| | | | |  | | By Ben White | | | | 
A 'We Want You!' sign is posted at an Ike's Love & Sandwiches store in Los Angeles, Calif. | Mario Tama/Getty Images | POWELL'S PREDICAMENT — Strap in for a pivotal week in the complicated and high-risk life of the American economy. On Tuesday morning at 8:30 a.m., we get the latest numbers on the consumer price index , offering a level-check on just how much 40-year high inflation is really going down (probably a bit, but not much). Then, on Wednesday, Federal Reserve Chair Jerome Powell is expected to announce that the central bank is easing up (just a touch) on the size and pace of its rate-hiking campaign aimed at slowing the economy and thus inflation. Powell faces an almost impossibly tricky communications predicament . He must signal a somewhat lighter approach on rate hikes because Wall Street expects it and some economic signals are showing early signs of tilting toward recession. But he's also got to prove to investors that the Fed remains dedicated to smashing inflation from its current pace of nearly 8 percent, as measured by CPI. So while slowing down, the rate hikes will continue and could increase again if needed. The Fed will also release a fresh set of predictions on where it thinks the economy is going and how high rates might need to go next year. But before we dig deeper into Powell's dilemma, let's take a dip into the inflation numbers the Fed will be dealing with when they make their announcement and the chair steps to the microphones on Wednesday at 2:30 p.m. Analysts expect that overall inflation dipped to 7.3 percent in November from 7.7 percent in October, after a pandemic-era peak of 9.1 percent in June. Anything above 7.3 percent — and certainly over 7.7 — would worry investors that the Fed's efforts to battle inflation are failing. And it would significantly change the tenor, if not the policy decision, that the Fed announces Wednesday. If, however, the number comes in below the 7.3 percent pace from the same month last year, Powell would get a freer hand to signal a lower path of rate hikes from an expected half-point on Wednesday (after three straight three-quarter point bumps) to a quarter-point at the next meeting in February. And then perhaps a few more quarter-point boosts after that until inflation is clearly shoved back into its cave and stops terrorizing the countryside. Powell's real problem is with the labor market. Gas prices have declined. Goods inflation has eased a bit as consumers transition more to services like dining out and travel from ordering stuff to their homes. Supply chain problems have eased off a lot. New and used car price increases are dropping. But one thing that has not relented much in the face of all the hiking is the labor market, which remains very tight, with far more demand than supply. That continues to drive up wages in ways the Fed doesn't think are sustainable and that goose overall inflation as employers pass higher employment costs on to customers. The strong labor market is one GOOD thing about the economy that is also bad. Wall Street analysts and economists both inside and outside President Joe Biden's administration keep expecting monthly job gains to cool off to a pace somewhere in the 100,000 to 200,000 range (or lower) with wage gains easing. Not much luck so far. November's number came in at a surprisingly strong 263,000 and wages jumped 0.6 percent on the month — double the expectations. Wage gains are still running about 5 percent a year, way higher than the Fed's 2 percent overall target. Even with some success in other areas, the Fed won't get comfortable with stopping its rate hiking campaign until job gains and wage inflation slow. That means they may simply have to do the job themselves by triggering a significant recession . Because the Goldilocks scenario — in which sidelined workers flood back into a tight labor market offering strong wages — does not appear to be happening. Nor is there any sign it will ever happen without much bigger structural changes to the economy involving transportation, child care and other issues. Best case for this week is solid progress on core inflation (stripping out food and energy, that is) and a breezy Powell suggesting that while not complete, the Fed sees a clear path to stopping all the hikes. The more likely scenario is a decent but not great CPI report and a stressed out Powell, increasingly unsure that he can succeed in taming inflation without smashing the whole economy. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com . Or contact tonight's author at bwhite@politico.com or on Twitter at @morningmoneyben .
| | | | A message from Chamber of Progress: If passed, the Open App Markets Act S. 2710 (OAMA) would undermine content moderation on app platforms, furthering the spread of hate speech, disinformation, and violent rhetoric. Some Democrats have questioned the disastrous impact of OAMA, raising concerns about the bill creating cybersecurity risks, hamstringing content moderation, and targeting specific tech companies. So why are Democratic lawmakers still supporting MAGA Republicans in spreading harmful content online? Learn more about the dangers of OAMA here. | | | | | | CALIFORNIA BLUE — House Democrats are as well-positioned as they could have hoped to swing back into power in 2024 after losing the chamber this year. They're still deciding who will lead the charge, write Nicholas Wu and Ally Mutnick . The two declared candidates, Reps. Ami Bera and Tony Cardenas, both California Democrats, are interviewing with Democratic leader Hakeem Jeffries (D-N.Y.), after the Democratic caucus voted to make the position appointed, rather than elected. The new leader is expected to make his pick soon, and he could choose either of them — or another candidate altogether. It tees up a difficult choice for Jeffries bound to frustrate at least one faction of the conference. Bera, who ousted a GOP incumbent 10 years ago, was the chair of the committee's Frontline program for endangered incumbents in 2022. But union leaders have quietly opposed his candidacy, stemming from his 2015 decision to side with President Barack Obama to fast-track the Trade Promotion Authority that allowed him to make trade deals with less input from Congress. Cardenas, who represents a safe Democratic seat in the Los Angeles area, is endorsed by the Congressional Hispanic Caucus, a group that tussled somewhat with the DCCC in 2020. Latino Democrats grew increasingly frustrated when the campaign arm refused to invest significant funds in competitive races in South Texas and southern Arizona, as well as when the House super PAC closely aligned with House Speaker Nancy Pelosi spent against a Latina candidate, now-Rep.-elect Andrea Salinas, in an open Oregon seat.
| | | | A NEW POLITICO PODCAST: POLITICO Tech is an authoritative insider briefing on the politics and policy of technology. From crypto and the metaverse to cybersecurity and AI, we explore the who, what and how of policy shaping future industries. We're kicking off with a series exploring darknet marketplaces, the virtual platforms that enable actors from all corners of the online world to traffic illicit goods. As malware and cybercrime attacks become increasingly frequent, regulators and law enforcement agencies work different angles to shut these platforms down, but new, often more unassailable marketplaces pop up. SUBSCRIBE AND START LISTENING TODAY . | | | | | | | | — FTX founder Bankman-Fried arrested in the Bahamas: FTX Founder Sam Bankman-Fried has been arrested by authorities in the Bahamas , according to the U.S. Attorney for the Southern District of New York. U.S. Attorney Damian Williams confirmed the arrest in a tweet from the Southern District's official account. "Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning and will have more to say at that time," Williams said.
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A tribute to journalist Grant Wahl is seen on his previously assigned seat at the World Cup quarterfinal soccer match between England and France. | Graham Dunbar/AP Photo | — Soccer journalist Grant Wahl's body returned to the U.S.: The body of prominent soccer journalist Grant Wahl, who died last week while covering the men's World Cup in Qatar , was repatriated to the United States today as fans around the world mourned his sudden passing. Wahl was one of America's most prominent soccer chroniclers, and he also was an advocate for the LGBTQ community in large part because his brother is gay. That caused friction in Qatar, which has laws against homosexuality and where fans have been hassled for expressions of LGBTQ pride. Wahl wrote that he'd been temporarily denied entry into a game last month for wearing a shirt with a rainbow on it. — White House ready to bargain over expanded Child Tax Credit: The White House has privately signaled to Democrats that it would support a compromise deal to revive the expanded Child Tax Credit , even if it includes work requirements it once opposed. A remarkable shift for an administration that has resisted applying such conditions to anti-poverty programs, it comes amid a recent push in Congress to include an expansion in a year-end legislative package while Democrats still control both chambers. And it reflects the growing urgency within the administration to salvage a policy that ranks among Biden's signature achievements. — Washington regulator aims for more control of Microsoft and Meta: Lina Khan's Federal Trade Commission has two headline-making cases underway right now: Its trial against Meta in a California courtroom, and a new suit to block a Microsoft megadeal. But Khan's long game appears to be even bigger. She wants to win unprecedented powers to review and potentially block any future deals by two of tech's most acquisitive companies. If the FTC can score a victory in either proceeding — though there's likely a long way to go before either reaches that point — Khan and her team would do more than just block these deals, they'd be arming themselves with broad investigative authority over future acquisitions at Meta and Microsoft.
| | | | A message from Chamber of Progress:   | | | | | | PARLIAMENTARY PAYOLA — Belgian prosecutors charged European Parliament Vice President Eva Kaili and three others with corruption on Sunday in a major investigation into an alleged illicit influence campaign by Qatar, writes Hannah Brenton . Kaili, a Greek MEP, was arrested on Friday as part of the corruption probe by Belgian authorities into suspected illicit lobbying by the Persian Gulf country, the host of the ongoing World Cup football tournament. Following her arrest on Friday, Kaili was suspended from the S&D group in the Parliament. She also was expelled from the center-left Pasok party in Greece. Kaili is one of 14 vice presidents at the European Parliament and so is a powerful player in the assembly. She has emerged as one of the most vocal defenders of Qatar, recently calling the country a "frontrunner in labor rights" after meeting with the country's labor minister, despite profound international concerns about conditions for stadium construction workers. The suspicion of the investigators in Brussels is that Qatar used money and gifts to influence economic and political decisions in the Parliament. And as part of the investigation, the home of Belgian MEP Marc Tarabella was raided on Saturday evening. Also among the four people charged is Kaili's partner, Francesco Giorgi. Giorgi is a parliamentary assistant to another MEP and a founder of the NGO Fight Impunity. The president of Fight Impunity, former Italian MEP Pier Antonio Panzeri, also was charged in the case. All four will remain in custody.
| | | | JOIN THURSDAY FOR A CONVERSATION ON FAMILY CARE IN AMERICA: Family caregivers are among our most overlooked and under-supported groups in the United States. The Biden Administration's new national strategy for supporting family caregivers outlines nearly 350 actions the federal government is committed to taking. Who will deliver this strategy? How should different stakeholders divide the work? Join POLITICO on Dec. 15 to explore how federal action can improve the lives of those giving and receiving family care across America. REGISTER HERE . | | | | | | | | | | $32 million The amount of money that two progressive groups spent in an effort to combat "stop the steal" rhetoric during the 2022 midterms. This included supporting voter outreach programs, expanded early voting and ballot initiatives related to voting rights. Altogether, the organizations funded 126 groups across 16 states. The groups — the Pro-Democracy Center and Pro-Democracy Campaign — operated behind the scenes, without even launching a public-facing website. | | | | | THE FAMILY THAT RIOTS TOGETHER — How did six people from the same family end up at the Capitol on January 6 ? The Munns, living just outside the small town of Borger, Texas, traveled the 1,600 miles to D.C. and stormed the Capitol, ending up inside lighting cigarettes and taking photos. But what caused election denialism to grip this particular family so hard? Robert Draper has the backstory in Texas Monthly.
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His Republican colleagues in the Senate think that Sen. Tim Scott (R-S.C.) could make a formidable presidential candidate. | Drew Angerer/Getty Images | SOUTH CAROLINA SLEEPER — Joni Ernst is "very excited" about a potential Tim Scott presidential run. John Cornyn would "advise him to go for it." And John Barrasso said it "doesn't get any better than Tim Scott," writes Marianne LeVine . Even Sen. Lindsey Graham, who spent much of Donald Trump's presidency sticking to his side, said he's intrigued by the possibility of a Scott presidential bid in 2024 and wants to see "what Tim does" before he makes any endorsements. Many of Scott's Republican colleagues in the Senate are happy to talk him up for even higher office . Scott's not personally chatty about the prospect of a 2024 presidential run, declining to talk and directing questions to his staff. But his fellow Republicans are buzzing about his massive reelection victory this year, rising national profile, substantial fundraising hauls and cross-country travels for other candidates. The South Carolinian carved out a unique lane in the GOP, well-liked by mainstream leaders like Senate Minority Leader Mitch McConnell but never publicly at odds with Trump world, even when he's offered halted criticism of the former president. And as the only Black Republican senator, he'd offer his party a compelling chance to build on its long-running effort to boost diverse candidate recruitment by further appealing to Democratic-leaning constituencies. Did someone forward this email to you? Sign up here .
| | | | A message from Chamber of Progress: Disinformation, hate speech, and violent rhetoric are threatening the stability of our democracy and the safety of many communities around the country. Even in the face of that reality, Democratic lawmakers are supporting legislation that would strip online platforms of their ability to remove harmful content—the Open App Markets Act S. 2710 (OAMA).
Some Democrats have continued to question the disastrous impact of OAMA, warning that "extremist outlets and disinformation sites could sue app platforms for blocking them," forcing platforms to provide soapboxes to outlets like Infowars and Parler.
Democrats shouldn't help MAGA Republicans spread harmful content online.
Learn more about lawmakers' concerns with OAMA here. | | | | | | | Follow us on Twitter | | | | Follow us | | | | |
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