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

Plus: Almost 4 million Americans cut from Medicaid since April ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ [The Fisc](   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 Majority Leader Chuck Schumer (Abaca Press) 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." --------------------------------------------------------------- Send your feedback to yrosenberg@thefiscaltimes.com. And please encourage your friends to [sign up here]( for their own copy of this newsletter. --------------------------------------------------------------- Fiscal News Roundup - [Senate Passes Pentagon Policy Bill, Teeing Up Partisan Clash With House]( – Washington Post - [Major Sticking Points Remain as House and Senate Reconcile Defense Spending Bills]( – Washington Examiner - [Showdown Looming: Senate Takes Moderate Route, House Pushes Culture Wars in Annual Defense Bill]( – Military.com - [US Annual Inflation Posts Smallest Rise in More Than Two Years]( – Reuters - [US Inflation Cooled While Consumer Spending Picked Up in June]( – Bloomberg - [Economic Data Bolster Soft Landing Hopes]( – New York Times - [Surprisingly Strong Economy Shifts Political Calculations]( – The Hill - [Biden: GOP May Try to Impeach Me Now That Inflation Is Cooling]( – The Hill - [Democrats Plot Middle-Class Message to Retake Economic High Ground]( – Washington Post - [US to Announce $345 Million Military Aid Package for Taiwan]( – Associated Press - [As McConnell Tries to Convey Business as Usual, His Future Is in Doubt]( – New York Times - [Doctors Who Put Lives at Risk With Covid Misinformation Rarely Punished]( – Washington Post Views and Analysis - [Infrastructure and Green Energy Spending Are Powering the Economy]( – Abha Bhattarai, Washington Post - [The Resilience in the GDP Data]( – Wall Street Journal Editorial Board - [Congress Can Lower Health Care Costs by Holding Hospital Systems Accountable]( – Michael Thompson and Tom Lussier, The Hill - [A Year After Dobbs, House GOP Proposes Taking Food From Hungry Babies]( – Catherine Rampell, Washington Post - [Conservatives Are Having an Epic Argument About Capitalism. Too Bad the Campaigns Are Ignoring It.]( – Michael Schaffer, Politico - [Europe Has a Plan to Avert a Sovereign-Debt Crisis]( – Bloomberg Opinion Editorial Board - [The Fight Against Alzheimer’s Is Entering a Critical Phase]( – Lisa Jarvis, Bloomberg Copyright © 2023 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website or through Facebook. The Fiscal Times, 399 Park Avenue, 14th Floor, New York, NY 10022, United States Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](