It’s inflation report day. The politics are already in full force, August recess notwithstanding. The Bureau of Labor Statistics is set to release July’s edition of the consumer price index at 8:30 a.m.
The stakes of this report are significant for Washington’s economic policymakers. Forecasters currently expect price data to tick upward again this month. The 12-month average of inflation has been increasing since May.
Inflation was in a gradual retreat for months before the Trump administration kicked off its trade war. Prices have also been boosted by increasing energy costs across the United States.
This slow climb upward has renewed the Federal Reserve’s deep-seated fears of inflation — or worse, stagflation — and prompted the central bank to keep rates unchanged for the length of President Donald Trump’s second term. Trump hasn’t liked that very much.
Speaking of things Trump doesn’t like: It’s already been a tough couple of weeks for the BLS. This will be the first major data release from the bureau since Trump fired former Commissioner Erika McEntarfer over regular revisions that wiped out a summer of job gains.
Trump announced McEntarfer’s replacement Monday night: E.J. Antoni, who currently serves as chief economist at the Heritage Foundation.
Hill watching: The great unanswered question of Trump’s economic policy has been how tariffs will manifest in consumer prices in the longer-term. The effects so far have been limited, as some Senate Republicans have loved to tell us.
“Tariffs have had no meaningful impact on inflation, despite the chicken littles walking around this place,” Sen. Bernie Moreno (R-Ohio) said late last month.
And it’s possible that will remain the case. It’s also distinctly possible hotter prices will endure into the fall.
But hotter inflation data, including last month’s personal consumption expenditures index, hasn’t done much to stop the Republican trend of calling for Fed Chair Jay Powell to resign in lieu of lowered rates. “We should just have rates that are in line with the rest of the world,” Moreno said.
Powell still has some friends on the Hill. Or at least, folks who will defend his independence from the White House. Sen. Thom Tillis (R-N.C.) told us before the Senate left town that the chamber had a role to play in protecting the Fed.
“This is a tug and pull between two co-equal branches, and we absolutely have a role to play. That’s how you do the counterbalance and make it less subject to losing its independence, just purely out of de facto pressure from the executive,” Tillis said.
