On The Money — The bad news behind the good GDP report

We explain why the higher economic growth in the third quarter may not be as good as it seems. We’ll also look at trouble brewing for a key financial regulator and another record broken by rising mortgage rates. 

But first, this stock tip from Jim Cramer turned out pretty poorly.  

Welcome to On The Money, your nightly guide to everything affecting your bills, bank account and bottom line. For The Hill, we’re Sylvan Lane, Aris Folley and Karl Evers-Hillstrom.

Why the GDP rebound isn’t soothing recession fears 

U.S. economic growth rebounded sharply during the third quarter, according to data released by the Commerce Department Thursday, rising at an annualized rate of 2.6 percent and proving that the U.S. has avoided a recession thus far. 

But beneath a strong headline number were several warning signs of a deeper slowdown ahead.

• While household spending and exports helped fuel a strong quarter of growth, both are likely to fall as higher interest rates and inflated prices weigh on buyers.   
• Meanwhile, declines in business spending and other crucial economic engines are likely to accelerate as the global economy slows. 

“While the US economy remains the cleanest shirt in the global laundry basket, it is likely to enter a recession with peak employment likely reached before year-end,” wrote Gregory Daco, chief economist at audit and consulting firm EY-Pantheon. 

Sylvan has more here. 

Read more: Biden pushes back on ‘doomsayers’ while touting latest economic growth numbers 

CFPB CRISIS? 

Obama-era watchdog agency’s independence in peril  

The future of a powerful financial watchdog agency has been upended by a federal court, with both its funding and its independence now in danger.  

A panel of the 5th Circuit Court of Appeals ruled last week that the Consumer Financial Protection Bureau’s (CFPB) unique power to fund its own operations is unconstitutional. 

• The decision will be appealed and could go to the conservative Supreme Court, where justices could rule that the CFPB cannot enforce financial rules or crack down on fraud without Congress stepping in to fund it.    
• That would also give Republican lawmakers, who’ve long griped about the agency, a chance to undermine it for good. 

“As Republicans have said all along, the CFPB’s ‘double-insulated,’ independent funding mechanism is unconstitutional and makes it wholly unaccountable,” Rep. Patrick McHenry (N.C.), the top Republican on the House Financial Services Committee, said in a statement responding to the ruling. 

Sylvan explains the situation here. 

STILL CLIMBING

Mortgage rates reach highest level in 20 years

Surging mortgage rates reached another high this week, eclipsing 7 percent for the first time in 20 years amid the U.S. Federal Reserve’s ongoing battle with inflation. 

• The 30-year-fixed rate mortgage climbed to 7.08 percent, up from 6.94 percent a week earlier, according to Freddie Mac.    
• At the same time a year ago, 30-year fixed rate mortgages averaged 3.14 percent. 

Yet the mortgage rate increases aren’t affecting Americans equally, according to Nadia Evangelou, senior economist at the National Association of Realtors, who noted that with 7 percent rates, only 15 percent of Black households can currently afford to buy the typical home compared to 30 percent of White households. 

Adam Barnes has more here. 

CHILD TAX CREDIT 

Dozens of Dems call for action on child tax credit during lame-duck session

Dozens of House Democrats are calling on caucus leadership to extend the enhanced child tax credit in the lame-duck session, as lawmakers look to tick off more legislative priorities in the final weeks of the current Congress.  

Members of the New Democrat Coalition — the largest Democratic coalition in the House — penned a letter to Speaker Nancy Pelosi (D-Calif.), House Majority Leader Steny Hoyer (D-Md.) and Whip James Clyburn (D-S.C.) on Thursday requesting that they “prioritize the enhanced [child tax credit] in any end-of-year package.” 

• Congressional Democrats expanded the child tax credit in the American Rescue Plan, a $1.9 trillion COVID-19 relief bill President Biden signed in March 2021, just weeks into his presidency. The measure increased the child tax credit from $2,000 to $3,600 for qualifying children under 6 years old, and $3,000 for other children under 18 years old who qualify.    
• The last payment with the enhanced provision, however, was sent on Dec. 15, 2021, because Congress did not pass a measure to renew the program. Democrats were looking to renew the program in their sprawling Build Back Better package, but the measure stalled in the Senate. 

The Hill’s Mychael Schnell has the details here. 

Good to Know

President Biden on Thursday pointed to a major investment in upstate New York to sharpen the contrast between his economic record and proposals by Republicans, who he said appeared to be hoping for a recession.  

Biden, in remarks at Onondaga Community College in Syracuse, N.Y., touted a $100 billion investment from Micron over the next two decades to build a semiconductor manufacturing facility in the region. He framed it as a game-changer for the local economy and a sign that his policies were effective in boosting domestic manufacturing. 

Here’s what else we have our eye on: 

• A federal court cleared the way Thursday for a Democratic-led House committee to review former President Donald Trump’s tax returns, although the Supreme Court could still block the action. 
  
• Americans plan to spend almost as much during the upcoming holiday season as they did before the COVID-19 pandemic, according to a new survey.  
  
• The parent company of Facebook was fined almost $25 million Wednesday for repeatedly and intentionally violating campaign finance laws in Washington state.
   
• Experts and stakeholders foresee another COVID-19 winter as the specter of the pandemic refuses to dissipate. 
  

That’s it for today. Thanks for reading and check out The Hill’s Finance page for the latest news and check out more newsletters here. We’ll see you tomorrow.