The Federal Reserve under Kevin Warsh

Summary

Marketplace Morning Report

Episode: The Federal Reserve under Kevin Warsh
Date: May 14, 2026
Host: Nancy Marshall Genzer

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Episode Overview

This episode of the Marketplace Morning Report centers on the economic implications of Kevin Warsh's confirmation as the new Chair of the Federal Reserve, replacing Jerome Powell. The show covers the challenges Warsh will face amid rising inflation, the complexities behind falling residential rents, and provides real-world insight from a small business owner navigating tariff refunds. The episode offers key analysis of national economic trends with a strong focus on current policy impacts.

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Key Discussion Points and Insights

1. Kevin Warsh Confirmed as Federal Reserve Chair

[01:26 – 02:38]

• Confirmation Details:

  • Kevin Warsh was confirmed by the Senate (54–45 vote) for a 4-year term as Fed chair, succeeding Jerome Powell after eight years in the role.
  • Warsh steps in during a period of significant economic turbulence and policy uncertainty.

• Current Inflation Landscape:

  • Recent reports indicate consumer prices surged 3.8% in April, well above the Fed’s 2% target.
  • Wholesale prices are rising at their fastest rate since 2022, suggesting ongoing upward pressure on consumer prices.

• Policy Pressures and Political Climate:

  • Rising inflation decreases the likelihood that the Fed will cut interest rates in the near term.
  • President Trump has been vocal in pressuring the Fed for rate cuts and has attempted to fire Fed Governor Lisa Cook.
  • The Department of Justice opened an investigation into Powell’s oversight of a building renovation during his tenure.

• Notable Quote:

  • Henry Epp ([01:53]): “A worsening inflation picture makes it less likely voting members of the Fed will want to lower interest rates. So Warsh could soon have to contend with public pressure from President Trump, who's relentlessly pushed the Fed to lower borrowing costs under Jerome Powell.”

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2. Why Are Rents Down When Other Prices Rise?

[02:38 – 04:48]

• Trend:

  • Median listed residential rent across the top 50 metro areas dropped 1.7% year-over-year in April, marking 33 consecutive months of year-over-year declines.

• Explanation—Supply Side:

  • A construction boom from 2021 to 2024 led to increased rental supply, especially in Sunbelt cities.
  • Joel Berner (realtor.com) ([03:16]): “We had this huge boom of construction from 2021 to about 2024, and that effect is still being felt.”

• Explanation—Demand Side:

  • Fewer people are forming new households, attributed to reduced immigration and more young adults living with family or roommates.
  • Jenny Schutz (Arnold Ventures) ([03:42]): “We have a contraction of households overall coming partly from the restrictions on immigration, so fewer people coming to the U.S.”

• Future Rent Outlook:

  • Delayed effect of increased construction costs (notably fuel) will eventually impact rents as new units reach market.
  • Utility costs for renters, rather than base rents, are currently rising.

• Notable Quote:

  • Susan Wachter (Wharton, paraphrased by reporter) ([04:13]): “Those that are going to come to market years from now will be impacted by today's higher costs, particularly for fuel costs.”

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3. Small Business Struggles with Tariff Refunds

[06:11 – 09:17]

• Context:

  • Following a Supreme Court decision overturning large parts of Trump-era tariffs, the federal government must process up to $166 billion in refunds.
  • Small businesses are now navigating the complex and sometimes exclusionary refund application process.

• Case Study:

  • Gabe Hagan, Co-founder & CEO of Brick Road Coffee (Tempe, AZ)
  • Tariffs severely disrupted business plans for expansion and roasting operations in 2024–2025.
  • Hagan describes confusion and frustration over refund eligibility, as technicalities prevent end businesses (who bore the costs) from filing for refunds themselves.

• Quote—On Tariff Confusion:

  • Gabe Hagan ([06:37]):
    “What I didn't know and I didn't realize, like, even though I'm the one that gets the bill from my importer to pay the tariff, they are technically the importer of records. So this has been a whole learning journey, realizing that I can't actually submit to get any of my refunds for my green coffee because it came through technically somebody else.”

• Quote—On Small Business Uncertainty:

  • Gabe Hagan ([08:20]):
    “I'm doing my budget month by month at this point because I can't, I can't plan for anything...these are the things where it's just like, I can't wrap my head around how any small business is going to survive.”

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Memorable Moments & Quotes

• [01:53] Henry Epp:
  “A worsening inflation picture makes it less likely voting members of the Fed will want to lower interest rates. So Warsh could soon have to contend with public pressure from President Trump, who's relentlessly pushed the Fed to lower borrowing costs under Jerome Powell.”

• [03:16] Joel Berner:
  "We had this huge boom of construction from 2021 to about 2024, and that effect is still being felt..."

• [03:42] Jenny Schutz:
  “We have a contraction of households overall coming partly from the restrictions on immigration, so fewer people coming to the U.S.”

• [06:37] Gabe Hagan:
  “What I didn't know and I didn't realize, like, even though I'm the one that gets the bill from my importer to pay the tariff, they are technically the importer of records…”

• [08:20] Gabe Hagan:
  “I'm doing my budget month by month at this point because I can't, I can't plan for anything...I can't wrap my head around how any small business is going to survive.”

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Useful Timestamps

• [01:26] Introduction of Kevin Warsh as new Fed Chair
• [01:53] Economic environment and political pressures facing the Fed
• [02:38] Overview of rent trends and economic forces behind them
• [03:06–04:21] Expert interviews and detailed explanation of rental dynamics
• [06:11] Small business spotlight: Tariff refunds and business survival
• [06:37–09:17] In-depth interview with Gabe Hagan on the ground-level impact of tariffs

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Conclusion

This episode provides a thorough update on major economic developments affecting Americans right now: the changing Fed leadership amid inflation uncertainty, surprising trends in the housing market, and persistent challenges for small businesses due to tariffs and policy shifts. With a mix of data, expert commentary, and personal stories, the show paints a comprehensive picture of the current U.S. economic landscape.

Transcript

[Marketplace Host]

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[Nancy Marshall Genzer]

What will a Warsh Fed look Like? From Marketplace, I'm Nancy Marshall Genzer in Washington. Kevin Warsh, next chair of the Federal Reserve The Senate voted 54 to 45 to confirm Warsh to a four year term yesterday. He'll replace Jerome Powell, who has led the central bank for the past eight years. War will face a challenging economic environment as marketplaces, Henry Epp reports.

[Henry Epp]

Confirmation coincided with two reports this week showing inflation heating up again. Consumer prices rose 3.8% in April, well above the Fed's target of 2%, and prices paid by wholesalers rose at the fastest pace since 2022. That could mean even higher consumer prices are still on the way. A worsening inflation picture makes it less likely voting members of the Fed will want to lower interest rates. So Warsh could soon have to contend with public pressure from President Trump, who's relentlessly pushed the Fed to lower borrowing costs under Jerome Powell. Trump has attempted to fire Fed governor Lisa Cook, and the Department of Justice began an investigation into Powell's oversight of a building renovation. I'm Henry Epp for Marketplace.

[Nancy Marshall Genzer]

Residential rents can differ wildly depending on the market or even the building or neighborhood, but according to the latest report from realtor.com, the median listed rent across 50 of the biggest metro areas fell in April, down 1.7% compared to the same month last year and the 33rd month in a row that rents were lower year over year. Marketplace's Carla Javier explains how that's possible when a lot of other things are getting more expensive.

[Carla Javier]

Like with so many things, it all comes down to supply and demand. Joel [e-mail] says, on the supply side of rentals, we had this huge boom

[Guest/Interviewee]

of construction from 2021 to about 2024, and that effect is still being felt,

[Carla Javier]

especially in the Sunbelt markets.

[Guest/Interviewee]

We had lots of movers chasing after a limited number of rental units, and that drove rents way up.

[Carla Javier]

That, along with lower interest rates, incentivized construction. But now there's less demand, says Jenny Schutz at Arnold Ventures.

[Marketplace Host]

We have a contraction of households overall coming partly from the restrictions on immigration, so fewer people coming to the U.S.

[Carla Javier]

she also says fewer young people are getting their own pads, instead opting to stay with parents or roommates. Less demand for more supply means lower rents, at least lower than they had been during that pandemic boom. Susan Wachter at the University of Pennsylvania's Wharton School says today's increased costs won't show up in rents immediately because it takes a while to build new units.

[Nancy Marshall Genzer]

Those that are going to come to market years from now will be impacted by today's higher costs, particularly for fuel costs.

[Carla Javier]

Though, she adds, renters are still feeling the impact of those higher costs, just not in rents necessarily, but in their utility bills. I'm Carla Javier from Marketplace.

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[Nancy Marshall Genzer]

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[Nancy Marshall Genzer]

We're continuing to check in with small businesses that are navigating the tariff refund process. The portal to apply for a refund opened a few weeks ago, this after the Supreme Court struck down a large swap swath of President Trump's tariffs. The federal government is on the hook for something like $166 billion in refunds. Today we hear from Gabe Hagan, co founder and CEO of Brick Road Coffee in Tempe, Arizona.

[Guest/Interviewee]

The tariffs have been probably the worst thing I could have imagined in 2024 is when my husband and I decided to take my retirement and invest in a second location and bringing in wholesale roasting. So 2024, we do all these projections, we take out these loans so we can expand, do the construction and open the roastery. By the time we're done with construction, it's now June, July 2025. Our first inventory purchase for the roastery was so much higher than we had originally planned because we didn't plan for tariffs. What I didn't know and I didn't realize, like, even though I'm the one that gets the bill from my importer to pay the tariff, they are technically the importer of records. So this has been a whole learning journey, realizing that I can't actually submit to get any of my refunds for my green coffee because it came through technically somebody else. And that's been frustrating because there's nothing that requires them to then pass it back down to me. So I'm still in this gray area of like, will I see any refunds back Tariff refunds aren't going to cover the increased cost of goods. They're not going to cover all of the chaos that was caused within the commodity market. Most of our goods come from distributors who aren't line items. They aren't putting a line item for tariff, they're just raising the prices. So we don't actually see the full impact of what is ERA versus what is being raised because of the war or the blockage of the Strait of Hormuz or whatever it may be at the moment that's causing that. Last year in December, we took a second mortgage on our house, my husband and I, so we could get another round of working capital into the business so there's not many more assets we have. So we're getting close to, like, running out of those, like, in case of emergency, pull lever things. I'm doing my budget month by month at this point because I can't, I can't plan for anything. There's no way of knowing what is going to happen because every time I think they can't do something else that will cause more harm, they do something like stop the flow of the Strait of Hormuz. Like, these are the things where it's just like, I can't wrap my head around how any small business is going to survive.

[Nancy Marshall Genzer]

That's Gabe Hagan with Brick Road Coffee. I'm Nancy Marshall Genzer. This is apm, American Public Media.

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