WEBVTT - Mild Inflation Print Boosts Fed-Cut Bets 0:00:02.520 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.520 --> 0:00:14.680 Weekdaily reporting from the magazine that helps global leaders stay 0:00:14.720 --> 0:00:18.799 ahead with insight on the people, companies, and trends shaping 0:00:18.800 --> 0:00:23.760 today's complex economy. Plus global business finance and tech news 0:00:23.800 --> 0:00:27.800 as it happens. The Bloomberg Business Week Daily Podcast with 0:00:27.920 --> 0:00:31.760 Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.280 --> 0:00:34.120 We're going to stay tim on the US economy. 0:00:34.120 --> 0:00:36.479 We're going to broaden out as well, especially when it 0:00:36.520 --> 0:00:39.840 comes to geopolitics and the global economy, something we talked 0:00:39.840 --> 0:00:41.479 about with our Stu Paul yesterday. 0:00:41.600 --> 0:00:43.280 We got a great voice to do this, Doctor Adam 0:00:43.320 --> 0:00:47.000 Posen joins US, President of the Peterson Institute for International Economics, 0:00:47.280 --> 0:00:51.280 joining us this afternoon from Washington, DC. Before we broaden out, 0:00:51.320 --> 0:00:54.280 doctor Posen, want to talk about the US economy coming 0:00:54.320 --> 0:00:56.560 off of that inflation print that we just talked about 0:00:56.720 --> 0:00:59.800 with Mike McKee. Where do you see the US economy? 0:01:01.320 --> 0:01:03.520 Well, thank you for having me back, Tim, and I 0:01:03.560 --> 0:01:05.520 agree with a lot of what Mike said about what 0:01:05.680 --> 0:01:07.640 was under the hood. But the main thing I think 0:01:07.680 --> 0:01:11.240 your investor listeners should be thinking about is that if 0:01:11.280 --> 0:01:14.440 your plus or minus zero point one zero point two 0:01:14.480 --> 0:01:19.720 from expectation on any given months print. It's not worth 0:01:19.800 --> 0:01:24.039 real information. I mean, nobody has their expectations that precise. 0:01:24.600 --> 0:01:26.800 So you have to look at the bigger stories. And 0:01:26.920 --> 0:01:29.280 to me, the bigger stories in the US are that 0:01:29.360 --> 0:01:33.119 we have a labor market that isn't cratering as people 0:01:33.280 --> 0:01:37.759 used to worry about, that has solid retention of employment, 0:01:37.880 --> 0:01:42.400 not huge employment growth, but solid retention. We have potentially 0:01:42.440 --> 0:01:46.280 some very stimulative fiscal policies coming down the pike in 0:01:46.400 --> 0:01:50.600 that the Republican majorities in the Congress may give President 0:01:50.640 --> 0:01:53.680 Trump checks to hand out ahead of the midterm elections 0:01:53.680 --> 0:01:58.280 in November. They may, I hope they will restore some 0:01:58.360 --> 0:02:02.080 of the funding for Obamacare insurance subsidies that we're taken 0:02:02.120 --> 0:02:05.480 out in last year's bill. And we've got in the 0:02:05.720 --> 0:02:10.080 end a bunch of things on the tara front and 0:02:10.200 --> 0:02:13.200 even more so on the anti migration front that are 0:02:13.240 --> 0:02:18.280 percolating through the economy. And people were premature to say, oh, 0:02:18.320 --> 0:02:20.760 it all must have happened by now, or it won't happen. 0:02:20.880 --> 0:02:24.680 That's not right. It takes time for businesses and households 0:02:24.720 --> 0:02:29.600 and migrants to make decisions. So I'm with Mike, I'm 0:02:29.600 --> 0:02:32.880 with a lot of people. I think the pricing of 0:02:33.040 --> 0:02:36.120 three FED cuts this year is much too many. 0:02:36.480 --> 0:02:39.359 So this explains, or I'm assuming this kind of explains, 0:02:39.639 --> 0:02:44.080 doctor Posen, that you and Lazard CEO Peter Orzag of course, 0:02:44.120 --> 0:02:46.720 formerly director of the Office of Management and Budget and 0:02:46.760 --> 0:02:50.239 director of the CBO. You guys put out a column 0:02:50.280 --> 0:02:52.799 in January that the Fed's two percent inflation target could 0:02:52.800 --> 0:02:55.600 be totally left in the dust. You think inflation could 0:02:55.639 --> 0:03:00.360 quote surprise to the upside, potentially exceeding four percent sent 0:03:00.480 --> 0:03:04.480 by the end of twenty twenty six. Is it because 0:03:04.520 --> 0:03:08.400 of what you just laid out in terms of you know, 0:03:08.520 --> 0:03:10.560 tax cuts, federal government spending. 0:03:10.600 --> 0:03:12.919 These are things that are going to be stimulative. 0:03:13.480 --> 0:03:16.840 Stimulation carols exactly and Peter and I And I was 0:03:16.919 --> 0:03:19.400 glad to co author with Peter because he knows the 0:03:19.400 --> 0:03:22.840 fiscal stuff. So if he and I agree that these 0:03:22.880 --> 0:03:26.840 are real likely risks to more stimulus out of fiscal 0:03:27.040 --> 0:03:30.680 I'm willing to buy it or willing to sell it. 0:03:30.760 --> 0:03:31.239 Actually. 0:03:31.840 --> 0:03:34.720 But I think the other things that we're talking about 0:03:34.880 --> 0:03:38.480 is the lagged effect of tariffs and anti migration. I 0:03:38.520 --> 0:03:41.200 wrote about this in a column for Business Week magazine 0:03:41.200 --> 0:03:44.520 earlier this month. I think we're talking about in Peter 0:03:44.680 --> 0:03:49.120 points too from his Purchaselizard, various corporate CEOs I at Amazon, 0:03:49.640 --> 0:03:52.280 and or the beige books from the FED that say 0:03:52.720 --> 0:03:56.440 companies are only just now passing through some of these adjustments. 0:03:57.000 --> 0:03:59.360 I think there's also just the bottom line that the 0:03:59.440 --> 0:04:02.080 labor market, it is more solid, and so if we 0:04:02.120 --> 0:04:06.120 get any inflation, it's in a more tidy economy. And 0:04:06.160 --> 0:04:09.760 then finally, whether or not we get into the new 0:04:09.840 --> 0:04:13.120 leadership at the FED. After all the attacks on the 0:04:13.120 --> 0:04:16.040 FED over the last year since President Trump came back 0:04:16.080 --> 0:04:19.360 into office, you have to be a little more worried 0:04:19.560 --> 0:04:23.080 that the FED will not react quickly if there is inflation, 0:04:23.240 --> 0:04:26.320 and that to some degree becomes self fulfilling. So I 0:04:26.360 --> 0:04:28.479 think there's a lot of things going on now. It 0:04:28.520 --> 0:04:31.360 could be a recession. It could be that the migrants 0:04:31.400 --> 0:04:34.960 really haven't left yet. They could be that the government 0:04:35.000 --> 0:04:38.040 breaks down and doesn't pass these stimulus, in which case 0:04:38.320 --> 0:04:41.240 inflation won't be that high. But I think each of 0:04:41.279 --> 0:04:44.520 these is pretty darn likely, and cumulatively they get you 0:04:44.640 --> 0:04:46.600 up to high inflation by end of the year. 0:04:46.760 --> 0:04:48.120 Well, you mentioned the FED, so I want to go 0:04:48.160 --> 0:04:50.760 there then, and then I want to do some demographic 0:04:50.800 --> 0:04:53.359 stuff because there's a lot of questions about what the 0:04:53.400 --> 0:04:55.240 economy looks like in the next few years with the 0:04:55.279 --> 0:04:59.080 decline and immigration. On the FED, you said if the 0:04:59.160 --> 0:05:02.719 FED is less react moving forward. Is that a result 0:05:02.800 --> 0:05:06.440 you think of Kevin Walsh being nominated as Chair of 0:05:06.440 --> 0:05:06.800 the FED? 0:05:08.000 --> 0:05:12.240 I think it's a result of the desires expressed so 0:05:12.560 --> 0:05:16.400 strongly by President Trump and by Secretary Dissent, and by 0:05:16.480 --> 0:05:19.120 not just Kevin worsh to the nominee, but all the 0:05:19.400 --> 0:05:23.039 shortlisted people who would be FED Chair in favor of 0:05:23.600 --> 0:05:27.919 loosening policy quite a bit, and doing so in the 0:05:27.960 --> 0:05:31.360 face of data which the vast majority of the Federal 0:05:31.400 --> 0:05:34.240 Open Market Committee has publicly said leads them to want 0:05:34.279 --> 0:05:38.640 to pause. I think should give people pause. So I 0:05:38.680 --> 0:05:41.119 think there is a real issue there. I think there's 0:05:41.160 --> 0:05:47.599 also genuine debate to be had. Nominee Warsh, Governor Waller 0:05:47.640 --> 0:05:51.400 and others have said that some of these tariff and 0:05:51.440 --> 0:05:53.880 other effects are one time shocks are not going to 0:05:53.920 --> 0:05:57.080 be passed on We'll see that would be very unusual. 0:05:57.200 --> 0:06:00.800 But maybe they've also said or started to say that 0:06:01.080 --> 0:06:04.599 productivity growth will bail us out, we'll be able to 0:06:04.640 --> 0:06:08.640 have more growth with less inflation. That's more plausible to me. 0:06:08.920 --> 0:06:11.360 But even there that's by no means for sure. There 0:06:11.400 --> 0:06:13.520 was a nice piece by Jason Furman and the Wall 0:06:13.520 --> 0:06:16.839 Street Journal discussing this. The angle I would take is, 0:06:17.080 --> 0:06:20.280 just as Governor Waller or Kevin worsh says, with the tariffs, 0:06:20.800 --> 0:06:23.640 you get a real income shock, in this case positive 0:06:23.680 --> 0:06:27.359 from AI. It's indeterminate ahead of time, to use a 0:06:27.400 --> 0:06:30.880 fancy word, how much of that shows up as income 0:06:31.000 --> 0:06:33.600 and how much of that shows up as price disinflation. 0:06:34.320 --> 0:06:37.200 And my reading of the historical evidence is when you 0:06:37.240 --> 0:06:40.760 get a new technology, most of the disinflation stuff comes 0:06:40.800 --> 0:06:45.000 with a lag, because that only comes when companies start restructuring, 0:06:45.200 --> 0:06:48.400 changing their workforces, figure out how to use this stuff. 0:06:48.680 --> 0:06:51.359 Whereas some of the income growth, the productivity growth you 0:06:51.400 --> 0:06:53.559 get upfront just because we've all got a new toy. 0:06:54.440 --> 0:06:58.440 So I think there's room for me to be plenty wrong. 0:06:58.680 --> 0:07:02.279 But I think we're going to end up pretty high 0:07:02.279 --> 0:07:04.520 inflation fed that's behind the curve. 0:07:04.800 --> 0:07:08.440 So is that the biggest realistic risk to the US economy. 0:07:08.480 --> 0:07:10.760 I wanted to insert that word realistic because I think 0:07:10.800 --> 0:07:12.840 we talk about risks all the time, and there's a list, 0:07:13.120 --> 0:07:14.760 you know, as long as my arm and then some. 0:07:15.120 --> 0:07:18.640 But I'm just curious. Is it higher inflation? Is a 0:07:18.760 --> 0:07:22.200 higher interest rates? Is it demographics and older population folks 0:07:22.200 --> 0:07:25.679 not having babies. Is it less immigration? Is it rising debt? 0:07:26.000 --> 0:07:29.800 Is it China? US tech? What do you think is 0:07:29.840 --> 0:07:34.080 the biggest realistic risk to the US economy, maybe to 0:07:34.080 --> 0:07:34.960 the global economy. 0:07:35.640 --> 0:07:37.880 Yeah, well, thank you for putting it that with, Carol. 0:07:37.960 --> 0:07:42.120 I would sort the risks by two categories, the realistic 0:07:42.120 --> 0:07:45.280 and unrealistic, as you said, but then at what time 0:07:45.360 --> 0:07:49.040 frame they hit. I think the realistic risk for the 0:07:49.200 --> 0:07:52.960 US in the next three to twelve months is probably 0:07:53.040 --> 0:07:56.559 inflation is the biggest risk. And I'm not that worried 0:07:56.600 --> 0:08:01.280 about a downside unemployment. I'm not that worried about trade 0:08:01.320 --> 0:08:05.120 wars turning into hot wars with China. I mean, I'm 0:08:05.160 --> 0:08:07.160 worried about it. It'd be terrible, but I'm not that 0:08:07.240 --> 0:08:11.160 worried it's likely. But if we start looking out one 0:08:11.320 --> 0:08:14.960 two years, then to me, the realistic risk starts to 0:08:14.960 --> 0:08:17.760 get into some of those demographic issues you and Tim 0:08:17.960 --> 0:08:21.600 just mentioned, because we are cutting off a lot of 0:08:21.640 --> 0:08:26.840 people from the workforce by excluding or deporting migrants. And 0:08:26.880 --> 0:08:29.120 there's a lot of things that happen, for example, the 0:08:29.160 --> 0:08:33.520 female labor force participation in prime AH women if you 0:08:33.600 --> 0:08:39.000 don't have cheap available healthcare and cheap available childcare and 0:08:39.280 --> 0:08:42.400 the budget doesn't support that out of the federal government, 0:08:42.920 --> 0:08:45.480 and healthcare is cut back if they don't pass the 0:08:45.520 --> 0:08:48.280 subsidies for Obamacare, and even if they do, it's still 0:08:48.280 --> 0:08:51.040 cut back. So those are the things in the next 0:08:51.080 --> 0:08:53.760 couple of years. But then when we think beyond that, 0:08:54.040 --> 0:08:58.760 then you've got a tug of war between the positive 0:08:58.800 --> 0:09:03.800 impact of AI and the potential for large scale unemployment 0:09:03.920 --> 0:09:07.120 as people adjust to AI. And there I got to say, 0:09:07.200 --> 0:09:11.440 not only I, but the economics profession has no clear idea. 0:09:11.480 --> 0:09:13.760 There are a few people out there a very strong opinions, 0:09:13.800 --> 0:09:16.600 but there's no consensus and we're still working on that. 0:09:16.920 --> 0:09:21.040 What's your best bet there? What's there's no consensus. We 0:09:21.040 --> 0:09:22.800 don't know what's going to happen. We can't see the future. 0:09:22.880 --> 0:09:24.000 But what's realistic. 0:09:24.920 --> 0:09:28.480 What's realistic is productivity growth stays up as high as 0:09:28.520 --> 0:09:31.079 it's now starting the trend, maybe even goes a little 0:09:31.120 --> 0:09:35.840 higher and unemployment shoots up in a couple of years, 0:09:35.960 --> 0:09:40.160 but doesn't shoot up enormously, and it is disproportionately on 0:09:40.400 --> 0:09:46.760 younger people, and that you get some decline in labor 0:09:46.800 --> 0:09:51.400 force participation because people figure out different ways of living 0:09:51.440 --> 0:09:55.480 their lives, and so the unemployment number understates how many 0:09:55.520 --> 0:09:56.880 people feel displaced? 0:09:58.720 --> 0:10:03.440 Yeah, gosh, a million questions. I want to ask you, 0:10:03.720 --> 0:10:06.800 when do we are we seeing kind of the fruits 0:10:07.320 --> 0:10:12.080 of the gaps in wealth playing out globally? 0:10:12.480 --> 0:10:14.120 And is it kind of where we are? 0:10:14.200 --> 0:10:19.199 It's amazing to me where people point to stock market highs. 0:10:19.559 --> 0:10:22.440 We've talked about the K shaped economy a lot, but 0:10:22.640 --> 0:10:25.360 how many conversations I have on a regular basis with 0:10:25.800 --> 0:10:28.920 so many Americans that just find it difficult and ones 0:10:28.920 --> 0:10:31.000 that I wouldn't even think so, that are probably in 0:10:31.040 --> 0:10:35.760 a decent income bracket, but it's just doesn't feel so good. 0:10:36.720 --> 0:10:36.840 Now. 0:10:38.040 --> 0:10:42.840 I think as economists, you all are anchors. You cover everything, 0:10:42.880 --> 0:10:44.679 but as economists have got to be a little bit 0:10:44.760 --> 0:10:47.800 modest that sometimes when people don't feel so good, it's 0:10:47.800 --> 0:10:50.520 not about the economic numbers. They may say it's about that, 0:10:50.800 --> 0:10:55.400 but it's about their relative position in life. It's about uncertainty. 0:10:55.600 --> 0:10:59.960 It's about through an ideological lens. Is their party in power? 0:11:00.120 --> 0:11:04.440 Not in power? Are their kids? So it's not that 0:11:04.640 --> 0:11:08.720 people's feelings are unimportant, but obviously not. They can vote, 0:11:08.760 --> 0:11:13.320 they can choose. But the connection, and there's very clear 0:11:13.400 --> 0:11:16.360 data on this, the connection between surveys of how good 0:11:16.400 --> 0:11:21.080 people feel, how confident people feel, has become much more 0:11:21.120 --> 0:11:25.520 tenuous in terms of linking it to actual economic outcomes 0:11:25.600 --> 0:11:29.720 than it used to be. That's interesting what I would say, Carol. 0:11:29.880 --> 0:11:31.160 We have to run though yet quickly. 0:11:31.240 --> 0:11:34.560 Yeah, no, no, no, sorry, just to just to say 0:11:34.600 --> 0:11:39.440 that the global situation is similar to the US. There's 0:11:39.480 --> 0:11:42.160 a lot of youth unemployment in China and in Europe, 0:11:42.200 --> 0:11:43.800 and that we got to think about. 0:11:44.040 --> 0:11:45.640 Just means you want to have you come back real soon, 0:11:45.679 --> 0:11:47.640 doctor Posen be well, have a great weekend. 0:11:48.520 --> 0:11:49.280 Stay with us. 0:11:49.320 --> 0:11:52.319 More from Bloomberg Business Week Daily coming up after this. 0:11:56.520 --> 0:12:00.360 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:12:00.440 --> 0:12:03.160 us live weekday afternoons from two to fiveys during the 0:12:03.320 --> 0:12:07.200 Listen on Applecarplay and Android Otto with the Bloomberg Business app, 0:12:07.400 --> 0:12:09.160 or watch us live on YouTube. 0:12:09.960 --> 0:12:12.560 Hey, consumer spending on Valentine's Day expected to reach a 0:12:12.600 --> 0:12:15.120 record twenty nine point one billion dollars according to an 0:12:15.120 --> 0:12:18.120 annual survey that was released by the National Retail Federation 0:12:18.640 --> 0:12:22.599 and Prosper Insights and Analytics. Now that amount surpasses the 0:12:22.640 --> 0:12:26.080 previous record of twenty seven point five billion that was 0:12:26.200 --> 0:12:29.959 last year. Shoppers budgeting a record almost two hundred dollars 0:12:30.200 --> 0:12:32.679 on average for gifts, and increase from one hundred and 0:12:32.720 --> 0:12:35.880 eighty nine dollars last year and surpassing the previous record 0:12:36.080 --> 0:12:38.800 of one hundred and ninety six dollars spent in twenty twenty. 0:12:39.160 --> 0:12:41.040 So basically, people are going to send two hundred bucks. 0:12:41.600 --> 0:12:45.640 Is that how you're talking? Yeah, Okay, that seems like 0:12:45.679 --> 0:12:45.960 a lot. 0:12:46.200 --> 0:12:49.439 It seems like a lot. Like I love, I love, Yeah, 0:12:49.559 --> 0:12:53.280 but but it's like I don't know. Yeah, it's sweet, Okay, 0:12:53.320 --> 0:12:53.840 I do love. 0:12:53.960 --> 0:12:55.079 Let's ask Christina Stembull. 0:12:55.160 --> 0:12:57.800 She's got her CEO of farm Girl Flowers Hates, a 0:12:57.800 --> 0:12:59.960 firm she built from the ground up. She strapped it 0:13:00.160 --> 0:13:02.679 starting back in twenty ten, making booquets from her San 0:13:02.679 --> 0:13:06.720 Francisco apartment. She's in Gig Harbor, Washingtonday at what the 0:13:06.720 --> 0:13:10.200 company calls the farm Quarters, which I'm guessing is like 0:13:10.240 --> 0:13:11.440 you know, there's a headquarters. 0:13:12.040 --> 0:13:14.560 There's a farm headquarters. This is the farm quarters. Where 0:13:14.559 --> 0:13:15.320 are you exactly? 0:13:16.120 --> 0:13:18.520 Yeah, we're about an hour south of Seattle. 0:13:19.400 --> 0:13:21.000 And what's going on there? 0:13:22.559 --> 0:13:25.720 Lots of lots of busyness here going on, just like 0:13:26.480 --> 0:13:28.439 Valentine's DA and Mother's Day. As you know, I've been 0:13:28.440 --> 0:13:30.160 on here many times with you. Thank you for having 0:13:30.200 --> 0:13:33.080 me back by the way, but just a lot of busyness, 0:13:33.120 --> 0:13:35.880 a lot of forecasting, making sure that orders are coming in, 0:13:35.920 --> 0:13:39.200 we're taking care of our customers. Well, the normal Valentine's 0:13:39.240 --> 0:13:39.800 Day hubbub. 0:13:40.240 --> 0:13:40.880 Well yeah. 0:13:40.880 --> 0:13:43.640 What we do know though, is that people think Valentine's 0:13:43.679 --> 0:13:45.440 Day is the busiest day for you, but it's not. 0:13:45.559 --> 0:13:48.360 Mother's Day is a busier holiday, right, Yeah. 0:13:48.360 --> 0:13:52.280 This is our like warm up to motas. So it's 0:13:52.320 --> 0:13:54.040 good to have this one. First Mother's Day is about 0:13:54.040 --> 0:13:55.400 double the size Valentine's Day. 0:13:55.400 --> 0:13:56.840 Fir tell us about like kind of what's going on 0:13:56.880 --> 0:13:58.360 behind the scenes, And I am curious. 0:13:58.400 --> 0:13:59.360 We are curious. 0:13:59.600 --> 0:14:02.800 Is a ber than last year or you know? No, 0:14:03.000 --> 0:14:05.120 you are always such a great read on the consumer 0:14:05.120 --> 0:14:07.760 because I think about things like holidays, is when okay, 0:14:07.800 --> 0:14:09.560 we can find the money to spend so give us 0:14:09.600 --> 0:14:11.280 an idea of what the consumer's doing this year, what 0:14:11.320 --> 0:14:12.840 they're buying, how much they're spending. 0:14:14.280 --> 0:14:16.280 Yeah, yeah, it kind of falls in line with what 0:14:16.320 --> 0:14:18.640 you just said. We are seeing that people are spending 0:14:18.640 --> 0:14:21.200 a little bit more this year. Orders are up a 0:14:21.200 --> 0:14:23.040 little bit as well year every year, which we're really 0:14:23.280 --> 0:14:23.920 happy about. 0:14:24.800 --> 0:14:26.760 And they're spending more this year, which is also a 0:14:26.760 --> 0:14:27.080 great thing. 0:14:27.160 --> 0:14:29.560 Valentine' Day has always been kind of a high average 0:14:29.640 --> 0:14:31.520 order value, high high ticket. 0:14:31.280 --> 0:14:33.520 Item holiday for us. Mother's Day tends to be a 0:14:33.560 --> 0:14:34.120 little bit less. 0:14:34.120 --> 0:14:36.120 We get a lot more orders, you know, but people 0:14:36.160 --> 0:14:38.880 spend a little bit less on their moms unfortunately. 0:14:38.280 --> 0:14:39.000 Than their lovers. 0:14:39.840 --> 0:14:41.320 What are they buying this year. 0:14:42.200 --> 0:14:46.320 Yeah, they're buying. You know, we did survey again. 0:14:46.360 --> 0:14:49.240 We hadn't done any surveying of our customers since before COVID, 0:14:49.400 --> 0:14:51.680 so we did a great survey this year that totally 0:14:51.680 --> 0:14:53.080 you know, kind of give us more insights. 0:14:53.400 --> 0:14:53.520 You know. 0:14:53.600 --> 0:14:56.000 Everything's kind of you know, changed a lot since COVID, 0:14:56.040 --> 0:14:57.640 so we wanted to see if if we were still 0:14:57.640 --> 0:15:01.160 providing what customers wanted, and we found a lot of 0:15:01.640 --> 0:15:03.120 the same from before COVID and a. 0:15:03.040 --> 0:15:05.880 Little bit different. So it's a thought that counts. 0:15:06.560 --> 0:15:09.280 You know, our customers want their loved ones to really 0:15:09.280 --> 0:15:11.680 think about what they what they like, to know what 0:15:11.840 --> 0:15:14.440 flower like, their favorite flower like instead of a red rose. 0:15:14.720 --> 0:15:17.840 We did find, just like before COVID, not many women 0:15:17.920 --> 0:15:20.040 want true just standard red roses. 0:15:20.200 --> 0:15:23.280 Yeah, we don't want it, guys, get the message. 0:15:23.680 --> 0:15:29.320 Sorry, most totally. You're so right, Carol. Women want a bright, mixed, 0:15:29.360 --> 0:15:32.600 beautiful bouquet. So that's what we're giving our customers a 0:15:32.640 --> 0:15:36.240 lot of options on bright, beautiful bouquets. But since men 0:15:36.360 --> 0:15:38.800 are the consumer for this holiday, we also have to 0:15:38.840 --> 0:15:40.960 keep them happy. We found this many many years ago, 0:15:41.000 --> 0:15:42.880 over a decade ago, you know, when I was just 0:15:42.960 --> 0:15:46.680 kind of stumped with like why the senders were not happy, 0:15:46.720 --> 0:15:49.040 but the recipients were. And so that was the first 0:15:49.080 --> 0:15:51.560 survey ever did over a decade ago and found that 0:15:51.640 --> 0:15:53.640 just what women and what men want are very different. 0:15:53.720 --> 0:15:56.360 So men want a red rose. So we're mixing red 0:15:56.440 --> 0:15:59.560 roses in with a lot of other flowers to give 0:15:59.600 --> 0:16:02.520 women they want and men what they want when they order. 0:16:03.040 --> 0:16:05.400 But the main thing from our survey showed us that 0:16:05.520 --> 0:16:08.560 women really and you know everyone really, not just women, 0:16:08.960 --> 0:16:12.520 want their partner to really think about the gifts they're giving. 0:16:12.840 --> 0:16:15.520 So if their favorite flower is a renucular, don't send 0:16:15.560 --> 0:16:18.600 a mixed Okay, send you know the forty stems of 0:16:18.640 --> 0:16:21.480 beautiful Hanoi rinuculars that we have on our site. So 0:16:21.520 --> 0:16:23.680 they just don't really want to feel like the person 0:16:23.680 --> 0:16:25.240 that they're with knows them really well. 0:16:25.560 --> 0:16:27.880 What does it mean when there's a Saturday delivery? Like 0:16:27.920 --> 0:16:29.720 I think about that a lot. Is it better? 0:16:29.800 --> 0:16:31.240 Is it easier? Is it harder? 0:16:31.320 --> 0:16:31.480 Like? 0:16:31.560 --> 0:16:33.640 How do and how do consumers think about it? 0:16:34.280 --> 0:16:37.080 Yeah, it's horrible, so you know, I'll just give it 0:16:37.120 --> 0:16:39.960 two straight. It's really bad. The only day worse is Sunday. 0:16:40.000 --> 0:16:43.400 So next year is going to be great. So you know, 0:16:43.440 --> 0:16:45.560 when you're a company our size, which is small, we're 0:16:45.640 --> 0:16:49.000 small business. You know, we don't have the buying power 0:16:49.040 --> 0:16:51.240 that some of the giant companies have that if made 0:16:51.280 --> 0:16:54.760 consumers think that deliveries happen at you know, eleven pm 0:16:54.800 --> 0:16:57.280 on a Sunday, even like that doesn't happen for companies 0:16:57.320 --> 0:17:01.040 outside of those you know, goliaths, companies that you think 0:17:01.080 --> 0:17:03.960 of with that, So you know, we can't get Sunday 0:17:04.000 --> 0:17:07.000 deliveries and Saturday deliveries are tough, so not everybody lives 0:17:07.280 --> 0:17:11.040 in an urban enough place to receive deliveries on Saturdays, 0:17:11.200 --> 0:17:14.879 but the senders don't know that necessarily, so you know, 0:17:14.960 --> 0:17:17.959 we offer Saturday delivery. It's we have it at right now. 0:17:18.000 --> 0:17:20.840 It's the same price as is during the week, but 0:17:20.880 --> 0:17:22.960 there's a lot more risk on Saturday. It's that they're 0:17:23.000 --> 0:17:24.919 not going to make it there in time. So another 0:17:24.920 --> 0:17:28.080 thing we found in our survey is that this surprised us. Actually, 0:17:28.400 --> 0:17:31.280 women don't want to get the flowers on Saturday. They 0:17:31.280 --> 0:17:32.679 want to get them earlier in the week so they 0:17:32.680 --> 0:17:34.800 can enjoy them. And on the weekends they have very 0:17:34.840 --> 0:17:36.720 full schedules, so they don't want to have to like 0:17:37.000 --> 0:17:39.800 worry that they're sitting on their front porch freezing somewhere. 0:17:39.880 --> 0:17:41.639 If you're in parts of the United States where it's 0:17:41.640 --> 0:17:44.439 freezing right now, and the flowers aren't going to look 0:17:44.440 --> 0:17:46.280 good when they get home. So we found that most 0:17:46.320 --> 0:17:49.159 people wanted to get them early. We saw that in 0:17:49.200 --> 0:17:52.800 the orders too, most people selected Friday for delivery, So 0:17:52.840 --> 0:17:55.359 now that timings up, so now we're getting the people 0:17:55.359 --> 0:17:57.600 that might have might have slipped their minds and are 0:17:57.680 --> 0:18:00.000 ordering for Saturday delivery, but there were always on pins 0:17:59.880 --> 0:18:02.000 and needles like, oh, you know, it's going to be 0:18:02.359 --> 0:18:04.240 a higher percent that don't make it in time on 0:18:04.240 --> 0:18:04.760 a Saturday. 0:18:04.840 --> 0:18:07.760 Yeah, the last minute folks out there making the calls 0:18:07.880 --> 0:18:09.920 right now, Christina. In the past year when we have 0:18:10.000 --> 0:18:11.960 you on, you've spoken about tariffs because a lot of 0:18:11.960 --> 0:18:14.399 the what ends up in these bouquets comes from outside 0:18:14.400 --> 0:18:16.200 of the United States. Just give us an update there 0:18:16.240 --> 0:18:19.280 and the way that you've shifted your supply chain or not, 0:18:19.400 --> 0:18:21.000 and how the bottom line has been affected. 0:18:22.160 --> 0:18:26.280 Yeah, tariffs are definitely impacting a lot this year in 0:18:26.320 --> 0:18:27.560 ways that people don't think about. 0:18:27.600 --> 0:18:28.159 And I wouldn't have. 0:18:28.160 --> 0:18:31.120 Thought about either, So I'm this is no shade on anybody. 0:18:31.119 --> 0:18:32.520 I wouldn't have thought about this if I didn't have 0:18:32.600 --> 0:18:36.840 a flower company. But you know, flowers, they cost a 0:18:36.880 --> 0:18:38.520 lot more in the United States. So you know, all 0:18:38.560 --> 0:18:42.160 the tariffs on encouraging to bring back manufacturing and agriculture 0:18:42.160 --> 0:18:44.800 to the United States, it just doesn't have that impact. 0:18:45.280 --> 0:18:47.600 I understand the intention is there, but the impact isn't 0:18:47.600 --> 0:18:51.159 that way because what happens are it's not just you know, 0:18:51.359 --> 0:18:53.880 the flowers themselves. So like when you're bringing in flowers 0:18:53.920 --> 0:18:55.320 from Europe or South America. 0:18:55.040 --> 0:18:56.240 Which is a tremendous amount. 0:18:56.240 --> 0:18:58.919 I think the stat this year is eighty percent of 0:18:58.960 --> 0:19:01.000 the exports from Columbia came to the United States. 0:19:01.000 --> 0:19:01.800 I just saw this morning. 0:19:01.880 --> 0:19:04.760 So you know, that's a lot are imported and you 0:19:04.800 --> 0:19:08.560 pay more for those imported flowers. But for US grown flowers, 0:19:08.720 --> 0:19:11.000 you have all of the materials to grow those flowers. 0:19:11.040 --> 0:19:15.000 So the bulb prices have gone up so much, the fertilizers, 0:19:15.000 --> 0:19:17.160 everything that you're bringing in still to grow them here. 0:19:17.400 --> 0:19:19.719 And then on top of that, the land, the labor, 0:19:20.240 --> 0:19:23.360 everything here costs so much more. The insurance, the legals, 0:19:23.520 --> 0:19:25.359 you know, everything here in the US costs more. So 0:19:25.760 --> 0:19:28.040 you know, for instance, a good example, just to kind 0:19:28.040 --> 0:19:29.320 of break it down and. 0:19:29.359 --> 0:19:31.320 Just quickly, yeah, a tulip. 0:19:31.600 --> 0:19:34.040 A tulip is you know, three times three to four 0:19:34.080 --> 0:19:36.360 times more expensive to buy it here in the US. 0:19:36.440 --> 0:19:39.720 We're still making that choice to buy tulips here here 0:19:39.720 --> 0:19:41.359 in the US to support the farms that we have 0:19:41.440 --> 0:19:43.119 that we've worked us for a long time, but we 0:19:43.160 --> 0:19:45.920 could get them significantly cheaper if we imported them, even 0:19:45.920 --> 0:19:49.040 with the tariffs. Because of what the farmers here are experiencing. 0:19:49.560 --> 0:19:52.000 Yeah, no, you like you really kind of like open 0:19:52.000 --> 0:19:54.480 a window for us in terms of what it means 0:19:55.119 --> 0:19:58.800 in terms of farming here in the United States. Happy 0:19:58.880 --> 0:20:01.560 Valentine's Day, Good luck. I know it's a crazy time 0:20:01.600 --> 0:20:04.080 for you, but always fun to check in with you. That, 0:20:04.160 --> 0:20:07.160 of course, is Christina Stembel, founder and CEO of farm 0:20:07.200 --> 0:20:08.280 Girl Flowers. 0:20:08.800 --> 0:20:09.560 Stay with us. 0:20:09.600 --> 0:20:12.520 More from Bloomberg Business Week Daily coming up after this. 0:20:17.720 --> 0:20:21.560