MACRO ANALYSIS: MNI US Macro Weekly: CPI And Waller Test Hawks

House Republican leadership have circulated a memo to members whipping votes for a three-month spending package that will avert a government shutdown at midnight on Friday. The whip effort comes amid criticism from House conservatives over perceived extraneous spending in the package. Top Trump advisor Elon Musk has also publicly spoken against the bill in a series of statements on X.

• Jake Sherman at Punchbowl News notes that GOP leaders have highlighted Republican wins in the package and will canvass members during a conference meeting at 13:30 ET 18:30 GMT.
• Chad Pergram at Fox News reports on X: "Fox is told the House could vote later today on the interim spending bill. It could go over into tomorrow. But expect lots of complaining from conservatives if a vote comes less than 24 hours after releasing the text."
• If a vote comes today, it will likely be taken under suspension of rules, requiring a two-thirds majority of all present and voting members to pass.
• John Bresnan at Punchbowl notes: "Democrats are not formally whipping the CR vote but have sent a “question” to member offices. Overwhelming majority of Dems are yes votes. But would it be enough to get to 290 in the face [of] pretty significant Republican opposition."
• For a detailed roundup of the Continuing Resolution and potential impacts on Trump's legislative agenda in 2025, see today's edition of the MNI US Daily Brief. 

The MNI Markets Team’s expectations for the updated Economic Projections are below.

• This will largely mark-to-market the stronger growth, lower unemployment and higher inflation in 2024 than foreseen in the September projections, rather than a wholesale change in the outlook.
• The main risks to our expectations are to the upside for 2024 real GDP (could be as high as 2.7-2.8%) and core PCE inflation (could be 2.9% depending on participants' assumptions).
• We will also be watching the longer-run variables, particularly longer-run GDP growth which could be nudged higher from 1.8% at a meeting in the not-too-distant future.
• We don’t expect the forecasts to incorporate anticipated policy changes under the incoming Trump administration - instead, as we explain in our full Fed preview, we expect it to be reflected in the forecast uncertainty diffusion indices provided with the SEP materials.
• By the same token, if uncertainties are extreme with risks pointing in the same direction (eg higher growth and inflation), it could just mean that the December economic projections are obsolete upon publication as they don't reflect participants' "true" view of the impact of tariff and trade policy shifts.

• 2026-27: While the 2025 median will show a rise vs September, we would expect the number of cuts in 2026 to remain roughly the same: 50bp (to 3.1%, up from 2.9% prior). However there may be no further cutting in 2027 (to steady at 3.1%, vs 2.9% in the September projections). That’s largely contingent on an increase in the longer-run dot, however, and we think the 2027 split will be very close between 2.9 and 3.1%.
   
• Longer-Run: The longer-run dot has shifted up in each quarterly projection so far in 2024, from 2.50% last December, to 2.625% in March, to 2.75% in June, and finally to 2.875% in September.
• There were 9 participants at 3.00% or above (including 7 at 3.25% or above), with 2 on 2.875% and 8 below that (2.375% the lowest dot). This means it would take only one of 10 dots dot to shift above 2.875% to move the median higher to 3.00%, and we would not be surprised to see such a move.
• That would bring it back to a level last seen in September 2018, and up from the trough of 2.40% in 2022.