Bloomberg Talks
00:02:10 · Michael McKee, Kevin Hassett, Dani Burger
[00:02:10] S2: Well, Kevin, the numbers you cited for this week and the number we got today that you saw last night, did you go into the Oval Office and tell the president, look, forget about the idea of rate cuts, just not going to happen? [00:02:24] S0: I didn't talk about rate cuts with him, but I did spend almost 45 minutes with him last night. His spirits are high. I got a veto hat, which I guess is his new hat. And we talked about a lot of things. But the fact is that he's concerned that the positive momentum that we built... is something that could be upended by Democrats now that they've taken more power. But I think that they're going to have a real hard time repealing all the great policies that have created this strong job market because the president will veto it. And we have a huge amount of executive authority to do other things like deregulation to make sure that the momentum keeps going. [00:03:02] S1: Well, Director Hassett, I'm happy you went there because that's where I wanted to go. This is an American electorate that voted on Tuesday that clearly they are unhappy with something. All of the exit polls showed number one issue over and over again is inflation. Is this a White House that's prepared to change its economic policy, shift anything in order to address those voter concerns?
00:03:02 · Dani Burger, Kevin Hassett
[00:03:02] S1: Well, Director Hassett, I'm happy you went there because that's where I wanted to go. This is an American electorate that voted on Tuesday that clearly they are unhappy with something. All of the exit polls showed number one issue over and over again is inflation. Is this a White House that's prepared to change its economic policy, shift anything in order to address those voter concerns? [00:03:24] S0: Well, the White House, of course, you know, you can listen to voter concerns. But as an economist, you also have to look at the data. And the data are very strong on growth. And inflation has been decelerating. And so I think that the policies that we've been pursuing, the supply side policies, are give us prosperity, great job creation, without creating Phillips curve effects that would run away inflation. And that contrasts with what happened under President Biden, where they basically helicopter dropped money down to people after the COVID crisis was over. And that's like a classic example of what creates the inflation and the inflation that you saw. So I don't think that we think that we have a policy change that we need to play at. I think that the policies are working. The growth is there. Inflation is coming down, but it's coming down from a high level. Remember, that was like 22 percent total inflation under President Biden. And so if you go up 22 percent and then you get it down to going up three percent, say that it's still going up. And so the frustration that people feel is real. But we're making great progress.
00:03:24 · Kevin Hassett, Michael McKee
[00:03:24] S0: Well, the White House, of course, you know, you can listen to voter concerns. But as an economist, you also have to look at the data. And the data are very strong on growth. And inflation has been decelerating. And so I think that the policies that we've been pursuing, the supply side policies, are give us prosperity, great job creation, without creating Phillips curve effects that would run away inflation. And that contrasts with what happened under President Biden, where they basically helicopter dropped money down to people after the COVID crisis was over. And that's like a classic example of what creates the inflation and the inflation that you saw. So I don't think that we think that we have a policy change that we need to play at. I think that the policies are working. The growth is there. Inflation is coming down, but it's coming down from a high level. Remember, that was like 22 percent total inflation under President Biden. And so if you go up 22 percent and then you get it down to going up three percent, say that it's still going up. And so the frustration that people feel is real. But we're making great progress. [00:04:31] S2: Well, the inflation rate was lower when President Trump took office than it is right now. So is it any surprise that people voted the way they did on Tuesday? Do you think if they'd seen these jobs numbers, it would have made any difference?
00:04:31 · Michael McKee, Kevin Hassett
[00:04:31] S2: Well, the inflation rate was lower when President Trump took office than it is right now. So is it any surprise that people voted the way they did on Tuesday? Do you think if they'd seen these jobs numbers, it would have made any difference? [00:04:46] S0: You know, I'm not a political scientist, but I could say that the top line inflation numbers are, of course, being driven by energy prices, which are related to the situation in Iran that the president says he has no regrets about. And if you look at what happened prior to the last CPI, then core inflation was back to around the Fed's target for the previous three months. And so I think that we've succeeded at creating growth and helping inflation go down.
00:04:46 · Kevin Hassett, Dani Burger
[00:04:46] S0: You know, I'm not a political scientist, but I could say that the top line inflation numbers are, of course, being driven by energy prices, which are related to the situation in Iran that the president says he has no regrets about. And if you look at what happened prior to the last CPI, then core inflation was back to around the Fed's target for the previous three months. And so I think that we've succeeded at creating growth and helping inflation go down. [00:05:15] S1: You know, Director Hassett, I would say some in your party don't necessarily agree with that. And I would point to what the Senator Ted Cruz put on an X the other day saying that this is very real pain for real Americans and too many Republican politicians seem like they don't understand or they didn't care. Food is too high. Gas is too high. Diesel is too high. Insurance is too high. Life is too high. Tariffs have made everything expensive. And the war in Iran has dragged on for too long. This is Republican Ted Cruz saying... that tariffs are a problem for inflation and the war is a problem for inflation. Director Hassett, will the White House do anything different on both those accounts to reduce their contribution to inflation? Or are you expecting more pushback from the likes of Republican senators who themselves say that they are heeding a call from voters?
00:06:04 · Kevin Hassett, Michael McKee
[00:06:04] S0: Look, the bottom line is that the energy price spike is real, and it infects inflation numbers up and down, so airfares go up and things like that. But absent that, the policies that we're pursuing are supply-side policies that put downward pressure on energy. inflation. Food prices, we've done an enormous amount to lower food prices. So if you look at, it used to be the only thing that you guys would talk about when I came out of the air was egg prices. They're way down. Beef prices are down four out of the last five months. But again, if you have a big spike and then you start making progress to get the rate of increase to go down, then it doesn't mean that prices have gone down. And I think that that's one reason why people still feel those frustrations. [00:06:49] S2: Does the Senate flip to Democratic control in January increase the urgency at the White House to get Fed Governor Lisa Cook off the Fed? Because come January, you probably won't be able to get anybody confirmed to replace her. [00:07:05] S0: Look, the president's team, the White House counsel's team has set up an orderly, fair process, has been negotiating collegially with Governor Cook and her team to schedule a meeting where we can put all the evidence on the table and then prepare a report for the president on where things stand. And there's nothing that's changing that schedule at all that I'm aware of.