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Speaker 1: So everybody wants to say this economy is going great,

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Speaker 1: except for all the people who want to say this

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Speaker 1: economy is going terrible. As always, it's a political conversation

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Speaker 1: to which we have no interest what is actually happening.

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Speaker 1: Scott Bessant, who is doing the job, the exact job

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Speaker 1: we said he should do, get out there and say

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Speaker 1: here's what the Trump economy is doing. Here's what's growing,

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Speaker 1: here's what's getting better, here's what's to look for, and

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Speaker 1: here is why it's working. This is going to make

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Speaker 1: a huge difference in the midterms. He's now doing this,

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Speaker 1: but he's getting into conversations of how inflation is two

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Speaker 1: point one percent, which well, I don't think it's two

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Speaker 1: point one percent unless something shifted and there is a

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Speaker 1: measure that we should be paying attention to. Tony Katz,

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Speaker 1: Tony Katz today, good to be here, Good to be

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Speaker 1: with you. Doctor Mattwell joined us right now, economist at

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Speaker 1: the University of Indianapolis.

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Speaker 2: I want to.

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Speaker 1: Get to the inflation number. Let's start with what we're seeing.

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Speaker 1: This was CNBC with the reporting that you have a

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Speaker 1: very very disappointing holiday sales number. December retail sales were flat,

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Speaker 1: falling well short of the estimate. Now, not everything means

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Speaker 1: what a headline means. And we saw from holiday sales

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Speaker 1: that people were buying luxury goods and were not buying

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Speaker 1: the other goods. So they may have spent more money

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Speaker 1: on the one specific item, but it didn't mean they

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Speaker 1: were spending more money on overall. It probably meant they

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Speaker 1: were spending less money overall. And this is therefore not surprising.

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Speaker 1: But you take a look at this report on holiday

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Speaker 1: sales and where it says sales were flat in December

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Speaker 1: following a point six percent increase in November. Economists with

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Speaker 1: the Dow Johnes Survey expected a point four percent increase

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Speaker 1: for December. What does this story tell you.

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Speaker 2: Well, you know, you've been saying a lot recently about

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Speaker 2: there's a lot of confusing economic data. We welcome to

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Speaker 2: the mix. This is another piece because it contradicts a

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Speaker 2: lot of what we've already seen far as far as

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Speaker 2: positive GDP numbers. When you break down the GDP, so, yeah,

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Speaker 2: it's flat. We were at seventy seven hundred and thirty

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Speaker 2: five billion dollars of sales retail sales in November, and

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Speaker 2: we were at seven hundred and thirty five billion dollars

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Speaker 2: of retail sales in December. But what's even worse about

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Speaker 2: this is the core. So you you know, we always

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Speaker 2: talk about the core. Remove energy and housing, and you

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Speaker 2: end up at a negative zero point one percent. And

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Speaker 2: so if you think expectations were you know, higher point four,

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Speaker 2: like you mentioned, we're half a percent below expectations. This

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Speaker 2: indicates a slowing of the economy. And remember we bragged

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Speaker 2: about that. The Atlanta Fed said the GDP forecast is

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Speaker 2: up above five percent. They're going to revise that this week.

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Speaker 2: I bet you it comes down below five percent. This

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Speaker 2: is two thirds of the economy is consumer spending. So

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Speaker 2: when the core declines and shrinks, that's not a good sign.

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Speaker 1: First things first, let's make sure we define core. How

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Speaker 1: do you define core for everybody?

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Speaker 2: Remove energy, remove housing, remove transportation.

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Speaker 1: Now, the one month of December is not necessarily indicative

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Speaker 1: of the entirety of an economy. It could have been

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Speaker 1: a whole host of reasons why this holiday season didn't

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Speaker 1: see the spending. People waiting to spend their money on

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Speaker 1: other things, thinking that things will turn around in six months,

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Speaker 1: and I have a better opportunity in Trump's economy, or

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Speaker 1: it says, my gosh, this is the end of times.

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Speaker 1: So is it right to read this one report as

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Speaker 1: or this one month as Yep, it's all over, it's

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Speaker 1: all terrible.

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Speaker 2: No, not at all. And by the way, I forgot

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Speaker 2: to food also, foods removed from the core. So no,

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Speaker 2: actually the opposite. I think it's a one piece of

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Speaker 2: data that contradicts other data that we've gotten. So I

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Speaker 2: want to wait and see. People should not overreact. In fact,

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Speaker 2: the market, let me tell you how much it didn't overreact.

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Speaker 2: The market actually went up. Yeah, and in fact, here's

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Speaker 2: how much it didn't overreact. The Wall Street Journal needn't

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Speaker 2: even put it on the front page of its daily webcast.

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Speaker 1: And this is where it gets This is where I

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Speaker 1: think it gets people nuts. Tony Katz here along with

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Speaker 1: doctor Matt Will, economists at the University of Indianapolis. The

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Speaker 1: Dow continued to rise. You know, we haven't even mentioned

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Speaker 1: the fact that we are over dow fifty k. I mean,

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Speaker 1: that's a that's an outstanding and insane number. The Dow

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Speaker 1: was up, I think near two hundred points at one

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Speaker 1: time today, and who knows where it's going to. Where

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Speaker 1: it's going to end. But there really seems to be nothing.

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Speaker 1: Even when there's some kind of jarring moment that takes place,

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Speaker 1: like Bitcoin going from one hundred and twenty six to

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Speaker 1: sixty two thousand, everyone's like, oh my gosh, what's happening.

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Speaker 1: Everything just works itself back up. We saw a silver

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Speaker 1: go from one hundred and twenty dollars an ounce to

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Speaker 1: sixty four dollars an ounce back up to eighty some

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Speaker 1: odd dollars an ounce. Nothing seems to rattle anybody. Everything

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Speaker 1: seems to be moving ahead. Tariffs are no tariffs, et cetera.

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Speaker 1: Are we all paying way too much attention to the market.

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Speaker 2: No, no, No, I think we should pay more attention

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Speaker 2: to the market because the market's up for two reasons today.

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Speaker 2: One is, treasury yields are damn so the Kevin Wars

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Speaker 2: trade is legitimate. Everybody believes, Okay, this guy's gonna get confirmed.

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Speaker 2: Treasury rates are gonna get cut, so this is this

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Speaker 2: is good. Second thing, earnings. You can't deny earnings. Taiwan's

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Speaker 2: Semiconductor had their best month in the history of their

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Speaker 2: company last month. Gucci, a luxury brand, they saw profits up,

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Speaker 2: Spotify profits up, Oh by the way because they're using

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Speaker 2: AI instead of on air talent. But let's move along.

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Speaker 2: Coca Cola, that stuff they used to a little bit today,

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Speaker 2: but they're up twenty three percent for the year. That's

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Speaker 2: not normal for Coca Cola. I mean, this is a commodity,

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Speaker 2: this is a basic, you know, staple of your home.

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Speaker 2: And Barkley's. Barkley's increased their forecast by five percent for

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Speaker 2: the year. Tony, it's raining. Good news, and so the

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Speaker 2: market's up. So the retail I want to sit tight.

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Speaker 2: I want to see what happens next month. But it

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Speaker 2: is consistent with the anecdotal stuff you've talked about about.

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Speaker 2: You know, people aren't quite as active as they.

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Speaker 1: Were talking to doctor Matt Weell, economists at the University

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Speaker 1: of Indianapolis. And trust me, when people are using AI

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Speaker 1: for their content creation doesn't make me happy at all.

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Speaker 1: It's a legit serious issue for those of us who

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Speaker 1: are in content creation. But you talk about these groups

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Speaker 1: being up and certainly Coca Cola being up twenty three percent,

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Speaker 1: Let's break that down a little bit. What was what

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Speaker 1: did what did we expect or what was the thought

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Speaker 1: there that the average would be? And when you see

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Speaker 1: what I would call a blue chip. Maybe it's not

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Speaker 1: officially a blue chat, it is a blue chef like

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Speaker 1: Coca Cola being up twenty three percent. What does that

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Speaker 1: say to economists like yourself.

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Speaker 2: It's pretty fascinating because Coca Cola is one of those

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Speaker 2: regular stable five percent six percent per year growth plus

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Speaker 2: they pay a decent div It in very predictable. But

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Speaker 2: this year, what happened with them is they have pricing power.

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Speaker 2: That is one of those additional confusion points. They had

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Speaker 2: the ability to significantly increase their price. They didn't increase

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Speaker 2: their sales. It was a normal increase in sales, but

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Speaker 2: they were able to have pricing power not just because

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Speaker 2: of inflation, but because the consumer was willing to pay it.

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Speaker 2: That is very unusual, which means the consumer is spending money,

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Speaker 2: which contradicts the darn retail sales data.

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Speaker 1: I'm going to stop you right there. Chipotle just came

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Speaker 1: out and said our plan for slumping sales is we

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Speaker 1: don't care about poor people. If you're poor, don't be

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Speaker 1: buying our burritos. No extra guacam only for you, our

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Speaker 1: average customer. We want being at one hundred thousand dollars

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Speaker 1: a year or more, they can afford what we offer.

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Speaker 1: We're going to address them aggressively. We want the people

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Speaker 1: who are willing to spend more. So Cocoa, Chipotle, all

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Speaker 1: of them have said, embrace the higher price. That Americans said,

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Speaker 1: sounds good.

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Speaker 2: Okay, Chipotle put them aside. Okay, let's talk about Coca Cola,

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Speaker 2: because that's a product that everybody purchases. So Coca Cola,

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Speaker 2: which I believe is a very good bell weather indicator

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Speaker 2: of how the economy is. They are saying even people

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Speaker 2: on the lower income bracket can afford an increase in

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Speaker 2: the price. That's a very dramatic statement. Now, is this

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Speaker 2: because of leftover COVID money. I don't know if that's

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Speaker 2: the case, because there's still a bunch of cash out there.

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Speaker 2: I think it could be because of overall good news

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Speaker 2: rising of the economy. The ship is going up, so

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Speaker 2: you know, rising tide lifts all ships. I think that's

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Speaker 2: what we're seeing here, at least that's what Coca Cola

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Speaker 2: is telling us, and I do trust them more than

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Speaker 2: a lot of other companies.

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Speaker 1: This plays into a conversation that Scott Besson's was having

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Speaker 1: with Maria Bartiromo on on Fox Business. It is a

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Speaker 1: conversation that I said he should be having. We have

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Speaker 1: discussed this, that he has to be proactive in talking

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Speaker 1: about what is happening in this Trump economy and how

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Speaker 1: things are working. This was Scott Bessens just the other day.

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Speaker 3: Trump economy is delivering for the American people, that we

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Speaker 3: have strong growth and inflation is in fact coming down.

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Speaker 3: For the past three months, inflation is two point one percent,

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Speaker 3: close to the Federal Reserves target, and a measure called trueflation,

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Speaker 3: which is daily observations now is below one percent. So

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Speaker 3: inflation down, strong growth, stocks at a record high, and

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Speaker 3: the low it's crime rate in over one hundred years.

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Speaker 1: Jim, don't get me wrong, I'm happy about low crime rates.

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Speaker 1: But I think the largest scale conversation here is this

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Speaker 1: idea of two point one and below one percent. First,

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Speaker 1: what is he talking about regarding true inflation?

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Speaker 2: You know, I think he may be a little bit confused,

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Speaker 2: you know, maybe like even when you and I talk

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Speaker 2: sometimes I may miss my data point on my reference.

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Speaker 2: I think he's referring to the National Bureau of Economic Report.

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Speaker 2: There was a paper written recently by some folks from

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Speaker 2: MIT that talked about the inflation figure, this ongoing constant,

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Speaker 2: which I guess maybe he's calling true inflation, and they

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Speaker 2: said it wasn't inflation, it was a decrease in purchasing power.

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Speaker 2: They referred to it as point seven percent or two

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Speaker 2: point one percent for three months. I think that's what

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Speaker 2: he's referring to. And what they said is the tariffs

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Speaker 2: have caused a point seven percent decrease in real wages,

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Speaker 2: which you could think of as okay, inflation. I think

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Speaker 2: that's what he's referring to. But I got to tell

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Speaker 2: you that's an obscure number to pluck out of thin air.

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Speaker 2: When this month, this week, this week, we're going to

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Speaker 2: have the inflation report, and the current expectation is roll

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Speaker 2: the drumser point three. That's gonna be a three point

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Speaker 2: six percent for the year if that comes in as expected.

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Speaker 2: So the expectation is inflation's here, but let's wait and

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Speaker 2: see what the reports us.

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Speaker 1: And this where it gets more peculiar, and and we've

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Speaker 1: talked about it as a sticking point that I don't

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Speaker 1: think he should say inflation's at two point one when

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Speaker 1: it's not a two point one When as you're describing it,

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Speaker 1: doctor will there's really good economic news out there. Things

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Speaker 1: are moving in a right direction that can eventually bring

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Speaker 1: this inflation down. And one of those things, as you

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Speaker 1: discussed it, I think it was last week, maybe this

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Speaker 1: was the week before, we saw an uptick in manufacturing. Yes,

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Speaker 1: the manufacturing number showed an up.

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Speaker 3: Now.

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Speaker 1: I don't know when the next manufacturing report comes out,

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Speaker 1: but look at you, he's going right to it. He's

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Speaker 1: going right to his all his data to make sure

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Speaker 1: he's got it for us. How what kind of things

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Speaker 1: can we be looking for? Because if earnings reports are good,

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Speaker 1: which is certainly is gonna help people's fur one ks

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Speaker 1: and other things, if spending is down, that could be

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Speaker 1: something that is temporary because it's spending in one category

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Speaker 1: and not necessarily talking about the spending that we're seeing

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Speaker 1: in some other categories. It manufacturing goes up for three

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Speaker 1: months in a row, what does that signal to Wall Street?

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Speaker 1: And how do we feel it on Midwest Main Street?

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Speaker 2: Okay, I'm gonna I'm gonna take your question, twist it

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Speaker 2: all around and say these guys are missing the boat

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Speaker 2: of an opportunity. You talked about some of the great

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Speaker 2: things that are happening, but they're lying to the public

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Speaker 2: about inflation. The ISM Report, by the way, comes out

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Speaker 2: the first of every month, and the ISM Report, after

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Speaker 2: ten months of declining, manufacturing went up dramatically fifty two

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Speaker 2: point six. That is a huge increase in manufacturing. It

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Speaker 2: was shrinking at forty seven anything below fifties break even.

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Speaker 2: New orders were up, production was up, Supplier deliveries were up.

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Speaker 2: These are things that had been declining for ten months.

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Speaker 2: Backlog of orders. Finally, there's a backlog of orders. That

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Speaker 2: is a good thing when companies can't even make enough

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Speaker 2: stuff to fill the orders. And new orders were new

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Speaker 2: orders up, backlog of orders up. But guess what else

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Speaker 2: was up? Prices. Prices were at the highest level we've

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Speaker 2: seen in the last year, and they were trending up

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Speaker 2: for sixteen months in a row.

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Speaker 1: Now, wait, is that a tariff conversation or is that

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Speaker 1: learning from Coca Cola and Chipotle that.

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Speaker 2: They can that's a teriff conversation because this is manufacturers.

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Speaker 2: So manufacturers' costs have been up for sixteen months in

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Speaker 2: a row, and this was the largest one month increase

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Speaker 2: we've seen since the you know, the Liberation Day back

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Speaker 2: in April. Besson has to be honest with people and

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Speaker 2: say there's all these great things in manufacturing, orders and production,

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Speaker 2: but we've still got the battle inflation. I think people

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Speaker 2: aren't stupid. I think they know they're still inflation out there,

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Speaker 2: and we see it in the retail numbers. I think

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Speaker 2: that's why the retail numbers in December were down because

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Speaker 2: of inflation.

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Speaker 1: Doctor Matt Will, economist at the University of Indianapolis. I

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Speaker 1: appreciate you taking the time to be with us. More

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Speaker 1: is coming up on Tony Katz. This is Tony Katz today,