Inflation, Short-Term Debt Ceiling, and U.S. Job Market

Economic News/Policy: 

May 10: Inflation slowed in April to lowest rate since 2021

Consumer prices rose 0.4 percent in April to hit an annual increase of 4.9 percent, according to inflation data released Wednesday by the Labor Department. That's the lowest annual inflation rate since April 2021.

Economists had been expecting prices to accelerate by 0.4 percent in April, up from 0.1 percent in March, and projected annual inflation to hold steady at 5 percent.

“Overall, the April inflation report is encouraging and suggests that the economy is cooling in a gradual and controlled manner that is allowing prices to stabilize without sharp job losses,” wrote Julia Pollak, chief economist at ZipRecruiter, in a Tuesday analysis.

Grocery prices, which have been running higher than inflation overall and represent some of the inflation felt most acutely by consumers, dropped 0.2 percent in April after falling 0.3 percent in March.

The price of milk dropped 2 percent, oranges fell 3.8 percent and hot dogs fell 2.9 percent in April.

The inflation rate "Is well below its peak of 8.9 percent reached last summer, and has been falling for 10 months in a row, even as the unemployment rate has fallen," Pollak wrote. Inflation has been falling somewhat steadily since the middle of last year when prices in the CPI topped out at a 9.1 percent annual increase in June.

May 9: McCarthy shoots down short-term debt ceiling hike

Speaker Kevin McCarthy on Tuesday shot down the idea of utilizing a short-term debt ceiling hike to prevent a government default.

Just hours before McCarthy is scheduled to meet with President Biden on the issue, the Speaker said the sides should come together to negotiate a compromise - combining a debt ceiling increase with sharp spending cuts - rather than punt the debate to a later day.

The debt limit debate has gained urgency over the last week after Treasury Department Secretary Janet Yellen warned the department could exhaust its ability to pay all the country's obligations as early as June 1.

Republicans are insisting that any increase in the Treasury Department's borrowing cap must be accompanied by steep cuts designed to curb deficit spending - the phenomenon that has, over decades, ballooned the national debt to more than $31 trillion.

House Republicans last month passed a debt ceiling hike that included cuts to federal programs estimated to reduce deficit spending by roughly $4.8 trillion over a decade.

The president has argued that because lifting the debt ceiling simply empowers the government to pay debts approved by Congress in the past, the cap should be lifted as a "Clean" standalone bill, and the parties can haggle over deficit reduction strategies as part of separate negotiations on federal funding, which must be extended by Sept. 30 to prevent a partial government shutdown.

The impasse has raised the odds that party leaders will need to seek a temporary suspension of the debt ceiling to prevent a default and allow the sides more time to negotiate.

May 5: Robust Hiring in April Shows U.S. Job Market Remains Hot in Cooling Economy

Americans landed jobs and their wages increased in April, showing the labor market remained resilient amid banking turmoil, rising interest rates and high inflation.

Over the past year, inflation hit historic highs, economic growth slowed, the Federal Reserve rapidly raised interest rates and stress emerged in the banking sector.

Fed Chair Jerome Powell suggested that the central bank might pause rate rises after that to study the impact of its rapid increases over the past year and assess any fallout from the failures of three midsize banks since March.

Job gains have moderated since, but have trended above the pace in the year before the pandemic began.

Receptionists now make between $18 and $20 an hour and nursing staff between $21 and $25. Goodheart also raised prices last year including for lab work and surgical fees, helping offset the higher labor costs.

Annual wage growth has cooled from a recent peak of 5.9% in March 2022 but remains well above 2019 pay raises of roughly 3%. Employers in construction, leisure and hospitality, and mining posted among the fastest wage gains in April from a year earlier.

In April, 83.3% of Americans in their prime working years, ages 25 to 54, were employed or seeking jobs, the highest share since 2008.

The strong labor market has delivered gains to workers who suffered from steep job losses three years ago.

Energy and Environmental Policy/News:

May 10: Leading Democrat blasts GOP war on ‘woke’ in anti-ESG hearing

Rep. Jamie Raskin blasted the GOP attacks on "Woke" ideology during a House Oversight Committee hearing Wednesday, arguing the term has a proud history and that it should guide companies in their business decisions.

"The word work comes from the Indo-European root 'weg,' which means to be strong and alert," Raskin said at a hearing focused on environmental, social, and governance investing.

"The whole point of being a fiduciary is to be vigilant, watchful, and alert to opportunities and risks," Raskin said in defending ESG investing.

The opposite of a woke investing strategy, Raskin argued, "Is a negligent and inattentive investment strategy."

State and national Republicans have gone on the attack over ESG, arguing that the embrace of ESG principles by multinational financial institutions represents an attempt by unelected, largely-foreign elites to set domestic policy in the U.S. In testimony on Wednesday to the House Oversight Committee, Utah attorney general Sean Reyes called ESG part of "An open conspiracy to bypass Congress and instead impose costly changes on American consumers using the power of horizontal agreements by key players in our financial system."

The GOP case against ESG is simple: asset managers shouldn't be considering anything other than financial returns when they make investment decisions.

GOP members pounced on this idea at Bloom Raskin's hearing, with Sen. John Kennedy causing her support for "Driving the oil and gas industry into bankruptcy."

For Fun: 

May 10: Mysterious planet has "unusually shiny atmosphere" and may contain water vapor, researchers say

A strange planet that's stymied astronomers for years has an "unusually shiny atmosphere" and could be home to large amounts of water vapor, scientists said in a study published Wednesday in the journal Nature.

The distant planet, which is outside of our solar system about 40 light-years away, is totally covered in a deep haze that has made it difficult to study since it was first discovered in late 2009, researchers said. Eliza Kempton, an associate professor of Astronomy at the University of Maryland and lead author of the study, said she's been trying to get a clearer picture of the planet for more than a decade.

The James Webb Space Telescope recently helped to reveal new information about the planet, formally named GJ 1214b. Planets such as GJ 1214b are often referred to as mini-Neptune planets because they're smaller than Neptune but with a similar atmospheric makeup. According to NASA, they are the most common type of planet in the galaxy, although none exist in our solar system.