TGIF! On this date 30 years ago, hundreds of Republican congressional candidates gathered on the steps of the Capitol building to sign the "Contract with America," the conservative policy agenda put together by Newt Gingrich and Dick Armey outlining the legislative action Republicans would take if they won a congressional majority. Republicans would go on to gain 54 House seats and 8 Senate seats, flipping both.
Here's what’s happening today.
Harris Tries to Flip Trump’s Biggest Advantages
Former President Donald Trump met with Ukrainian President Volodymyr Zelensky this morning before heading to Walker, Michigan, for a campaign event, where he criticized Vice President Kamala Harris on immigration, hammering her over reports about the number of migrants with criminal histories in the country. He again promised "the largest deportation operation in American history." He also repeated his baseless claim that the only way he’ll lose is if Democrats cheat. "They beat us by a whisker," he said, referring to the 2020 election. "It’s the only thing they’re good at. They’re good at cheating in elections."
Then, after nearly half an hour, he turned to discuss Michigan manufacturing and the auto industry, again promising to impose steep tariffs on foreign goods and to cut the corporate tax rate from 21% to 15% for companies that make their products in the United States. He slammed Harris’s tax plans and touted his own plan to have billionaire Elon Musk lead a government efficiency commission. "He’s going to be our cost-cutter," Trump said. "I think he can save trillions."
Harris, meanwhile, was looking to go on offense on the immigration issue with a visit to the southern border in Douglas, Arizona, where she embraced a tough stance on border restrictions and blamed Trump for tanking a bipartisan Senate deal tilted toward conservatives earlier this year. "The American people deserve a president who cares more about border security than playing political games," Harris said in her prepared remarks.
Harris is trying to close the gap with Trump on the immigration issue in much the way she appears to have done on the economy.
A Bloomberg News/Morning Consult poll of swing-state voters published Thursday evening finds that Harris has narrowed Trump’s edge on the economy to just 4 percentage points, down from 6 points last month. And on the question of which candidate voters trust more to deal with the cost of everyday goods, the two candidates were essentially tied, with 47% saying Trump and 46% pointing to Harris. Voters also gave Harris an 11-point edge on the question of who they trust more to help the middle class.
"The results suggest that Harris is benefiting from a campaign that focuses on her economic agenda, including pledges to build more affordable housing, offer down payment assistance to first-time homebuyers, and a promise to make the wealthy pay more in taxes," Bloomberg’s Gregory Korte and Mark Niquette report. "Trump’s economic messaging has lately taken a backseat in his campaign, with his speeches often straying from the subject and his advertisements prioritizing immigration and crime."
The same poll finds that Harris has surged to a lead in six of seven swing states, up 7 percentage points in Nevada, 5 points in Pennsylvania, 3 points in Arizona, Michigan and Wisconsin and 2 points in North Carolina. The poll shows Harris and Trump tied in Georgia. The poll’s margin of error is plus or minus 3 percentage points in six of the states and 4 points in Nevada.
Fed’s Favorite Inflation Gauge Now Close to 2% Target Rate
In another sign of progress in the battle against inflation, a measure of price increases watched closely by the Federal Reserve barely rose in August, according to government data released Friday.
The personal consumption expenditure price index, or PCE inflation rate including food and fuel, was 2.2% on an annual basis in August, down from the 2.5% rate recorded in July and the lowest reading since February 2021.
Core PCE, which excludes volatile food and fuel prices to provide a better sense of the underlying trend, increased just 0.1% from July to August, while the three-month annualized rate — which calculates the inflation rate over the last three months and then extends it over a full year — was 2.1%, just shy of the Fed’s 2% target. The full 12-month core PCE number was a bit higher, clocking in at 2.7%.
"All quiet on the inflation front," Chris Larkin, a managing director at E-Trade from Morgan Stanley, told CNBC. "Add today’s PCE Price Index to the list of economic data landing in a sweet spot. Inflation continues to keep its head down, and while economic growth may be slowing, there’s no indication it’s falling off a cliff."
The inflation numbers should encourage the Fed to continue reducing interest rates, which the central bank started to do earlier this month. "It’s exactly the kind of evidence they want to see," Omair Sharif of Inflation Insights told The New York Times.
Economists ready for a soft landing: Jared Bernstein, chair of the White House’s Council of Economic Advisers, cautioned that it is too early to declare victory in the war on inflation. "Our work isn’t done, especially on costs, but we’re moving in the right direction, and with some nice momentum," he told the Times.
But economists surveyed by Bloomberg foresee something like a victory coming soon, as they project a return to 2% inflation in the first quarter of 2025, as measured by the annual personal consumption expenditures price index. Core CPE will stay a bit higher, averaging 2.2% in 2025, according to the survey.
The economists also see the unemployment rate climbing next year, but only modestly, to 4.4%. They predict that the unemployment rate will drop slightly lower in 2026, averaging 4.3%.
Interest rates are expected to move lower, as well, with the economists penciling in a benchmark federal funds rate in a range between 3% and 3.25% by December 2025.
As for recession — something the economy must avoid if a soft landing is to be achieved — the economists say they think there’s a 30% chance of one occurring over the next year.
Fiscal News Roundup
- Harris Visits the Border in Arizona and Says She Will Toughen Up Asylum Rules – NPR
- Harris Arrives at the US-Mexico Border to Try to Show That Her Record Is More Than Trump Criticisms – Associated Press
- In Michigan Trump Calls for Slashing Corporate Taxes, Hiking Tariffs on Foreign Products – Detroit Free Press
- Key Fed Inflation Gauge at 2.2% in August, Lower Than Expected – NBC News
- New PCE Reading Supports Case for Smaller Fed Rate Cut in November – Yahoo Finance
- Kamala Harris Holds Razor-Thin Lead Across Swing States in Tight 2024 Race – Bloomberg
- Trump Hawks $100,000 Watches as He Leverages His Candidacy for Profit – CNN
- Harris Significantly Outspending Trump on Television, Digital Ads – Washington Post
- The Politics of Tariffs Are Complicated. A Democrat Just Introduced a Bill to Make Trump's Proposals Law – NBC News
- Senators Want Expanded Employer-Provided Child Care Credit – The Hill
- Lawmakers Scramble to Reach Last-Minute Deal to Save Farm Bill – The Hill
- Federal Employee Health-Care Premiums to Rise 13.5 Percent on Average – Washington Post
- Biden Officials Stave Off Sticker Shock on Medicare Drug Premiums – New York Times
- Kentucky Sues Express Scripts, Alleging It Had a Role in the Deadly Opioid Addiction Crisis – Associated Press
Views and Analysis
- A $28 Trillion Problem Is About to Get Much Worse. Harris and Trump Are Ignoring It – Elisabeth Buchwald, CNN
- Trump’s Big Ideas Would Stunt U.S. Growth and Spur Inflation – Fareed Zakaria, Washington Post
- Biden’s Economic Record Beats Trump’s, With Some Caveats – Justin Fox, Bloomberg
- Kamala Harris Defies Critics on Policy and Politics – Jennifer Rubin, Washington Post
- Maybe It’s Not the Economy, Stupid? – Susan Milligan, New Republic
- Lower Interest Rates Don’t Guarantee a Soft Landing – Nick Timiraos, Wall Street Journal
- The Best Way to Keep Congress From Getting Things Done – Jamelle Bouie, New York Times
- Not Enjoying the Mark Cuban for President Campaign – David Dayen, American Prospect