Reuters' Howard Schneider and Ann Saphir have a good overview of the short term economic situation and the Fed's next likely moves, as President-elect Trump prepares to take office.

The bottomline is this: Trump is getting a good economy. The jobs numbers are good, and inflation is tampening down, so much so that the Fed is signaling that it will probably cut rates later this month.

"Traders after the jobs data put the probability of a rate cut at the Fed's Dec. 17-18 policy meeting at 85%, up from less than 70% before the release of the report, and added to bets that short-term borrowing costs will drop another 75 basis points next year - a slower pace than Fed officials anticipated in a September set of economic projections," they write.

The combination of Covid and the Biden Administration's spending (and regulation) spree caused inflation and various other economic ills, but, at least on the macroeconomic front, the government has been trying to right the ship, and the situation has been steadily improving for the past year.

What does that mean for policy?

Well, for starters, during the big tax fight, people might be more generous with their assumptions of future growth, which might give more room for tax cuts.

Secondly, if the Administration really does follow through on its promise of mass deportations, including raids on employers (which "czar" Tom Homan has said he intends to do), the economic impact may be blunted, and indeed, we may see a positive impact as wages go up. If you're going to crack down on immigration, doing it at a time when you're getting an economic tailwind is probably indicated.

Thirdly, though this is a long ways off, if we are at the beginning of a new business cycle, the economic tailwind may only be stronger by the time we get to the Midterms, where we have a very narrow House majority and the incumbent party is usually forecast to make losses.

We won't be offering any forecasts about the impact of the economy on the Vance/Gabbard '28 ticket, however…

Policy News You Need To Know

#LGBT — The journalist Jesse Singal is part of a small breed your correspondent deeply, and unironically, admires: the honest liberal. He has suffered countless slings and arrows for doing simple, honest reporting on the trans issue, doing things like very factually pointing out that the alleged "science" on which the trans movement rests is very shoddy and even sometimes fraudulent, or that many minors or young adults who have been submitted to "gender-affirming care" end up deeply regretting it and suffering lifelong consequences. He has been allowed to write an article in The Economist on the lawsuit against "America's best-known practitioner of youth gender medicine." The person suing her is Clementine Breen, now a 20 year old student at UCLA, who "got puberty blockers at 12, testosterone at 13, and a double mastectomy at 14." Now she "regrets it all" and is suing. The details are chilling. "Olson-Kennedy referred Breen for puberty blockers at her first visit. In her notes from that visit, Olson-Kennedy explicitly states Breen hasn’t seen a therapist yet and had come out as trans three months earlier." The DSM criteria for gender dysphoria requires at least six months of feeling that way, Singal notes. "Breen claims that when her parents were skeptical of medical intervention, Olson-Kennedy spoke to them separately and told them Breen was suicidal and could kill herself unless they acquiesced. Breen wasn’t suicidal and accuses Olson-Kennedy of lying in the lawsuit," he goes on. It gets worse: "In the letter of support for the double-mastectomy that Olson-Kennedy wrote for Breen, she claimed that Breen had 'endorsed a male gender identity since childhood,' which is plainly false and contradicted by her own notes." Utterly damning. This insanity needs to stop, and there needs to be consequences.

#WokeMadness — Speaking of woke insanity, a new study on "more than 26,000 adult attachment interviews" finds that "A combination of high scores on the unresolved and insecure-preoccupied dimensions was shared by borderline personality disorder, autism spectrum disorders, and gender dysphoria." In other words, wokeness correlates strongly with having terrible interpersonal relationships. Developmental psychologist JD Haltigan explains.

#DEI — Speaking of woke insanity, AEI's Max Eden and Newsweek editor Josh Hammer make the case for why DEI is unconstitutionnal under the 14th Amendment.

#AdministrativeState — Jeff Stein has an interesting piece at WaPo on how Federal employees are "bracing" for a Trump "purge." People with titles having to do with DEI or climate change are changing job titles to dodge the scythe they believe might be coming. "Outgoing Biden administration appointees are joining forces with labor unions to extend collective bargaining agreements, locking in benefits before the incoming administration can seek to undo them," he reports. We'll see what happens, won't we?

#Wages — In his recent interview with NBC, President-elect Trump signaled openness to raising the Federal minimum wage. Let's get it out of the way: yes, minimum wage laws are bad policy. However, raising the minimum wage is also a very popular policy—including with Republican voters. Also: the minimum wage was raised in 2009 to $7.25 per hour; adjusted to today, that would be approximately $10.83 per hour. Given the delay and given the amount of inflation, it doesn't feel like a small rise would be massively damaging to the economy. The debate about the minimum wage reminds us of the debate on tariffs, in that proponents and opponents claim effects that go in one direction, when it clearly will be both, and the question is the mix. What we mean is: opponents of tariffs claim they will all be passed on as price increases; proponents argue that manufacturers will eat the loss; in reality, it will certainly be a mix of both. Similarly, no doubt a rise in the minimum wage would destroy some jobs; but there can be no doubt that, at least in some cases, employers will just eat the cost rather than lay off productive employees, so that some working Americans will see an increase in their standard of living. Yes, it's bad policy, and ideally the United States should not have a minimum wage. But is it as bad as opponents claim? There's room for debate.

#AI #DefenseTech — People are already adjusting to the Trump presidency. OpenAI has announced a partnership with the most famous of the new breed of defense startups, Anduril. Anduril's founder, Palmer Luckey, has been a prominent Trump supporter; meanwhile, most conservatives hate OpenAI because ChatGPT is woke. This in spite of internal employee groaning and gnashing of teeth.

#RuleOfLaw — No comment necessary: White House Press Secretary Won’t Rule Out Preemptive Pardons for Biden Allies.