Is Trump's Economy Taking Shape?

Summary

The NPR Politics Podcast: "Is Trump's Economy Taking Shape?" – February 17, 2025

In this engaging episode of The NPR Politics Podcast, hosts Sarah McCammon and Danielle Kurtzleben delve into the current state of the U.S. economy under President Donald Trump. Joined by NPR's chief economics correspondent, Scott Horsley, the discussion provides a comprehensive analysis of Trump's economic policies, their implementation, and the broader economic indicators shaping the nation's financial landscape.

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1. Trump's Economic Message

Danielle Kurtzleben outlines the core components of Trump's economic platform during his campaign:

• Blaming Biden for Economic Woes: Trump consistently argued that "Bidenomics has failed" and attributed high inflation directly to President Joe Biden's policies (02:38).

• Tax Cuts: He promised broad and targeted tax reductions, including eliminating taxes on tips, Social Security, and overtime, aiming to "put more money in your pocket" (02:38).

• Emphasis on Tariffs: Trump hailed tariffs as the "most beautiful word in the dictionary," advocating their use to generate revenue, bolster manufacturing, and negotiate trade deals (02:38).

Sarah McCammon probes these priorities, questioning which policies Trump is actively advancing.

2. Current Economic State Inherited by Trump

Scott Horsley provides a reality check on the economy Trump inherited:

• Inflation: While inflation soared to over 9% in mid-2022, it has since decreased to around 3% as of last January, still above the Federal Reserve's target of 2% (04:02).

• Job Market: The economy boasts robust job growth with unemployment hovering near 4%, defying recession predictions (04:02).

• GDP Growth: Sustained GDP growth indicates a healthy economic expansion (04:02).

Horsley notes the partisan lens through which economic performance is often viewed, with Democrats and Republicans each perceiving the economy more favorably when out of power.

3. Partisan Perspectives on the Economy

The discussion highlights how economic perceptions are influenced by political affiliations:

• Pre-Election Sentiments: During the campaign, Republicans viewed the economy more pessimistically than Democrats, a trend that reversed post-election (05:39).

• Current Sentiments: Democrats now express more concerns about the economy than Republicans, mirroring previous shifts when power changes hands in the White House (05:39).

4. Disconnect Between Economic Indicators and Personal Experiences

Sarah McCammon raises the issue of the gap between favorable economic metrics and the everyday struggles of Americans:

• High Consumer Prices: Despite positive indicators, consumers face persistent high prices on essentials like eggs, exacerbated by issues like bird flu (05:39).

• Consumer Sentiment vs. Economic Data: While economists highlight declining inflation rates, consumers still experience high grocery bills, leading to skepticism about the overall economic health (06:21).

5. Challenges for Trump's Economic Strategy

As the economy transitions under Trump's administration, several challenges emerge:

• Ownership of the Economy: Horsley asserts that Trump will eventually need to take responsibility for the economy's performance, despite limited presidential control over broader economic factors (06:21).

• Continued Inflation Pressures: Persistent high prices, such as a 15% increase in egg prices within a month, present ongoing obstacles to public satisfaction (07:49).

• Tariff Implications: Danielle emphasizes that tariffs, contrary to Trump's portrayal, ultimately burden American consumers by increasing the costs of imported goods (10:46).

6. Tariffs and Policy Tools

The episode examines the practical impacts of Trump's tariff policies:

• Implementation of Tariffs: Trump has imposed tariffs on China (10%) and signed orders for 25% tariffs on steel and aluminum, though some measures are pending implementation (02:46).

• Reciprocal Tariffs: The administration's approach includes "reciprocal tariffs," aiming to match tariffs imposed on the U.S. by other countries (02:46).

• Economic Consequences: Tariffs are likely to raise prices for consumers, negating their intended benefits of boosting domestic manufacturing (10:46).

7. Congressional Dynamics and Economic Policy

Sarah McCammon and Danielle Kurtzleben discuss the interplay between the White House and Congress in shaping economic policy:

• Need for Congressional Approval: Major economic policies typically require congressional support. However, Trump has leveraged existing laws and national security justifications to impose tariffs unilaterally (11:32).

• Potential for Bipartisan Cooperation: While there is a slim majority for Republicans in Congress, bipartisan efforts remain uncertain, hinging on policy specifics and political strategies (11:32).

• Upcoming Budget Deadline: The March 14th budget deadline poses a critical test for Trump and Congressional relations, with potential outcomes including government shutdowns (13:18).

8. Key Economic Indicators to Watch

Scott Horsley identifies essential metrics to monitor in assessing the economy's trajectory:

• Inflation Trends: Whether inflation continues to decline towards the 2% target or stabilizes around 3%, and the impact on consumer prices (13:29).

• Interest Rates: Particularly long-term rates like mortgage rates, which have risen due to expectations of increased federal deficits and borrowing (13:29).

• Job Market Health: Continued job creation is vital for economic stability and personal financial security (13:29).

• Consumer Spending: As the primary driver of the U.S. economy, shifts in consumer spending habits, especially post-holiday spending behaviors, are crucial indicators (13:29).

9. Conclusion

The episode concludes with a reflection on the complexities of managing the economy. While Trump's administration has inherited a relatively strong economic foundation, ongoing challenges such as inflation, consumer price pressures, and the effective implementation of tariff policies will significantly influence public perception and economic outcomes. The interplay between the White House and Congress, alongside the monitoring of key economic indicators, will shape the future trajectory of the U.S. economy under Trump's leadership.

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Notable Quotes:

• Danielle Kurtzleben on Trump's tariff policy: "Tariffs, again, work differently than how Trump frames it. [...] In large part consumers, because those companies need to cover that cost somehow." (10:46)

• Scott Horsley on inflation and economic control: "Presidents have limited control over the economy. [...] There are certainly policies they can put in place that can move the needle one way or the other, but lots of things happen that are beyond the president's control." (06:21)

• Scott Horsley on economic indicators: "Consumer spending is the main driver of the economic engine in this country. [...] If people continue to spend, keep the economic gears turning or if they really keep a tight grip on their wallets and maybe slow the economy down." (13:29)

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This detailed analysis provides listeners with a thorough understanding of the current economic landscape under President Trump, highlighting the interplay between policy decisions, economic indicators, and public perception.

Transcript

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[Thomas]

Hey, this is Thomas in Chicago, Illinois. I was laid off just over a year ago. And while I've been searching for a job, I've been able to play with my dogs, try new recipes, see friends, and just not know what to do with myself. But after a long time searching, I start my dream job on Monday. This podcast was recorded at 12:08pm Eastern.

[Sarah McCammon]

Time on Monday, February 17, 2025.

[Thomas]

Things may have changed by the time you hear it, but I'll be launching my new career. Okay, here's the show.

[Sarah McCammon]

Congratulations.

[Danielle Kurtzleben]

No kidding.

[Sarah McCammon]

What a relief, huh?

[Danielle Kurtzleben]

I have no witty commentary. That's just awesome. Good.

[Sarah McCammon]

You know, you hear sometimes stories about people struggling to get get a job after a very, very long time. And it's just heartening to hear that it all worked out. And it worked out well. Hey there. It's the NPR Politics podcast. I'm Sarah McCammon. I cover politics.

[Danielle Kurtzleben]

I'm Danielle Kurtzleben. I cover the White House.

[Sarah McCammon]

Today on the show, we're looking at the economy, what President Trump says he wants to achieve and whether or not that economy is starting to take shape. So a longtime friend of the pod is here, NPR's chief economics correspondent, Scott Horsley. Hey, Scott.

[Scott Horsley]

Great to be with y'all.

[Sarah McCammon]

So, Danielle, the economy, as we both know, was a major theme of the presidential campaign. We heard about it again and again from voters on the campaign trail last year. Just remind us, what was Trump's economic message when he was running?

[Danielle Kurtzleben]

I would put three big bullet points at the top of Trump's economic message. One is not really a policy so much as just a thing he said, which is bidenomics has failed. Your life is bad because of Joe Biden, especially inflation. Inflation is high under Joe Biden. I will bring it down. So that was one part. Another was, I'm going to cut taxes. I'm going to put more money in your pocket. That means broad tax cuts, but also a few piecemeal tax cuts. No tax on tips, no tax on Social Security, no tax on overtime. That is how I am going to help you personally. One other thing, of course, was tariffs. He said over and over, tariffs is the most beautiful word in the dictionary. I love it, I love it. I love it. He said he would use tariffs for all sorts of things as well, to bring in revenue, possibly by doing that, eliminate the income tax he floated that at one point, but also to help boost manufacturing via tariffs and just use them as a bargaining chip. So we'll get into those, but those are the three big ones that come to mind for me.

[Sarah McCammon]

I mean, you touched on a few policy ideas there in addition to just messaging. But so far, which of those policies does he seem to be prioritizing?

[Danielle Kurtzleben]

Well, he is still blaming Joe Biden for inflation, but that is not a policy. That is again, just a message. We haven't gotten to tax cuts yet. House Republicans did just put out a plan that pretty ambitiously aims to cut up to $4.5 trillion in taxes. That's a lot. We'll see how far that legislative agenda goes. But then there's tariffs and there we've talked a lot about tariffs. But has he put many into practice? No, it's a wait and see game on tariffs. For example, he has imposed some tariffs on China, some 10% tariffs. He did just sign an order for tariffs on steel and alumin, 25% tariffs. Those will not go into effect for a couple of weeks yet. There were also those tariffs he threatened to impose on Canada and Mexico, but he ended up punting those a month out. He's also talked about what he calls reciprocal tariffs. The basic idea seems to be that the United States would impose tariffs on other countries equal to whatever tariffs they impose on the US And Scott, as.

[Sarah McCammon]

Danielle just mentioned, Trump blamed Biden for problems in the economy, especially inflation. We heard so much about that, but just a little bit of a reality check. I mean, big picture, what was the economy that Trump inherited? How strong was it?

[Scott Horsley]

Donald Trump inherited a pretty good economy from Joe Biden. Inflation did go very high back in 2022, but it's come down a lot. It's still higher than we'd like. We just got inflation data last week that showed prices in January were up 3% from a year ago, which is a little more than most of us would like. The Federal Reserve likes to see inflation around 2%, but it's a far cry from the 9 plus percent we saw back in the summer of 2022. So inflation has cooled a lot. The job market's done very well. We've added millions of jobs. Unemployment is quite low. It's around 4%. And a lot of people thought we were going to have to go into a recession in order to get inflation under control. We've got inflation largely, although not totally under control without a recession, with a strong job market, with low unemployment, GDP is growing at a healthy clip. So, all in all, pretty good economy. It is interesting. We've talked in the past about how people tend to see the economy through the partisan lens. And in most of 2024, in the run up to the election, it was generally Republicans who were more down on the economy than Democrats, that flipped right after Donald Trump got elected. And now it's Democrats who are more down on the economy than Republicans. It's kind of a mirror image if you look at what it was before and after the election, and we've seen that in the past, where anytime control of the White House changes, the people whose party is in power tends to feel like the economy is doing better, and the people who are out of power feel like the economy's doing a little bit worse.

[Sarah McCammon]

Yeah. And another thing we've talked about a lot, Scott, is the disconnect sometimes between some of those strong economic indicators that may cause economists and people who write business news to say, well, the economy is strong, and the lived experience of people's lives who are many times working paycheck to paycheck and facing high prices. You know, for example, the price of eggs was such a huge talking point in the campaign. That's a continuing challenge with bird flu and whatnot. So I guess even if the greater economy is relatively good and people aren't feeling it in their personal economy, how long can Trump continue to blame Biden for some of these problems if they persist or maybe even get worse?

[Scott Horsley]

Greg Yip of the Wall Street Journal had a column last week where he said inflation helped to elect Donald Trump. Now it's his problem. So going forward, Donald Trump is going to own this economy, even though some of the things that we're going to see will maybe be after effects of policies that were put in place during the Biden administration. It's Donald Trump's economy now, and at some point, people will start to hold him accountable, even though, as we've said many times on this podcast, the presidents have limited control over the economy. There are certainly policies they can put in place that can move the needle one way or the other, but lots of things happen that are beyond the president's control. It is true that there was kind of a disconnect in the run up to the election between economists and economic reporters like me who kept saying, look, inflation's come down, inflation's come way down. And folks at the supermarket who said, well, my grocery bill is still high, and that hasn't changed. Grocery bills are still high, and they're probably not going to come down very much. If at all. What will happen over time is that wages will catch up and people be gaining ground. And in fact, wages have been outpacing inflation now for the better part of two years. But there's still sort of a cumulative hangover from the high inflation we had a few years ago. And you mentioned eggs, which are still a real sore point. Egg prices jump more than 15% just between December and January. So that's a real challenge.

[Danielle Kurtzleben]

I would agree with everything Scott said. People's feelings about the economy, yes, they are based on their own personal data in their daily lives, but it also is to some degree dependent upon what they hear, what they see in the news. And should Democrats find problems in the economy, for example, point to egg prices, point to whatever other problems happen to materialize and say this is Donald Trump's fault, then that could cause people to hold Trump more responsible. Republicans were incredible at this when Joe Biden was in the White House. So should Democrats be able to mount that kind of a messaging challenge to Trump? That is one thing.

[Sarah McCammon]

All right. Well, it's time for a quick break. And when we're back, what tools does the White House have to work on the economy?

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[Sarah McCammon]

You know, Scott, you mentioned a moment ago that eventually Trump will have to own his economy. You also mentioned that there's just so much a president can actually do. So I want to talk about that. What can the president do when it comes to adjusting the economy?

[Scott Horsley]

Well, the president didn't put forward a whole lot of proposals to actually address inflation. The big thing he talked about was to increase drilling for oil and natural gas and to try to bring down gasoline prices. Of course, oil production in the US Is already at near record high. So it's not clear how much additional room there is there to bring down the price of gasoline and the price. Price of diesel and everything gets trucked around. That was really Trump's main policy prescription for dealing with inflation. The other thing that Danielle's touched on is his tariff proposals, which have the potential to move the needle in the other direction. That is raising prices for Americans. He's called for a 25% tariff on all imported steel and aluminum. Well, for Joe Sixpack, that's probably going to mean higher prices for beer and soft drinks. That comes in aluminum cans. That's not going to be helpful when it comes to lowering prices.

[Sarah McCammon]

I mean, that's what history would tell us, right?

[Danielle Kurtzleben]

Yeah. And also just logic, the way that tariffs work. Tariffs, again, work differently than how Trump frames it. Trump has often said that other countries pay tariffs. That is not true. American companies that import goods pay tariffs to the US Government. That is how it works. So if those American companies are importing goods and paying those taxes, who is going to end up paying for them? Well, in large part consumers, because those companies need to cover that cost somehow.

[Sarah McCammon]

So people's wallets do you know, aside from tariffs, major economic policy requires Congress. It needs congressional approval. Trump will have to work with Democrats to get things done on this front. Republicans have such a narrow majority in Congress. Is there a world where they can work together?

[Danielle Kurtzleben]

Maybe. I do want to add one thing about that question you just asked. You said, aside from tariffs, major economic policy needs congressional approval. Generally true, but also Congress does have the power to pass tariffs. Normally they would, but Donald Trump, this is another feature of his last presidency, and now this one is him claiming different laws. You'll hear us talk about section 232, section 301, et cetera. He claims that the authority of various different laws, that it's a national emergency, that there's national security reasons. Therefore, I, President Trump, I'm going to impose these tariffs. So Congress could, in fact, do this themselves or not do this themselves. But he has decided he's going to do it, and thus far, he hasn't gotten much pushback. At any rate, let's leave that to the side. Is there a world where Democrats work with Trump? I mean, to me, it depends on the policy and it depends on what Trump keeps doing. It depends on Democrats figuring out their strategy. Think back to Trump's first term. A whole bunch of Democrats voted for the USMCA that renegotiation of nafta. So they have shown themselves willing to go along with certain kinds of policy. But it also depends on what Democrats decide to do next, how they decide to strategize against Donald Trump. Uh, a lot of them would tell you that Donald Trump has been flouting the Constitution in this first month of his presidency. And Democrats might not be as happy to go along with any sort of Trump policy, depending on what he keeps doing, depending on what they decide as a winning strategy for them. And the first test of this or one of the first big tests we'll see of this is in March 14th, which is when budget deadline. Yes, absolutely. So do Democrats decide to risk a shutdown? Maybe, maybe not.

[Sarah McCammon]

You know, Scott, we started out this podcast talking about a lot of numbers. And I'm curious, which ones will you be watching in the months to come? What economic indicators are going to be the most important?

[Scott Horsley]

I'm certainly going to watch what happens with inflation. Does it continue to normalize back to around 2% or does it get kind of stuck in this low 3% range where it's been? Does it even go up higher than that? I'm going to watch what happens with interest rates, in particular, longer term interest rates like mortgage rates, which have actually gone up since the election in the expectation of bigger federal deficits and more borrowing by the federal government that makes it harder for people to buy a house or to finance other long term projects. I'm going to continue to watch the job market, hope that we continue to add jobs so that folks who've been on the sidelines can go to work and pay the bills and be productive. And I'm going to watch what happens with consumer spending because, of course, consumer spending is the main driver of the economic engine in this country. We saw a little bit of a hiccup in January where Americans tightened their belts a little bit. That often happens after the holidays, but it happened pretty significantly this year. We'll see if that continues, if people continue to spend, keep the economic gears turning or if they really keep a tight grip on their wallets and maybe slow the economy down.

[Sarah McCammon]

And what the White House says about all of it.

[Danielle Kurtzleben]

Absolutely.

[Sarah McCammon]

All right, Scott Horsley, thanks so much for being with us.

[Scott Horsley]

Great to be with you all.

[Sarah McCammon]

That's all from us today. I'm Sarah McCammon. I cover politics.

[Danielle Kurtzleben]

I'm Danielle Kurtzleben. I cover the White House.

[Sarah McCammon]

And thank you for listening to the NPR Politics podcast.

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