Happy Friday! Donald Trump scored a significant victory today as Manhattan Judge Juan Merchan postponed the former president’s sentencing on 34 felony convictions in his election interference case until after Election Day. The decision to move the sentencing to November 26 was made “to avoid any appearance — however unwarranted — that the proceeding has been affected by or seeks to affect the approaching presidential election in which the Defendant is a candidate,” Merchan wrote in a four-page ruling.
The judge is also still considering a motion by Trump’s team to have the guilty verdict overturned based on the Supreme Court’s recent decision on presidential immunity, but Friday’s decision means that voters will be casting their ballots without knowing whether Trump will be facing time behind bars.
Trump was also in court Friday seeking to overturn a separate verdict that found him liable for sexual abuse and defamation — and he went in front of TV cameras for some 45 minutes to lash out at several women who have made sexual harassment allegations against him.
Here’s what else is happening.
Job Market Shows Signs of Further Cooling, Teeing Up Fed Rate Cut
Job growth was a bit softer than expected in August, according to government data released Friday. Employers added 142,000 new jobs, falling short of expectations closer to 165,000. The gains for previous months were revised lower, as well, knocking 86,000 jobs off the tally for June and July.
At the same time, the unemployment rate fell a tenth of a point to 4.2%, as expected, as employers rehired workers temporarily laid off in July due to bad weather. Wages continued to grow, rising 3.8% over the previous year, surpassing the inflation rate of 2.9% over the same period.
Overall, the data point to a labor market that is cooling but still relatively healthy as it continues to expand and provide wage growth. “The payroll numbers were weaker than expected, but when you look deeper into the numbers and other economic data which is holding up well, there’s not reason to panic,” said Beth Ann Bovino, chief U.S. economist for U.S. Bank, per The Washington Post.
The White House highlighted the big picture underlying the ongoing recovery. “Thanks to our work to rescue the economy, nearly 16 million new jobs have been created, wages and incomes are rising faster than prices, businesses are investing in America, and millions of entrepreneurs are opening small businesses—acts of hope and confidence in our economy,” President Joe Biden said in a statement. “With inflation back down close to normal levels, it is important to focus on sustaining the historic gains we have made for American workers.”
The Fed gets ready to move: The Friday report set off a new round of speculation about how Federal Reserve officials will react at the meeting of the Federal Open Market Committee in two weeks.
Federal Reserve Governor Christopher Waller said Friday that he thinks the time has come to cut interest rates. “Considering the achieved and continuing progress on inflation and moderation in the labor market, I believe the time has come to lower the target range for the federal funds rate at our upcoming meeting,” he said in prepared remarks delivered at the University of Notre Dame.
Waller said he was open to multiple cuts this year, or larger cuts, to be determined by the economic reports. “If the data supports cuts at consecutive meetings, then I believe it will be appropriate to cut at consecutive meetings,” he said. “If the data suggests the need for larger cuts, then I will support that as well.” Waller noted that he was “a big advocate” of large rate hikes when inflation accelerated in 2022 and would advocate large cuts now “if that is appropriate.”
Federal Reserve Bank of New York President John Williams also endorsed cuts Friday. “With the economy now in equipoise and inflation on a path to 2%, it is now appropriate to dial down the degree of restrictiveness in the stance of policy by reducing the target range for the federal funds rate,” he said in a speech at the Council on Foreign Relations in New York.
Williams said he wants to get interest rates back to a “more normal level” — though he added that there is some uncertainty as to what that might mean. “I’m not sure what that more normal level is and I’m not sure at all about how long that should take,” he said.
One key question in the months ahead is whether Fed officials see “normal” as meaning neutral, with interest rates neither restricting nor encouraging growth. Many on Wall Street are hoping that the Fed takes a more expansive approach, cutting rates with the goal of boosting growth. Investors now largely expect the Fed to slash rates by at least 1 percentage point by the end of the year.
What the experts are saying: The economy appears to be returning to something like normal as it downshifts from its post-pandemic high. “This report does not indicate that we’re taking another step toward a recession, but we’re still seeing further signs of cooling,” Sam Kuhn, an economist with the recruitment software company Appcast, told The New York Times. “We’re trending more closely to a 2019 labor market, than the labor market in 2010 or 2011.”
University of Michigan economist Justin Wolfers said the August numbers didn’t change the existing narrative of a slowing but still decent labor market. “There’s nothing in this report that would turn optimists pessimistic,” he said, per The Wall Street Journal. “Would it turn pessimists optimistic? I think the answer to that is no.”
Raymond James Chief Economist Eugenio Aleman said he thinks the report sets the table for a 25-basis point rate cut later this month. “It is clear that the employment market is slowing down, and the Fed has to start to move,” he told Reuters. “But the sky is not falling, the floor is not shaking ... and making a 50-basis-point cut will send an incorrect signal to the market” that the economy is falling apart, he said. “And they don't want to do that.”
House Republicans Roll Out Stopgap Plan to Avoid a Shutdown
House Republicans on Friday rolled out their plan to avert a government shutdown at the end of the month, setting the stage for a fight with Democrats over the coming few weeks.
Republicans introduced a bill that would extend government funding until March 28, 2025. The proposed legislation reportedly would keep federal funding largely in line with current levels and includes the SAVE Act, which would require proof of citizenship from anyone registering to vote in federal elections. Democrats oppose that measure, noting that it is already illegal for noncitizens to vote in federal elections.
Some Republicans have also expressed doubts about the GOP plan, suggesting that a clean extension of government funding is the most likely result of any showdown ahead of the November elections.
Number of the Day: $1.3 Billion
The Treasury Department and IRS said Friday that they have recovered $1.3 billion from wealthy tax dodgers since last fall as the result of initiatives enacted under the Inflation Reduction Act, which provides $60 billion for the agency to modernize and ramp up its enforcement efforts.
“In 2019, the top 1% of Americans was estimated to owe over one-fifth of unpaid taxes, leaving ordinary Americans to shoulder the burden,” Treasury Secretary Janet Yellen said in a speech Friday. “To fix this, we’ve channeled IRA funding toward significant investments to combat tax evasion.”
One initiative using Inflation Reduction Act funding focused on people with more than $1 million in income and more than $250,000 in recognized tax debt. The IRS said it had previously lacked the resources to go after these tax dodgers, but it has now recovered a total of more than $1.1 billion from nearly 80% of the roughly 1,600 wealthy individuals with delinquent tax debt it targeted, including $100 million since July.
Yellen also said that the IRS has collected $172 million from nearly 21,000 taxpayers in just six months under a program pursuing 125,000 wealthy individuals who had not filed taxes for years. “The IRS had not had the resources to pursue these wealthy non-filers. Now, it does, and we’re making significant progress,” she said.
Fiscal News Roundup
- House Republicans Unveil Stopgap Government Funding Plan – Politico
- House GOP Unveils Stopgap Plan to Avert Government Shutdown – The Hill
- White House Mocks Trump for Answer on Child Care Costs – The Hill
- Judge Delays Donald Trump’s Sentencing in Hush Money Case Until After November Election – Associated Press
- IRS Says It Has Recovered $1.3 Billion in Unpaid Taxes From Rich Americans – CBS News
- Yellen Says Ending Biden Tax Incentives Would Be ‘Historic Mistake’ for States Like North Carolina – Associated Press
- Dick Cheney Will Vote for Kamala Harris, Daughter Liz Cheney Says – New York Times
- All Your Questions About New Covid Shots, Answered – New York Times
Views and Analysis
- Kamala Harris Needs a Better Plan for Taxing the Ultrarich – Peter Coy, New York Times
- How Elon Musk Is Influencing Donald Trump – Ryan Mac, Theodore Schleifer and Maggie Haberman, New York Times
- Trump and Vance Took Questions on Child Care. Their Non-Answers Said a Lot. – Michael C. Bender, New York Times
- Why Trump’s Word Salad Answer on Child Care Policy Matters – Steve Benen, MSNBC
- Trump’s Child Care Plan Is Nonsensical – Jessica Grose, New York Times
- I Know What Trump Was Really Talking About in His Child Care Rant, and It’s More Troubling Than You Thought – Michael Hiltzik, Los Angeles Times
- The GOP’s Pro-family Delusion – David A. Graham, The Atlantic
- No, Calling Grandma Isn’t the Way to Fix Nation’s Child-Care Crisis – Petula Dvorak, Washington Post
- J.D. Vance Proves He’s an Idiot With Answer on Rising Daycare Costs – Hafiz Rashid, New Republic
- Trump Proposed a Bridge to the 19th Century, at Least When It Comes to Tariffs, in His Economic Address – Jonathan Weisman, New York Times
- Donald Trump’s Secret Plan to Eliminate the Government – Timothy Noah, New Republic
- We Must Invest in Our Aging Nuclear Arsenal – Rep. Mike Turner (R-OH), New York Times
- The Fed Needs to Pull the Plane Up – Paul Krugman, New York Times
- The U.S. Economy Looks Fragile. There’s an Easy Way to Fix That – Heather Long, Washington Post