| | | | |  | | By Sam Sutton and Michael Stratford | | | | Voters say the state of the economy is the most important issue they’ll consider when they head to the polls in November. Thursday night’s debate between President Joe Biden and former President Donald Trump was hardly an economic policy showcase. The candidates clashed over their economic track records before moving on to a series of personal attacks that touched on everything from Hunter Biden’s laptop, Trump’s relationship with porn star Stormy Daniels, the Jan. 6 riot at the Capitol and — of all things — Biden’s golf handicap. On the economy: Both candidates offered up — at best — misleading depictions of their opponent’s overall performance in office while leaning into populist talking points to shore up their base. Biden said the economy had been in a “free fall” when he took office (GDP in the fourth quarter of 2020 grew 4 percent and the unemployment rate had fallen by more than 8 points to 6.7 percent by the time he was inaugurated). He quickly moved on to say that he would cap rents to tackle corporate greed — leaning into messaging that progressive advocates have been calling for — and promote the construction of new housing to ease inflation. Trump, in turn, claimed that the U.S. had the “greatest economy in the history of our country” prior to Covid and that the only job creation that occurred under Biden has been “for illegal immigrants and bounceback jobs” from pandemic losses. Obviously, the labor market’s recovery from the brief 2020 recession is much more complicated than that. (Not for nothing, he also repeated false claims that the results of the 2020 election were fraudulent.) Trump then claimed that his plan to impose tariffs of 10 percent or more on imports would have no impact on consumers and would lower the deficit. Estimates from conservative and progressive think tanks peg the policy’s annual cost to households in the thousands of dollars. All of this matters to voters, of course, but none of it really matters this morning. The story of the debate comes down to Biden’s ineffective performance on stage. He stumbled over words, left time on the clock for his allotted answers and struggled to deliver on some of his strongest talking points. At one point, he declared, “we finally beat Medicare.” As Eugene Daniels reports: Democrats are freaking out. Within 30 minutes of the debate starting, one Democratic operative told MM that the “word most used in the group chat right now is disaster.” Voters have given Biden much lower marks than Trump when it comes to the economy. The debate will not change that. “It was a really disappointing debate performance from Joe Biden,” said former Biden Communications Director Kate Bedingfield, per POLITICO’s Eli Stokols. “I don’t think there’s any other way to slice it. His biggest issue was to prove to the American people that he had the energy, the stamina — and he didn’t do that.” IT’S THURSDAY — As always, send tips and suggestions to Sam at ssutton@politico.com or on Signal at 925.216.7576.
| | | | THE GOLD STANDARD OF FINANCIAL SERVICES POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries, like financial services, equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists.
Our newsroom is deeper, more experienced, and better sourced than any other. Our financial services reporting team—including Zach Warmbrodt, Victoria Guida and Declan Harty—is embedded with the market-moving legislative committees and agencies in Washington and across states, delivering unparalleled coverage of financial policy and the financial services industry. We bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY. | | | | | | | | | The personal consumption expenditures (PCE) index for May will be out at 8:30 a.m. The median estimate for annual inflation is 2.6 percent … The Commodity Futures Trading Commission holds a closed meeting on enforcement matters at 9 a.m. … Fed Governor Michelle Bowman will participate virtually in a discussion before the Ronald Reagan Presidential Foundation and Institute Leadership Council Conference at noon … San Francisco Fed President Mary Daly to discuss AI at the Aspen Ideas Festival at 12:40 p.m. Will May PCE finally reflect softening rents? — SunBelt rental markets that turned white hot during the height of the pandemic are starting to cool off. That bodes well for the PCE — the Federal Reserve’s preferred inflation gauge — which will be released at 8:30 “We're getting a lot of data points saying, hey, rents are at least flattening out. That has very good implications for inflation,” Mike Skordeles, the head of U.S. economics at Truist, told MM. “The Charlottes and the Miamis and even Atlanta – there's just a lot of supply that's come online.” Transaction data from Truist credit and debit cardholders, which has a large banking footprint in the Southeast, found that rent payments to property managers increased by an annual rate of just 2.3 percent in May — the slowest growth in more than two years. The multifamily construction boom in the early days of Covid-19 has finally started to show signs of easing rental prices in these markets, Skordeles said. Completed construction of multifamily housing hit levels not seen since the late 1980s earlier this year. The Zillow Observed Rent Index (ZORI), which measures changes in asking rents over time, dropped to an annualized rate of 2.5 percent in May — below pre-pandemic norms. The ZORI for rentals in Austin, Texas dipped into negative territory last month. Rental prices in key markets are starting to move “in the direction of deflation,” Zillow Chief Economist Skylar Olsen told MM, cautioning that PCE’s measure of inflation could remain sticky since it’s a reflection of the “whole rental market, not just the new rental leases.” — More signs that the economy is slowing from Bloomberg’s Vince Golle: “The government marked down personal spending — the main engine of the economy — by half a percentage point to an annualized 1.5% in the first quarter.” IMF’s debt warning: The International Monetary Fund is raising the alarm over budget deficits in the U.S., calling it an issue “that needs to urgently be addressed,” Adam Behsudi reports. The IMF praised robust growth in the U.S. economy but recommended that policymakers raise taxes, overhaul entitlement programs and take other steps to tackle the rising national debt. “The U.S. economy is very strong and it is in good times when you can do more to prepare yourself for risks in the future,” said IMF Managing Director Kristalina Georgieva. Fink calls for global growth strategy — BlackRock CEO Larry Fink has an op-ed in the FT this morning calling for a global strategy to tackle slowing economic growth. That will require investments in infrastructure, including for renewable energy, as well as permitting reform, he wrote.
| | Biden’s new student debt dilemma: Unexpected court rulings this week blocked key parts of a student loan program that the White House was counting on to slash monthly loan payments for millions and ratchet up relief for borrowers ahead of the election. With those plans now in limbo, Michael reports, progressive groups are making a new push to convince the Biden administration to once again freeze student loan payments altogether. Jarkesy, Ob-La-Da — The Supreme Court struck down the Securities and Exchange Commission’s use of in-house administrative courts to resolve certain enforcement disputes, Declan Harty and Josh Gerstein report. The 6-3 decision – which was accompanied by a furious dissent from Justice Sonia Sotomayor that labeled the ruling “earthshattering” – could unleash chaos throughout the federal government, creating uncertainty about how agencies go after law-breakers, Alex Guillen wrote. New Coinbase lawsuit — Also from Declan: Coinbase sued the SEC and FDIC on Thursday in a bid to obtain documents and information related to the agencies' policing of the cryptocurrency markets. Crypto law firm squabble — Reuters reports that a law firm known for representing crypto investors has settled a dispute with one of its former partners, “ending a bitter legal battle involving allegations of stolen crypto tokens and bullying less than two weeks before trial in the case.”
| | | | SUBSCRIBE TO GLOBAL PLAYBOOK: Don’t miss out on POLITICO’s Global Playbook, our newsletter taking you inside pivotal discussions at the most influential gatherings in the world. Suzanne Lynch delivers the world's elite and influential moments directly to you. Stay in the global loop. SUBSCRIBE NOW. | | | | | | | | Republicans press DOJ on bank data — GOP lawmakers are ramping up pressure on Attorney General Merrick Garland to provide greater transparency around how the government handles data from banks that flag suspicious customer activity, Zach Warmbrodt reports. In a new letter, House Republicans led by Rep. Scott Fitzgerald ask Garland for details on how DOJ is complying with a 2021 law that directs the department to report statistics on law enforcement agencies' use of Bank Secrecy Act reports. Reps. Blaine Luetkemeyer, Elise Stefanik, Tom Emmer, Warren Davidson and John Rose also signed the letter. The lawmakers cite a 2022 GAO report that found agencies were unable to provide statistics to DOJ. They also raise concerns about the potential abuse of bank customer data in law enforcement investigations following the Jan. 6, 2021, Capitol riot.
| | Policing AI-driven lending: Consumer groups are asking the Consumer Financial Protection Bureau to install new guardrails on how banks use artificial intelligence in lending, American Banker reports.
| | Truth-squadding “Swiftonomics”: Taylor Swift’s concert tour through Europe this summer is selling out stadiums across the continent, but it’s not generating the economic effect some might have wanted. “’Swiftonomics’” is not actually real," Reuters reports. “She may be a megastar revolutionising the music industry, but once the excitement wears off, you will need a magnifying glass to spot the economic benefit.”
| | David Chavern, the leader of the Consumer Brands Association, will be the next president and CEO of the American Council of Life Insurers, the organization announced Thursday. He’ll succeed Susan Neely, who announced her retirement from the group earlier this year. | | | | Follow us on Twitter | | | | Follow us | | | | |
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