| | |  | BY VICTORIA GUIDA | | | 
A woman carries a Century21 shopping bag while walking through a mall on June 6 in New York. | Bebeto Matthews/AP Photo | THE FED’S ASSIGNMENT — The Federal Reserve just got its latest report card. The Fed’s goal is 2 percent annual inflation, and they measure that goal by way of the personal consumption expenditures index, a monthly data set. This morning, it clocked in at 3.8 percent — definitely not an A, but a sign their grade is improving. Prices are rising a lot less quickly than they were last summer, when PCE peaked close to 7 percent. But Fed Chair Jerome Powell, strikingly, isn’t claiming much credit yet. One big reason inflation has come down so much is the 13.4 percent drop in energy prices over the past year, something that is “principally affected by other things in the economy,” Powell said last week. (Oil is a unique global market that is driven by many different geopolitical factors.) Inflation on physical stuff you buy has also come down, which is in no small part because supply chain snarls have been getting worked out. “That, again, is not really a function of monetary policy,” Powell says. There are also more people participating in the workforce, which has helped the number of job vacancies drift down. If you’ll allow us to torture this analogy, bringing down inflation is more like a group project. Prices rise more quickly when supply (what is being produced) doesn’t keep up with demand (what people want to buy). The Fed is raising borrowing costs so that spending cools, but increases in supply (whether it be a higher number of human workers, faster shipping or more efficient production) also help reduce inflation. The question is how hard the Fed’s rate hikes will hit once they really start to sink in. There’s a delay in much of the effect of the central bank’s policies because, well, rates matter first and foremost when you’re borrowing. A lot of companies locked in lower-rate loans before the hikes, and it’s only when that debt matures that the higher rates hit. Similarly, Americans have a lot more savings than they did before the pandemic, which has helped them weather higher prices without racking up too much credit card debt. But the more those savings dwindle, the more consumers will get squeezed. That’s why, even if the Fed just holds rates where they are, more pain is likely on the way . But Fed officials have made clear that they’re likely to raise rates at least a bit more. For now, they’re penciling in two more rate increases this year, though what they actually do will depend on how inflation behaves. This brings us back to PCE. So-called headline inflation — which tracks all categories of prices — has steadily fallen, but prices have cooled off considerably less when you don’t factor in volatile food and energy costs. “Core” inflation has stayed at essentially the same level for months, driven particularly by higher prices in services sectors. Addressing that part of inflation is what Powell sees as his part of the assignment — and it will determine his final grade. For now, though, the economy seems to be benefitting from the fact that the Fed isn’t completely taking over the project. Welcome to POLITICO Nightly. Reach out with news, tips and ideas at nightly@politico.com . Or contact tonight’s author at vguida@politico.com or on Twitter at @vtg2 .
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| | A message from Bank of America: As climate change intensifies, every segment of society must have an abiding interest in stemming its impact. In Bank of America’s sustainability Q&A , leaders share the essential commitment needed by business and financial communities to create innovative solutions that counter the environmental and social challenges facing our planet. | | | | | — Supreme Court strikes down Biden’s student debt relief plan: The Supreme Court today struck down President Joe Biden’s plan to cancel up to $20,000 of student debt for tens of millions of Americans, thwarting a major domestic priority of the president as he seeks reelection. In a 6-3 decision, the conservative majority on the court ruled that Biden’s effort to erase roughly $400 billion of student debt was an illegal use of executive power. The decision immediately upends debt relief that the Education Department approved last fall for 16 million borrowers and the pending applications of millions of additional borrowers. — Supreme Court limits LGBTQ protections in dispute over services for same-sex weddings: A Christian web designer has a First Amendment right to refuse to create websites for same-sex weddings , the Supreme Court ruled today in a decision that dilutes legal protections for LGBTQ people. By a 6-3 vote, the justices sided with Lorie Smith, an evangelical Christian and Colorado web designer who opposes same-sex marriage. Colorado law bars businesses from discriminating on the basis of sexual orientation, but Smith argued that the free speech guarantee of the federal Constitution entitles her to an exemption from that law. — Coast Guard hid sexual assault probe from Senate for years, committee letter says: A yearslong U.S. Coast Guard investigation into decades of sexual assault and violence at the Coast Guard Academy went undisclosed to the Senate Commerce Committee until last week , according to a letter lawmakers sent today that calls the lack of disclosure “disturbing.” The letter, signed by Commerce Chair Maria Cantwell (D-Wash.) and Senate Oceans, Fisheries, Climate Change and Manufacturing Chair Tammy Baldwin (D-Wis.), seeks more information to investigate if the agency “complied with the law and to inform potential legislative action.” It was addressed to Coast Guard commanding officer Admiral Linda L. Fagan.
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| | 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 . | | | | | | | CASH DASH — Ron DeSantis flooded his supporters’ inboxes three times this week with the subject line: “Do not tell my children that men can get pregnant.” Nikki Haley branded several fundraising emails as a response to former president Barack Obama, contrasting his comments on race with her own vision. And then there is former President Donald Trump, who was largely focused on his own legal travails, which have proven a successful fundraising motivator for him in the past. The Republican presidential candidates’ appeals for cash came fast and heavy ahead of a key fundraising deadline today. And they revealed the issues that are motivating small-dollar Republican donors to part with their cash . Emails that rail against President Joe Biden, “wokeness” and the left were most common across the field, according to a POLITICO analysis of more than 200 emails sent by presidential campaigns in the past month. There were still plenty of yard signs and apparel giveaways, too. THIRD TIME’S A CHARM — Marianne Williamson announced her new campaign manager for her 2024 presidential bid today, reports POLITICO. Carlos Cardona, formerly her New Hampshire state director, will be the third person to occupy the top post since the campaign launched . The elevation of Cardona comes as Williamson starts a 13-stop New Hampshire and Boston campaign tour for the July Fourth weekend — a tour that will be orchestrated by the new campaign chief. POLITICAL FLEX — Moms for Liberty, a conservative parents-rights advocacy group that has rapidly expanded since its founding little more than two years ago, flexed its political muscles today as top rivals for the 2024 Republican presidential nomination addressed its national conference in Philadelphia. "2024 is going to be the year when the parents across this country finally fight back," said Florida Governor Ron DeSantis, the closest challenger to front-runner Donald Trump, told the hotel ballroom crowd. Trump, the former president, was expected to speak later in the day, Reuters reports. Their appearance, along with other three candidates including former South Carolina Governor Nikki Haley, serves as a testament to the weight their campaigns are placing on race and gender-based cultural issues related to education heading into next year’s nominating contests. Those culture war issues have animated parts of the Republican base, and the Republican rivals are hoping to appeal to parents of school-age children, particularly suburban women, an important voting bloc in U.S. presidential elections.
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| | A message from Bank of America:  
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Russian President Vladimir Putin addressing units of the Russian Defense Ministry in Moscow on June 27. | Sergei Guneyev, Sputnik, Kremlin Pool Photo via AP | NO EXIT — The recent attempted mutiny in Russia proved that no matter how much many world leaders hate Vladimir Putin, they don’t want the Russian president suddenly ousted , writes Nahal Toosi . The instability that could follow isn’t worth the risk. The possibility of post-Putin chaos in Russia is one key factor many countries — from adversaries such as the United States to Russia partners such as China — considered as they calibrated their reactions to mercenary leader Yevgeny Prigozhin’s armed rebellion against Moscow. It’s a tricky calculation, especially for the United States. The Biden administration has taken many steps, including imposing economic sanctions, that arguably are weakening Putin in the wake of his war on Ukraine. But Washington has repeatedly insisted it does not back regime change in Russia, a fellow nuclear power. At the moment, the lack of a clear successor, or the possibility of a violent warlord such as Prigozhin taking charge, leaves too many uncomfortable variables to openly root for a Putin overthrow, according to two current U.S. officials, two foreign officials and one former U.S. official. “The United States has no interest in instability inside Russia that has the potential to spill over into Europe,” said Andrea Kendall-Taylor, a former U.S. intelligence official who specializes in Russia and autocracies. “Regime change that occurs through a chaotic and violent process is also the most likely to produce another authoritarian leader, which could possibly be worse than Putin.”
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| | STEP INSIDE THE WEST WING : What's really happening in West Wing offices? Find out who's up, who's down, and who really has the president’s ear in our West Wing Playbook newsletter, the insider's guide to the Biden White House and Cabinet. For buzzy nuggets and details that you won't find anywhere else, subscribe today . | | | | | | | | |
40.7 percent The percentage of fundraising emails from GOP presidential candidates Donald Trump, Nikki Haley, Ron DeSantis, Tim Scott and Mike Pence that mention the word “woke,” the most of any word, according to an analysis from POLITICO. That’s followed by “Biden” at 34.3 percent, “Left” at 22.5 percent and “border” at 12.3 percent. |
| | | GALAXIES FAR, FAR AWAY — The European Union is unveiling a new space project that will launch on Saturday : an orbiting observatory that will search for clues about the universe’s expansion. At the heart of the project is a telescope called the Euclid, capable of looking through the past 10 billion years in cosmic time. It’s specifically searching for information on two things: dark matter and dark energy — components that make up large portions of the known universe. Ramin Skibba reports for Wired.
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On this date in 2005: Children wear white masks with a red X over the mouth to protest Spain's parliament's legalization of gay marriage. Parliament legalized gay marriage defying conservatives and clergy to make the predominantly Roman Catholic country the third in the world to officially recognize same-sex unions. | Jasper Juinen/AP Photo | Did someone forward this email to you? Sign up here .
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| | A message from Bank of America: What will it take to create a more sustainable world?
Three Bank of America leaders discuss what the transition to a low-carbon economy entails, why environmental and social challenges are linked, and the essential role financial institutions and investors must play in driving solutions. They share the innovations needed in financing, technology and risk management to counter the environmental and social challenges facing our planet.
“Sustainable finance means putting humanity and purpose together with capital. Every industry has the power and obligation to adapt and help drive positive change,” said Karen Fang, Global Head of Sustainable Finance for Bank of America.
Learn how Bank of America is supporting the transition to a sustainable economy through its operations, business activities and partnerships. | | | | |
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