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Westlake Legal Group > Boeing Company

Three U.S. Airlines Extend Halt on Boeing 737 Max Flights

Westlake Legal Group 14max1-facebookJumbo Three U.S. Airlines Extend Halt on Boeing 737 Max Flights United Continental Holdings Inc United Airlines Southwest Airlines Company Boeing Company Boeing 737 Max Groundings and Safety Concerns (2019) Airlines and Airplanes

All three U.S. carriers that use Boeing’s 737 Max jetliner have again put off returning the plane to their schedules.

On Friday, United Airlines said it would operate without the jet until Sept. 4, while American Airlines said it would do so through Aug. 17. Southwest Airlines said Thursday that it would do likewise through Aug. 10.

The three airlines had previously said they expected to bring the 737 Max back in June, but none had provided a formal update since Boeing said last month that it did not expect regulatory approval to fly the jet until June or July. Once approval is granted, airlines will have to prepare the planes and train pilots, which would take weeks.

United said Friday that its decision allowed it to plan service during the peak summer travel season with greater certainty, even if regulators clear the 737 Max to fly sooner.

After it reported quarterly earnings call last month, Andrew Nocella, United’s chief commercial officer, said the company did not expect to fly the Max this summer. United has 14 of the 737 Max jets in its fleet. Sixteen more have been produced for the airline, with 155 on order.

Southwest said Thursday that it had chosen to extend its suspension of 737 Max flights in light of “continued uncertainty around the timing” of the jet’s return to service. American said it would formally change its schedule later this month and notify customers whose trips were affected.

The Max has been grounded worldwide after two crashes, in late 2018 and early 2019, killed a total of 346 people. An automated anti-stall system called MCAS was identified as a common factor in the disasters.

To fly again, the 737 Max must overcome a series of hurdles. Boeing will have to resolve several issues in collaboration with regulators, including fixing the problems associated with MCAS and determining whether the company needs to separate wire bundles that could, in rare cases, short circuit and possibly lead to catastrophic failure. Regulators will then have to test the plane and determine how pilots should be trained to fly it.

The problems with the 737 Max have created an opportunity for Airbus, Boeing’s European rival, but Airbus has such a lengthy backlog that it cannot immediately benefit from Boeing’s troubles.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Three U.S. Airlines Extend Halt on Boeing 737 Max Flights

Westlake Legal Group 14max1-facebookJumbo Three U.S. Airlines Extend Halt on Boeing 737 Max Flights United Continental Holdings Inc United Airlines Southwest Airlines Company Boeing Company Boeing 737 Max Groundings and Safety Concerns (2019) Airlines and Airplanes

All three U.S. carriers that use Boeing’s 737 Max jetliner have again put off returning the plane to their schedules.

On Friday, United Airlines said it would operate without the jet until Sept. 4, while American Airlines said it would do so through Aug. 17. Southwest Airlines said Thursday that it would do likewise through Aug. 10.

The three airlines had previously said they expected to bring the 737 Max back in June, but none had provided a formal update since Boeing said last month that it did not expect regulatory approval to fly the jet until June or July. Once approval is granted, airlines will have to prepare the planes and train pilots, which would take weeks.

United said Friday that its decision allowed it to plan service during the peak summer travel season with greater certainty, even if regulators clear the 737 Max to fly sooner.

After it reported quarterly earnings call last month, Andrew Nocella, United’s chief commercial officer, said the company did not expect to fly the Max this summer. United has 14 of the 737 Max jets in its fleet. Sixteen more have been produced for the airline, with 155 on order.

Southwest said Thursday that it had chosen to extend its suspension of 737 Max flights in light of “continued uncertainty around the timing” of the jet’s return to service. American said it would formally change its schedule later this month and notify customers whose trips were affected.

The Max has been grounded worldwide after two crashes, in late 2018 and early 2019, killed a total of 346 people. An automated anti-stall system called MCAS was identified as a common factor in the disasters.

To fly again, the 737 Max must overcome a series of hurdles. Boeing will have to resolve several issues in collaboration with regulators, including fixing the problems associated with MCAS and determining whether the company needs to separate wire bundles that could, in rare cases, short circuit and possibly lead to catastrophic failure. Regulators will then have to test the plane and determine how pilots should be trained to fly it.

The problems with the 737 Max have created an opportunity for Airbus, Boeing’s European rival, but Airbus has such a lengthy backlog that it cannot immediately benefit from Boeing’s troubles.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

As Boeing Jets Sit Idle, Airbus Can’t Make Planes Fast Enough

Westlake Legal Group 13airbus-1-facebookJumbo As Boeing Jets Sit Idle, Airbus Can’t Make Planes Fast Enough Faury, Guillaume Factories and Manufacturing Company Reports Boeing Company Boeing 737 Max Groundings and Safety Concerns (2019) Airlines and Airplanes Airbus Industrie

PARIS — The troubles plaguing Boeing after the yearlong grounding of its 737 Max plane have created an unusual opening for its chief rival, Airbus, to swoop in and grab business. There’s just one hitch: Airbus is in no position to benefit.

The European aerospace giant, which last year took the title from Boeing as the world’s biggest plane maker, has such a large backlog of orders to fill that it cannot immediately produce more of its popular narrow-body jets that airlines view as an alternative to the Max.

“It might look like a paradox, but in the short term, we don’t benefit from the situation with our competitor,” Airbus’s chief executive, Guillaume Faury, said Thursday at a news conference in Toulouse, France, announcing the company’s 2019 annual results.

Airbus has been unable to take advantage of the shortfall at Boeing partly because it can’t build planes fast enough. Production of Airbus’s A320 jets — the main competitor to the 737 Max and the bulk of Airbus’s commercial business — is months behind schedule because of slowdowns at some of its European factories.

As it is, the company’s A320 jets are sold out through 2025, Mr. Faury said, making it “difficult if not impossible” to make new planes quickly for airlines that have been left scrambling to find an alternative since Boeing stopped producing the Max.

Even so, in the long-running duel between the two rivals for the top spot in commercial aviation, Airbus is riding high.

In the year since Boeing’s most important plane was grounded after two deadly crashes killed 346 people, orders for the Max have dried up, and Boeing has been unable to deliver the roughly 400 Max planes it built since the grounding began in March.

Last month, Boeing said the costs associated with the Max grounding were likely to exceed $18 billion. Those costs may rise further, with airlines that were counting on the Max continuing to lose money and the 737 factory in Renton, Wash., still shut down.

Boeing said this week that it did not record any new orders for commercial airplanes in January, and that it delivered just 13 planes in the month. Though the start of the year is usually a slow time for orders, and the deliveries were dented by the Max grounding, the dismal numbers were a reminder of the depths of Boeing’s problems. It was the first time in decades that Boeing failed to record any commercial orders in January.

Airbus has won several competitive orders in recent months. In December, Qantas picked Airbus over Boeing to supply jets for what will be the world’s longest nonstop commercial routes, from Australia to the New York area. Also last year, United Airlines ordered 50 Airbus jets.

Still, on Thursday, Airbus reported an overall loss of 1.36 billion euros, or $1.48 billion, for 2019. The main reason for the shortfall was an agreement to pay $4 billion in fines to France, Britain and the United States to settle a lengthy global corruption investigation, removing a legal cloud as it sought to keep ahead of Boeing.

Despite the hit, Airbus reported record deliveries in 2019 of 863 commercial aircraft, up from 800 in the year before, and an increase in orders to 768 jets, from 747, as Boeing stumbled. With the Max grounded, Airbus also sought to shore up its advantage in the narrow-body market by raising its stake in the A220, a jet developed by Bombardier, a Canadian plane maker.

Delivering on orders is Airbus’s biggest challenge. Mr. Faury said the company planned to ramp up production of the A320neo, its best-selling single-aisle jet and an alternative to the Max, to around 67 a month in 2023, up from a target of 63 a month in 2021. Suppliers had balked when Airbus sought to accelerate the timetable further, he noted.

But analysts said splashing money on increasing production might be a problem if it made the planes more expensive, or if Airbus had to slow production again.

“They’re going to end up effectively over-geared,” said Andrew Charlton, the managing director at the consulting firm Aviation Advocacy. “They’re going to have all these people, factory lines that they’re going to have to shut down again.”

For now, however, even if Airbus continued to produce planes at the same rate, it is likely to stay ahead of Boeing, said Richard Aboulafia, vice president for analysis at Teal Group. “By doing nothing, they’re doing a great deal,” he said. “Market trends are benefiting them hugely.”

Airlines have focused on flying point to point, rather than routing through giant hubs, a shift that led to the sunsetting of the Airbus A380, one of the world’s largest jets. For these sorts of flights, airlines prefer to use planes from the Airbus A320 family or the Boeing 737 Max 8 — and at the moment, all the orders are for Airbus A320-type planes, Mr. Aboulafia said.

“This is the best of all worlds for Airbus,” he said. “It’s an enviable position.”

The Max crisis is also affecting Boeing in ways that go beyond immediate costs, lost orders and delayed deliveries. Plans for the company’s next major commercial airplane have effectively been put off.

“There is a benefit to Airbus from the Max grounding,” said Scott Hamilton, managing director of Leeham, an aviation consultancy. “It has delayed any decision by Boeing for a new midmarket airplane.”

Still, the Max could be flying soon. The head of the Federal Aviation Administration said last week that a critical test flight could happen in the next few weeks, setting in motion the complex process of clearing the plane’s return to service. If no other major problems with the Max are found, airlines could be using the plane for commercial flights this summer.

And when that happens, Boeing can start delivering its stockpiled jets, and could start logging new orders for the Max again.

“When the 737 Max is released and cleared for flying, it’s going to be the safest airplane in the world,” Mr. Charlton said, pointing out that British Airways placed an order for 200 Max planes in June after the second fatal crash. “There’s going to be no bit of that airplane that hasn’t been crawled over a million times.”

If Boeing then opts to offer heavy discounts, Airbus could be forced to do the same. Airlines can seek discounts after their planes have been ordered.

“Suddenly, their order book becomes a burden, not an asset,” he said.

Liz Alderman reported from Paris, and David Gelles from New York. Amie Tsang contributed reporting from London.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

U.S. Growth at Slowest Since 2016, Complicating Trump’s Pitch

The American economy turned in a weaker annual performance last year than in 2018, held back by developments that set the stage for slower growth to come.

Gross domestic product — which measures the value of goods and services produced inside the United States — grew at a 2.1 percent annual rate between October and December, the same as the previous three months, according to preliminary data released by the Commerce Department on Thursday.

A shrinking trade deficit resulting from a steep falloff in imports helped bolster the fourth quarter’s reading, as did a revived housing sector. Consumer spending expanded, but at a slower pace than during the summer.

Year-over-year growth was 2.3 percent in 2019, compared with 2.5 percent a year earlier.

“In the bigger picture on 2019, growth was solid,” said Matthew Luzzetti, chief United States economist for Deutsche Bank Securities. But he said a key element, domestic demand, disappointed, growing by 2.2 percent as consumers and businesses pulled back on spending. That was the weakest figure since 1.8 percent in 2013.

In the second half of 2017 and in some of 2018, the annual growth rate surged past 3 percent, helped by hearty tax cuts and government spending. And it continued to sail ahead at the start of last year, reaching 3.1 percent between January and March.

But the stimulus effect faded, and that growth level now looks more like an aberration. The economy has not expanded by 3 percent or more in a full calendar year since 2005.

Most economists now see normal growth circling the 2 percent mark.

The slowdown, in part, reflects a maturing labor market, where the official jobless rate creeps along at half-century lows as the expansion heads toward its 11th anniversary and a hefty chunk of the population ages into retirement.

“Underneath what you’re seeing is slower domestic activity,” said Kathy Bostjancic, chief United States financial economist at Oxford Economics. “It’s just the natural state of things.”

Federal Reserve officials have maintained a wait-and-see approach on the economy, and on Wednesday left benchmark interest rates unchanged. The inflation rate has remained stubbornly below the Fed’s target of 2 percent.

One measure of inflation reported on Thursday, the personal consumption expenditure index, was unexpectedly weak. Excluding the volatile categories of food and energy, the index increased just 1.3 percent on an annual basis.

“That was the biggest surprise in the report,” Mr. Luzzetti of Deutsche Bank said. Jerome H. Powell, the Fed chair, has “become increasingly worried about persistently low inflation and feeding into lower inflation expectations,” he said, “so these data do put some additional pressure on the Fed around the middle of the year when they’re doing this policy review.”

The economy’s resilience has been one of the Trump’s administration’s most notable accomplishments, and is sure to loom large as the 2020 presidential campaign gains momentum.

President Trump has maintained an enthusiastic bullishness on the economy even though the annual growth rate has fallen short of his promises of 3 or 4 percent.

At the World Economic Forum in Davos, Switzerland, this month, he declared that “the United States is in the midst of an economic boom the likes of which the world has never seen before.”

Mr. Trump has spread blame for the economic slowdown, reserving his harshest criticism for the Federal Reserve Bank, which raised benchmark interest rates between 2015 and 2018 before cutting rates three times last year.

“No. 1, the Fed was not good,” he said. “Had we not done the big raise on interest, I think we would have been close to 4 percent.”

The president also mentioned the six-week strike at General Motors last fall and the continuing turmoil at Boeing, the nation’s largest aerospace manufacturer and largest manufacturing exporter, after accidents involving two of its 737 Max airplanes that killed 346 people.

ImageWestlake Legal Group merlin_152689473_0048f378-f43b-42c5-8bc4-3d25e3071537-articleLarge U.S. Growth at Slowest Since 2016, Complicating Trump’s Pitch United States Economy Trump, Donald J International Trade and World Market Gross Domestic Product Commerce Department Boeing Company

Boeing 737 Max airplanes on the assembly line last year in Renton, Wash. Boeing’s troubles with the airliner hurt economic output.Credit…Ruth Fremson/The New York Times

December has usually been a strong month for Boeing, with average sales of 234 airplanes over the past five years, Ian Shepherdson, chief United States economist at Pantheon Macroeconomics, noted in a newsletter. Last month, it sold just three. Strong sales of defense aircraft after Congress raised military spending offset the decline.

Still, Boeing’s halt in 737 Max production will continue to ripple throughout the economy in the coming year. This week, one of the airplane manufacturer’s suppliers, Arconic, said it expected to lose $400 million in Boeing sales and cut jobs. Another contractor, Spirit AeroSystems Holdings, recently announced that it was eliminating 2,800 jobs this month. Hundreds of other companies are also grappling to manage the fallout.

Analysts say they expect Boeing’s disrupted production to shave half a percentage point off G.D.P. in the first three months of this year.

Imports fell sharply in September after the United States imposed tariffs on China because some American companies held off buying goods, hoping that the Trump administration might soon strike a trade deal that reduced or removed the tariffs.

As tensions with China cooled in December, imports revived, according to figures released Wednesday. And with a Phase 1 trade deal now signed, they might climb further in the months to come.

Rising imports push down G.D.P. because the measure counts only the value of goods and services produced within a country’s borders. When a nation buys more things from abroad than it sells — the definition of a trade deficit — it pushes down G.D.P.

While the deficit excluding oil steadily climbed through most of President Trump’s tenure, it had fallen sharply in recent months before December’s figures came in.

The Trump administration has made lowering the American trade deficit a goal. Economists, though, have opposed using the deficit as a scorecard: It can fall for a variety of reasons, and not all of them are good.

The deficit can fall because exports are growing, or because imports are shrinking, or both. For example, a boom in manufacturing can reduce the deficit by pushing imported products out of the American market and feeding a surge in exports — the outcome the Trump administration wanted to engineer.

But the deficit can also fall because the pace of the American economy is slowing, making consumers less likely to buy imported goods and businesses less likely to invest in the United States. And that has been the situation in the United States, economists say.

“There is no evidence of those broader positive developments,” said Brad W. Setser, a senior fellow in international economics at the Council on Foreign Relations. “There is no growth in exports, and manufacturing is weak. So to the extent that tariffs have succeeded in bringing the trade deficit down, they have done so largely by reducing U.S. demand, not by raising U.S. production.”

Businesses are hesitant to invest when they are unsure of what’s ahead.

According to Ben Herzon, executive director of United States economics at Macroeconomic Advisers, a forecasting firm, research shows that the “level of investment spending recently has been about $100 billion lower that it would have had there been no uncertainty about trade policy.”

That suggests there is room for more investment if trade policy settles.

Tensions with China have eased with the signing of the Phase 1 pact. And this week, Mr. Trump signed the new North American trade agreement with Canada and Mexico into law. But tariffs remain on two-thirds of Chinese imports. At the same time, trade frictions with Europe over tariffs, airplane subsidies, digital taxes and the World Trade Organization have ratcheted up.

Also unsettling is the outbreak in China and spread of a mysterious and deadly virus that has the potential to rattle investors, and slow growth in Asia.

On the domestic front, Mr. Trump’s impeachment trial in the Senate and the coming presidential election add another large dose of political uncertainty.

No matter who becomes the Democrats’ nominee, “we’re likely to have two candidates with very different views on tax, regulatory and trade policy,” said Mr. Luzzetti of Deutsche Bank. “Businesses don’t know which direction that’s going to go in, so they may hold back on spending projects.”

Mr. Luzzetti said the volatility in the data because of trade and Boeing would make it hard to gauge the underlying growth dynamics until midyear.

Although wage growth and business investment have slacked off, consumers’ confidence in the economy has been unshaken. Optimism about the ease of finding a job helped fuel the rise in its most recent monthly measure of confidence, the Conference Board, a business research group, reported this week.

Consumer spending accounts for two-thirds of economic activity, and enthusiasm drives growth.

The growth, though, is not spread evenly. “The manufacturing and service sectors are telling two slightly different stories,” said Emily Weis, macro strategist at State Street Corporation, a large financial institution based in Boston.

While spending on services has remained strong, manufacturing in the United States has yet to revive, despite signs that it has stabilized abroad.

December was the fifth month in a row that the sector had declined. One large company, 3M, which makes Post-it notes and a wide range of other consumer and office products, announced this week that it was laying off 1,500 people globally.

“Manufacturing has generally underwhelmed in the U.S.,” Ms. Weis said.

The Commerce Department will revise the fourth-quarter results twice, as more data comes in.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

U.S. Economy Grew at 2.1% Rate in Fourth Quarter

The American economy turned in a weaker annual performance last year than in 2018, held back by developments that set the stage for slower growth to come.

Gross domestic product — which measures the value of goods and services produced inside the United States — grew at a 2.1 percent annual rate between October and December, the same as the previous three months, according to preliminary data released by the Commerce Department on Thursday.

A shrinking trade deficit resulting from a steep falloff in imports helped bolster the fourth quarter’s reading, as did a revived housing sector. Business investment and consumer spending expanded, but at a slower pace than they had during the summer.

In the second half of 2017 and in some of 2018, the annual growth rate surged past 3 percent, helped by hearty tax cuts and government spending. And it continued to sail ahead at the start of last year, reaching 3.1 percent between January and March.

But the stimulus effect faded, and that growth level now looks more like an aberration. The economy has not expanded by 3 percent or more in a full calendar year since 2005. Year-over-year growth was 2.3 percent in 2019, compared with 2.5 percent a year earlier.

Most economists now see normal growth circling the 2 percent mark.

The slowdown, in part, reflects a maturing labor market, where the official jobless rate creeps along at half-century lows as the expansion heads toward its 11th anniversary and a hefty chunk of the population ages into retirement.

“Underneath what you’re seeing is slower domestic activity,” said Kathy Bostjancic, chief United States financial economist at Oxford Economics. “It’s just the natural state of things.”

ImageWestlake Legal Group merlin_164333802_4124a6b1-19c1-406f-810b-f9cf2eaf1a13-articleLarge U.S. Economy Grew at 2.1% Rate in Fourth Quarter United States Economy Trump, Donald J International Trade and World Market Gross Domestic Product Commerce Department Boeing Company

Caterpillar equipment in November awaiting export to Asia from Tacoma, Wash.Credit…Ted S. Warren/Associated Press

Imports fell sharply in September after the United States imposed tariffs on China because some American companies held off buying goods, hoping that the Trump administration might soon strike a trade deal that reduced or removed the tariffs.

As tensions with China cooled in December, imports revived. And with a Phase 1 trade deal now signed, they might climb further in the months to come.

Rising imports push down G.D.P. because the measure counts only the value of goods and services produced within a country’s borders. When a nation buys more things from abroad than it sells — the definition of a trade deficit — it pushes down G.D.P.

While the deficit excluding oil steadily climbed through most of President Trump’s tenure, it had fallen sharply in recent months before December’s figures came in.

The Trump administration has made lowering the American trade deficit a goal. Economists, though, have opposed using the deficit as a scorecard: It can fall for a variety of reasons, and not all of them are good.

The deficit can fall because exports are growing, or because imports are shrinking, or both. For example, a boom in manufacturing can reduce the deficit by pushing imported products out of the American market and feeding a surge in exports — the outcome the Trump administration wanted to engineer.

But the deficit can also fall because the pace of the American economy is slowing, making consumers less likely to buy imported goods and businesses less likely to invest in the United States. And that has been the situation in the United States, economists say.

“There is no evidence of those broader positive developments,” said Brad W. Setser, a senior fellow in international economics at the Council on Foreign Relations. “There is no growth in exports, and manufacturing is weak. So to the extent that tariffs have succeeded in bringing the trade deficit down, they have done so largely by reducing U.S. demand, not by raising U.S. production.”

The economy’s resilience has been one of the Trump’s administration’s most notable accomplishments, and is sure to loom large as the 2020 presidential campaign gains momentum.

President Trump has maintained an enthusiastic bullishness on the economy even though the annual growth rate has fallen short of his promises of 3 or 4 percent.

At the World Economic Forum in Davos, Switzerland, this month, he declared that “the United States is in the midst of an economic boom the likes of which the world has never seen before.”

Mr. Trump has spread blame for the economic slowdown, reserving his harshest criticism for the Federal Reserve Bank, which raised benchmark interest rates between 2015 and 2018 before cutting rates three times last year.

“No. 1, the Fed was not good,” he said. “Had we not done the big raise on interest, I think we would have been close to 4 percent.”

The president also mentioned the six-week strike at General Motors last fall and the continuing turmoil at Boeing, the nation’s largest aerospace manufacturer and largest manufacturing exporter, after accidents involving two of its 737 Max airplanes that killed 346 people.

December has usually been a strong month for Boeing, with average sales of 234 airplanes over the past five years, Ian Shepherdson, chief United States economist at Pantheon Macroeconomics, noted in a newsletter. Last month, it sold just three. Strong sales of defense aircraft after Congress raised military spending offset the decline.

Still, Boeing’s halt in 737 Max production will continue to ripple throughout the economy in the coming year. This week, one of the airplane manufacturer’s suppliers, Arconic, said it expected to lose $400 million in Boeing sales and cut jobs. Another contractor, Spirit AeroSystems Holdings, recently announced that it was eliminating 2,800 jobs this month. Hundreds of other companies are also grappling to manage the fallout.

Analysts say they expect Boeing’s disrupted production to shave half a percentage point off G.D.P. in the first three months of this year.

Businesses are hesitant to invest when they are unsure of what’s ahead.

According to Ben Herzon, executive director of United States economics at Macroeconomic Advisers, a forecasting firm, research shows that the “level of investment spending recently has been about $100 billion lower that it would have had there been no uncertainty about trade policy.”

That suggests there is room for more investment if trade policy settles.

Tensions with China have eased with the signing of the Phase 1 pact. And this week, Mr. Trump signed the new North American trade agreement with Canada and Mexico into law. But tariffs remain on two-thirds of Chinese imports. At the same time, trade frictions with Europe over tariffs, airplane subsidies, digital taxes and the World Trade Organization have ratcheted up.

Also unsettling is the outbreak in China and spread of a mysterious and deadly virus that has the potential to rattle investors, and slow growth in Asia.

On the domestic front, Mr. Trump’s impeachment trial in the Senate and the coming presidential election add another large dose of political uncertainty.

No matter who becomes the Democrats’ nominee, “we’re likely to have two candidates with very different views on tax, regulatory and trade policy,” said Matthew Luzzetti, chief United States economist for Deutsche Bank Securities. “Businesses don’t know which direction that’s going to go in, so they may hold back on spending projects.”

Mr. Luzzetti said the volatility in the data because of trade and Boeing would make it hard to gauge the underlying growth dynamics until midyear.

Although wage growth and business investment have slacked off, consumers’ confidence in the economy has been unshaken. Optimism about the ease of finding a job helped fuel the rise in its most recent monthly measure of confidence, the Conference Board, a business research group, reported this week.

Consumer spending accounts for two-thirds of economic activity, and enthusiasm drives growth.

The growth, though, is not spread evenly. “The manufacturing and service sectors are telling two slightly different stories,” said Emily Weis, macro strategist at State Street Corporation, a large financial institution based in Boston.

While spending on services has remained strong, manufacturing in the United States has yet to revive, despite signs that it has stabilized abroad.

December was the fifth month in a row that the sector had declined. One large company, 3M, which makes Post-it notes and a wide range of other consumer and office products, announced this week that it was laying off 1,500 people globally.

“Manufacturing has generally underwhelmed in the U.S.,” Ms. Weis said.

The Commerce Department will revise the fourth-quarter results twice, as more data comes in.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

What Will Today’s G.D.P. Reading Show? Here’s a Preview.

Westlake Legal Group 30econ2-facebookJumbo What Will Today’s G.D.P. Reading Show? Here’s a Preview. United States Economy Trump, Donald J International Trade and World Market Gross Domestic Product Commerce Department Boeing Company

The Commerce Department will release its initial estimate of the gross domestic product — the broadest measure of goods and services produced in the economy — for the fourth quarter of 2019 at 8:30 a.m. on Thursday. Here’s what to watch for:

  • Wall Street analysts expect the figures to show that the economy grew at an annual rate of about 2 percent from October through December, a shade behind the 2.1 percent growth over the previous three months.

  • A fourth-quarter growth rate of 2 percent would amount to an increase of 2.3 percent year-over-year. That is weaker than the 2.5 percent rate for 2018, setting the stage for slower growth to come.

The economy continues to expand, even though it has done so more slowly in recent months.

In the second half of 2017 and in some of 2018, the annual growth rate surged past 3 percent, helped by hearty tax cuts and government spending. And it continued to sail ahead at the start of last year, reaching 3.1 percent between January and March.

That level now looks more like an aberration, as the temporary spurs faded. Most economists see normal growth circling the 2 percent mark.

The slowdown, in part, reflects a maturing labor market in which the official jobless rate remains at half-century lows as the expansion heads toward its 11th anniversary.

“Given how tight labor markets have become and how challenging it is for businesses to find qualified employees to fill spots, 2 percent growth is welcome,” said Ben Herzon, executive director of United States economics at Macroeconomic Advisers, a forecasting firm.

An unexpectedly large jump in December’s imports reported on Wednesday caused some Wall Street analysts to reduce their estimates of G.D.P. growth in the fourth quarter.

G.D.P. measures only the value of goods and services produced within a country’s borders, so when a nation is buying more things abroad than it sells — the definition of a trade deficit — it pushes down G.D.P.

The Trump administration has made lowering the American trade deficit a goal. While the deficit excluding oil steadily climbed through most of President Trump’s tenure, it had fallen sharply in recent months before December’s figures came in.

Economists have opposed Mr. Trump’s use of the trade deficit as a scorecard: It can fall for a variety of reasons, and not all of them are good. Currently, economists say, the deficit has fallen because of factors reflecting weakness in the economy, rather than strength.

The trade deficit can drop because exports are growing, or because imports are shrinking, or both. For example, the deficit can fall because manufacturing is booming, pushing imported products out of the American market and leading to a surge in exports — the outcome the Trump administration wanted to engineer.

But the deficit can also fall because the American economy is slowing, making consumers less likely to buy imported goods and businesses less likely to invest in the United States. And that is the situation in the United States, economists say.

“There is no evidence of those broader positive developments,” said Brad W. Setser, a senior fellow in international economics at the Council on Foreign Relations. “There is no growth in exports, and manufacturing is weak. So to the extent that tariffs have succeeded in bringing the trade deficit down, they have done so largely by reducing U.S. demand, not by raising U.S. production.”

Imports fell sharply in September after the United States imposed tariffs on China because some American companies held off on buying goods, hoping that the Trump administration might soon strike a trade deal reducing or removing the tariffs.

As tensions eased in December, imports revived. With a Phase 1 trade deal now signed, imports are expected to climb further in the months to come.

The economy’s resilience has been one of the Trump’s administration’s most notable accomplishments, and is sure to loom large as the 2020 presidential campaign gains momentum.

Mr. Trump has maintained an enthusiastic bullishness on the economy even though growth has fallen well below his promises of 3 or 4 percent. At the World Economic Forum in Davos, Switzerland, this month, he declared that “the United States is in the midst of an economic boom the likes of which the world has never seen before.”

Mr. Trump has spread blame for the economic slowdown, reserving his harshest criticism for the Federal Reserve, which raised benchmark interest rates between 2015 and 2018 before cutting rates three times last year.

“No. 1, the Fed was not good,” he said.

The president also mentioned the six-week strike at General Motors last fall and the continuing turmoil at Boeing, the nation’s largest aerospace manufacturer and largest manufacturing exporter, after accidents involving two of its 737 Max airplanes killed 346 people.

“With all that, had we not done the big raise on interest, I think we would have been close to 4 percent,” he said.

Most economists disagree. The economy has not expanded by 3 percent or more in a full calendar year since 2005. As Mr. Herzon said, “We’re continuing along in this 2 percent economy.”

Nonetheless, expect Mr. Trump to claim economic success and the Democratic candidates to highlight the economy’s soft spots.

Boeing has historically recorded bonanza sales in December, with the company selling an average of 234 airplanes over the past five years, Ian Shepherdson, chief economist at Pantheon Macroeconomics, noted in a newsletter. Last month, it sold just three. Strong sales of military aircraft offset the decline.

Still, Boeing’s halt in 737 Max production will ripple throughout the economy in the coming year. This week, Arconic, one of the airplane manufacturer’s suppliers, said it expected to lose $400 million in Boeing sales and cut jobs. Another contractor, Spirit AeroSystems Holdings, recently announced that it was cutting 2,800 jobs this month. Hundreds of other companies are also grappling to manage the impact.

Kathy Bostjancic, chief United States financial economist at Oxford Economics, said she expected Boeing’s disrupted production to shave half a percentage point off G.D.P. in the first three months of this year.

The Commerce Department will revise the fourth-quarter results twice in the months ahead as more data comes in.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Boeing Expects 737 Max Costs Will Surpass $18 Billion

Westlake Legal Group 29boeing1-facebookJumbo Boeing Expects 737 Max Costs Will Surpass $18 Billion Company Reports Calhoun, David L Boeing Company Boeing 737 Max Groundings and Safety Concerns (2019) Aviation Accidents, Safety and Disasters Airlines and Airplanes

Boeing on Wednesday said the costs associated with the grounding of the 737 Max were likely to surpass $18 billion, a significant increase over earlier forecasts.

The new estimate, announced during Boeing’s quarterly earnings report, is the company’s most recent approximation of just how expensive it will be to return the Max to service, compensate airline customers and restart the shuttered 737 factory.

Boeing continues to grapple with the fallout from the crashes of two Max jets in 2018 and 2019, which killed 346 people, leading to the worldwide grounding of the plane in March. In addition to the rising costs, the company is contending with a new chief executive, the temporary shutdown of the 737 factory and a range of challenges in other parts of the business.

Boeing on Wednesday said that the costs associated with shutting down and restarting the factory would amount to some $4 billion. The decision to temporarily halt production of the Max was only made last month, and Boeing had not previously given guidance on what the move would cost.

The company also said that the cost of compensating airlines that have suffered lost sales as a result of the grounding of the Max was now expected to reach $8.3 billion, up from a previous estimate of $5.6 billion. That figure represents a mixture of cash payments to airlines, as well as discounts on future sales.

And Boeing said that as a result of the grounding, which has lasted nearly a year now, it expected the overall cost to produce the 737 Max to rise to $6.3 billion in the years ahead, up from an earlier estimate of $3.6 billion.

In total, the anticipated costs now equal more than $18.6 billion, or nearly 20 percent of Boeing’s annual sales before the Max was grounded.

The Max crisis continued to weigh on the company’s financial results. Revenue for the quarter was $17.9 billion, down 37 percent from the same time a year earlier, before the jet was grounded.

Boeing also said it would incur a charge of $410 million as a result of its botched rocket launch late last year, when a space capsule it designed for NASA failed to reach the correct orbit.

This was the company’s first quarterly earnings report with David L. Calhoun at the helm, following the ouster of the previous chief executive, Dennis A. Muilenburg.

Since taking over this month, Mr. Calhoun has tried to set himself apart from Mr. Muilenburg, who was pushed out after alienating airline customers and the Federal Aviation Administration with overly optimistic projections about when the Max would return to service.

“We recognize we have a lot of work to do,” Mr. Calhoun said in a statement. “We are focused on returning the 737 Max to service safely and restoring the long-standing trust that the Boeing brand represents with the flying public. We are committed to transparency and excellence in everything we do.”

There is still no precise timeline for the return of the Max. Last week, Boeing said it did not expect regulators to approve the plane to fly until June or July, though that estimate was conservative. If regulators do not find any additional problems with the plane, the Max could return to service before then, though new issues cropped up earlier in the process.

The company has enjoyed rare bits of good news in recent weeks. It successfully completed the first flight test of the 777X, its new wide-body jet. And the trade deal that the White House struck with China included a commitment for the sale of new American aircraft to Chinese customers.

Yet Boeing still faces enormous challenges. The grounding of the Max is costing the company many billions of dollars, and costs are still rising. The fatal crashes and a cascade of damning revelations have badly damaged Boeing’s reputation, and the company’s own research shows 40 percent of regular travelers are unwilling to fly the Max. Other Boeing programs, including its work for NASA and the United States military, are behind schedule.

The Max is Boeing’s most important product, representing hundreds of billions of dollars in expected future sales. But just over a year after it was introduced in 2017, a Max crashed off the coast of Indonesia, after a new automated system triggered based on data from a faulty sensor. Less than five months later, a second Max crashed in Ethiopia under similar circumstances, leading to the worldwide grounding.

That has thrust Boeing into the biggest crisis in its history and led to the temporary shuttering of its 737 factory in Renton, Wash. Boeing has developed a software update and has been working with regulators to win approval to return the plane to service. But the grounding is now likely to last a year.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Boeing Expects 737 Max Costs Will Surpass $18 Billion

Westlake Legal Group 29boeing1-facebookJumbo Boeing Expects 737 Max Costs Will Surpass $18 Billion Company Reports Calhoun, David L Boeing Company Boeing 737 Max Groundings and Safety Concerns (2019) Aviation Accidents, Safety and Disasters Airlines and Airplanes

Boeing on Wednesday said the costs associated with the grounding of the 737 Max were likely to surpass $18 billion, a significant increase over earlier forecasts.

The new estimate, announced during Boeing’s quarterly earnings report, is the company’s most recent approximation of just how expensive it will be to return the Max to service, compensate airline customers and restart the shuttered 737 factory.

Boeing continues to grapple with the fallout from the crashes of two Max jets in 2018 and 2019, which killed 346 people, leading to the worldwide grounding of the plane in March. In addition to the rising costs, the company is contending with a new chief executive, the temporary shutdown of the 737 factory and a range of challenges in other parts of the business.

Boeing on Wednesday said that the costs associated with shutting down and restarting the factory would amount to some $4 billion. The decision to temporarily halt production of the Max was only made last month, and Boeing had not previously given guidance on what the move would cost.

The company also said that the cost of compensating airlines that have suffered lost sales as a result of the grounding of the Max was now expected to reach $8.3 billion, up from a previous estimate of $5.6 billion. That figure represents a mixture of cash payments to airlines, as well as discounts on future sales.

And Boeing said that as a result of the grounding, which has lasted nearly a year now, it expected the overall cost to produce the 737 Max to rise to $6.3 billion in the years ahead, up from an earlier estimate of $3.6 billion.

In total, the anticipated costs now equal more than $18.6 billion, or nearly 20 percent of Boeing’s annual sales before the Max was grounded.

The Max crisis continued to weigh on the company’s financial results. Revenue for the quarter was $17.9 billion, down 37 percent from the same time a year earlier, before the jet was grounded.

Boeing also said it would incur a charge of $410 million as a result of its botched rocket launch late last year, when a space capsule it designed for NASA failed to reach the correct orbit.

This was the company’s first quarterly earnings report with David L. Calhoun at the helm, following the ouster of the previous chief executive, Dennis A. Muilenburg.

Since taking over this month, Mr. Calhoun has tried to set himself apart from Mr. Muilenburg, who was pushed out after alienating airline customers and the Federal Aviation Administration with overly optimistic projections about when the Max would return to service.

“We recognize we have a lot of work to do,” Mr. Calhoun said in a statement. “We are focused on returning the 737 Max to service safely and restoring the long-standing trust that the Boeing brand represents with the flying public. We are committed to transparency and excellence in everything we do.”

There is still no precise timeline for the return of the Max. Last week, Boeing said it did not expect regulators to approve the plane to fly until June or July, though that estimate was conservative. If regulators do not find any additional problems with the plane, the Max could return to service before then, though new issues cropped up earlier in the process.

The company has enjoyed rare bits of good news in recent weeks. It successfully completed the first flight test of the 777X, its new wide-body jet. And the trade deal that the White House struck with China included a commitment for the sale of new American aircraft to Chinese customers.

Yet Boeing still faces enormous challenges. The grounding of the Max is costing the company many billions of dollars, and costs are still rising. The fatal crashes and a cascade of damning revelations have badly damaged Boeing’s reputation, and the company’s own research shows 40 percent of regular travelers are unwilling to fly the Max. Other Boeing programs, including its work for NASA and the United States military, are behind schedule.

The Max is Boeing’s most important product, representing hundreds of billions of dollars in expected future sales. But just over a year after it was introduced in 2017, a Max crashed off the coast of Indonesia, after a new automated system triggered based on data from a faulty sensor. Less than five months later, a second Max crashed in Ethiopia under similar circumstances, leading to the worldwide grounding.

That has thrust Boeing into the biggest crisis in its history and led to the temporary shuttering of its 737 factory in Renton, Wash. Boeing has developed a software update and has been working with regulators to win approval to return the plane to service. But the grounding is now likely to last a year.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Boeing Expects 737 Max Costs Will Surpass $18 Billion

Westlake Legal Group 29boeing1-facebookJumbo Boeing Expects 737 Max Costs Will Surpass $18 Billion Company Reports Calhoun, David L Boeing Company Boeing 737 Max Groundings and Safety Concerns (2019) Aviation Accidents, Safety and Disasters Airlines and Airplanes

Boeing on Wednesday said the costs associated with the grounding of the 737 Max were likely to surpass $18 billion, a significant increase over earlier forecasts.

The new estimate, announced during Boeing’s quarterly earnings report, is the company’s most recent approximation of just how expensive it will be to return the Max to service, compensate airline customers and restart the shuttered 737 factory.

Boeing continues to grapple with the fallout from the crashes of two Max jets in 2018 and 2019, which killed 346 people, leading to the worldwide grounding of the plane in March. In addition to the rising costs, the company is contending with a new chief executive, the temporary shutdown of the 737 factory and a range of challenges in other parts of the business.

Boeing on Wednesday said that the costs associated with shutting down and restarting the factory would amount to some $4 billion. The decision to temporarily halt production of the Max was only made last month, and Boeing had not previously given guidance on what the move would cost.

The company also said that the cost of compensating airlines that have suffered lost sales as a result of the grounding of the Max was now expected to reach $8.3 billion, up from a previous estimate of $5.6 billion. That figure represents a mixture of cash payments to airlines, as well as discounts on future sales.

And Boeing said that as a result of the grounding, which has lasted nearly a year now, it expected the overall cost to produce the 737 Max to rise to $6.3 billion in the years ahead, up from an earlier estimate of $3.6 billion.

In total, the anticipated costs now equal more than $18.6 billion, or nearly 20 percent of Boeing’s annual sales before the Max was grounded.

The Max crisis continued to weigh on the company’s financial results. Revenue for the quarter was $17.9 billion, down 37 percent from the same time a year earlier, before the jet was grounded.

Boeing also said it would incur a charge of $410 million as a result of its botched rocket launch late last year, when a space capsule it designed for NASA failed to reach the correct orbit.

This was the company’s first quarterly earnings report with David L. Calhoun at the helm, following the ouster of the previous chief executive, Dennis A. Muilenburg.

Since taking over this month, Mr. Calhoun has tried to set himself apart from Mr. Muilenburg, who was pushed out after alienating airline customers and the Federal Aviation Administration with overly optimistic projections about when the Max would return to service.

“We recognize we have a lot of work to do,” Mr. Calhoun said in a statement. “We are focused on returning the 737 Max to service safely and restoring the long-standing trust that the Boeing brand represents with the flying public. We are committed to transparency and excellence in everything we do.”

There is still no precise timeline for the return of the Max. Last week, Boeing said it did not expect regulators to approve the plane to fly until June or July, though that estimate was conservative. If regulators do not find any additional problems with the plane, the Max could return to service before then, though new issues cropped up earlier in the process.

The company has enjoyed rare bits of good news in recent weeks. It successfully completed the first flight test of the 777X, its new wide-body jet. And the trade deal that the White House struck with China included a commitment for the sale of new American aircraft to Chinese customers.

Yet Boeing still faces enormous challenges. The grounding of the Max is costing the company many billions of dollars, and costs are still rising. The fatal crashes and a cascade of damning revelations have badly damaged Boeing’s reputation, and the company’s own research shows 40 percent of regular travelers are unwilling to fly the Max. Other Boeing programs, including its work for NASA and the United States military, are behind schedule.

The Max is Boeing’s most important product, representing hundreds of billions of dollars in expected future sales. But just over a year after it was introduced in 2017, a Max crashed off the coast of Indonesia, after a new automated system triggered based on data from a faulty sensor. Less than five months later, a second Max crashed in Ethiopia under similar circumstances, leading to the worldwide grounding.

That has thrust Boeing into the biggest crisis in its history and led to the temporary shuttering of its 737 factory in Renton, Wash. Boeing has developed a software update and has been working with regulators to win approval to return the plane to service. But the grounding is now likely to last a year.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Boeing Pushes Back 737 Max Return Again

Westlake Legal Group merlin_167287344_8d3c2441-f234-4e16-999b-83415c3bf1de-facebookJumbo Boeing Pushes Back 737 Max Return Again United Airlines Boeing Company American Airlines Airlines and Airplanes

The return of Boeing’s 737 Max has been delayed again. On Tuesday, the company said that it did not expect regulators to approve the jet to fly again until the middle of the year. American Airlines, United and Southwest had already taken Max flights off their schedules until June and this new timeline will further push back when the plane will be available for commercial flights.

Boeing shares dropped sharply after CNBC first reported the news on Tuesday afternoon before trading was temporarily halted.

The Max was involved in two accidents, in late 2018 and early 2019, that killed 346 people. It has been grounded worldwide since last March.

Boeing has encountered repeated setbacks in its efforts to return the plane to service, as the company and regulators continue to find flaws with the Max that go beyond an automated software system known as MCAS, which contributed to both accidents. Late last year, the company discovered a potential problem with wire bundles on the plane, which were placed so close together that an electrical short could cause a catastrophic accident.

In assessing the issue, the company discovered about a dozen places in the Max where wire bundles may need to be separated, including in the electrical bay under the cockpit, according to two people familiar with the situation who spoke on the condition of anonymity to discuss internal matters. The company is still analyzing whether it needs to separate the wire bundles, the people said.

“Returning the Max safely to service is our No. 1 priority, and we are confident that will happen,” the company said in a statement. “We acknowledge and regret the continued difficulties that the grounding of the 737 Max has presented to our customers, our regulators, our suppliers and the flying public.”

The grounding of the Max is the worst crisis in the company’s 117-year history. It has cost the company billions of dollars, led to the ouster of its chief executive and disrupted the global aviation industry. Last month, Boeing announced that it would temporarily halt production of the Max.

Boeing is the largest manufacturing exporter in the United States. It employs more than 130,000 people, in all 50 states, in addition to a network of thousands of suppliers. The Max production shutdown led one of them, Spirit AeroSystems, to announce that it was laying off 2,800 employees.

The mass cancellation of flights caused by the grounding has led to steep losses for airlines, which have scrambled to fill key routes without a workhorse jet. Several airlines, which pay roughly $100 million each for the Max planes, have reached settlements with Boeing to compensate for those losses.

Boeing’s announcement on Tuesday was a departure from the company’s handling of the crisis under its previous chief executive, Dennis A. Muilenburg, who was prone to making overly optimistic projections about how quickly the plane would fly again. The delay through June reflects a new appreciation for the difficulties facing the company and the Federal Aviation Administration, which is under intense pressure to prove to lawmakers and the flying public that it has conducted a thorough review of the plane.

Boeing prepared the estimate on when the Max would be approved for its own financial planning in advance of the company’s report on quarterly earnings next week, said Gordon Johndroe, a company spokesman. It did not expect any layoffs as a result of the move. The company also wanted to publicize the new timeline before United, Southwest and American Airlines report quarterly earnings this week “to make sure they had our most recent estimate,” Mr. Johndroe said.

Airline stocks, which opened the day down on fears of the potential impact of a deadly viral outbreak in China, continued to slump. At roughly 3 p.m., United Airlines was down more than 5 percent, and American and Delta had dropped by about 4 percent.

Mr. Muilenburg’s replacement, David Calhoun, formally stepped into the chief executive role last week.

For its part, the F.A.A. said it was continuing with the process of getting the plane approved to fly again.

“We have set no time frame for when the work will be completed,” the agency said in a statement.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com