With many forces behind inflation beyond the Federal Reserve’s control, we look at some supply-side fixes to rising prices. We’ll also examine why housing prices could keep climbing and the rising odds of a recession.

But first, bookworms in New York have 500,000 reasons to be happy this summer. 

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. Someone forward you this newsletter? Subscribe here.

Economists are looking beyond the Federal Reserve and thinking outside the box of monetary policy for ways to fight inflation.  

With gas prices soaring, they are focusing largely — though not exclusively — on the energy industry and are increasingly coming up with ideas on how to bring down prices for consumers that cross the traditional liberal-conservative divides.  

The Hill’s Tobias Burns breaks them down here.

Why high housing costs could keep climbing 

Sky-high mortgage rates and a construction slowdown could push record rents and home prices even higher, further threatening housing affordability for millions of Americans.  

Economists say that rising mortgage rates should cool down the housing market’s red-hot price appreciation in the short term but are also likely to drive up rents. New construction of houses and apartments is waning, suggesting that the nation’s meager housing supply won’t improve any time soon.  

“It’s a perfect storm right now,” said National Association of Home Builders CEO Jerry Howard. “I don’t think I’ve ever seen this many red flags at one time in my entire career.”  

Those factors will put pressure on already rising rents, which surpassed $2,000 on average for the first time ever last month.  

Karl has the details here. 

Read more: Home sales give way as prices enter unprecedented territory

IRS says it’s making headway in clearing tax return backlog 

The IRS says it is climbing out from under the unprecedented stack of tax returns that piled up after the agency had to scale back its operations and close facilities in 2020 following the onset of the pandemic. 

The agency announced Tuesday that by the end of this week it will have cleared all original individual tax returns that were filed in 2021 and that didn’t contain any major mistakes. 

In getting through the 2021 backlog of around 8 million returns, the agency said it’s hit a new milestone in getting back to business as usual, according to a Treasury official. 

Tobias has more here.

Goldman Sachs sees higher likelihood of recession in next year 

Economists from Goldman Sachs said on Monday that the probability of a recession in the next year is higher than they last previously predicted, as other executives have warned of economic uncertainty ahead. 

The economists said in a note they were raising the likelihood that there would be a recession over the next year from 15 percent the last time they weighed in to 30 percent now.  

The Hill’s Caroline Vakil tells us why.

President Biden is set to announce the appointment of Lynn Malerba, the lifetime chief of the Mohegan Tribe, as the first Native American to serve as U.S. treasurer.  

In a statement, the Treasury Department said that Malerba, who previously served in the department’s Tribal Advisory Committee, will also oversee the Office of Tribal and Native Affairs, a newly established office that will directly communicate with tribal nations and be the hub for tribal policy.  

Here’s what else we have our eye on: 

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

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