GDP Numbers Remain Strong; Fed Raises Interest Rates
Members of Congress head into August recess after today and will return to a long “to do” list, with the end of the current fiscal year looming on September 30th. The House Appropriations Committee approved ten of the Fiscal Year (FY) 2024 bills out of Full Committee in June and July and passed one bill on the House Floor. That leaves two bills for the House Appropriations Committee to consider when they return to Washington after Labor Day: Labor, Health and Human Services, Education and Related Agencies as well as Commerce, Justice, Science and Related agencies, both of which are expected to be difficult to pass out of Committee. Before the House adjourned, the Military Construction, Veterans and Related Agencies appropriations bill passed the House floor. However, the Agriculture and FDA funding bill, which was also scheduled for a vote on the floor, faced pressure which divided moderates from House Republicans in the Freedom Caucus who demanded additional spending cuts beyond what was agreed to. Meanwhile, the Senate Appropriations Committee did something they haven’t done in years — they approved all twelve FY2024 bills out of Full Committee before the August Congressional work period. The Senate FY2024 Appropriations bills will likely see Senate floor action after Labor Day.
Looking forward to Congress’ return to session after Labor Day, the Senate returns September 5th and the House returns September 12th. That leaves about 15 or so legislative days until the end of the fiscal year on September 30th. Many in Congress, especially the House and Senate Appropriators, will work behind the scenes through the August Congressional recess to try and reconcile what is shaping up to be a massive budget fight. Keep in mind, the House and Senate proposed spending levels are more than $100 billion apart. The Congressional schedule does not leave much time before the September 30th end of the fiscal year, so a Continuing Resolution (CR) is all but assured to give the House and Senate Appropriators time to move the twelve Appropriations bills across each Chamber’s floor. A CR would fund the government at current FY 2023 levels and the timeframe at this point is unclear. Look for this legislation to come before both chambers in mid-September.
Here’s what else you may have missed this week:
The Federal Reserve raised interest rates to a 22-year high amid continued inflation fears. After a brief pause to rate hikes in the previous month, Fed Chair Jerome Powell on Wednesday announced another rate increase of a quarter of a percent in an effort to continue to tamp down inflation. Powell told reporters that if inflation did not cool to the projected 2% annual rate, that he would raise interest rates even higher. Although inflation has not been evenly felt across all products and services, on average it is currently sitting at about a 3% annual rate, nearly half of what it was a year ago. Despite these concerns and the Fed’s tightening of the economy, second-quarter growth of the GDP exceeded expectations yet again, outpacing some speculation of an impending recession.
UPS and Teamsters have reportedly reached an agreement, averting nationwide strike. After more than a month of building tension around the strike which could have impacted some 6% of the U.S. economy, Teamsters President Sean O’Brien announced a tentative agreement with UPS on Tuesday which includes higher pay, more union jobs, and A/C in all delivery vehicles. This victory mints the new Teamsters President as a force in organized labor, especially after he specifically directed President Biden to not get involved in the negotiation process. It remains to be seen if this development could have further reaching impacts in workforces around the country, perhaps where other companies have engaged in union-busting or unfair labor practices.
Congressional priorities in September will likely include more investigations and possibly impeachment. September will be a busy month in Congress, and spending bills will likely take up the majority of floor time, but you should expect committees charged with investigations and oversight to still dominate the limelight like they have these past months. There is growing pressure, especially among House Republicans, to charge somebody with something, whether that be the president’s son, Hunter Biden, or the president’s cabinet, like Attorney General Merrick Garland or Homeland Security Secretary Alejandro Mayorkas, or maybe even President Biden himself. The calls for impeachment or indictment will likely only grow louder as news broke yesterday that former President Trump is being charged with additional crimes in the classified documents case which include efforts to delete security camera footage.
Senate Minority Leader Mitch McConnell causes concern after apparent health scare. Capitol Hill was abuzz on Wednesday after McConnell froze mid-sentence for an extended period during his weekly press briefing. He eventually was escorted away before returning minutes later to continue his remarks. Aides later said that the Senator felt lightheaded, but some have speculated that a more serious health concern is underlying the incident. McConnell has reportedly fallen several times this year, including one time in March which landed him in the hospital with a concussion. Similar health concerns have been shared about Senator Dianne Feinstein, the Senate’s oldest member.
