The Fed’s Favorite Inflation Measure Hits 2-Year Low

Senate Majority Leader Chuck Schumer
Abaca Press
By Yuval Rosenberg

It’s summer and it’s Friday, so we’ll make this quick.
Here’s what you need to know heading into the weekend.

Senate Passes Defense Policy Bill, Setting Up Another Clash
With the House

The Senate on Thursday night easily passed its version of the
$886 billion National Defense Authorization Act for 2024 before
heading out for its August recess. The broadly bipartisan vote,
86-11, comes a couple of weeks after the House passed its own
version of the NDAA, which included controversial provisions sought
by conservative Republicans targeting abortion policy, transgender
care and diversity programs. The House vote fell largely along
party lines, with only four Democrats voting for the bill.

The NDAA has been passed every year for more than six decades.
The competing versions of this year’s bill will have to be
reconciled once lawmakers return from their summer break. That
means the two chambers are headed for another showdown, similar to
the fight they face on annual spending bills. Negotiators will have
to figure out how to address those culture war issues included in
the House bill as well as questions on support for Ukraine.

Schumer jabs at the House GOP: Senate Majority Leader
Chuck Schumer cited the passage of the NDAA as another indication
that his chamber is functioning well. He said House Republicans
should follow the Senate’s example rather than pursuing partisan
legislation that has no chance of being enacted.

"The NDAA – and the bipartisan process we went through to get
here – should be a glimmer of hope for the American people, a sign
that bipartisanship is alive and well in the Senate," the
Democratic leader from New York said. "But it’s not the only
glimmer: We also came together to avert a first-ever default a few
months ago, and we are currently making great progress on the
appropriations bill, where almost miraculously under the leadership
of Senator Murray and Senator Collins they have advanced all 12
bills out of committee with bipartisan support."

Why it matters: The defense policy bill is another major
item on the congressional to-do list that faces an uncertain path
because of House conservatives’ agenda on social issues and federal
spending.

The Fed’s Favorite Inflation Measure Falls to Lowest Since
March 2021

A key inflation measure tracked closely by Federal Reserve
officials rose at the slowest pace in more than two years last
month, offering another signal the price increases are cooling and
boosting hopes the economy may be able to avoid a recession.

The personal consumption expenditures (PCE) price index rose
0.2% in June after inching upward 0.1% in May, according to the
Commerce Department. For the 12 months through June, the PCE index
rose 3%, down from 3.8% as of May and the smallest increase since
March 2021. The core PCE price index, which excludes the more
volatile food and energy categories, rose 4.1% year over year, down
from 4.6% in May. That is also the lowest increase since September
2021.

Other data released Friday showed labor costs rose the least in
two years as wage growth cooled, providing yet another encouraging
sign for Fed officials intent on reining in inflation.

What it all means: "It is too soon to say whether the
Federal Reserve will succeed in its effort to bring inflation under
control without causing a recession," Ben Casselman and Jeanna
Smialek write at
The New York Times. "But recent economic data —
including two reports released Friday — have looked more positive
than even optimists had dared to hope a few months ago."

The Post-Pandemic Medicaid Purge Nears 4 Million

More than
3.8 million Americans across 39 states and the
District of Columbia have been removed from Medicaid since April
after the expiration of a pandemic-era provision ensuring that they
could keep their coverage throughout the health emergency.

KFF, a health policy group tracking disenrollment data, says
that the number undercounts the actual number of people who have
lost Medicaid coverage — and that 73% of all people who have been
cut off from the program had their coverage terminated for
procedural reasons not related to whether or not they were still
eligible for Medicaid. "High procedural disenrollment rates are
concerning because many people who are disenrolled for these
paperwork reasons may still be eligible for Medicaid coverage," KFF
says.

In the eight states reporting age data, children account for 32%
of Medicaid disenrollments, according to KFF.

Kristin Fortner, identified as a 33-year-old waitress in
Arkansas earning $3 an hour plus tips, is quoted in
The Washington Post describing her efforts to
navigate the bureaucratic maze involved in reapplying for coverage
after being cut off from Medicaid at the end of April: "It’s very,
very frustrating," Fortner told the Post’s Amy Goldstein. "I keep
thinking I’ve done everything I’m supposed to do and it’s fine, but
then, when I check, it’s not fine."

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