, the administration could appeal directly to the U.S. Supreme Court.