Good Thursday evening!
Vice President Kamala Harris will wrap up the Democratic National Convention tonight — and kick off a 75-day dash for the White House — when she accepts her party’s presidential nomination. Will there be — or bee — any big surprises tonight? Will Harris deliver a speech to match the moment? And will she be able to sustain and build on the tremendous momentum she has built in just one month as a presidential candidate? Her campaign has raised about $500 million since she entered the race on July 21, including $200 million in her first week. She also drew support from more than 2.4 million donors in her first 11 days — or, as Bloomberg reports, “nearly 200,000 more contributors than during the entirety of President Joe Biden’s year-plus long campaign.”
Here’s what else we’re watching.
The Fed Tries to Stick a Soft Landing
Just hours after Democrats wrap up their convention in Chicago, the attention will turn to Grand Teton National Park in Wyoming, where Federal Reserve Chair Jerome Powell is set to deliver highly anticipated remarks on Friday morning that are expected to shed light on the central bank’s interest rate policy for the next few months. According to The Wall Street Journal’s Nick Timiraos, the speech will kick off what could be the final phase of the Fed’s attempt to pull off a soft landing for the economy in which the central bank beats inflation without causing a recession.
“If he succeeds and maneuvers the economy to a soft landing that brings inflation down without a big rise in unemployment, it’ll be a historic achievement worthy of the central banking Hall of Fame,” Timiraos wrote Thursday. “If he fails, the economy will slide into recession anyway under the weight of higher interest rates” — and thereby prove the old maxim that economic expansions don’t die of old age but are instead killed by the Federal Reserve.
The central question for now is how the Fed plans to go about cutting interest rates, and if it can find a path that won’t reignite inflation or allow the labor market to grow too weak. The Fed had made considerable progress in reducing the inflation rate, which continues to fall along a bumpy route toward its 2% target, but there’s always a risk that interest rate cuts could generate new inflationary pressures, especially in housing, which has been a persistent problem for the central bank.
Looking at the other half of the Fed’s dual mandate, employment remains robust by historical standards, but the unemployment rate has risen recently, climbing from 3.7% at the beginning of the year to 4.3% in July, and this week’s downward revision of recent job growth data suggests the labor market is not as strong as previously thought.
Inside the Fed, some are reportedly pushing for faster rate cuts as they eye a softening labor market. “In regular business cycles, unemployment goes up like a rocket but comes down like a feather,” Chicago Fed President Austan Goolsbee told the Journal, adding that while the post-pandemic economy has been unusual, “it’s at least a note of caution that the job market has been cooling. It needs to stop cooling.”
Others are calling for caution, arguing that the still-low unemployment rate gives the Fed more room to maneuver as it seeks to keep the inflation rate moving down.
The current consensus is that the Fed will cut rates by a quarter of a percentage point in September, with the CME Fed Watch tool giving that outcome a 75% probability. Powell’s comments Friday are expected to point in that direction, while maintaining as much freedom of movement as possible in case new data suggest the central bank should move faster or slower.
Jay Bryson, chief economist at Wells Fargo, told the Journal that he thinks the Fed should lean toward more aggressive rate cutting, given the weakening of the labor market. “They’ve got a lot of wood to chop, and they need to get going,” he said. “But it’s a very consensus-driven place, and they don’t have the consensus yet to do that.”
Numbers of the Day: 50 and 1
Former President Bill Clinton cited an astonishing statistic during his speech Wednesday night at the Democratic National Convention: “You’re going to have a hard time believing this, but so help me, I triple-checked it,” Clinton said. “Since the end of the Cold War in 1989, America has created about 51 million new jobs. I swear I checked this three times. Even I couldn’t believe it. What’s the score? Democrats 50, Republicans one.”
Washington Post Columnist Philip Bump checked it again and says Clinton was right: “There have been six presidents since 1989, three from each party. Under the three Democrats — Clinton, Barack Obama and Joe Biden — there was a cumulative increase of 50 million more people working between the starts of their terms and the ends. Under the three Republicans — George H.W. Bush, George W. Bush and Donald Trump — the cumulative total was, in fact, only 1 million. (That’s starting at the beginning of the elder Bush’s term, not the fall of the Berlin Wall a few months later that marked the start of the Cold War’s demise.)”
Bump adds that if you look all the way back to the end of World War II, each party has had seven presidents in the years since then, but the tally of jobs added is still lopsided, with 88 million under Democrats and 32 million under Republicans.
Or if, in this election season, you just compare the middle two years of the Trump and Biden terms, leaving out the Covid pandemic job losses under Trump and initial rebound under Biden, the total is 4.3 million for the Republican and 7.5 million for the Democrat.
As Bump notes, there are a host of caveats that might merit consideration if trying to draw broad political conclusions from the data, but the numbers themselves are striking.
Fiscal News Roundup
- Kamala Harris’ ‘Build, Baby, Build’ Convention – Politico
- What We Know About Kamala Harris’s $5 Trillion Tax Plan So Far – New York Times
- Buttigieg: Trump Campaign ‘Might Not Recover From’ Project 2025 – The Hill
- Sen. Bob Casey Targeting "Greedflation" in DNC Speech – Axios
- Democrats Signal Voting Rights Bills Will Top the Agenda if Harris Wins – Washington Post
- Despite Trump’s Accusations, Democrats Have Largely Avoided Medicare for All – New York Times
- RFK Jr. as Trump’s Health Secretary? Here’s What He Wants to Do – NBC News
- McConnell Says Deterring America’s Adversaries Should Be ‘Front and Center’ for the Next President – Associated Press
- Trump Jabs ‘Highly Overrated Jewish Governor’ Josh Shapiro – The Hill
- Biden Administration Blocks Two Private Sector Enrollment Sites From ACA Marketplace – KFF Health News
- U.S. Applications for Unemployment Benefits Inch up, but Remain at Historically Healthy Levels – Associated Press
- Markets and Households Eagerly Await Powell’s Hints About Fed Rate Cut – Washington Post
- The Make-or-Break Moment That Will Determine the Economy’s Fate – Wall Street Journal
- FDA Greenlights Updated COVID Shots, Prepares for Fall Rollout – Roll Call
Views and Analysis
- Harris Should Fight Trump With a Better Bidenomics – Bloomberg Editorial Board
- Sometimes You Just Have to Ignore the Economists – Zephyr Teachout, The Atlantic
- How to Design a Tax Exemption for Tips That Is Workable and Fair – Sloan G. Speck, The Hill
- Tim Walz and JD Vance Are Having the Argument That Matters – Matt Bai, Washington Post
- Democrats Set Her Up for Success. Now Harris Has to Stick the Landing – Dan Balz, Washington Post
- Why Harris’s Proposed Baby Bonus Just Might Work – Sophie Moullin, American Prospect
- Presidential Candidates Hesitate to Single Out the Poor for Extra Help – Christopher Howard, The Hill
- Will the Senate Take Off the Handcuffs? – David Dayen, American Prospect
- Project 2025 Would Recast HHS as the Federal Department of Life – Stephanie Armour and McKenzie Beard, Washington Post
- In Echo of 2020, Trump Claims He’ll Lose Only if Democrats ‘Cheat’ – Philip Bump, Washington Post