CUSEF Blog

Economy

Inflation continued to ease in January, but the slight slowdown suggested price pressures remained.

Why it matters: January’s data shows there is still a long way to return to the Federal Reserve’s 2% target, suggesting the central bank will have to do more to curb stubborn inflation.

What’s happening: The consumer prices index (CPI) rose 6.4% in January from a year earlier, down from 6.5% in December.

• On a monthly basis, the CPI increased by 0.5% in January, well above the 0.1% rise in December.
• Excluding the volatile food and energy prices, the so-called core CPI also increased by 0.4% monthly and 5.6% annually.
• Rising housing prices were the main contributing factor to inflation, with food, gas, and services also driving up inflation.

Opinions: Economists said that as the Fed highlighted that its path to addressing inflation would be data-driven, the CPI report indicated that the central bank could raise interest rates more than previously anticipated.

Debt ceiling

The nonpartisan Congressional Budget Office (CBO) warned that the federal government could be unable to pay its bill sometime between July and September if Congress does not raise the debt limit in time.

Why it matters: The CBO forecast pushed back Treasury Secretary Janet Yellen’s previous estimate of a possible June default, giving lawmakers more leeway on lifting the debt ceiling.

What’s happening: In the estimate released with its annual budget outlook, the CBO said the projected exhaustion date is uncertain because it depends on how much tax revenue the federal government collects in the coming months.

• If revenues fall short of expectations, a historic default on the federal debt could occur before July.
• Meanwhile, it remains unclear where Biden and Republicans are in negotiations over raising the debt limit, with the two sides arguing over whether to cut government spending or lift the limit first.

The big picture: The CBO said the U.S. will add $19 trillion to its debt between 2024 and 2033 because of increased interest payments and social security costs. Also, the annual deficit will average $2 trillion over the next decade.

Opinions: Observers believed such numbers in the deficit estimate would make negotiations on the debt ceiling more difficult.

2024 presidential election

Nikki Haley, a former UN ambassador and South Carolina governor, announced that she is running for President in 2024.

Why it matters: Haley became the first Republican to challenge Donald Trump for the presidential nomination.

What’s happening: In the announcement video and at a campaign speech the following day, Haley said “it’s time for a new generation of leadership” and emphasized her role as a young leader who would help the country “move past the stale ideas and faded names of the past.”

• She also highlighted her gender and her family’s immigrant roots as she was the first female Asian American governor in the country and the first Indian American to serve in the Cabinet when Trump appointed her as U.S. ambassador to the UN.
• The former South Carolina governor repeatedly criticized the Biden administration and its policies and called for term limits on Congress members and mental competency tests for politicians over 75.
• However, Haley did not publicly attack her direct rival, Donald Trump. She has been shifting her position with Trump, from initially criticizing his 2016 presidential campaign to joining the Trump administration in 2018 and leaving less than a year, to previously vowing she would not run against Trump in 2024.

Opinions: Observers said Haley, like many other potential Trump challengers in the Republican Party, is focusing on building her political brands and differentiating herself from Trump rather than criticizing former president directly.

• Others believed that Haley will seek to build early support in key states and raise money from donors skeptical of Trump.

Hotspots in the field

• Earlier this month, a train carrying toxic chemicals derailed in East Palestine, a small town in Ohio, causing a fire. Although the government said “no levels of concern” of pollutants had been detected, the accident raised health concerns among residents in the area.
• Meta, the parent company of Facebook and Instagram, announced on Sunday that it would launch a paid subscription service that allows users to verify their accounts with a government ID.