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Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Sam Sutton and Kate Davidson | Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro . Economists say the economy grew by about 2.3 percent last quarter. If the Bureau of Economic Analysis estimate later this morning puts third-quarter GDP growth anywhere close to that, claims that the U.S. has entered a recession can be swept aside faster than the New York Yankees in a pennant series. Despite the doom and gloom — and to be clear, POLITICO has written plenty about the doom and gloom — the Biden administration can still point to a few bright spots in the economy. Labor markets are strong, unemployment’s low, consumer spending is steady, household balance sheets remain in decent shape and corporate bankruptcies haven’t spiked. Will any of that matter in the midterm elections? Probably not. Most voters don’t set their economic antennae to the release of BEA data. And while there are obvious positive signs in the economy, they’re difficult to see amid a lingering pandemic, Russia’s invasion of Ukraine, supply chain issues, persistent inflation and the looming dread that’s infected central bankers, policymakers, the financial sector, economists and the media. We’re not in a recession, but we can’t stop talking about the one that’s coming. Maybe that’s part of the problem, according to Joanne Hsu, director of the influential University of Michigan consumer survey. “The typical consumer isn't watching the GDP numbers, but what they are watching is the news coverage,” Hsu said in an interview. “If news coverage starts to shift into ‘Oh, we're not in a recession,’ [then] over time, that is something that could absolutely influence how consumers see the world.” That is very hard to do when most economists and forecasting tools peg the likelihood of a recession between “ uncomfortably high and “ 100 percent .” And there’s already some evidence that’s starting to bleed into how consumers are thinking about what’s ahead. While the University of Michigan will update its consumer survey on Friday, the Conference Board’s consumer confidence index earlier this week suggested that “ recession risks appear to be rising .” IT’S THURSDAY — Have a tip, story idea or feedback to share? Let us know: kdavidson@politico.com and ssutton@politico.com .
| | | | NEW AND IMPROVED POLITICO APP: Stay up to speed with the newly updated POLITICO mobile app, featuring timely political news, insights and analysis from the best journalists in the business. With a fresh look and improved features, the sleek and navigable design offers a convenient way to access POLITICO's scoops and groundbreaking reporting. Don’t miss out on the app you can rely on for the news you need, reimagined. Already a POLITICO app user? Upgrade today! DOWNLOAD FOR iOS – DOWNLOAD FOR ANDROID . | | | | | | | | First estimate of third-quarter GDP and durable goods data released at 8:30 a.m. ... American Bar Association virtual conference on blockchain and cryptocurrency at 12 p.m. LOOSE OIL CAP — Bloomberg’s Saleha Mohsin, Alberto Nardelli and Ewa Krukowska: “US officials have been forced to scale back a plan to impose a cap on Russian oil prices, following skepticism by investors and growing risk in financial markets brought on by crude volatility and central bank efforts to tame inflation. Instead of strangling the Kremlin’s oil revenues by imposing a strict lid on prices that would have been observed by a broad ’buyer’s cartel’ of nations, the US and European Union are likely to settle for a more loosely policed cap at a higher price than once envisioned, with just Group of Seven nations and Australia committed to abide by it.” “The White House and the administration are staying the course on implementing an effective, strong price cap on Russian oil in coordination with the G-7 and other partners,” a spokeswoman for the White House’s National Security Council, Adrienne Watson, said in a statement. OUR HOUSE — NYT’s Max Bearak: “Countries around the world are failing to live up to their commitments to fight climate change, pointing Earth toward a future marked by more intense flooding , wildfires, drought, heat waves and species extinction, according to a report issued Wednesday by the United Nations.” "PARALLEL THEMES TO 2008" — From Sam: "CFTC Commissioner Christy Goldsmith Romero on Wednesday warned traditional financial institutions to tread carefully before investing in crypto. The volatile asset class could soon become a major systemic risk, she said ... Goldsmith Romero’s speech — delivered in front of an audience of banks and Wall Street firms — comes as a growing number of traditional financial companies forge ties with crypto startups that were hammered by a market contagion earlier this year." FIRST IN MM: RETIREMENT FAIL — Retirement savings for the top 10 percent of earners have increased 400 percent over the past 30 years, compared to just 30 percent for the bottom 20 percent of earners, according to a new report from Third Way out this morning. The analysis also highlights important inequities in the retirement system — for example, Black households with a bachelor’s degree have the same amount of retirement savings as white households with a high school degree. And white households hold a much higher share of retirement wealth than their proportion of the U.S. population. “Our private retirement system continues to benefit high earners the most, the racial retirement wealth gap in this country is widening, and education greatly impacts the retirement options available to workers,” the report concludes. RAIL WOES — Our Eleanor Mueller and Tanya Snyder: “Yet another union voted down a proposed contract with the freight railroad industry Wednesday, again pushing the nation toward an economically crippling rail strike as soon as next month. Wednesday’s vote by the Brotherhood of Railroad Signalmen makes it the second rail union to reject a compromise since mid-September, when eleventh-hour deal-making by the Biden administration averted the threat of an immediate work stoppage.” FIRST IN MM: REPUBLICANS DEMAND CBO CHECK RISING DEBT COSTS — Senate Republicans led by Sen. Steve Daines of Montana on Thursday demanded the Congressional Budget Office provide an assessment on how rising interest rates are driving up the cost of servicing the $31 trillion federal debt , warning that “federal spending will increasingly be comprised of net interest rather than legislative priorities , reducing lawmakers’ ability to fund critical projects for taxpayers.”
| | | SEC CLAWBACK — Our Declan Harty: “The SEC on Wednesday adopted long-awaited regulations that would ratchet up the consequences for corporate executives whose bonuses are based on misstated financial information.” “SEC commissioners voted 3-2 to finalize new rules that will allow public companies to claw back compensation from executives after they receive pay linked to the firm hitting certain metrics but it later turns out the company missed the mark and financial results have to be restated.” FEE CRACKDOWN — Our Katy O’Donnell: “The CFPB on Wednesday issued guidance warning banks about two kinds of fees they charge , a move that was bolstered by President Joe Biden calling on companies to eliminate ‘hidden’ fees. Biden and CFPB Director Rohit Chopra appeared together at the White House Wednesday with FTC Chair Lina Khan. It marked an escalation of Chopra's attack on banking fees, which has set off a major conflict with the industry.”
| | | WHAT IS THE TRUE RATE OF INFLATION? — WSJ’s Greg Ip: “It is a critical question for the economy and financial markets, but a surprisingly difficult one to answer . There are credible arguments for above 8%, below 3% and almost anything in between. “The difficulty arises because how much prices have risen—the headline inflation rate—might differ from how much they rise once various random shocks wash out, i.e. the underlying inflation rate.” HELP ON THE MARGINS — NYT’s Ben Casselman: “The strong late-pandemic labor market is giving a lift to a group often left on the margins of the economy : workers with disabilities. Employers, desperate for workers, are reconsidering job requirements, overhauling hiring processes and working with nonprofit groups to recruit candidates they might once have overlooked. At the same time, companies’ newfound openness to remote work has led to opportunities for people whose disabilities make in-person work — and the taxing daily commute it requires — difficult or impossible.” INVERSION WATCH — WSJ’s Eric Wallerstein: “The spread between yields on the three-month U.S. Treasury bill and the benchmark 10-year note has inverted several times since Tuesday's trading session . Inversions have preceded both the 2008 financial crisis and the Covid-19 crash, and haven't been seen since March 2020. A WRINKLE IN TECH — WSJ’s Salvador Rodriguez: “Meta shares dropped a further 14% in after-hours trading. Meta is battling a host of challenges , including the tough macroeconomic climate, growing competition from rival TikTok and the fallout from Apple Inc.’s ad-tracking changes, all of which have taken a toll on its massive advertising business.”
| | | THIS EPISODE OF THE ALL-IN PODCAST — WSJ’s Berber Jin: “As cryptocurrency prices soared last year, no investor bet more on the sector than Andreessen Horowitz … The timing wasn’t good … Andreessen’s flagship crypto fund shed around 40% of its value in the first half of this year, according to people familiar with the matter. That decline is much larger than the 10% to 20% drops recorded by other venture funds, which have largely avoided the risky practice of purchasing volatile cryptocurrencies.”
| | | Raffi Williams has joined the Managed Funds Association as vice president of communications. Williams was most recently a vice president on the financial communications team at Edelman Smithfield and was previously acting director of communications for the FHFA and deputy assistant secretary for public affairs at HUD. Jennifer Songer, a former policy counsel to SEC Chair Gary Gensler, is moving to the private sector to join the law firm Paul, Weiss as a member of the firm’s Private Funds Group.
| | | | SUBSCRIBE TO POWER SWITCH: The energy landscape is profoundly transforming. Power Switch is a daily newsletter that unlocks the most important stories driving the energy sector and the political forces shaping critical decisions about your energy future, from production to storage, distribution to consumption. Don’t miss out on Power Switch, your guide to the politics of energy transformation in America and around the world. SUBSCRIBE TODAY . | | | | | | | | The sneaker resale market plummeted earlier this year and now faces a new threat : the downfall of Ye. — Bloomberg’s Paulina Cachero and Misyrlena Egkolfopoulou The US is exporting record volumes of oil and taking on a bigger role as a fuel supplier in response to the global energy crunch caused by Russia’s war in Ukraine, even as tensions flare over petrol prices at home. — FT’s Myles McCormick and James Politi A virulent new strain of avian influenza is wiping out turkey flocks, and may force consumers to pay an additional 20 percent more per pound for Thanksgiving turkeys compared with last year, according to several estimates. — WaPo’s Erica Werner and Laura Reiley | | | | Follow us on Twitter | | | | Follow us | | | | |  |
