CPI and USDA reports Thursday | Biden visits southern border | Japan PM visits
Washington Focus
After four days and 15 rounds of voting, Kevin McCarthy’s (R-Calif.) wait to become Speaker of the House of Representatives ended. A caucus of 20 hardline Republicans had initially blocked his path, but several key concessions, including allowing a single lawmaker to force a vote on ousting the speaker, was the key to unlocking the GOP chaos. The final tally on the 15th roll-call vote was 216 for McCarthy, 212 for Democrat Hakeem Jeffries and six present.
Two past GOP speakers, John Boehner and Paul Ryan, left office amid divisions in their conference.
McCarthy, a 57-year-old native of Bakersfield, Calif., said that the new GOP House will be a crucial “check” on the Biden administration, and he vowed to stop wasteful spending, the rise in the national debt, and the rise in prices at the pump and grocery store. “I hope one thing is clear after this week: I never give up,” McCarthy said during his first speech as House speaker
During his first year as Speaker, McCarthy will need to raise the debt limit and fund the government — both major fights ahead. Lawmakers got a commitment to voting on specific bills and the promise to tie spending cuts to a debt-ceiling increase.
McCarthy said the very first bill Congress will take up will be to “repeal the funding for 87,000 new IRS agents” and that one of the first hearings will be on the “crisis” on the southern border. He also announced the reopening of the Capitol complex to the public. It had been closed since the start of the Covid pandemic.
Concessions: McCarthy agreed to appoint more members of the far-right House Freedom Caucus to the powerful House Rules Committee, that sets the terms for floor debate and amendments, and the Appropriations Committee. They won two seats on the Rules Committee that could narrow McCarthy’s maneuvering room as he tries to put together majorities for legislation. More symbolically, he also allowed a rules change that will enable just one member to be able to call for a vote to oust the Speaker. Other accommodations McCarthy reportedly made to sway Freedom Caucus members included mandating 72 hours between the posting of bills and votes on them, and trying for a constitutional amendment that would impose term limits on members of the House and Senate. They also won a pledge that the top-line budget figure for domestic discretionary spending in fiscal 2024 won’t exceed what it was in fiscal 2022. That includes defense spending, which would have to fall by $75 billion if the cuts are split with nondefense accounts. He also agreed to open government spending bills to a freewheeling debate in which any lawmaker could force votes on proposed changes. Also: separate votes on the 12 appropriations bills approved each year and a Judiciary Committee investigation into government collaboration with tech companies. The rules resolution would eliminate proxy voting and remote committee proceedings spurred by the Covid-19 pandemic, rename some House committees, adopt budget procedures aimed at restricting mandatory spending increases, and repeal collective bargaining rules adopted last year.
“I ran out of things to ask for,” said Florida Rep. Matt Gaetz, a GOP holdout against Kevin McCarthy’s bid for speaker
McCarthy tried to downplay the idea that the protracted conflict was a bad omen for a highly dysfunctional House in the coming years. “This is the great part,” McCarthy told reporters Friday night. “Because it took this long, now we learned how to govern. So now we’ll be able to get the job done.”
The concessions McCarthy agreed to will make it more difficult to pass legislation, particularly when it comes time to fund the government later this year. The Rules panel is usually staffed by loyalists to the speaker, so the head of the party retains control of the schedule. Six of the panel’s 13 seats are expected to be saved for lawmakers close to McCarthy, led by incoming Chair Tom Cole (R-Okla.). If the panel’s four Democrats opposed a bill, three Republicans from the Freedom Caucus could potentially join them and block the measure from coming to the floor.
Next up in the House is to approve a rules package, a key component to the deal struck between McCarthy and the faction of Republicans against his speakership. The vote on the rules package will come Monday.
Japan’s prime minister visits the White House. On Friday, Jan. 13, Japanese Prime Minister Fumio Kishida will visit Washington D.C., where he’ll meet with U.S. President Joe Biden to discuss the North Korean threat, tensions over Taiwan and Japanese defense spending. Biden is expected to voice support for Japan’s new assertive defense policy and national security strategy, which is crucial for Kishida in justifying his plans to double Japan’s defense budget by 2027. Kishida will likely also press Biden to extend the tax breaks earmarked for American green technologies in the U.S. Inflation Reduction Act to Japanese products, though it is unclear whether Biden would agree to such a request.
President Biden traveled on Sunday to the U.S./Mexico border amid a surge in illegal border crossings. The president went to El Paso, Texas, which in December saw a surge of migration. His first stop was at the Bridge of the Americas Port of Entry, where the president toured the facility with border officials. He then stopped along the border fence that separates El Paso from Juárez, Mexico. Biden also visited the El Paso County Migrant Services Support Center. “They need a lot of resources. We’re going to get it for them,” Biden told reporters. To the dismay of some Democrats and immigration advocates, his plans rely on the resumption or expansion of several Trump-era policies that Biden has previously decried, including Title 42, the pandemic-era border measure that allows migrants seeking asylum to be quickly turned away. Biden was greeted at the airport by Texas GOP Gov. Greg Abbott.
Homeland Security Secretary Alejandro Mayorkas defended the president’s policies to reporters on Air Force One Sunday, saying the goal is to “incentivize a safe and orderly way and cut out the smuggling organizations.” He said Biden was traveling to the border because “he made a decision to see what the challenges are and to see how we responded to those challenges down in El Paso.”
The administration said last week it would use Title 42 to rapidly expel asylum seekers from Cuba, Haiti, Nicaragua and Venezuela, the countries whose migrants have posed the greatest challenge to the U.S. in the past year. It is taking the step even as the Supreme Court prepares to hear oral arguments on the legality of Title 42 and the administration has argued that the measure is no longer justified on public-health grounds and must end. The administration announced a new program for up to 30,000 migrants a month combined from the four countries to enter the U.S. legally. In the coming weeks, the administration plans to adopt an updated version of a different Trump-era policy known as the transit ban, which would make migrants at the border ineligible for asylum if they didn’t first seek protection in another country, such as Mexico, on their way to the U.S.
North American leaders to meet in Mexico. President Joe Biden, Canadian Prime Minister Justin Trudeau and Mexican President Andrés Manuel López Obrador will meet in Mexico City for the North American Leaders Summit (popularly known as the ''Three Amigos’’ summit) on Jan. 9-10. The leaders are expected to discuss economic stability, security and immigration.
López Obrador is expected to additionally ask Biden for support in financing clean energy projects and attracting semiconductor investment, while Biden and Trudeau may press López Obrador on stalled trade dispute negotiations over Mexico’s policy of favoring its state-owned power company.
Washington is sending a $2.85 billion package of military hardware to Ukraine, supplying the type of powerful weapons it previously withheld, as Kyiv looks to press a counteroffensive.
House Ag Chairman G.T. Thompson’s (R-Pa.) farm bill listening session rescheduled. The bipartisan Congressional listening session has been postponed until Friday, Jan. 13; it was originally scheduled for Jan. 7.
USDA Secretary Tom Vilsack on Monday will address the American Farm Bureau Federation annual meeting in San Juan, Puerto Rico. The convention runs through Jan. 11.
Meanwhile, the Farm Bureau reached an agreement with Deere and Co. to let farmers and independent mechanics identify and repair problems with Deere equipment. A memorandum of understanding (link) “will ensure farmers everywhere are able to repair our own equipment,” AFBF President Zippy Duvall told delegates to the group’s annual convention. “You will have access to the diagnostic tools and information you need. And you’ll get it at a fair and reasonable price,” he said.
On Tuesday, EPA is holding a virtual hearing on proposed RFS levels for 2023-2025. The session could continue Jan. 11 depending on the number of speakers that want to deliver remarks on the proposed levels. Each commenter will have 3 minutes to provide oral testimony. EPA may ask clarifying questions during the oral presentations, but will not respond to the presentations at that time.
Resources for the Future will host a panel on Friday titled “Plugging in: How Much Will Electric Vehicles Drive Decarbonization?” to discuss the environmental benefits of plug-in electric vehicles, along with the issues related to policies, markets and the power sector.
On the international front, thousands of supporters of former Brazilian President Jair Bolsonaro broke through security barriers in the capital of Brasilia and invaded congress, the supreme court and the presidential palace to protest his election loss. Television images showed many protesters, draped in Brazilian flags flooding into congress and other branches of government in a sitation described by President Luiz Inácio Lula da Silva as “barbaric.”
Key Economic Reports and Events for the Week
Inflation will be in the spotlight this week with the CPI report for December due out on Thursday, Jan. 12. The headline Consumer Price Index reading for December is expected to cool to +6.7% from +7.1% in November and be up 0.1% on a month-over-month comparison. Core CPI is forecast to be up 5.6% and up 0.2% month-over-month.
Monday, Jan. 9
- Federal Reserve reports consumer credit data for November. In October, total consumer debt increased at a seasonally adjusted annual rate of 6.9% to a record $4.73 trillion. Revolving credit, which is mostly credit-card debt, jumped 10.4% as more consumers tap credit to pay for living expenses.
Tuesday, Jan. 10
- National Federation of Independent Business releases its Small Business Optimism Index for December. Consensus estimate is for a 91.5 reading, roughly even with the November data. The index remains mired near eight-year lows from last summer as small-business owners continue to cite inflation as their No. 1 issue.
Wednesday, Jan. 11
- Mortgage Bankers Association releases its Market Composite Index, a measure of mortgage loan application volume, for the week ending on Jan. 6. Mortgage activity declined sharply in the second half of last year as interest rates surged. In October, mortgage activity hit a 25-year low.
Thursday, Jan. 12
- Department of Labor reports initial jobless claims for the week ending on Jan. 7. In December, jobless claims averaged 217,500, still low historically. Despite the many announcements of layoffs in the tech and real estate sectors, the job market remains tight, as the Bureau of Labor Statistics this past week reported the unemployment rate edging down to 3.5%, near a half-century low. The U.S. economy added 4.5 million jobs last year, or about 375,000 a month on average. The second half of 2022 did see a slowing of job growth from the first half’s blistering pace but nothing that portends a recession in 2023, which the majority of economists are forecasting.
- Bureau of Labor Statistics releases the Consumer Price Index for December. Economists forecast a 6.5% year-over-year increase, after a 7.1% jump in November. The core CPI, which excludes volatile food and energy prices, is expected to rise 5.7%, slightly slower than the 6% rate of growth previously. The CPI peaked at 9.1% in June of 2022, while the core CPI hit its top at 6.6% in September. The past two CPI reports have seen a sharp deceleration in inflation, but the Federal Open Market Committee has stressed that it needs to see many months of data before even considering an end to its interest-rate hiking campaign.
- Fed Balance Sheet
- Money Supply
Friday, Jan. 13
- University of Michigan releases its Consumer Sentiment index for January. The consensus call is for a 60.5 reading, about one point more than previously. In December, consumer expectations for the year-ahead inflation hit an 18-month low of 4.4%.
Federal Reserve events:
Monday:
• Atlanta Fed President Raphael Bostic scheduled to speak.
Tuesday:
- Federal Reserve Chair Jerome Powell will deliver remarks as part of a panel at the Sveriges Riksbank International Symposium on Central Bank Independence in Stockholm.
- Cleveland Fed officials will host a 2023 Economic Outlook webinar.
Thursday:
- Richmond Fed President Thomas Barkin will speak to the Virginia Bankers Association and Virginia Chamber of Commerce at their financial forecast virtual event on Thursday.
- St. Louis Fed President James Bullard joins the Wisconsin Bankers Association’s Midwest Economic Forecast Forum on Thursday.
Friday:
- Minneapolis Fed President Neel Kashkari will give the opening remarks at the bank’s sixth annual Regional Economic Conditions Conference on Friday.
- St. Louis Fed will hold a 2023 outlook discussion on Friday.
Key USDA & international Ag & Energy Reports and Events
Thursday brings a batch of USDA reports, including supply/demand and the Annual Summary.
On the energy front, the U.S. Energy Information Administration releases its monthly Short-Term Energy Outlook on Tuesday
Monday, Jan. 9
Ag reports and events:
- Export Inspections
- U.S. Agricultural Trade Data Update
- Holiday: Japan, Venezuela, Panama, Ghana, Colombia
Tuesday, Jan. 10
Ag reports and events:
- Malaysian Palm Oil Board’s Dec. data on stockpiles, production and exports
- Malaysia’s Jan. 1-10 palm oil exports
- EU weekly grain, oilseed import and export data
Energy reports and events:
- API weekly U.S. oil inventory report
- Energy Information Administration monthly Short-Term Energy Outlook,
Wednesday, Jan. 11
Ag reports and events:
- Broiler Hatchery
- Cost of Pollination
Energy reports and events:
- EIA weekly U.S. oil inventory report
- U.S. weekly ethanol inventories
- Genscape weekly crude inventory report for Europe’s ARA region
- Holiday: Algeria
Thursday, Jan. 12
Ag reports and events:
- Weekly Export Sales
- Meat Price Spreads
- Cotton Ginnings
- Crop Production
- Crop Production, Annual
- Grain Stocks
- Rice Stocks
- Winter Wheat/Canola Seedings
- Cotton: World Markets and Trade
- Grains: World Markets and Trade
- Oilseeds: World Markets and Trade
- World Agricultural Production
- Livestock and Poultry: World Markets and Trade
- China’s agriculture ministry (CASDE) monthly supply and demand report
- International Grains Council report
- Brazil’s Conab releases data on area, yield and output of corn and soybeans
- Port of Rouen data on French grain exports
Energy reports and events:
- EIA natural gas storage change
- Insights Global weekly oil product inventories in Europe’s ARA region
- China’s first batch of December trade data, including oil, gas and coal imports, oil products imports & exports
Friday, Jan. 13
Ag reports and events:
- CFTC Commitments of Traders report
- Peanut Prices
- Turkey Hatchery
- Feed Grains Database
- Season Average Price Forecasts
- Wheat Data
Energy reports and events:
- Baker Hughes weekly U.S. oil/gas rig counts
KEY LINKS |
WASDE | Crop Production | USDA weekly reports | Crop Progress | Food prices | Farm income | Export Sales weekly | ERP dashboard | California phase-out of gas-powered vehicles | RFS | IRA: Biofuels | IRA: Ag | Student loan forgiveness | Russia/Ukraine war, lessons learned | Election predictions: Split-ticket | Congress to-do list | SCOTUS on WOTUS | SCOTUS on Prop 12 | New farm bill primer | China outlook | Omnibus spending package |