What happens if Trump gets the interest rate he wants?

Summary

Marketplace Morning Report – August 28, 2025

Episode Summary: What happens if Trump gets the interest rate he wants?

Overview

This episode centers on the economic and political ramifications if former President Trump were to successfully pressure the Federal Reserve to drastically lower interest rates, specifically from the current ~4.5% down to 1%. It also briefly covers key business news: Nvidia’s earnings update, the marketing fallout for Cracker Barrel, and the growing trend of companies reacting to politically charged consumer sentiment.

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Key Discussion Points and Insights

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1. Nvidia Earnings and AI Slowdown Concerns

[01:02–02:07]

• Nancy Marshall Genser reports on Nvidia’s latest quarterly results:
  • Nvidia’s revenue was up 6% from the previous quarter, at over $46 billion.
  • The company’s latest AI chip, Blackwell, is selling well, but data center revenue missed Wall Street expectations.
  • Concerns of a potential slowdown in AI spending as a result.
  • Nvidia's specially designed chip for China saw zero sales in Q2, with no expected China revenue included in forecasts.

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2. Presidential Pressure on the Federal Reserve

[02:07–05:07]

A. Trump’s Goal and the Rate Cut Scenario

• President Trump is pushing hard to gain control over the Federal Reserve, recently attempting to fire Fed Governor Lisa Cook.
• His stated desire: reduce the federal funds rate from ~4.5% to 1%.

B. What Would Happen If Rates Dropped to 1%?

[02:44–05:07]

• Justin Ho breaks down the potential economic impacts, with experts weighing in:

  • Immediate Market Reaction

    • George Perks, Macro Strategist at Bespoke Investment Group:
      • “So interest rates would drop across the entire benchmark treasury curve, meaning both short term and long term rates.” [02:56]
      • Lower rates would make borrowing cheaper for consumers (e.g., auto loans) and corporations (e.g., business expansion, hiring).

  • Surge in Demand and Inflation Risk

    • “Taken together, you just see a range of factors that would point to a hotter economy, certainly, but also significantly higher inflation than the already above target inflation we have right now.” — George Perks [03:26]

  • Long-term Consequences: Higher Yields and Mortgage Costs

    • Darrell Fairweather, Chief Economist at Redfin:
      • Though Trump blames high Fed rates for hurting the housing market, a drastic cut would have the opposite effect:
      • “Mortgage rates, they would go up and it would actually make it more expensive for people getting long term debt. And that would probably hurt the housing market.” [04:09]
      • Direct question asked: Would this make homes more affordable?
        “No, no, that is not going to accomplish that goal.” — Darrell Fairweather [04:30]

  • Loss of Fed Credibility and Possible Capital Flight

    • Ann Villemill, Economics Professor, University of Iowa:

      • Dramatic policy shifts could undermine the Fed’s credibility, causing investors to flee.
      • “Then that could lead to an exodus of capital.” [04:40]
      • Markets would demand higher yields on government bonds to compensate for greater risk.
      • “And that's what markets do, they price out risks.” — Ann Villemill [04:52]

    • Summary Insight:

      • Even if the President pushes for lower rates believing it will stimulate the economy, markets are likely to react negatively, perceiving greater risk and instability.

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3. Cracker Barrel’s Marketing U-Turn Amid Political Backlash

[05:26–07:14]

• Story Overview

  • Cracker Barrel quickly reversed its recent logo change following social media and direct criticism from President Trump.
  • The move calmed investors; the company’s stock rebounded by 8%.

• Marketing Experts Weigh In

  • Kimberly Whitler, University of Virginia:

    • Notes it’s rare for a CEO to admit missteps on a rebrand:
      “The CEO literally admitted that they made a mistake. That is rare.” [06:12]
    • Argues that the company tried to court new customers while losing sight of its base.

  • Tim Calkins, Northwestern University:

    • Suggests the logo U-turn acts as a partial retreat and signals the company is listening:
      • “By announcing this logo pullback, I think they've addressed a lot of the concern and they've certainly indicated that they've listened and they've heard the feedback.” [06:43]
    • Reflects on the attention economy:
      • “We are thinking more about Cracker Barrel than I think we've thought about Cracker Barrel in a very, very long time.” [06:59]
      • Having everyone’s attention, even if controversial, could help fuel a brand comeback.

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Notable Quotes & Memorable Moments

• On the effects of a drastic rate cut:

  • “You would be able to buy a lot more car because you have a lower interest rate that you have to pay on your borrowing.”
    — George Perks [03:07]
  • “Taken together, you just see a range of factors that would point to a hotter economy, certainly, but also significantly higher inflation than the already above target inflation we have right now.”
    — George Perks [03:26]
  • “Mortgage rates, they would go up and it would actually make it more expensive for people getting long term debt ... No, no, that is not going to accomplish that goal.”
    — Darrell Fairweather [04:09, 04:30]
  • “Then that could lead to an exodus of capital ... And that's what markets do, they price out risks.”
    — Ann Villemill [04:40, 04:52]

• On brand decision-making:

  • “The CEO literally admitted that they made a mistake. That is rare.”
    — Kimberly Whitler [06:12]
  • “We are thinking more about Cracker Barrel than I think we've thought about Cracker Barrel in a very, very long time.”
    — Tim Calkins [06:59]

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Timestamps: Key Segments

• [01:02–02:07] – Nvidia’s earnings, AI chip slowdown concerns
• [02:07–05:07] – Trump’s pressure on the Fed, possible interest rate cut scenario, expert analysis
• [05:26–07:14] – Cracker Barrel marketing reversal, role of political pressure and consumer sentiment

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Tone & Language

The tone is brisk, factual, and analytical, aligning with Marketplace’s reputation for quick, plain-English breakdowns of economic news. Quotes from experts add color and clarity, while the reporting remains objective and data-driven.

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For Listeners Who Missed the Episode...

This episode covers the potential economic fallout if the Fed were forced to sharply lower rates, why such a move could actually backfire for consumers (especially those seeking more affordable mortgages), and how political pressure continues to reshape both central bank policy debates and corporate decision-making. Plus, a quick check-in on Nvidia and Cracker Barrel’s very different market stories.

Transcript

[A]

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[C]

For Nvidia From Marketplace I'm Sabri Benishore in for David Brancaccio. Nvidia, maker of AI and gaming chips, is not quite meeting Wall Street's lofty expectations. The company announced second quarter results yesterday which were pretty good, but they fell short in one key area marketplaces Nancy Marshall Genser and has that Nvidia computer.

[D]

Chips help power AI and the data centers being built by the likes of Google and Meta. Its newest chip, the Blackwell, is selling briskly. But Nvidia's data center revenue came in below analysts expectations, sparking fears of a slowdown in AI spending. Still, the company reported overall revenue for the second quarter of more than $46 billion, up 6% from the last quarter. It's expecting to rake in even more money this quarter. Nvidia designed a special chip for China, but it didn't sell any of them to China in the second quarter and doesn't include any China's sales of the chip in estimates for this quarter. I'm Nancy Marshall Genser for Marketplace.

[C]

President Trump has been relentlessly trying to gain control over the Federal Reserve, attacking its independence, most recently with the ongoing attempt to fire Fed Governor Lisa Cook. But what specifically does the president want from from the central bank? Well, he wants lower interest rates, the current federal funds rate. These are the short term rates between banks that spill over into the rest of the economy. The current rate is around four and a half percent. The president would like it down to 1%. So what if that happened? Marketplace's Justin Ho has that.

[E]

Let's say the Federal Reserve cuts the federal funds rate to 1% tomorrow. George Perks, macro strategist at Bespoke Investment Group, says the first place he'd see a reaction would be in government bond yields.

[F]

So interest rates would drop across the entire benchmark treasury curve, meaning both short.

[E]

Term and long term rates. Perk says those influence all kinds of credit throughout the economy.

[F]

One example would be auto loans. So for a given dollar amount that you can spend on a car payment every month, you would be able to buy a lot more car because you have a lower interest rate that you have to pay on your borrowing.

[E]

Business loans would also get cheaper. Perk says companies would likely borrow more to expand and to hire people.

[F]

Taken together, you just see a range of factors that would point to a hotter economy, certainly, but also significantly higher inflation than the already above target inflation we have right now.

[E]

That's because more demand for workers would push up wages. More demand from consumers and businesses would push up prices. And if inflation picks up again, there would be some unintended consequences.

[F]

We would see, ironically, yields on long term debt increase.

[E]

That's Darrell Fairweather, chief economist at Redfin. She says investors would demand higher yields on longer term debt because inflation would otherwise eat away at their returns. And remember, yields on longer term bonds affect the cost of mortgages.

[F]

Mortgage rates, they would go up and it would actually make it more expensive for people getting long term debt. And that would probably hurt the housing market.

[E]

Even though President Trump has argued that the Federal Reserve is the one hurting the housing market by keeping rates too high. So I asked Fairweather whether a lower federal funds rate would make mortgages more affordable.

[F]

No, no, that is not going to accomplish that goal.

[E]

One thing a drastic rate cut would do is undermine the credibility of the Federal Reserve.

[D]

Then that could lead to an exodus of capital.

[E]

Ann Villemill is an economics professor at the University of Iowa. She says that exodus could push interest rates on government bonds higher too, to.

[D]

Compensate for the risk of the Fed losing its credibility. And that's what markets do, they price out risks.

[E]

That's why even if the President thinks lower rates would be good for the economy, markets would think otherwise.

[F]

Justin.

[E]

I'm Justin Ho for Marketplace.

[C]

After backlash on social media and from President Trump himself, Cracker Barrel said it's scrapping its new logo for Wall street was relieved. The stock rose 8% yesterday. And closed higher than before the company announced the now canceled change. This comes just weeks after American Eagle doubled down on its controversial campaign featuring actress Sydney Sweeney. Trump liked that one. Marketplace's Kristen Schwab looks at marketing in this politically driven moment, Cracker Barrel announced.

[G]

It'S bringing back what it calls its Old Timer logo. The guy with the barrel, Kimberly Whitler, a marketing professor at the University of Virginia, says it's not every day a company walks back an expensive rebrand.

[F]

The CEO literally admitted that they made a mistake.

[H]

That is rare.

[G]

It shows the growing influence of consumers, social media, shareholders and now politicians, Whitler says. Cracker Barrel lost track of its core customers while trying to reach new ones.

[F]

They're trying to shift the target and rather than expand the target, the logo.

[G]

Walk back may not signal a full retreat, but more of a compromise, says Tim Calkins, a marketing professor at Northwestern. He thinks the brand is still likely to follow through on changing its menu and dining room design.

[F]

But by announcing this logo pullback, I think they've addressed a lot of the concern and they've certainly indicated that they've listened and they've heard the feedback, cawkins says.

[G]

Consumers want to feel seen and if executed well, this moment might actually help fire the brand's comeback.

[F]

We are thinking more about Cracker Barrel than I think we've thought about Cracker Barrel in a very, very long time.

[G]

We live in an attention economy, says Calkins. And right now, Cracker Barrel has everyone's attention. I'm Kristen Schwab for Marketplace in New York.

[C]

I'm Sabri Benishore with the Marketplace Morning.

[G]

Report.

[C]

From APM American Public Media.

[H]

Poetry has the power to connect our inner universe in the outer world. I'm Maggie Smith, poet and host of the Slowdown, a podcast from American Public Media. Each weekday, find time to take a breather from your to do list or doom scrolling for that matter, and take in a moment of reflection with a hand picked poem. Listen to the Slowdown wherever you get podcasts.