Inflation cooled slightly to 3.3 percent in May, the Department of Labor reported on Wednesday morning. That’s a welcome sign that tees up the possibility the Federal Reserve will signal plans to cut interest rates later today.
A rare one-two punch that will indicate whether the fight against inflation is being won makes Wednesday one of the most important days of the year for economic news, CNBC reports. This morning’s consumer price report from the Department of Labor was an encouraging sign, and all eyes now turn to this afternoon’s decision by the central bank’s officials. The Federal Reserve has raised interest rates 11 times since March 2022 to help combat inflation, and those increases have made mortgage rates, car loans, and other forms of credit more expensive. The central bank has not raised rates since July, when it set the baseline interest rate just north of 5 percent, but it hasn’t cut them either.
For the past year, the tug-of-war between inflation and interest rates has been a stalemate. After falling to a post-2022 low of 3 percent in June 2023, inflation has bubbled back upwards in recent months. At its last meeting in May, the Federal Reserve declared “a lack of further progress” in combating inflation.
This morning’s consumer price index report showed prices holding steady after increasing by at least 0.3 percent in each of the past four months. Food prices remained mostly flat and energy prices fell during May, but services and housing continued to get more expensive.
Good news on inflation today. You can really see it in the chart. The pinkish line (“core inflation”) is the lowest since April 2021.
Overall inflation is back to 3.4% (purplish line).
Declines in May in gas, new vehicles, clothes and auto insurance all helped. Rent is the out… pic.twitter.com/QOON7C4vpF
— Heather Long (@byHeatherLong) June 12, 2024
Even a hopeful inflation report is unlikely to have an immediate impact on the Fed’s decision about interest rates. “Officials are widely expected to leave interest rates unchanged, no matter what happens. But the fresh inflation reading could help shape officials’ estimates of how many times they will cut rates this year, because policymakers will have a chance to update their forecasts in response to the data,” writes Jeanna Smialek, The New York Times‘ Federal Reserve reporter.
However, “a well-behaved May inflation report is a likely prerequisite for the Fed to consider lowering interest rates after that, as officials have said they want to see a series of readings that rebuilds their confidence inflation will head lower,” The Wall Street Journal explained.
Americans are understandably eager to see both inflation and interest rates fall toward the historically low levels that were enjoyed before the COVID-19 pandemic. We are likely still a long way from that point, but today may turn out to be a significant turning point in the ongoing battle against higher prices and more expensive debt.
Hunter Biden, the president’s son, was convicted of three felony gun crimes on Tuesday. All three counts are related to the younger Biden’s 2018 purchase of a handgun, which he was not legally allowed to own because of his track record of using illegal drugs.
Biden was never accused of threatening or harming anyone with the handgun, and he likely never would have been prosecuted at all if he hadn’t revealed in a 2021 memoir that he’d been addicted to crack cocaine around the time that he’d bought the gun. (Never memoir, kids.) Yes, there’s arguably a good reason for the government to try to prevent reckless drug abusers from owning guns, but this overly broad intersection of federal anti-gun and anti-drug laws doesn’t make much practical sense, as Reason‘s Jacob Sullum explained yesterday:
Judging from survey data on drug use and gun ownership, something like 20 million Americans are committing that felony right now. The Justice Department prosecutes only a minuscule percentage of those potential defendants. That is partly because such cases are not a high priority, which tells you something about the logic of treating this offense as a felony that is currently punishable by up to 15 years in prison (thanks to legislation that Biden’s father signed in 2022, which also created a new potential charge in cases like this).
Biden could get up to 25 years in prison for these crimes, though it is unlikely that he’ll be given the maximum penalty. Congress should change the law so that less privileged individuals are also spared the threat of federal prison in similar circumstances.
An end to gerontocracy? Voters in North Dakota on Tuesday approved a ballot measure that sets a maximum age for the state’s U.S. representatives and senators. The ballot measure amends the state’s constitution to prohibit candidates from running if they would turn 81 years old (or older) during their term in office.
The U.S. Constitution sets minimum ages for office-holders (25 for House, 30 for Senate, 35 for president), and I’ve argued before that setting upper limits on who can be elected to those positions makes a lot of sense. But North Dakota’s anti-octogenarian rule will likely have to survive a court challenge. As The New York Times notes, the U.S. Supreme Court ruled in 1995 that states may not restrict eligibility for federal offices beyond the age limits written into the Constitution.
There is, of course, one surefire way to free America from the doddering ancients who run much of the federal government: Stop voting for them.
Scenes from Washington, D.C.: A popular café in Washington’s ossified Georgetown neighborhood might be forced to close by a combination of stupid zoning laws and grumpy neighbors (who are eager to use those stupid zoning laws to drive away a successful business.) A neighborhood commission has formally asked the city government to yank Call Your Mother’s permits and force it to close, Axios reports, due to “large crowds” and “objectionable conditions.”
This is, I hasten to note, a shop that primarily sells bagels and coffee—not a raging nightclub or noisy bar. But, of course, Washington is a city populated almost entirely by people who desire to meddle in the affairs of others.
Unbelievable: with all the major issues DC faces, some people are choosing to focus on shutting down a fantastic and beloved neighborhood bagel shop. @CYMDeli, let us know how we can help ???? @georgetowndc https://t.co/ufvi3H33Yn
— Michael Petricone (@mpetricone) June 12, 2024
QUICK HITS
- An Israeli strike into Lebanon killed Taleb Abdallah, a senior commander of the Hezbollah militia. In response, Hezbollah launched a barrage of rockets into northern Israel.
- Several allies of former President Donald Trump, including Sen. J.D. Vance (R–Ohio), tell The Washington Post that they’d like to see young adults forced to serve in the military.
- A school district in Florida is banning the book Ban This Book, a novel about a kid who fights her fictional school’s attempt to ban books. The book is blamed for “teaching rebellion of school board authority.” Wouldn’t want any of that.
- The World Bank expects the global economy to grow at a rate of 2.6 percent this year, thanks in large part to “exceptional” growth in the United States.
- Matt Taibbi and Walter Kirn discuss Fyodor Dostoyevsky’s parable about “The Grand Inquisitor,” one of the quintessential ruminations on the nature of state (or institutional) power and the morality of individual freedom.
- Joey Chestnut, the 16-time champion of the Coney Island hot dog eating contest (one of America’s greatest sporting events), won’t be allowed to participate this year after inking an endorsement deal with plant-based meat company Impossible Foods, a competitor to Nathan’s Famous, the hot dog maker that sponsors the 4th of July eat-a-thon.
