Loading summary
Transcript17 lines
- [00:00]
JVL
Hello, everyone. This is JVL here with my bulwark colleague, Andrew Egger. Before we get started with all the great news about our incoming stagflation, which we can have until the Bureau of Labor Statistics is fully taken into the Borg and stops publishing such data, before we get started, hit, like, hit. Subscribe, follow the feed, because where else are you going to get cheery news about America's decision for national decline? Andrew? We had last week some inflation numbers in the Consumer Price Index which were not great. We'll get to them in a minute. But just an hour ago or so we got the Producer price index, the PPI numbers, and they were very bad, jumped 3.3%. And this is the largest jump in prices since. Wait, wait. Oh, 2022. I feel like prices were bad in 22. I feel like this is a thing that people are very angry about. So what are, what are we going to do, Andrew? Can we fire somebody else over at the BLS to stop these sorts of numbers from coming out?
- [01:18]
Andrew Egger
Yeah, I mean, this is, these are really actually quite bad numbers. I mean, I, we were, we were kind of expecting to see a certain amount of inflation just in general because of the, the tariff regime kind of wreaking havoc on supply chains as well as just the actual cost of the tariffs. But, but these were kind of a slobber knocker. It's not just 3.3% increase year over year in the Producer Price Index. It's almost a whole percentage point up just from a month ago. And, you know, these are like, like as far as, as far as a jump that's like a shocking increase where, where, you know, we've known all along that Post Liberation Day was going to start taking some time to see exactly how these prices were going to shake out. And we were going to really start feeling the effects beginning last month and now kind of coming into this one. And, and it's bad news. It's really, I mean, it's hard to know what to say about it because again, it's what everyone expected. Right? It's like you're, it's, it's what happened after the pandemic in terms of rattled supply chains and rattled kind of consumer confidence and just like an unusual aberrations in the economy. Except that instead of a global pandemic doing that to the economy, now it's just Trump's fun economic decisions. Just like his decision, his unilateral decision to reshape global markets according to whatever his daily whims were from April to June and this is, you know, what we're seeing now as a result of that in the hard data for as long as we have it.
- [02:54]
JVL
As you say services increase as well, 1.1%, a 1.1% jump in a single month. That's month on month, not year on year. And this is something we saw with the cpi. We saw the, the consumer price index last week. We also saw prices and services jumping. And one of the things I want to point out here, and we'll put some of these graphics up on the screen, I think this is all happening at the same time that demand is softening so prices are going up while people are starting to buy less in responses to prices going up. What is that? That is what we call stagflation. This is something, by the way, we didn't have under Biden. Under Biden, we just had inflation and that was not great. But we also were coming off of a once in a century pandemic which caused all sorts of supply chain dislocations and problems with injecting capital into the system from the central bank. And here we go. And we're doing none of this for any reason. And there is no, it's a man made crisis and we're getting not everything. Right. So we saw bad jobs numbers last week, which is why we had to fire the head of the Bureau of Labor Statistics. And so this is again, this is stagflation. This is literally stagflation. You have unemployment creeping up, job growth starting to flatten out, demand softening and prices going up.
- [04:29]
Andrew Egger
Yeah, yeah. And the contrast I think that you bring up with what we just went through under Joe Biden is, is really apropos because I mean, that was. People talked a lot about like the vibe session, right, like where, where the underlying numbers were bad, but there were all kinds of like, psychological reasons why people felt like the interlink numbers worse than they were. Yeah, right, yeah. I mean, not in 2022. Right. Like, like, during, during the moment of like peak inflation, things were actually really real changes were actually underwater for a period in there. Right. But, but by the time, you know, by the time we were kind of out of that, by the last two years of, of the Biden presidency, the fundamentals were strong. I mean, wages were outpacing inflation, you know, real. And by the time, and you know, we were out, we were far outpacing everybody else around the world in terms of how these problems were going economically. And so by the end of it, it was like, well, our wages are all up, but Prices are up, too. And for psychological reasons, when your wages go up, you're like, I did that. But when prices go up, you're like, joe Biden did that. And so it was a real problem for him. But I think what we are kind of on the cusp of feeling now is that a real, real genuine economic bad situation is going to hurt worse than the Vibes one did. And I will it, because this is.
- [05:50]
JVL
My question for you, Andrew, if it is possible that the American people are so stupid that they were able to look at the Biden economy and say, this is terrible. And again, I want to, I want to. I want to underline for people who have not been listening to me, beat this drum for three years, that when you looked at the polling data about people's attitudes toward the economy during the Biden years, especially years 34234 of Biden, people believe that the economy was as bad as it was in early 2009, which is to say the start of the Great Recession, where we had this global financial crisis, you know, like, 2% of all houses were in foreclosure and, like, everybody was freaking out. Right? People thought it was that bad. They didn't think, like, oh, we're going through a tough moment. They thought, this is as bad as it has ever been in my lifetime, which was an insane thing to think. So if people could be insane in that direction, why couldn't they be insane in the other direction and just decide, well, daddy, Trump says that everything is great, and everybody else is going to say that everything is great. Tim Cook is never going to come out and say, facing some tough economic headwinds because he knows that would anger the president, and then he might have bad things happen to his company. Everybody who is subject to leverage from the President of the United States, which is basically everybody, is going to pretend that things are good. And maybe the capital markets, which are sort of diffuse and can't be blackmailed, will move. But I don't know. Like, is. Are Cletus and Lurleen going to be able to understand bond market yields? I don't think so. Isn't it possible, Andrew, that with Donald Trump in our faces six hours a day, every day, and the entire business community sort of like, like in a hostage video, pretending that everything is great, everything is great, that people look around and say, well, so long as I personally still have my job, everything must be fine?
- [08:02]
Andrew Egger
I would say it's possible, but it is by no means guaranteed, because there's no question that a big part of the, the kind of perception of pain under Biden was just a result of, of relentless Republican messaging on the question. But that wasn't all of it. Right. I mean, the, there's a reason why inflation is, Democrats thought it too. Yeah. And there's a reason why inflation is politically toxic for whoever happens to be in power anywhere. And we saw this around the world, right. I mean, there was a global inflation shock. And basically all the democracies that had elections in 2023 and 2024 kicked out the bums who are in charge because they were mad about inflation. And that's one of the things that we saw happen here. Just because, I mean, like I mentioned before, inflation is so psychologically kind of infuriating for an electorate. And I think that there are a lot of reasons to believe that even though Trump and his people are gonna put a brave face on this, just like Biden tried to do last time around, it's a lot harder to do that when it is hitting people where they are every day at the supermarket, at the gas pump, you know, whenever they go out and try to buy anything. It's another shock. And that's the reason why it's difficult. And by the way, we have seen a certain amount of this already in the data, Right. I mean, Donald Trump was, I was just, I saw on CNN yesterday, Harry Entom was talking about this nine points up on Kamala Harris going into as far as who the public trusted to handle inflation because Paris was the incumbent, he was the Vice president. Now Trump is 25 points underwater on that question. And now obviously, like in a sane world, he would be a lot more than 25 points underwater. But you don't want to be 25 points underwater on any issue, especially the most pressing issues when you're the President of the United States. So, so I think like, yeah, we're going to still see an enormous amount of like totally ludicrous spin from the White House and even, you know, as far down as the act economic numbers, like, who knows whether we're going to get good ones from now on. And probably a tooth grinding amount of deliberate credulity on the part of at least some of these MAGA people, some of whom might even be willing. I mean, this is something we saw in the first term. I covered this when I covered the first trade war is the farmers who were just getting totally annihilated by Trump's initial tariff regime, his trade war with China, but who were essentially saying, well, this is sort of like our way of showing economic Patriotism is. We're taking one on the channel. Well, eventually, yeah, eventually he did get around to bailing out them specifically, which he can't do, you know, at scale for the whole economy. That's just not how that works.
- [10:32]
JVL
Well, I mean, and this is.
- [10:33]
Andrew Egger
What would it look like? What would it look.
- [10:34]
JVL
So this is, frankly, this is my, what I have sort of thought when I'm in my dark place about this is maybe Trump's thinks that, that he can localize all of the pain for this stuff with the people who don't vote for him. Now, I think that's hard. I mean, the economy is a big thing and it's really hard to micro target economic pain, but I'm not sure it's impossible. Right. In the same way that they're clearly trying to target the economic pain that results from immigration crackdowns in Democratic areas. Right. They're, they're not running around construction sites in Texas rounding up illegal immigrants, which would drive up construction costs and hurt the Texas economy. That's not happening. You know, they're doing raids in, in Washington, in New York and California and Chicago. They're truly trying to target the, the pain against the people who they view as their, their enemies. I think they might try to do that with the economic stuff again, harder, heavier, lift, but I'm not sure it's impossible.
- [11:46]
Andrew Egger
Yeah, it is an interesting thought and it is very possible that they will try to do that. I think the problem that you're going to run into is that even if you could somehow be successful at concentrating certain economic harms where you want to see them targeted, the overall problem here that they're trying to get around is this system wide inflation that accompanies. Just the more monkeying you're doing in these supply chains and the more inefficiencies you're introducing and the more you're making businesses scramble to accommodate and reaccommodate and reaccommodate the changes that you're making to these sorts of things where they already have, you know, path of least resistance efficient supply chains built up. These are all inflationary pressures. And so like the idea that you could somehow solve for that particular problem in this way. Like, it'd be one thing if it were like a small like sectoral shock in the economy that you could maybe like, oh, this is hurting. You know, our great American steel manufacturers are having a hard time and so we're going to like target them with industrial policy and let everybody else sort of soak up the downsides. Of that systemically you can make that sort of thing happen. But when the entire system is the thing that you've been monkeying with and that's now creaking under the, under the strain or like, where do you go to put the extra, you know, you know I'm saying, like that's the problem. I do.
- [13:06]
JVL
It's very hard. It's very hard. And complicating all this is that of course what Trump wants more than anything right now are rate cuts from the Fed. Most people expect to get a rate cut in September when the Fed meets. But because, and that's what you would do in response to the jobs numbers, right? The jobs numbers that Trump insists are fake are the reason the Fed would cut rates because they see the economy starting to slow down and they want to ease things a little bit and try to jumpstart and get into a softer landing. But of course, Trump A says that the job growth is fantastic, which then would make no sense why he would want rate cuts. But if you are seeing inflationary pressures, you would not want to cut rates. And so the Fed can wind up in a little bit of a bind where what do you do? You see the job market softening in alarming ways and you see economic slowdown, but you also see inflation starting to rise. And I mean, I think they're likely to cut like 25 basis points maybe and see what happens. But I don't know. Again, it's just, it's a, it's a bad situation where the two bad things that are happening are cross pressuring and the remedy for one actually exacerbates the other problem.
- [14:24]
Andrew Egger
Yeah, no, it's, it's an enormous problem. It's huge. And like, again, to just contrast now with sort of like the, the vibes issue we were having before. I mean, at a time when like the underlying economy is quite strong, the Fed can like make mistakes. You know, it can, it can lean too far one way or the other such that, such that, you know, it actually kind of tamps down, down good growth that you otherwise would have had by keeping rates too high or it lets inflation get too high when it otherwise, you know, could have stayed low by, by, by, by cutting rates too fast. What we are rapidly approaching now, as you mentioned, is the exact opposite thing. It's like a no win situation. You know, it's not, it's not like we're like moving down the interstate at a good speed and yet and just having to worry about not like careening off of one side or the other, I mean, the engine's falling out of the car. Right. So it's so, so it's rapidly becoming a problem that, that the Fed, that's not really in the Fed's ambit to address or solve. Even though I think you are absolutely right to bring them up as of the scapegoats that, that Trump will point to if and when this, this continues. And right now there's no reason why it shouldn't. Although, you know, it will be interesting to see a couple months from now again, if we continue to get the numbers that will be kind of like the, the secondary settling in from like the latest tariff rates that we've been getting just in the last few weeks, which do seem to be kind of like the status quo going forward. But again, it's, it's not like, it's not like there's like a pressure valve to release any of this. Right. Like anytime the supply chains are forced to get re snarled and resettled and businesses are forced to scramble, that's cumulative damage. Like, it's just increased inefficiency in the system that leads to these exact problems that we're seeing now.
- [16:12]
JVL
Yeah. Again, I guess one of the things I have taken from the last decade of American life is that we should never bet on, on the cognitive ability or logical thinking of American voters. And I'm just drawn to this. There's a CNN segment which Ellie Reeve went to a boat parade, like a big Trump MAGA boat gathering, I don't know if you remember this, and talked to all these people with these gigantic, expensive boats who were telling her how horrible the economy was. And she was asked this one guy about his boat and he this big, big fat. And she's like, so, so you're doing fine though. And he's like, yeah, I'm doing great, but the economy's terrible. And she's like, so you're worried about your children? He's like, no, my kids are great because I raised them right. My kids, they've got bigger boats than I have even. They're doing so well. But it's because they're smart. You know, it's just like, so you're doing great, your kids are doing great, the economy's terrible. He's like, yeah, Biden socialist. I don't know, man. That feels like it's 44% of America. You can win a lot of elections with that.
- [17:21]
Andrew Egger
Yeah. My favorite example of that from the last cycle was a guy the New York Times interviewed who was a real estate agent, I think In Virginia, I can't remember exactly where. North Carolina. He was a real estate agent in North Carolina and he had been doing great coming out of the insane housing price boom of the post pandemic. He'd been sitting pretty and his big complaint is in Joe Biden's America, I've never paid his many taxes I'm paying right now really, really, really good stuff. But no, and this is in kind of like a broader way. This has always been sort of my, my hesitation with like the touch the hot stove way of way of thinking is like putting people under more real actual economic pressure and pain is not necessarily a recipe to make them less paranoid and less kind of like insular and online and gullible and hoodwinkable by.
- [18:16]
JVL
This is the COVID streams, right? I mean, there was a school of thought pre Covid that was the problem in America is we're too soft. We don't have anything since 911 we haven't had any real problems. If only we had some big, real serious problem that would bring us all together and we got the big, real serious problem in a global pandemic. And instead it made people go even stupider.
- [18:39]
Andrew Egger
Yeah, yeah, well, and it just made them live on their phones more. Which is, which doesn't help either in terms of all this like Internet poisoning stuff. Stuff. It's a real moment like, like this is when it's getting real, right? I mean, like, we've all been talking about this stuff forever. It's all been horrible economic policy for months, ever since Liberation Day. It was obvious that this was going to be bad stuff. And even though he's backed off a lot of it, he hasn't backed off it, you know, that much. These are still massive tariffs that we have everywhere now. And, and it's getting real, right? It's. It's getting real. He. There is very little indication that he will learn from these lessons. So we should not really expect these to change. We should not expect Donald Trump to turn into a free trader overnight. That's not going to happen. And so, and so this is going to be a new. I mean, you hesitate to make predictions, but there's every reason to believe this is going to be kind of a new lived reality and a new kind of seismic shock. And, and those things shake out in political, in new political ways that, that are hard to predict and hard to expect. So I don't know, I don't know how you map it on to, onto like what happened in Covid, but, but it's not going to look good for. For anybody here. And that's kind of the bottom line, I guess.
- [19:46]
JVL
Guys, follow the channel. We'll be back with more. Good luck, America.