The Archive

ECONOMY

Gas dips below $4 per gallon, but housing and food spikes hit hard

The White House and Democrats on Capitol Hill want you to know that the national average cost for gasoline is now under $4 per gallon. That’s a lot lower than it was just a couple months ago, although still high compared to last year.

Yet as with Wednesday’s inflation report, President Joe Biden and the Democratic leadership will take anything they can get.

The House votes tomorrow on the Democrats’ $700-billion plus Inflation Reduction Act. The landmark reconciliation package – 18 months in the making – includes some major tax, health care and climate change initiatives. It’s also projected to cut the deficit by more than $300 billion during the next decade.

But nothing in the Democratic proposals will have a near-term impact on inflation or the U.S. economy. And inflation, while slightly lower in July than June, remains at the highest level in decades. The Federal Reserve is likely to continue to raise interest rates throughout the fall and possibly into 2023. The only question is by how much.

White House officials point to the fact that Biden has ordered the release of one million barrels of oil per day from the nation’s Strategic Petroleum Reserve – more than 125 million barrels so far – as one of the reasons for the dramatic downward shift in gas prices. Biden pressured other nations to release a similar amount of oil onto the global market as well.

Much of the decrease, however, is also because gas is so expensive. Americans are simply buying less and driving less because gas prices are that high.

Most alarmingly, food and housing costs continue to rise at a shocking rate.

Grocery prices are up more than 13% on a year-to-year basis. CNN notes this data from the July CPI report:

The high cost of housing – and especially rent increases – may soon replace high gas prices as the biggest problem facing millions of Americans. Tenant and community groups are calling it a “national emergency” and urging the White House to intervene.

Here’s Bloomberg:

As Bloomberg notes, there’s a “perfect storm” hitting renters right now, especially in the South and West. While roughly one million new apartments may come on the market during the next year, experts estimate the need is for as many as five million units.

Higher rents means higher inflation, as housing costs make up about one-third of the CPI. Higher inflation will provoke more rate increases by the Fed, even as the U.S. economy teeters on the edge of a recession. The “soft landing” that Fed Chair Jay Powell hopes for gets even harder to achieve. These higher interest rates force more Americans to rent rather than buy. Which drives rents higher. And so on.

– John Bresnahan

REMOTE VOTING

Attendance may be light for House reconciliation vote

As we’ve noted for a few days, the House’s vote on the Inflation Reduction Act is scheduled for tomorrow. Thanks to their four-vote cushion, House Democrats can’t lose many members on this $700 billion-plus package.

But we’re in the middle of the August recess, and lawmakers are lining up to vote by proxy.

One-hundred and forty three members have sent letters to the House clerk indicating that they will be voting proxy. Now, some of these members might still show up in person. There’s no way of knowing until tomorrow when the House actually comes into session how many members will attend.

Yet the fact that one-third of members indicated they want to vote from home is a strong indication that the floor could look a bit empty.

The previous proxy voting extension only covered members until Aug. 12. However, Speaker Nancy Pelosi extended it earlier this week through Sept. 26. Republicans have vowed to do away with proxy voting in the next Congress if they win the House.

This is likely the last major piece of legislation that House Democrats can pass before the midterm elections, and a lot is riding on this vote for Pelosi and the rest of her leadership team.

After tomorrow’s session, the House isn’t due to vote again until Sept. 13. The chamber is only scheduled to be in session for 11 days that entire month. The final vote is set for Sept. 30, giving members a full five weeks back home before Election Day.

– Jake Sherman and Heather Caygle

THE CAMPAIGN

Dean Swihart, Walorski’s husband, has signaled he will endorse in the race. “There was nothing more important to Jackie than public service, and as part of her legacy I know she would want to weigh in on her successor. At this time, I am not ready to engage on this topic, but I do plan to offer my thoughts at a later date,” Swihart said in a statement.

– Jake Sherman

MOMENTS

President Joe Biden is in Kiawah Island, S.C., with no public events. Vice President Kamala Harris is in California.

5:05 p.m.: Harris will hold a roundtable with state legislators about reproductive health care. This event will be at the Fairmont in San Francisco.

CLIP FILE

CNN

NYT

WaPo

WSJ

Politico

LA Times

Detroit News