With help from Calder McHugh
DIVERGENT PATHS — It’s almost hard to imagine, given conventional wisdom from just just a few weeks back. However the relatively rosy scenario for the economy next 12 months — sinking inflation and no recession — isn’t any longer a fantastic dream akin to pigs withdrawing.
It’s still not the most probably final result, needless to say. That, unfortunately, stays at the least a brief recession triggered by all of the Federal Reserve rate of interest hikes geared toward slowing the economy and stomping out the worst price spikes in 4 a long time.
But as you wrap up your 12 months and look to slide off the grid for just a few blissful days, we at Nightly desired to give you real talk on two ways the economy could tilt in 2023.
After all, there are limitless variations on these two paths. And geopolitical flare-ups in Europe, Asia and the Middle East could scramble all the pieces. But one path is usually a sunny one, and the opposite is dark and foreboding.
Let’s start with the sunny. Overall inflation is clearly — if slowly — falling within the wake of multiple sharp rate hikes, less disruption in energy prices and continued healing in supply chains. The job market stays super tight with real wage gains — that’s wage increases adjusted for inflation — finally staying positive, supporting consumer demand whilst Covid-era savings dwindle for lower-income employees.
Among the structural changes and investments supported by the Biden White House and passed during full Democratic control of Washington should offer some support when it comes to infrastructure spending and recent development of domestic green-technology, amongst other things.
“We end the 12 months and go into the brand new 12 months optimistic about each how much progress we now have made with respect to the economic recovery itself and the way much progress we’ve made on the policy side,” White House National Economic Council Director Brian Deese told POLITICO reporters this week. “We’ve got measures which are really just beginning to have the economic impact they may eventually have.”
Fed Chair Jerome Powell continues to warn that nobody knows if the hikes will cause recession or how bad a recession may be. However the Fed chief and his colleagues remain on the right track to likely trim down the dimensions of the following hike in February to 1 / 4 point, after which stop completely sometime next 12 months. How high rates will go and the way long they may stay there remain totally unknown. But there may be now a non-zero probability that Powell and his colleagues pull off the fabled and barely executed “soft-landing” during which the Fed snuffs out inflation without crushing consumer and business spending and driving unemployment far higher. Such an final result would create a rather more favorable political outlook for Biden and Democrats heading into the 2024 campaign.
Now let’s gaze down that dark, scary path. The essential case against a soft landing is that wage hikes, while positive for employees — especially after they outpace inflation — also mean overall higher inflation, as labor costs are passed along as higher prices. Powell and the Fed are already frustrated by their inability to this point to ease pressure within the labor market and slow the pace of wage gains.
Powell nearly begged at his recent press conference for Congress to alter policy and permit more immigration because there are simply not enough willing American employees straight away. That’s not possible to occur given the split Congress and the noxious, culture war nature of migration policy.
There are not any other fixes to the labor market — like much broader child care availability and immediately effective training programs — more likely to arrive in time to be of any help.
And if wages keep spiking higher next 12 months, the Fed will keep mountaineering even when it means forcing a serious recession that might drive unemployment to six percent or more.
That is where it could get seriously ugly given the dearth of stimulus more likely to come out of a split Congress should recession arrive, the disappearance of Covid savings amongst low income employees and the indisputable fact that your entire state-based unemployment profit system is a wildly underfunded, horribly designed and totally broken heap of rancid garbage. For now, just take heart that the gate appears to be at the least somewhat open to the happier, sunnier path.
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We’re compiling a listing of the 12 months’s biggest stories for a year-end issue. Tell us what you think that were an important or interesting news stories of 2022 — and why. Tell us if we are able to include your name and hometown. Submit a response to [email protected] for a probability to be featured within the newsletter later this week.
We’ll be off from Dec. 26 to Jan. 2 for the vacations. Nightly will resume its regular programming on Jan. 3.
BREAKING BARRIERS — Democrats in a vacant Richmond-based congressional district nominated Virginia state Sen. Jennifer McClellan for the seat, putting her on a path to develop into the state’s first Black woman in Congress, writes Madison Fernandez.
McClellan was one among 4 Democrats on the ballot Tuesday in Virginia’s 4th District primary. The seat was previously held by the late Democratic Rep. Don McEachin, who died on Nov. 28, just weeks after winning reelection.
McClellan received 85 percent of the vote within the quick-turnaround firehouse primary, in comparison with 14 percent for state Sen. Joe Morrissey.
A firehouse primary, also often called an unassembled caucus, is a party-run vote where people can vote in-person as they’d on a typical Election Day. Greater than 27,000 voters within the district turned out on Tuesday — a number that party officials say is the biggest firehouse primary turnout in state Democratic Party history.
The district is heavily blue, so McClellan is more likely to win the special election on Feb. 21, when she’ll face off against Republican Leon Benjamin. That is Benjamin’s third time running for the seat; McEachin beat him with greater than 60 percent support in each 2020 and 2022.
— Buttigieg monitoring airlines as U.S. braces for a frigid holiday: Transportation Secretary Pete Buttigieg said he’s watching how airlines perform amid a winter storm that can sock a lot of the country and create blizzard conditions in some states — a storm that was already snarling travel this morning prematurely of its path. Buttigieg praised the airline industry for what he suggested was a seamless Thanksgiving travel week — a steep departure from the summer chaos that saw hundreds of flights delayed or canceled and folks stranded in airports across the country. But he warned that the outlook for the upcoming holiday travel season won’t be as rosy.
— Trump tax controversy fuels passage of presidential audits bill: Laws that might require the IRS to audit presidents’ tax returns and make reports of the audits public passed the House largely along partisan lines today, echoing the divide over a bombshell report this week on former President Donald Trump’s tax returns. Five Republicans voted for the laws, despite the fact that GOP leaders said it was a sham designed to politically damage Trump, who has launched one other bid for the White House. Democrats on the House Ways and Means Committee released a report Tuesday that showed Trump paid little or no federal income tax while he was in office and that the IRS delayed auditing his returns despite its policy of auditing all presidents.
— Ex-Google boss helps fund dozens of jobs in Biden’s administration: Eric Schmidt, the previous CEO of Google who has long sought influence over White House science policy, helps to fund the salaries of greater than two dozen officials within the Biden administration under the auspices of an outdoor group, the Federation of American Scientists. The revelation of Schmidt’s role in funding the roles, the extent of which has not been previously reported, adds to an image of the tech mogul’s growing influence within the White House science office and within the administration – at a time when the federal government is looking closely at future technologies and potential regulations of artificial intelligence.
— Republicans praise Zelenskyy but balk at future aid: President Volodymyr Zelenskyy of Ukraine arrived on Capitol Hill on Wednesday able to tout bipartisan support amongst lawmakers who’ve helped fund his country’s efforts to fend off Russia’s invasion. And his message was well received, eliciting multiple standing ovations from either side of the aisle as he addressed Congress. Despite the largely warm reception, several Republican lawmakers, including those set to assume top leadership positions, weren’t yet able to commit to keeping the funding stepping into the following session. Asked whether the House would proceed to support Ukraine next 12 months, House Minority Whip Steve Scalise (R-La.) said: “we expressed an interest in ensuring the cash goes to be scrutinized. That’s something that we still will keep pushing for.”
SHOTGUN WEDDING — Russia’s brutal invasion of Ukraine has ripped apart Moscow’s ties with the EU and the U.S. on all the pieces from energy to trade to travel — but there’s one partnership they will’t escape, writes Victor Jack.
Tucked away in a quiet sun-soaked corner of southern France, the International Thermonuclear Experimental Reactor (ITER) — an effort to harness the ability of nuclear fusion to unleash vast amounts of unpolluted energy — continues to purr together with the participation of Russian scientists and Russian technology.
Earlier this month, scientists at ITER hailed a significant breakthrough announced by the National Ignition Facility at Lawrence Livermore National Laboratory in California, which said it had overcome a significant barrier — producing more energy from a fusion experiment than was put in.
The 35-nation ITER — born out of U.S. President Ronald Reagan’s and Soviet leader Mikhail Gorbachev’s 1985 meeting after a long time of Cold War tension — has no way of removing a member gone rogue; there’s no path to kicking Russia out of the experiment without torpedoing your entire scheme.
The €44 billion project goals to check nuclear fusion — a process occurring in the middle of stars — as a viable source of carbon-free energy that’s minimally radioactive. By injecting hot plasma that reaches 150 million degrees Celsius right into a device and confining it with magnetic fields, hydrogen nuclei fuse right into a helium nucleus and extra neutrons, releasing huge amounts of energy.
‘THE ROAD OF DEATH’– The federal government of Moscow has denied targeting civilians in its assault on Ukraine but an eight-month investigation published today concluded that the perpetrators of one among the worst atrocities in Ukraine were Russian paratroopers, The Recent York Times reports.
The evidence identifies 36 Ukrainian victims killed by Russian forces on Yablunska Street, now referred to by residents because the “road of death,” as a part of a deliberate and systematic effort to secure a path to the capital of Ukraine, Kyiv.
The reporters spent months within the war-ravaged city of Bucha following the exit of Russian forces and interviewed residents, collected troves of security camera footage and records from government sources to supply damning evidence about possible war crimes committed by the Russian army’s 234th Air Assault Regiment, led by Lt. Col. Artyom Gorodilov.
Matthew Gillett, a senior lecturer on the University of Essex who worked in international criminal courts said the video evidence produced by the Times is “a sea change, especially in comparison with past investigations equivalent to in the previous Yugoslavia.”
PINK SLIP FOR CHRISTMAS — It’s principally a vacation tradition at this point: droves of employees getting laid off right around the top of the 12 months. For tax purposes, fiscal 12 months budgets typically end at the top of the calendar 12 months, meaning that if businesses aren’t hitting targets or spending an excessive amount of, layoffs often follow. Dig into the history of this unlucky practice, the way it got here to be and discover what state within the union disallows such behavior (it’s a surprising one) from Timothy Noah in The Recent Republic.
THE SANTOS SOAP OPERA — It was only three days ago that a bombshell report from The Recent York Times forged doubt on much of Rep.-Elect George Santos’ (R-N.Y.) personal biography, from where (and whether) he attended college, to where he’s worked to where he’s lived and the way much money he has.
Since then, the story has only gotten weirder, writes Nightly’s Calder McHugh.
First, from Santos, there was the seeming try and throw around his political weight. Right before the Times story dropped, the incoming freshman sent out a suspiciously-timed, now-deleted tweet reiterating his support for Rep. Kevin McCarthy (R-Calif.) to be the following Speaker of the House. One possible interpretation: should you throw me overboard, you’ll risk losing a vital vote in your tough battle to develop into Speaker.
Then got here a clumsy statement from Santos’ lawyer, hammering Democrats and the media for “attempting to smear his good name,” but notably not denying a single assertion within the story. All that did was persuade a city that’s all the time attuned to political spin that each word of the Times’ report was probably true. And to place a cherry on top, the statement misattributed a quote to Churchill (it’s actually a paraphrase of something Victor Hugo once said).
Things have only gotten worse for Santos from there. The Forward reported Wednesday that genealogy records show that Santos may not have been telling the reality about having Jewish grandparents who fled Europe during World War II; records state that Santos’ grandparents in query were born in Brazil before WWII, in 1918 and 1927. Then, The Every day Beast got in on the motion with a report that Santos, who’s openly gay, divorced a girl in 2019. In each cases, the reporting contradicts details of Santos’ background that he shared while campaigning.
One of the best reality show on Long Island and in Washington continues to be going. “I even have my story to inform,” Santos announced in a tweet today. “And it is going to be told next week. I would like to guarantee everyone that I’ll address your questions and that I remain committed to deliver the outcomes I campaigned on; Public safety, Inflation, Education & more.”
Mark your calendars for some appointment viewing.
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