INFLATION NATION — The topline number from this morning’s Consumer Price Index report is that inflation in America rose 3.2% year over year in July, speeding up slightly from 3% in June.

But under the hood, the inflation data actually looks more encouraging — the latest indicator that the economy could be on approach to a soft landing. The core CPI, which excludes food and energy and is the measure that the Fed watches most closely, ticked down a tenth of a point to 4.7% annually. And month to month, both overall and core CPI rose just 0.2% in July, the same rates as in June and tied for the smallest increases in the past two years. That’s a signal that inflation isn’t primed for a rebound, and stock markets were up on the news.

“My God, that’s incredible,” former Fed governor LAURENCE MEYER told WSJ’s Amara Omeokwe, Nick Timiraos and Christian Robles of the core CPI trend. It could also give the Fed pause about raising interest rates once more later this year.

What’s driving inflation up — and down: Housing costs make up a huge proportion of the rise in CPI. Food and gas prices ticked up moderately on the month. But Americans got a break with falling prices for used cars, hotels, TVs, pet food and flights.

Overall, economists expect inflation to keep trending lower, even if it stubbornly remains a bit above the Fed’s 2% goal, AP’s Paul Wiseman reports. Of course, many Americans are still feeling the squeeze as prices remain considerably higher than before the economic shocks of the pandemic.

One knock-on effect of moderating inflation: Social Security checks will likely rise only slightly next year — about 3% — in line with the overall economy, WSJ’s Anne Tergesen reports.

MIDDLEMANCHIN — Sen. JOE MANCHIN (D-W.Va.) today dangled the prospect of leaving the Democratic Party, telling Hoppy Kercheval on West Virginia radio that he’s long been thinking “seriously” about becoming an independent. Though Manchin has previously dismissed chatter that he might leave the Dems, he told Kercheval today that both parties’ brands have suffered and he wants to serve as an independent voice.

Manchin going independent, like fellow centrist KYRSTEN SINEMA (Ariz.) did, would be a shakeup for a potential reelection or presidential bid. It’s unlikely that he’d stop caucusing with the Dems entirely, though, as CNN’s Manu Raju notes: Manchin surely wants to hang onto his prized Energy and Natural Resources chairmanship.

THE LATEST TURN OF THE SCREWS — This morning, DONALD TRUMP aide WALT NAUTA pleaded not guilty, and the former president’s not guilty plea was officially accepted by a judge, in the expanded criminal charges filed against the pair in the Mar-a-Lago classified documents case. Nauta appeared in person in Fort Pierce, Fla., but Trump did not. Prosecutors added three new charges against Trump last month on top of the 37 he faced already, prompting the second wave of pleas. (The numbers were two and six for Nauta.)

Property manager CARLOS DE OLIVEIRA also had a court date in the case today, but his arraignment was postponed again because he still hasn’t gotten a lawyer in Florida. That’s the latest delay in the case, but it may not be long: His new date is Tuesday, and his attorney said paperwork is expected to be filed tomorrow. More from CNN

Also pleading not guilty: the final nine Michigan Republican “fake electors” facing state felony charges for trying to subvert the 2020 election. They entered their pleas, which echoed those from seven other fake electors, today. More from The Detroit News

Good Thursday afternoon. Thanks for reading Playbook PM. Drop me a line at [email protected].

AMERICA AND THE WORLD

BREAKTHROUGH IN IRAN — Iran has moved five Americans from prison to house arrest, the first step toward a potential prisoner swap and broader diplomatic deal with the U.S., NBC’s Dan De Luce, Andrea Mitchell and Abigail Williams report. SIAMAK NAMAZI, EMAD SHARGI, MORAD TAHBAZ and two unnamed others are expected to be released ultimately, as are several Iranians behind bars in the States, while the U.S. would free up about $6 billion in blocked funds for the Iranian government. Iran would be able to use the money only for humanitarian ends, but that could still court controversy for the Biden administration.

WITH FRIENDS LIKE THESE — “A U.S. Ally Promised to Send Aid to Sudan. It Sent Weapons Instead,” by WSJ’s Nicholas Bariyo and Benoit Faucon in Entebbe, Uganda: “African and Middle Eastern officials said … the U.A.E.’s covert arms shipments are fueling a war that has plunged Sudan into a humanitarian catastrophe and killed more than 3,900 people … Arming [warlord MOHAMED HAMDAN] DAGALO’s Rapid Support Forces militia could add to friction between the U.A.E. and the U.S., which has been working to mediate an end to the war.”

HOW THE WAR MACHINE IS FUNDED — Nuclear fuel imports from Russia put the U.S. and Europe in the uncomfortable position of paying hundreds of millions of dollars to Moscow, AP’s Martha Mendoza and Dasha Litvinova report. It’s all legal. But American companies’ purchase of “Russian nuclear products — used mostly to fuel civilian reactors” keeps the country’s energy sector dependent on Russia. And the transition away from fossil fuels will only make the paradox sharper, as nuclear plays a bigger role.

CONGRESS

SHUTDOWN SHOWDOWN — As Congress veers toward a potential government shutdown, it’s looking more likely than ever that Speaker KEVIN McCARTHY might need to seek Democrats’ support to pass spending legislation, Sarah Ferris and Nick Wu report. It could be hard for McCarthy to survive his conference’s anger if he jettisons the far right for Democratic votes to keep the government open. And Democrats might be forced to do more than usual — voting yes on the rule for debate, not just the bill — which could mean they’ll want more in return.

— Meanwhile, Rep. CHIP ROY’s (R-Texas) pledge not to allow DHS to get funded unless there are major border policy changes has now attracted the signatures of 15 Texas Republicans — way more than enough to block a bill and shut down the department unless Democrats help, Jordain Carney reports in Congress Minutes.

THE WHITE HOUSE

HAPPENING SHORTLY — President JOE BIDEN’s event at a VA hospital in Utah today will celebrate the one-year anniversary of the PACT Act’s passage to improve benefits for veterans exposed to toxic burn pits, AP’s Chris Megerian previews from Salt Lake City. It’s an extremely personal matter for the president, who believes his son BEAU died of cancer incited by burn pits. It’s also an opportunity for him to tout his bipartisan credentials with Utah Gov. SPENCER COX and to highlight a big achievement of his presidency.

ALL POLITICS

WHAT GINA McCARTHY IS UP TO — The former national climate adviser is joining America Is All In as managing co-chair, WaPo’s Maxine Joselow scooped. McCarthy will be focused on raising awareness of the Inflation Reduction Act’s historic climate investments as Biden seeks a political dividend for the law.

YOWZA — “GOP Candidate Plagiarized Massive Segments of His College Thesis,” by The Daily Beast’s Roger Sollenberger: ANTHONY “SABATINI’s honors thesis — a 2012 treatise on the political legacy of German philosopher FRIEDRICH NIETZSCHE, titled ‘A Profound Logic of The Blood’ — is wildly plagiarized. … Sabatini also appears to have lied about his sources. … Sabatini didn’t return a request for comment. It bears emphasizing that, had Sabatini been caught, it would have changed the course of his entire life. … There are simply too many of these plagiarized passages to cover in full. A small sampling demonstrates the sheer audacity of Sabatini’s con.”

PRIMARY COLORS — As Utah state House Speaker BRAD WILSON prepares to primary GOP Sen. MITT ROMNEY, he today rolled out a list of endorsements from more than 60 state legislators. The who’s who of many Utah Republicans amounts to a show of force as Romney decides whether to seek reelection.

BATTLE FOR THE HOUSE — The race between Rep. MARC MOLINARO (R-N.Y.) and Democratic challenger JOSH RILEY (or another Democrat) will test whether Dems’ success in running on abortion can extend to New York, where it decidedly did not in 2022, Semafor’s Kadia Goba reports from Saugerties. Democrats think the abortion issue will give them a boost, especially with a potential referendum on the ballot. But Republicans say New York voters know abortion access isn’t much threatened in the state — and that their message focused on the economy, crime and immigration is the winning formula.

DON’T SEE THIS OFTEN — Democrat ADITYA PAI today suspended his House campaign in the crowded primary to take on Rep. MICHELLE STEEL (R-Calif.), citing “a lack of joy” in the campaign and “the life of a politician.”

THE BRAVE NEW WORLD — “FEC takes first step toward rules on artificial intelligence deepfakes in campaign ads,” by the Washington Examiner’s Christopher Hutton: “The FEC voted unanimously on Thursday in favor of publishing an amended petition filed by the advocacy group Public Citizen, which would amend the agency’s definition of ‘fraudulent misrepresentation’ to include deepfakes.” Listen to the latest POLITICO Tech podcast for more

2024 WATCH

PLEDGE DRIVE — NIKKI HALEY today became the third GOP candidate to sign the pledge that she’ll support the party’s eventual presidential nominee, Fox News’ Kyle Morris scooped.

NEWS THE CANDIDATES CAN USE — This weekend’s main event is the Iowa State Fair, where almost all the GOP presidential contenders will descend for the ritual butter sculptures, baby kissing and soapboxes. From Des Moines, WSJ’s John McCormick, Catherine Lucey, Stephanie Stamm and Juanje Gómez have a fun guide to how not to screw up an appearance at the fair, based on strategists’ advice and past candidates’ stumbles. Among the tips: Don’t neglect to buy a ticket, and tread cautiously with food. (Beer and flipping pork chops are a good look, golf carts a bad one.)

But does the Iowa State Fair even matter anymore? Nearly every candidate not named Trump is hoping it does, leaning on old-fashioned retail politics to break out of the pack, NYT’s Reid Epstein and Lisa Lerer note. But Trump’s juggernaut campaign focused on national, not local, politics suggests otherwise.

BLUNT TALK — CHRIS CHRISTIE tells Fox News’ Paul Steinhauser in Manchester, N.H., that he thinks any contenders who don’t make the cutoff for the first GOP debate should drop out — which could apply to three to five candidates. “It’s time to go,” Christie says. “It’s that simple. That’s the first winnowing process.”

BEYOND THE BELTWAY

DeSANTIS’ AMERICA — With students heading back to the classroom this week in Florida, there’s an array of changes in the state’s schools pushed through by Florida Gov. RON DeSANTIS and Republican state legislators, NYT’s Dana Goldstein reports. Thanks to a broad effort to give parents more say, and a concerted intervention in particular around gender and sexuality, parents have plenty of new forms to fill out. Teachers and librarians, meanwhile, are navigating new restrictions on instruction county by county. As a result of Florida’s efforts to hamper gender transitions, some parents have to request in writing even the usage of a same-gender nickname for a cisgender child. And the fate of AP Psychology is still up in the air.

POLICY CORNER

INTELLIGENCE QUOTIENT — The U.S. intelligence community is seeking to get a little less secretive. The latest National Intelligence Strategy envisions the spy agencies coordinating more closely with NGOs, companies and academia, sharing intelligence to better confront new types of threats, WSJ’s Warren Strobel reports. DNI AVRIL HAINES tells the Journal in an interview of plans for “a broader, more institutionalized information exchange on a wider array of topics with the private sector, ranging from academia to local governments.”

PLAYBOOKERS

MEDIA MOVE — Jamal Simmons is joining CNN as an on-air political commentator. He previously was deputy assistant to the president and comms director for the VP.

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