Angi CEO Jeff Kip & Sally Beauty CEO Denise Paulonis on Earnings

Summary

Bloomberg Businessweek Podcast Summary: "Angi CEO Jeff Kip & Sally Beauty CEO Denise Paulonis on Earnings" (May 11, 2026)

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Episode Overview

In this episode of Bloomberg Businessweek, hosts Carol Massar and Tim Stenovec dive into the latest earnings reports and strategic pivots at Angi and Sally Beauty Holdings. Angi CEO Jeff Kip discusses a major AI-driven transformation amid concerns about the company's core business model, while Sally Beauty CEO Denise Paulonis explores consumer trends and company strategies in an environment marked by lower consumer discretionary spending. The episode also touches on Jay Powell’s legacy as Federal Reserve Chair, emphasizing central bank independence.

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Segment 1: Angi’s Strategic Pivot to AI (02:36–10:49)

Key Discussion Points

• Angi’s Stock Volatility and Business Model

  • Angie shares plunged 35% after a disappointing earnings report and the company’s move to stop issuing quarterly guidance. (02:41–03:19)
  • CEO Jeff Kip explains the company is moving away from its complex, outdated tech stack, accelerating a rebuild on a modern AI platform.

• AI-Empowered Platform for Homeowners and Pros

  • Kip highlights improvements in customer experience: “We’re going to be able to have more nuanced, more natural language conversation[s] with the homeowner... get to a better identification of the details that need work, give the homeowner better estimates.” (04:58)
  • For service providers, Angi aims to build a “Pro Chief Revenue Officer” toolkit to help pros win more jobs, respond quickly to leads, and provide enhanced sales follow-up: “Agents really change the game for pros.” (05:41)

• Impact on Investors and Internal Changes

  • The tech overhaul is being funded internally—“We're not going to add headcount. …We're probably going to add some token and AI software costs, but not massive.” (07:41)
  • Kip admits the company is ceasing revenue guidance for a year to focus entirely on this transformation: “We're not going to talk to you about where our revenue is going for a year.” (08:13)

• Addressing Analyst Skepticism

  • When asked if the core business was failing, Kip responds: “The core business is working quite well... We’ve gone from $1.5 billion to roughly a billion in revenue in the last few years. Most of that is giving up less profitable and lower quality revenue.” (09:34)
  • He points to significant improvement in Net Promoter Score (NNPS) and reduced pro churn, asserting that the trade-off was to improve customer and pro experience over unsustainable higher revenues.

• Timeline for Impact

  • “We think we need a year to get our new platform in place, …but we think we should start seeing good moves by the end of this year and start accelerating our revenue in 2027.” (10:38)

Notable Quotes

• Jeff Kip (Angi CEO):
  • "Now is the time we needed to move quicker... it's time for us to stop fighting the old platform and kind of move into the present if you will." (03:57)
  • “We're moving to AI-first coding. It’s going to double our speed to market.” (06:28)
  • “We had a bit of an overbuilt revenue base, but we’ve pivoted and we still have the strongest brand, the best acquisition machine, and the largest pro network of anybody in our space.” (09:34)

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Segment 2: Sally Beauty’s Consumer Pulse and Digital Evolution (13:35–24:07)

Key Discussion Points

• Earnings and Consumer Trends

  • Sally Beauty’s shares fell due to a weak Q3 outlook and concerns over increased frugality among lower middle-income consumers: “We watch them be more choiceful... they're buying what matters to them right now, which is hair color, it's nail gel, it's press on nails.” (14:34)
  • While core product sales like hair color and nails remain robust, there’s a clear trend toward doing beauty treatments at home rather than in salons.

• Trading Down and Shifting Habits

  • “A lot of them share between coloring in a salon and coloring at home... our color business was up 12% in the US.” (16:25)
  • Denise Polonis emphasizes shifting consumer behaviors due to persistent high gas prices and absorbed tax refunds.

• Navigating Investor Sentiment

  • Despite positive EPS and cash flow, the company faces skepticism amid broader concerns about the health of the consumer: “I can't predict the market anymore... My hope is the market will catch up once there's a little less...worry about consumer discretionary.” (17:00)

• Digital Channels and Customer Acquisition

  • Sally’s US e-commerce grew 28%; they’ve recently launched on TikTok Shop. “That’s where customers are and that's where they're engaging with beauty.” (20:09)
  • Use of platforms like DoorDash brings in 75% incremental business, and they see increases in both new and reactivated customers.

• Resilience and Adaptation

  • Sally Beauty’s categories—hair color, nail care, beauty essentials—are relatively resilient, as they are used continuously even in tougher times: “If you start coloring your hair, you generally don't stop.” (19:07)
  • The company’s cash strategy prioritizes business investments, debt reduction, and share buybacks. (22:11)

• Labor Market Perspective

  • Hiring remains stable, with slower voluntary turnover: “Retaining workers helps us drive retention and good understanding of our customers and our business... we'll continue to be status quo.” (23:19)

Notable Quotes

• Denise Paulonis (Sally Beauty CEO):
  • “We're serving a lower middle income consumer. We watch them be more choiceful in their behavior.” (14:34)
  • “We serve our customer well with value. Our save while you skip the salon message can help drive hair color growth.” (19:07)
  • “We love AI...but at the moment we need every person that we've got to keep growing our business.” (23:57)
  • On strategy: “First and foremost, investing behind the business…secondly, we're managing to a really good debt position...and then...share buybacks.” (22:11)

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Segment 3: Jay Powell’s Legacy and Fed Independence (26:54–33:47)

Key Discussion Points

• Defending Central Bank Independence

  • Bloomberg News’ Amara Mokwe discusses how Powell’s robust defense against White House interference has become his defining legacy: “His legacy as a champion for central bank independence was cemented when he publicly challenged President Trump's Justice Department probe.” (27:07)

• Record on Inflation and Crisis Management

  • Powell’s tenure covered the COVID-19 crisis, a regional banking crisis, and ethics scandals. “Inflation did get up to 40-year highs. The Fed was late to respond... And we won’t see inflation return to the Fed’s 2% target on Chair Powell’s watch.” (31:31)

• Enduring Critique and Market Confidence

  • Despite missteps, Fed independence has reassured markets: “Even his critics will say...maybe he didn’t get it quite right on inflation. But on that question of protecting the Fed’s independence...he has passed the test.” (33:32)

Notable Quotes

• Amara Mokwe (Bloomberg News):
  • “We value our independence and we're going to do everything that we can to defend it and to protect it.” (27:38)
  • “Fed chairs are judged on their record on inflation...that is one of the Fed's two main mandates. And on that goal, the Fed has still not gotten there.” (31:31)

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Timestamps for Key Segments

• Angi CEO Jeff Kip Interview: 02:36–10:49
• Sally Beauty CEO Denise Paulonis Interview: 13:35–24:07
• Jay Powell Legacy Discussion with Amara Mokwe: 26:54–33:47

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Memorable Moments

• Jeff Kip on Company Overhaul:

  • "[AI] is going to allow our organization to move much quicker... We think it's going to double our speed to market." (06:28)

• Denise Paulonis on Consumer Behavior:

  • “If you start coloring your hair, you generally don't stop. If you love your nails and you want to take care of them, you're going to do that.” (19:07)

• Amara Mokwe on Central Bank Independence:

  • “You really saw the Fed in this moment with Chair Powell say, look, we value our independence and we're going to do everything that we can to defend it.” (27:38)

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Overall Tone

The episode balances technical business analysis with accessible explanations, probing both the challenges and the optimism shaping two major consumer-focused companies. The tone is candid, measured, and insightful, offering both hard numbers and strategic reflections. The Federal Reserve discussion highlights the intersection of economics and politics, with underlying respect for institutional resilience.

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This summary delivers the essence and key moments from the episode, offering a comprehensive, attribution-rich guide for listeners and non-listeners alike.

Transcript

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Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Businessweek daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg

[Tim Stenovec]

Radio well, it's sort of like hitting your finger with a hammer.

[Amara Mokwe]

We've all done that.

[Tim Stenovec]

It really hurts. And I'm just pointing this out because we did see shares of Angie dropping 35% last Wednesday following its latest Earnings release after the online portal for Home improvement reported first quarter revenue that missed expectations. They also plan to stop issuing quarterly guidance and outline outlined a major strategic pivot to refocus on AI. I do want to be fair though. The stock did bounce back the following two days after the earnings share price drop, gaining about 21% in that bounce back. Stock is down though another 12% in today's session. It's about a $207 million market cap stock. It is down Tim, about 60% year

[Carol Massar]

to date after that intro, I'm going

[Tim Stenovec]

to let you Jeff, Jeff, if you want to come in, we do welcome you back. We like talking to you. We think it's interesting platform tells us a lot about small business owners, talks to us about the consumer and about kind of the home market and then so much more. Jeff Kip is the CEO of Angie. He joins us from Cohasset, Massachusetts. You guys have a lot going on, Jeff, since we talked with you in mid February, got changes to your CFO and CEO that happened in March and April. What's what happened that you guys said we got to do something different.

[Jeff Kipp]

So we have been working on the same technologies at HomeAdvisor for over 20 years from the Angie's List and handy business is a little less. But we've had three old platforms we've been working on. The older your technology gets, the more code is layered on top of other code. Slows you down, makes innovation harder. And we have been plotting a path to a new platform but we've just decided now is the time we needed to move quicker. The big catalysts are what I would call the biggest changes in technology in a generation, which we really saw February when you saw things like Openclaw Cloud Opus 0.6 released and now our engineers are able to move a lot faster and the capabilities we have are a lot greater and it's time for us to stop fighting the old platform and kind of move into the present if you will.

[Carol Massar]

So what does that look like? Not just from you know, this is a two sided market. So what does it look like from the provider and the home services professional standpoint, but also from the customer standpoint.

[Jeff Kipp]

So if you think about the homeowner customer, I think we are going to be able to have a more nuanced, more natural language conversation with the homeowner. Homeowners are not natural experts at describing their problems that they need pros to work on and we're gonna be able to ask better questions, upload photos and get to a better Identification of the details that need work, give the homeowner better estimates. So we'll be going there over the course of the next year. The first stage of our new platform is to put the homeowner experience into place over the course of this year. On the pro side, we're gonna build a set of tools for the pro. We referred to it in our release and our letter as the Angie Pro Chief Revenue Officer. Pros are very good at doing work. They're not always good at calling the homeowner right away. They're not always good at making sure there's a sales trained technician or a salesperson at the appointment. They're not always good at following up. They're juggling a lot of balls in the air. We believe that agents really change the game for pros. You can already see it out there. There are startups out there doing pieces of this. We believe we can build a toolkit to make sure that our pros win jobs at a much higher rate, gets more value from the platform and then if our pros are winning, the homeowners are getting more value from the plat because their jobs are getting done well by our pros.

[Carol Massar]

So what are the changes that happen internally at Angie to facilitate something like this and what can investors, you know, understand about how this changes margins, what it looks like for the business and where they actually see differences?

[Jeff Kipp]

So internally we need to change the way our teams work and the way they code. What Cloud Opus 4.6 did and you can read about all over the place is that now you can not only write code, but you can write more code and you can check code using AI. Now you still have to have engineers who understand systems, understand the business and understand the ultimate product. They also need to understand how to test and spot issues in the code. But there's really a game changer there that it's going to allow our organization to move much quicker. One piece of what we're doing is we were midstream on building our homeowner experience afresh. We're now writing some of that with AI, but we're going to rebuild our entire pro back end much faster using AI. So effectively our teams are going to move to AI first coding. So we're going through a really material transition with our product technology, UX and data teams to make sure that we can do this effectively. But we think it's going to double our speed to market.

[Carol Massar]

You know, if some analysts are out with, with different views, I'm just going to read from, read from Benchmark's note, they say we have no idea how much this is going to cost and over what time frame we should expect a return on investment. What would you say to benchmark?

[Jeff Kipp]

So Dan is a great guy, very, very smart guy. I think that we are going to fund it effectively internally. In other words, we're not going to add headcount. We are probably going to add some token and AI software costs, but not massive. So we're going to fund it internally. I think what we're really talking about is opportunity costs where the reason we decided to pull our guidance is instead of working away at our old platform to optimize revenue and deliver product change that deliver revenue, which ultimately are hard to do on the old code, we're going to go fast forward to the new platform and be able to develop from there. We've estimated it's going to take us a year or so to get to the new platform and in that time we're also going to start building our first pro agents, which we don't plan to monetize. We plan for it to improve the experience of our pros and maybe ultimately we'll monetize it if they want to use it for other leads from other platforms. But effectively what we said is we're not going to talk to you about where our revenue is going for a year. We gave some very rough directional comments and so that's really going to be the cost.

[Carol Massar]

Okay.

[Tim Stenovec]

Hey, one of the things. Well, and also in that note from Benchmark that we also got Jeff, he said given the out of the blue nature of the new game plan, we suspect investors are simply going to assume that Angie's core business model just is not working. The strategy could work out, but a lot of questions have to be answered for investors to get even remotely comfortable. Is. Is that the case that the core business model was not working? And I bring up to the Decline in revenue, 56% drop in network revenue, related to the implementation of homeowner choice last year as a practice of letting homeowners on the platform select which professionals they match with. Was it a strategy mistake? And was the. Is the core business not working because is this just a case about creating velocity?

[Jeff Kipp]

Yeah, the core business is working quite well. Fundamentally. If you look at Angie over the last few years, we've gone from 1.5 billion to roughly a billion in revenue in the last few years. Most of that is giving up less profitable and lower quality revenue. So we've actually made a decision to move off what you might have termed an inflated model, bring it down so that the quality of the experience is much better for the homeowner and for the pro. You can see that our NNPS has moved 30 points over three years. That is a cataclysmic change in the world of NPS. Our pro churn has come down 30%. We see that our win rate for pros has moved directionally about the same amount in terms of improvement. So we've dramatically changed the experience. We had a bit of an overbuilt revenue base, but we've pivoted and we still have the strongest band, the best acquisition machine, and the largest pro network of anybody in our space. And we're spinning the flywheel as we go through this change.

[Tim Stenovec]

Jeff, real quickly, 20 seconds. How long is this going to take to kind of play have an impact? Positively, Much more positively real quickly.

[Jeff Kipp]

We think we need a year to get our new platform in place and build out the first set of agents, but we think we should start seeing good moves by the end of this year and start accelerating our revenue in 2027.

[Tim Stenovec]

Well, we look forward to continuing the conversation with you as you guys evolve. Jeff Kipp, he's the CEO of Angie, joining us right here on Bloomberg businessweek Daily.

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[Carol Massar]

Well, shares of Sally Beauty holding shares taking a hit today, down seven and a half percent as we speak. Earlier though sliding the most intraday going back to May of 2023, the company gave a weak outlook for the third quarter and on a conference call the company said it's seeing pressure in stores that identify as low income and frugality among lower middle income consumers. We've got Denise Polonis back with us. President and CEO of the $1.2 billion market cap Sally Beauty Holdings. She joins us from Plano, Texas. Denise, always good to have you on the program. Appreciate you taking the time today. I do want to remind everybody two different segments you have your own stores you also sell to. In the other segment you sell to beauty salons. You are, you're global so you have a really good understanding of the consumer. Can you expand on the comments that you made when you were answering that analyst call? Analyst question on the call a little earlier today. A little bit more frugality out of the marketplace with our kind of lower middle income consumer. What do you mean by that?

[Denise Polonis]

Yeah, thanks so much for having me on. You know interestingly we had a great second quarter so our overall sales were up 2.3% comp sales up 1.3% and real outperformance on the consumer side with our Sally brand up 4.4% here in the U.S. but that said, we do serve a lower middle income consumer. And so we watch them be more choiceful in their behavior, which means they don't replace things like blow dryers or flat irons if they don't need them. But they're buying what matters to them right now, which is hair color. It's nail gel, it's press on nails. And those pieces continue to see strength. But as we watch a consumer that continues to get a little bit more pressured by gas prices, we're conscious of the fact that they're feeling a little bit more stretched.

[Tim Stenovec]

So if the war continues, energy prices continue, Denise, you think then this trend continues in the current quarter, I'm assuming you're still seeing kind of this, this restraint, if you will, among some of your consumers?

[Denise Polonis]

Yeah, to date we're seeing the same restraint that we've seen the last few quarters. I think we're just a little wary that it could get a little bit worse as we get out of Q2 and tax refunds are fully absorbed into the economy. And if that gas price stays a little inflated, we can be watching for some concern. But what say right now is stylists still have busy chairs, they're still serving a lot of customers, they're seeing good business come through and that consumer continues to buy. We had saw both transactions and ticket each up 2% in our US Sally business. So good news, just watchful.

[Carol Massar]

What, what are they, what are they buying differently? Are they trading down a little bit? Is it, is there, do you offer at least on the side of where people are buying, the consumables, you know, the shampoos, the conditioners, those things that people use on their nails? Are people trading down at price point?

[Denise Polonis]

You know, I think what they're doing is they're really trading into Sally to some extent. So for those folks who color their hair, a lot of them share between coloring in a salon and coloring at home, our color business was up 12% in the U.S. and so what does that mean? It means somebody might be going to the salon a little less frequently and maybe doing their root touch up at home or going to a nail salon is very expensive. And so our nail business was up 3% as people were trading in and saying, I can get a lot of this look at home for, for a lot less cost.

[Tim Stenovec]

So do you think, are you frustrated then with investor reaction here?

[Denise Polonis]

You know, I can't predict the market anymore. I certainly think that we've got a strong business with, with a lot of momentum behind us. You know, we continue to Be in the first half of the year, our EPS is up 8% versus last year. Lots of good things to be looking forward to the right amount of cash to keep investing in the business. So my hope is the market will catch up once there's a little less. Maybe worry about consumer discretionary.

[Carol Massar]

What about geographies? Particular strength in different parts of the country, particular weakness in other parts. What can you tell us?

[Denise Polonis]

No, we've seen pretty consistent behavior across the U.S. i think what we always watch is we always watch border stores. We watch lower income stores. They might index a little bit lower than what we'll see across the fleet as a whole. But as the geographies go, not a lot of difference.

[Tim Stenovec]

What I'm always curious and we love, Denise, talking to folks like yourself where you do have a great window into the consumer and different, you know, we say consumer but there's all kinds of consumers, right? There are wealthier consumers which can shrug off a lot of stuff. There are other consumers that, you know, middle income and so on that feel these higher energy prices and it's an impact and you have to make some choices. Is there anything though that you're seeing within the different consumer segments that says to you that we could be headed for something more significant in terms of an economic slowdown or is it just, you think, reactionary to higher energy prices? And if energy prices come down, things kind of go back to quote, unquote, normal.

[Denise Polonis]

The best I can see is it feels a bit more reactionary right now. You know, overall consumer trends are pretty consistent. Transactions are healthy. So it's not as if customers are not coming in. You know, I think what we'd watch for, I watch for is if grocery prices or other things started to tick back up and there was more pressure beyond just gas prices. We aren't seeing that yet. So I'm certainly hoping that this is a period in time and as we head through the summer, we will see things feel maybe a little bit better for that end customer.

[Carol Massar]

What if they don't?

[Denise Polonis]

You know, if they don't, we serve our customer well with value. Our save while you skip the salon message can help drive hair color growth. We've got a great promotional offering and value offering for for our stylists to be able to shop across color and care. And our business is generally resilient. You know, when we talk about comps at 1.3%, you know, we see good performance. We might not see real high highs, but we don't see real low lows because at the end of the day. We participate in categories that customers need. If you start coloring your hair, you generally don't stop. If you love your nails and you want to take care of them, you're going to do that. If you want healthy hair, you're going to come and get styling treatments, you're going to get serums and ma and we will keep being there for our customers.

[Tim Stenovec]

So top of mind, Obviously you want to watch what, you know, customers are up to, what salons are up to, but beyond that, in terms of the macro, what is top of mind for you? Denise, as you look at, you know, kind of so many things that are coming at folks that run companies just

[Denise Polonis]

like you, you know, I'm really looking at the places where we can differentiate and where other companies can differentiate as well. So our e commerce business is up 28% in the Sally business in the US we just recently launched on Tick Tock Shop, a really important place to be because that's where customers are and that's where they're engaging with beauty. And so the more we can respond to that or our licensed colorist on demand program where once again, if that consumer is pressured and they need to learn how to color their hair at home, we've got a pro right there willing to help them walk along with them and help them have that be a successful journey. So things where we can drive growth while that customer might be feeling a little pinched.

[Jeff Kipp]

Yeah.

[Carol Massar]

Denise, talk a little bit more about finding those new customers and bringing them in through these channels. How do you, how do you know, you know, how do you follow the customer from. From that TikTok journey and then maybe they end up in the store.

[Denise Polonis]

Yeah. So with the TikTok journey, you know, they'll definitely start on TikTok shop, but those orders are all fulfilled by us. So our ability to understand that customer and, and see their journey we feel pretty good about. You know, we've done work in black box work with some of our other marketplace partners and we've seen about 75% of those transactions through places like DoorDash would be incremental business to us, which we think is great news and is bringing a new customer into the Sally fold. Overall, our marketing campaigns with what we can do with performance marketing and then trace those activities back into our customer fold. You know, our customer database, customer information management continues to get better, to let us watch those trends. And we've seen new growth growth. We've seen customer new customer growth. We've seen reactivated customers picking up and importantly, with our core Customers, our good everyday shoppers, frequency is going up. So you feel like all the, all the engines are firing the right way around understanding our customer on the Sally side of the business.

[Tim Stenovec]

Hey, one thing I want to ask you. A year ago when you guys reported earnings, you extended your buyback program through September of 2029. What's your best use of cash right now in your view?

[Denise Polonis]

Yeah, we really are focused on three things. First and foremost, investing behind the business. So whether that is supporting our marketplaces, digital campaigns, our Sally ignited store refresh that is starting, that is first and foremost, you know, secondly, we're managing to a really good debt position. So we have a targeted net leverage ratio of 1.5 to 2. We're at the 1.5 level, so we're still doing a little bit of pay down. And then we've committed to invest about 50% of our free cash flow back into share buyback. So you know, we're really firing across all those dimensions and believe that as you can see with the stock price today, you know, there's some good value for us to be purchasing there. But most importantly, we have the cash we need to invest in the business and that's going to be our primary objective go forward.

[Tim Stenovec]

And what about in terms of the labor force? We just came off of a jobs report on Friday and this is really important. We think about this in terms of what the Fed may or may not do if we see weakness in the labor, labor market. We didn't get that on Friday necessarily. But what about when you need workers? Are you able to fill them? Are you holding off on hiring in terms of maybe managing costs a little bit? What's your position?

[Denise Polonis]

Yeah, out in the field, in both our stores and our distribution centers, we are able to hire as we need to. We've actually seen turnover slow, so voluntary turnover has gone down, which is great for us because that drives retention and good understanding of our customers and our business. Amongst our store teams, you know, in our support center, we are always frugal in terms of how we manage headcount and cost. We'll continue to do that, but we don't have any plans to either stop hiring or to ramp up hiring. I think we're going to be pretty status quo in the near term.

[Carol Massar]

In other words, low hire, low fire.

[Denise Polonis]

Exactly.

[Tim Stenovec]

The robots coming, you know, Elon wants to put robots everywhere.

[Denise Polonis]

You know, we love AI. We're driving it hard in personalization and on the marketing side of our house. House. But at the moment we need every person that we've got to to keep growing our business.

[Tim Stenovec]

All right. Always fun to catch up with you. Denise. Thanks so much for once again finding time for Tim and me. Denise Polonis, President, Chief Executive Officer of the $1.2 billion market cap Sally Beauty holdings joining us from Plano, Texas.

[Sonesta Representative]

Stay with us.

[Carol Massar]

More from Bloomberg Businessweek Daily Coming up after this.

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[Bloomberg Businessweek Host]

You're listening to the Bloomberg Business Week daily podcast. Catch Us Live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Sonesta Representative]

You think Jay Powell does the wordle?

[Denise Polonis]

Oh, that's nice. Nice.

[Tim Stenovec]

What would be his first?

[Amara Mokwe]

What would be his word?

[Carol Massar]

I'm gonna tell. I'm not gonna touch this one. I'm not gonna touch this one. The reason, reason we're talking about Jay Powell is because it is today's big take. It's one of the most read stories on the Bloomberg terminal. The Fed chair who fought back Jerome Powell's legacy as a champion for central bank independence was cemented when he publicly challenged President Trump's Justice Department probe. We've got Amara Mokwe with us, Bloomberg News, Federal Reserve reporter. She joins us from our Washington D.C. bureau. Amara, you and the team spoke with policymakers, economists, historians for a comprehensive portrait of Jay Powell's eight year tenure leading the Fed. What is his legacy?

[Amara Mokwe]

You know, that's such an interesting question because if not for the last year or so that we've seen the Trump administration and President Trump really put a lot of pressure on the Fed and Chair Powell, we might have said that his legacy would be the Fed's pandemic response and the subsequent response to the highest inflation that we've seen in decades. But really, when Chair Powell came out earlier this year and did this really unprecedented, unprecedented, remarkable video pushing back on subpoenas that the Fed had received from the Department of Justice and basically saying in really plain language that the subpoenas were about the President being unhappy with how the Fed has set interest rates, I think that really just kind of cemented his legacy as someone who stood up to the President at a time when many officials in Washington have not, when many institutions have not. You really saw the Fed in, in this moment with Chair Powell say, look, we value our independence and we're going to do everything that we can to defend it and to protect it. And I talk to people, even people who are really critical of how the Fed handled the inflation surge, say that would normally be the thing that we're talking about as his tenure ends, but instead we're talking about Fed independence. And Powell being the one who really

[Carol Massar]

stood up to President Trump and markets were really nodded approval to that.

[Amara Mokwe]

Approval to him.

[Carol Massar]

To him. Yeah, to him. I mean, because that is the threat. And you would see that play out in the bond market.

[Sonesta Representative]

We didn't see that.

[Amara Mokwe]

Yeah, we haven't, we haven't seen that. And that's been a big question. Like, okay, normally there are checks on things like a president pushing on the Fed, applying pressure on the Fed. It would be the markets, it would be Congress, it'd be all these things. And we were wondering, like, when are any of these things gonna kick in? And I think there was kind of a fundamental belief in markets that the Fed would hold the line. And really that's what we've seen, right. We haven't seen the pressure from President Trump and his allies really translate into anything different in policy. Right. Like, the Fed has pretty much taken the policy moves that you would expect as they've confronted these various economic conditions. And so I think markets have taken comfort both in the fact that they, the pressure doesn't seem to be impacting policy, and also because we've seen Chair Powell come out now and say, like, look in that video, he said, look, we're going to continue to do our jobs and we're not going to be intimidated. And now you see him saying, even though my chair term is ending, I'm going to stay, exercise my option to stay on as a governor and make sure that this pressure doesn't lead to something nefarious, basically. And so I think markets have taken comfort in the fact that you're sitting, seeing both of those things.

[Tim Stenovec]

You know, I always think about Amara, how we have the right Fed person for the moment in time. And people talk about Ben Bernanke, right. Certainly during the. Was it coming out of gfc, right. Coming out of the financial crisis. I'm just trying to think about, like, we've just had kind of the right people in place who, who he was obviously a student of depression, of the depression, like understanding what can happen if you don't take care of things. And there were lessons that we learned from the great financial crisis. Right. And that is something that I think Jay Powell, as you guys write about, thought about the shutdown of the economy. None of us had ever seen anything like this. And the need to kind of pump liquidity into the system. That is something that Jay Powell caught onto. I do think about his tenure. Was it all good? Was it. Some say he was too late in catching, you know, the inflationary pressures. But again, it was a shock that no one expected in terms of COVID and the shutdown and then the bounce back.

[Amara Mokwe]

Right. I mean, I think that Fed chairs, people, Fed watchers, often say this, right? Like Fed chairs are judged on their record on inflation.

[Denise Polonis]

Right.

[Amara Mokwe]

And if you are thinking about Chair Powell's tenure, inflation did get up to 40 year highs. The Fed was late to respond. I think people inside the Fed have acknowledged that now. And we won't see inflation return to the Fed's 2% target on Chair Powell's watch. Right. And that is a risk to the Fed's credibility because ultimately you want markets and investors and the public to believe that the Fed can get inflation down to where it says it's going to get it down to. And so, you know, there's still work to be done there. In terms of other shortcomings, we did have a regional banking crisis that saw Silicon Valley bank and two other banks fail. So that is also a stain on his legacy. We've had ethics scandals at the Fed that saw the resignation of several officials who had embarrassing investment in trading issues. And so some of those things, I think, again, if not for the pressure from President Trump, that's probably what we'd be talking about most prominently. And so, no, I mean, it has been a rollercoaster eight years and there have been missteps. I think you've heard Chair Powell over the years talk about those things. And I think you hear him saying even now in these days that there's still work to be done to get inflation down to 2% because he realizes that, like, that is one of the Fed's, that is one of the Fed's two main mandates. And on that goal, the Fed has still not gotten there.

[Tim Stenovec]

It is kind of, though, amazing between Covid, regional banks, ethics scandals, I mean, there was a lot of stuff that has happened during Jay Powell's tenure. But I want to go back to kind of where we started in an administration, a White House where many motion, most are fearful of pushing back against President Trump. We talk about the importance of an independent central bank, and he certainly showed that the US central bank is independent. 25 seconds. As you said, if that's a legacy, that's a good one to have.

[Amara Mokwe]

I think so. And I think that's why even his critics will say, yeah, maybe he didn't get it quite right on inflation. But on, on that question of protecting the Fed's independence and what that means for the health of the US Economy, economy and the health of global economies, really, they feel like he has passed the test.

[Tim Stenovec]

So interesting stuff. Yeah. I mean, man, he's seen a lot. Amara Mokwe, Bloomberg News Federal Reserve reporter, joining us. So appreciate it there in our D.C. radio studio.

[Bloomberg Businessweek Host]

This is the Bloomberg Businessweek Daily podcast, available on Apple, Spotify and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.

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