CUSEF Blog

Economy

Inflation slowed for a sixth straight month in December after peaking in mid-2022 as the Federal Reserve’s aggressive rate hikes took effect.

Why it matters: High inflation, which lasted for much of 2022, continues to show signs of cooling late in the year, but rising prices still place a burden on American households.

What’s happening: The Labor Department reported Thursday that the consumer price index (CPI) climbed 6.5% in December from a year ago, down from 7.1% in November and well below the 9.1% peak in June.

• The core CPI, which excludes volatile food and energy prices, rose 0.3% from November and 5.7% from a year earlier.
• The main reason for the slowdown in inflation in December was a drop in gas prices, with the prices at the pump falling 9.4% in December.

Opinions: Economists noted that while lower gas prices primarily caused the inflation decline in December, it would be difficult to sustain as market dynamics and consumer demand change.

• Others said that inflation is moderating and heading in the right direction and predicted that headline inflation, or total inflation, below 4% by mid-year is a reasonable path, with a return to Fed’s 2% target challenging.

Biden documents investigation

The White House confirmed last Tuesday and Thursday that classified documents from President Joe Biden’s time as vice president were found in his private office in Washington D.C. and at his home in Delaware.

Why it matters: The disclosures could create a shadow over Biden, who criticized his predecessor, Donald Trump, for mishandling classified materials as the two prepare a possible rematch in the 2024 presidential election.

What’s happening: On Monday, the White House said several classified documents from President Joe Biden’s time as vice president were discovered in his former private office last fall.

• Richard Sauber, special counsel to the President, said Biden’s personal lawyer found “a small number” of documents with classified markings while packing documents at the Penn Biden Center in Washington, D.C. on November 2, 2022. Sauber stressed the National Archives “took possession of” the documents the next morning, adding that the Biden side is working with the Archives and the Justice Department to ensure that any documents from the Obama-Biden administration “are appropriately in the possession of the Archives.”
• On Thursday, the White House confirmed that a second batch of classified documents from Biden’s time as vice president had been found at his home in Wilmington, Delaware. A “small number” of classified documents were found in the garage, and one document was found in “an adjacent room.”
• Also, on Thursday, Attorney General Merrick Garland appointed a special counsel, Robert Hur, to investigate the matter.
• On Saturday, Sauber confirmed that five more classified documents were found in the “adjacent room” in Biden’s Wilmington home.
• Meanwhile, the President’s personal lawyer released a timeline of events surrounding the discovery of classified documents in Biden’s private office and at his home in Wilmington to show that the President is cooperating with the Justice Department’s investigation.

The big picture: The Biden classified documents case was inevitably linked to the Mar-a-Lago case.

• The FBI raided former President Donald Trump’s home in Florida over the summer, recovering hundreds of classified documents. He is now under investigation by special counsel for mishandling government documents.

Opinions: While both Biden and Trump are currently under investigation by special counsels, legal experts said the two cases are different in terms of the number of classified documents found and their willingness to cooperate. The second difference is that Biden bears less legal risk than Trump since he is the sitting President with broad latitude to declassify documents. Also, Biden is likely protected from prosecution because of the Justice Department’s longstanding policy of not filing criminal charges against the sitting President. By contrast, Trump has lost those protections since leaving the White House.

Congress

The Republican-led House passed a package of rules for the new Congress, including one that will make it easier to remove the speaker.

Why it matters: It was the first test for the newly elected speaker Kevin McCarthy (R-CA), who had just been elected to the post on a historic 15th vote after making major concessions to the far-right Republicans.

What’s happening: The package, which set rules for how the House operates, passed on a mostly party-line vote, with all Democrats and one Republican opposing it.

• Under the new rules, a single lawmaker could call for a vote to remove the speaker.
• The package also includes Republican priorities, such as making it harder to raise taxes by requiring a 3/5 vote rather than a simple majority. Another is to try to limit spending.
• The new rules will create a more transparent and slower legislative process, allowing lawmakers at least 72 hours to review legislation before it is brought to the House floor for a vote. It also eliminates proxy voting and remote committee hearings in the House, which was in place at the start of the pandemic. Under this rule, Congress members now must vote in person.

Opinions: Observers warned that the new rules could make it difficult for the House to perform its most basic duties over the next two years, such as funding the government or raising the nation’s debt ceiling to avoid a catastrophic default.

• Democrats were opposed to the new rules and more concerned about what other concessions McCarthy had agreed to in return for the party’s far right for supporting his speakership.

Hotspots in the field

• Goldman Sachs began laying off more than 3,000 employees last week in response to economic uncertainty. It is the company’s largest scale of layoff since the 2008 financial crisis.
• The Federal Aviation Administration's (FAA) pilot-alert system outage temporarily grounded all domestic flights Wednesday, affecting travel on thousands of flights.
  
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