WEBVTT - The Midterms May Hinge on One Thing: How the Economy Feels 0:00:02.680 --> 0:00:07.160 Bloomberg Audio Studios, podcasts, radio News. 0:00:17.200 --> 0:00:20.720 I'm seventy Flanders, head of Government and Economics at Bloomberg. 0:00:20.960 --> 0:00:24.720 This Trumpanomics the podcast the looks at the economic world 0:00:24.800 --> 0:00:28.760 of Donald Trump, how he's already shaking up the global economy, 0:00:29.120 --> 0:00:32.360 and what on earth is going to happen next. This week, 0:00:32.600 --> 0:00:36.000 we're taking a first look at how the US economy 0:00:36.120 --> 0:00:39.800 could affect the midterm elections coming up in November. In 0:00:39.840 --> 0:00:42.240 the US elections that of course, the Democrats are hoping 0:00:42.680 --> 0:00:46.280 will favor the out of power party them even more 0:00:46.600 --> 0:00:49.640 than usual, potentially giving them control of one house even 0:00:49.680 --> 0:00:53.080 conceivably both houses of Congress. When you look at the 0:00:53.080 --> 0:00:55.280 world economy, there's a sort of feeling that it's been 0:00:55.400 --> 0:01:01.280 remarkably resilient in the face of continued inflation, Donald Trump's 0:01:01.320 --> 0:01:06.880 tariffs war, and Ukraine the Iran war most recently, and 0:01:06.959 --> 0:01:10.640 related to all that, some pretty big energy shocks. We 0:01:10.680 --> 0:01:14.479 still see stock markets going up, and we have now 0:01:14.520 --> 0:01:16.800 in the last few weeks seen oil price has come 0:01:16.840 --> 0:01:20.720 down quite sharply, despite the Iran agreement seeming to be 0:01:20.840 --> 0:01:25.560 quite tenuous. But how much damage has already been done 0:01:25.920 --> 0:01:31.120 and how can the Republicans make voters feel more positive 0:01:31.120 --> 0:01:33.720 about the economy, because when you look at the polling, 0:01:34.120 --> 0:01:35.959 they seem to be pretty down on it at the moment. 0:01:35.959 --> 0:01:37.520 We're going to get into all of that with our 0:01:37.600 --> 0:01:40.040 usual kind of two sides of the street. Here at Bloomberg. 0:01:40.040 --> 0:01:45.240 We have Nancy Cook, senior national political correspondent in Washington. Nancy, 0:01:45.280 --> 0:01:46.920 thanks very much for joining. It's been a while. 0:01:46.959 --> 0:01:49.880 Actually, yeah, thanks for having me, Stephanie, I'm delighted to 0:01:49.920 --> 0:01:50.240 be here. 0:01:51.080 --> 0:01:53.680 And Stu Paul, based in New York, who covers the 0:01:53.800 --> 0:01:57.600 US and Canadian economies for Bloomberg Economics. Stu, nice to 0:01:57.640 --> 0:01:57.960 have you. 0:01:58.640 --> 0:02:03.040 Thank you for having me, Stephanie. 0:02:05.080 --> 0:02:10.720 So, Nancy, you're sitting in DC. You're writing often about 0:02:11.480 --> 0:02:15.200 how Republicans are thinking about the midterm some of the 0:02:15.240 --> 0:02:20.399 sort of ways in which they're hoping to rebuild Republicans support. 0:02:20.960 --> 0:02:23.079 Is the economy the main thing they're worried about at 0:02:23.080 --> 0:02:23.480 this point? 0:02:24.280 --> 0:02:28.560 Well, I think that Republicans take a very overconfident stance 0:02:28.600 --> 0:02:30.840 when you talk to them publicly or when they talk 0:02:30.880 --> 0:02:33.760 about things, but privately they are pretty worried about the 0:02:33.760 --> 0:02:37.440 state of the economy. It's not that the actual economy 0:02:37.639 --> 0:02:40.880 is poor in the US. For instance, the labor market 0:02:41.120 --> 0:02:45.200 remains really healthy. Unemployment is hovering around four percent, and 0:02:45.280 --> 0:02:47.800 so there are like a lot of really bright spots 0:02:47.800 --> 0:02:51.799 in the economy. However, American voters are in a bad 0:02:51.880 --> 0:02:55.120 mood about the economy and that has just been persistent. 0:02:55.600 --> 0:02:58.160 I have done some traveling in this spring to very 0:02:58.200 --> 0:03:01.720 red districts in Texas. I went to Kentucky in May, 0:03:02.160 --> 0:03:04.880 and people are just not happy. And these are people 0:03:04.919 --> 0:03:08.639 who are really core to the Trump base, and they 0:03:08.639 --> 0:03:11.119 feel like the cost of living is too high. I've 0:03:11.160 --> 0:03:14.280 talked to a late twenty something couple in Kentucky. They 0:03:14.320 --> 0:03:16.360 want to buy a house, they want to have children, 0:03:16.360 --> 0:03:19.160 They're worried about the cost of childcare. So these voters 0:03:19.200 --> 0:03:21.320 are just in a bad mood and no matter what 0:03:21.360 --> 0:03:23.960 the Trump people say, they're having a hard time overcoming that. 0:03:24.600 --> 0:03:27.680 And so they privately are very freaked out about this. 0:03:28.040 --> 0:03:31.840 And I was at a conference on Friday last week 0:03:31.919 --> 0:03:36.000 of evangelical voters who are some of the most hardcore 0:03:36.240 --> 0:03:38.760 supporters of the Republican Party, and they're not in a 0:03:38.800 --> 0:03:40.640 good mood. So that to me is just a real 0:03:40.680 --> 0:03:43.680 warning sign. And I think that there's a few things 0:03:43.680 --> 0:03:46.440 at play one, people are not happy about gas prices, 0:03:46.920 --> 0:03:49.920 people are not happy that the war and Iran seems 0:03:49.920 --> 0:03:52.560 to be going on. And then a lot of people 0:03:52.560 --> 0:03:54.680 are just really mad about the cost of living. They 0:03:54.680 --> 0:03:57.000 feel groceries are still high. They just feel like everything 0:03:57.040 --> 0:04:00.840 costs more, and they held President Biden responsible for that. 0:04:00.880 --> 0:04:04.119 But now the economy squarely belongs to Trump and they 0:04:04.240 --> 0:04:05.880 are holding him responsible. 0:04:06.680 --> 0:04:08.440 I remember he has said in the past when they 0:04:08.440 --> 0:04:10.680 say which bits of the economy your responsible for, and 0:04:10.720 --> 0:04:12.520 he says very clearly, well, the good bits and the 0:04:12.520 --> 0:04:16.080 bad bits are all. He's as upfront about it STU. 0:04:16.720 --> 0:04:18.560 So let's get into this a bit about what the 0:04:18.640 --> 0:04:22.080 damage might be and the particular groups that might be affected. 0:04:22.120 --> 0:04:25.120 Because part of this is gas prices have always been 0:04:25.160 --> 0:04:27.600 a concern for all presidents, but there was a specific 0:04:28.279 --> 0:04:32.120 aspect to the Trump coalition that really was quite new, 0:04:32.360 --> 0:04:34.839 and then that affects maybe the voter blocks that we're 0:04:34.839 --> 0:04:37.880 looking at when we think about the impact of things 0:04:37.960 --> 0:04:42.120 like inflation and rising gas prices. Remind us what was 0:04:42.200 --> 0:04:44.080 different about his coalition. 0:04:45.720 --> 0:04:50.560 The Trump coalition that really formed before the twenty twenty 0:04:50.680 --> 0:04:55.960 for election was one in which the Republicans gained even 0:04:55.960 --> 0:05:00.919 more of unadvantage among men, particularly young men, and the 0:05:01.000 --> 0:05:05.800 Trump coalition included a larger share of Hispanic and Black 0:05:05.880 --> 0:05:10.000 voters in twenty twenty four, So we wanted to dig 0:05:10.040 --> 0:05:12.840 into the data to see a little bit how each 0:05:12.920 --> 0:05:16.760 of those voting blocks have been faring since President Trump 0:05:16.800 --> 0:05:19.479 took office. Of course, it's easiest to start with men 0:05:19.520 --> 0:05:23.880 and to think about employment for men versus women, for example, 0:05:24.400 --> 0:05:26.520 and if you look at the industries that are dominated 0:05:26.560 --> 0:05:32.000 by men, things like construction or manufacturing, or transportation and warehousing, 0:05:33.240 --> 0:05:38.359 all of those industries overall basically lost jobs. The industries 0:05:38.400 --> 0:05:41.760 that have been gaining jobs are those that are primarily 0:05:41.760 --> 0:05:45.640 dominated by women, education and healthcare in particular. And so 0:05:46.120 --> 0:05:50.680 the durability of Trump's coalition starts to come into question 0:05:50.720 --> 0:05:53.560 when you look at the data with a little bit 0:05:53.720 --> 0:05:58.599 of a finer toothcomb. Where he might still have a 0:05:58.680 --> 0:06:03.000 little bit of an advantage or where the data have 0:06:03.200 --> 0:06:07.400 swung somewhat in his favor, is that the unemployment rate 0:06:07.480 --> 0:06:11.279 for black men and Hispanic men has fallen just slightly 0:06:11.839 --> 0:06:14.240 by about half a percentage point in and a quarter 0:06:14.279 --> 0:06:18.760 percentage point respectively since President Trump took office. That's probably 0:06:18.920 --> 0:06:23.279 not quite enough. That's just one dimension of analysis for 0:06:23.400 --> 0:06:28.479 thinking about maintaining a pretty significant voting block. But that 0:06:28.760 --> 0:06:31.080 is one data point at least that he could point 0:06:31.080 --> 0:06:33.160 to to try to get voters to show up for 0:06:33.200 --> 0:06:37.239 the polls. Nancy brought up a really important point about affordability, 0:06:38.160 --> 0:06:43.560 and of course, gasoline prices, food prices, shelter prices are 0:06:43.720 --> 0:06:46.920 front of mind for everybody. And I'm here in New 0:06:47.000 --> 0:06:50.840 York where the election of Mayor Mom Donnie, that entire 0:06:50.920 --> 0:06:54.200 campaign was entirely focused around that key word of affordability. 0:06:54.880 --> 0:07:01.160 And so we looked at the US voting population by 0:07:01.240 --> 0:07:07.120 income decile, and it's those lowest income households that are 0:07:07.200 --> 0:07:12.760 experiencing the highest inflation. We estimate that cumulative inflation over 0:07:13.120 --> 0:07:15.800 Trump's most recent term in office for those in the 0:07:15.840 --> 0:07:19.720 lowest income decile is about four point eight percent. For 0:07:19.800 --> 0:07:24.800 those in the highest income decile richest households, cumulative inflation 0:07:24.880 --> 0:07:27.200 is just about three point eight percent of full percentage 0:07:27.200 --> 0:07:30.920 point lower for the richest among us. What's interesting, though, Stephani, 0:07:31.080 --> 0:07:36.280 is that gasoline prices seem to be hitting those middle 0:07:36.320 --> 0:07:40.760 class households and upper middle class households relatively more even 0:07:41.080 --> 0:07:43.440 than those at the lowest end of the income distribution. 0:07:43.960 --> 0:07:47.760 These are suburban folks, These are two car households, These 0:07:47.800 --> 0:07:50.920 are suv households that need to fill up and bring 0:07:50.960 --> 0:07:53.840 the kids to schools, commute into the office. And so 0:07:54.800 --> 0:07:58.640 even those households that seem to be faring slightly better 0:07:58.840 --> 0:08:01.160 than the worst among us, those who are faring even 0:08:01.200 --> 0:08:04.000 slightly better are feeling the effects of higher energy prices. 0:08:05.440 --> 0:08:07.360 You and you remind us in that piece this is 0:08:07.400 --> 0:08:10.200 a relatively new phenomenon, but that Trump had got seventy 0:08:10.280 --> 0:08:14.160 percent among voters earning between thirty thousand dollars and one 0:08:14.200 --> 0:08:16.720 hundred thousand dollars a year. So those kind of classic 0:08:16.800 --> 0:08:20.440 working class group, and you're right to point out that 0:08:20.480 --> 0:08:23.680 the inflation rate affects them differently. I guess one more 0:08:23.720 --> 0:08:26.680 thing for you, Stuart, because I know there's some related work. 0:08:26.680 --> 0:08:30.240 We did a little bit more on the geography of 0:08:30.600 --> 0:08:34.160 some of these sort of key races in the Senate. 0:08:34.320 --> 0:08:36.160 There's only there's a sort of just over half a 0:08:36.200 --> 0:08:38.839 dozen I think Senate seats that are in play if 0:08:38.880 --> 0:08:41.760 the Democrats are going to have a chance of retaking control, 0:08:41.760 --> 0:08:44.480 which I think is probably a tough ask. And there 0:08:44.480 --> 0:08:48.440 are some pretty wide differences across states in how much 0:08:48.480 --> 0:08:50.640 gas prices have gone up. It seems that sometimes I 0:08:50.679 --> 0:08:53.840 hear people talking in California seem to have really had 0:08:53.840 --> 0:08:57.440 a massive increase, but that's they're less in the frame 0:08:57.600 --> 0:09:01.719 for the Senate. But just on that do how is 0:09:01.760 --> 0:09:05.680 the difference in gas prices potentially affecting some of those races. 0:09:06.840 --> 0:09:10.120 So on a dollar basis, there's a little bit less 0:09:10.160 --> 0:09:15.600 dispersion in gasoline price increases across states. Among those states 0:09:15.640 --> 0:09:19.240 that have contested Senate seats, Georgia and North Carolina have 0:09:19.280 --> 0:09:22.480 had a relatively small increase in gasoline prices since the 0:09:22.520 --> 0:09:26.200 onset of the war in Iran, Ohio Michigan have had 0:09:26.240 --> 0:09:29.839 a relatively larger increase in gasoline prices. When we talk 0:09:29.880 --> 0:09:34.640 about states like California, of course, state level gasoline taxes 0:09:34.760 --> 0:09:39.079 matter a lot, and I imagine that those voters might 0:09:39.080 --> 0:09:41.240 be blaming their state and local governments more so than 0:09:41.280 --> 0:09:44.560 the president. And as you say, California isn't so much 0:09:44.640 --> 0:09:47.520 in play. But you're right to look at the geographic 0:09:47.559 --> 0:09:51.800 differences for things like gasoline prices. If we look at 0:09:51.840 --> 0:09:56.600 something like unemployment, also, there's pretty stark differences across those 0:09:56.679 --> 0:10:01.960 key battle ground states. So, for example, and Georgia have 0:10:02.040 --> 0:10:05.280 seen a relative increase in the unemployment rate since President 0:10:05.320 --> 0:10:08.400 Trump took office. Of course, pretty important contested Senate seats 0:10:08.400 --> 0:10:13.200 in those states Maine, North Carolina, Michigan have actually seen 0:10:13.240 --> 0:10:16.400 a decrease in their unemployment rate. All eyes on main 0:10:16.520 --> 0:10:20.360 right now with Platner and Susan Collins, but the data 0:10:20.400 --> 0:10:24.360 are faring relatively well for Susan Collins at this point. 0:10:24.000 --> 0:10:26.360 I guess we should say, Nazi. Obviously we're just focusing 0:10:26.400 --> 0:10:28.360 on the economics here, but there's plenty of other things. 0:10:28.440 --> 0:10:31.000 As people always saying, you mustn't make assumptions about how 0:10:31.080 --> 0:10:33.439 all Hispanic people voting it, For example, whether or not 0:10:33.480 --> 0:10:35.920 their unemployment rate has gone up, maybe less important than 0:10:35.920 --> 0:10:39.839 how they're feeling about ice. But still on the economics. 0:10:40.440 --> 0:10:44.400 You highlighted, Nancy, this seemed a bit similar from some 0:10:44.400 --> 0:10:46.280 of the debates we had in the Biden era that 0:10:46.320 --> 0:10:49.680 the numbers didn't look that bad. But as you say, 0:10:49.679 --> 0:10:51.760 there's just a lot of grumpy people around who don't 0:10:51.760 --> 0:10:54.040 really care that inflation is lower because everything's still costs 0:10:54.040 --> 0:10:56.080 a lot more than it did a few years ago. 0:10:56.200 --> 0:10:59.280 Just the fact that the price is not rising anymore 0:10:59.360 --> 0:11:01.960 doesn't mean they're fed up every time they go to 0:11:02.080 --> 0:11:05.560 the grocery store. And the dynamic was that President Biden 0:11:05.720 --> 0:11:07.959 kept telling them they were wrong to be down on 0:11:08.000 --> 0:11:10.120 the economy and the economy was really doing very well. 0:11:10.400 --> 0:11:13.360 That didn't work out so well. There has been this tension, 0:11:13.400 --> 0:11:17.640 and you've talked about it before about the President seeming 0:11:17.760 --> 0:11:20.320 to do the same thing, seeming to just not want 0:11:20.360 --> 0:11:24.720 to recognize that anyone is feeling anything negative about the economy, 0:11:25.160 --> 0:11:29.080 even though his advisors might be suggesting that he feel 0:11:29.280 --> 0:11:32.520 voter's pain a bit more. Is that tension got any 0:11:32.600 --> 0:11:36.199 better they has his advisors had any success on that. 0:11:36.720 --> 0:11:38.160 I feel like there was supposed to be a whole 0:11:38.160 --> 0:11:43.400 affordability tour that didn't really happen. Were seeing that reprieved 0:11:43.480 --> 0:11:44.319 maybe in the fall. 0:11:45.160 --> 0:11:48.280 Interestingly, I feel like President Trump is going even further 0:11:48.440 --> 0:11:52.240 than President Biden did and dismissing American's concerns. I mean, 0:11:52.280 --> 0:11:55.480 Biden tried to actively convince Americans that what they were 0:11:55.520 --> 0:11:59.600 feeling was not true. But Trump is just actively saying 0:11:59.679 --> 0:12:04.000 that he you know, he has called affordability a democratic hoax, 0:12:04.840 --> 0:12:05.319 so oh, he. 0:12:05.280 --> 0:12:09.360 Doesn't realize prices. Prices are coming down very substantially. But 0:12:09.679 --> 0:12:10.520 they have a new word. 0:12:10.679 --> 0:12:11.880 You know, they always have a hoax. 0:12:12.320 --> 0:12:14.120 The new word is affordability. 0:12:14.640 --> 0:12:18.160 Last week, he refused to sign a bipartisan housing bill 0:12:18.200 --> 0:12:21.040 that both Republicans and Democrats on Capitol Hill were very 0:12:21.080 --> 0:12:24.520 excited about because it would have given money to create 0:12:24.600 --> 0:12:26.960 new housing supply, which is a big problem in the US. 0:12:27.440 --> 0:12:30.760 He called that a quote big yawn compared to this 0:12:30.920 --> 0:12:32.800 voter id legislation he wants. 0:12:33.040 --> 0:12:35.679 Here's what I would like to say, much more than 0:12:35.679 --> 0:12:39.959 a bill, that big deal. It's a yawn something. It's 0:12:39.960 --> 0:12:45.920 wonderful to me. Compared to the Save America Act. Just 0:12:45.960 --> 0:12:48.480 about everything is a big yawn. 0:12:48.840 --> 0:12:51.040 And so it's not like that he's trying to convince 0:12:51.120 --> 0:12:53.679 voters of something. He just is not taking it seriously. 0:12:53.800 --> 0:12:56.160 And that's like a whole new level to the problem. 0:12:56.600 --> 0:12:59.920 What has been interesting to me is that Republicans have 0:13:00.040 --> 0:13:02.400 really shifted their strategy in the last month, and so 0:13:02.480 --> 0:13:06.360 they know that the historical headwinds for them to lose 0:13:06.400 --> 0:13:09.200 congressional seats that is very much in play this time, 0:13:09.720 --> 0:13:13.400 and Trump is really not playing ball with them on campaigning, 0:13:13.440 --> 0:13:16.480 on the economy or trying to stand up Republicans for 0:13:16.600 --> 0:13:18.920 House and Senate races. So what they're trying to do 0:13:19.040 --> 0:13:23.080 instead is they're trying to call out the Democrats. And 0:13:23.160 --> 0:13:25.320 so you've seen a lot of top Trump advisors go 0:13:25.360 --> 0:13:28.640 on TV or say, hey, look, the Democrats are crazy now, 0:13:28.679 --> 0:13:32.120 they're too liberal, and they're trying to make Mayor Mondami 0:13:32.160 --> 0:13:34.120 in New York the poster child for all of the 0:13:34.160 --> 0:13:39.319 Democratic Party and basically scare voters into continuing to support 0:13:39.320 --> 0:13:42.920 Republicans even though voters may not be super happy about 0:13:42.920 --> 0:13:45.080 the economy. And that has been a shift we've seen 0:13:45.120 --> 0:13:47.360 in the last six months. They're trying to make it 0:13:47.400 --> 0:13:50.160 not a referendum on Trump, but just a referendum on 0:13:50.200 --> 0:13:51.400 the two parties in general. 0:13:51.600 --> 0:13:54.160 And as far as there's quite left wing candidates in 0:13:54.200 --> 0:13:56.120 some of the Democrat races, they're going to get and 0:13:56.240 --> 0:14:14.719 enormous amount of publicity. I suspect, Stuart, we've been sort 0:14:14.760 --> 0:14:17.679 of backward looking how have these particular parts of the 0:14:17.720 --> 0:14:21.200 electorate been affected by what's happened so far under the 0:14:21.240 --> 0:14:24.560 second Trump administration. But obviously we're also in the business 0:14:24.600 --> 0:14:28.120 of forecasting, and we have seen the old price fall 0:14:28.280 --> 0:14:33.640 pretty sharply, which if sustained, could feed into pump prices 0:14:33.680 --> 0:14:37.920 in the US fairly quickly presumably also have a softening 0:14:37.920 --> 0:14:41.160 effect on inflation. Right now, is it looking like it 0:14:41.240 --> 0:14:43.560 is going to be a slightly better environment just from 0:14:43.560 --> 0:14:46.560 those kind of those basic headline numbers on inflation. 0:14:47.960 --> 0:14:52.960 I think so. It's particularly difficult to forecast in the 0:14:52.960 --> 0:14:55.920 most granular level, so for example, the level of the 0:14:55.960 --> 0:14:58.920 congressional district. But if we look at a more zoomed 0:14:58.960 --> 0:15:01.200 out level and we think out a lot of the 0:15:01.240 --> 0:15:05.040 factors that send voters to the polls, things like living 0:15:05.080 --> 0:15:09.680 standards and as you say, inflation, it actually looks as 0:15:09.720 --> 0:15:13.080 though it's the case that softening inflation throughout the rest 0:15:13.120 --> 0:15:18.080 of the year, paired with solid economic growth fueled by 0:15:18.720 --> 0:15:22.600 a lot of investment and solid hiring plans, will be 0:15:23.080 --> 0:15:26.200 enough to keep it a little bit closer than betting 0:15:26.240 --> 0:15:29.240 markets are currently thinking that the midterms are going to be. So, 0:15:29.320 --> 0:15:32.240 for example, if you just use a strictly top down 0:15:32.360 --> 0:15:38.440 model that forecast the share that Republicans will retain in 0:15:38.480 --> 0:15:41.600 the House of Representatives, for example, based on these high 0:15:41.720 --> 0:15:44.240 level economic statistics, and you plug in some of our 0:15:44.280 --> 0:15:48.200 forecasts for inflation, GP growth and so on. It looks 0:15:48.480 --> 0:15:53.200 like they're just about five House seats flipping from a 0:15:53.360 --> 0:15:57.920 publican to democratic control. Now again, with betting markets assigning 0:15:58.280 --> 0:16:02.400 really high probabilities the Senate flipping or the House flipping, 0:16:03.040 --> 0:16:07.600 the top down statistics, the aggregate economic activity and data 0:16:07.640 --> 0:16:10.960 that are nationwide make it look like it's a bit 0:16:11.120 --> 0:16:15.280 more of a contested set of midterm elections than the 0:16:15.280 --> 0:16:16.840 betting markets are currently supposing. 0:16:17.560 --> 0:16:20.640 And we haven't talked about interest rates. And obviously the 0:16:20.760 --> 0:16:24.000 vast majority of the mortgages are on long term fixed 0:16:24.080 --> 0:16:26.880 rate mortgages, so they're not affected day to day by 0:16:27.480 --> 0:16:30.240 what happens at the Fed. But the President has put 0:16:30.320 --> 0:16:33.400 a pretty big emphasis on getting interest rates down and 0:16:33.960 --> 0:16:37.440 doesn't seem to be much evidence that his new head 0:16:37.480 --> 0:16:41.720 of the Central Bank, Kevin Walsh, is itching to lower rates. 0:16:41.760 --> 0:16:44.880 If anything, he sounded a bit more hawkish on inflation. 0:16:45.040 --> 0:16:47.080 So just on that, remind me, is Donald Trump going 0:16:47.120 --> 0:16:49.440 to get any rate cuts between now and the midterms? 0:16:50.240 --> 0:16:50.600 I don't. 0:16:50.920 --> 0:16:53.360 It's interesting. I've talked with a lot of Trump advisors 0:16:53.360 --> 0:16:57.280 who have spent months actually laying the groundwork to try 0:16:57.280 --> 0:16:59.400 to make sure that Kevin Walsh the new head of 0:16:59.400 --> 0:17:03.440 the Federals has an easier time than Jay Powell, and 0:17:03.520 --> 0:17:06.240 so no one thinks that the interest rates are going 0:17:06.280 --> 0:17:08.840 to drop before the November midterms. And a lot of 0:17:08.840 --> 0:17:12.080 people have spent time trying to explain to Donald Trump 0:17:12.240 --> 0:17:15.880 why that's okay, and let's give Kevin wash some runway 0:17:16.040 --> 0:17:18.360 and this is going to be your guy, because they 0:17:18.400 --> 0:17:20.520 really don't want him to turn against Wash. But that 0:17:20.640 --> 0:17:24.240 is another piece of the economic puzzle that's making voters 0:17:24.240 --> 0:17:26.840 feel bad, really, the gas prices, the interest rates, and 0:17:26.840 --> 0:17:28.960 then people just being mad about the war in Iran. 0:17:29.080 --> 0:17:31.679 And I would pinpoint those three things as when I 0:17:31.720 --> 0:17:34.160 talk to Republican voters the things that people are most 0:17:34.200 --> 0:17:35.320 concerned about. 0:17:36.000 --> 0:17:38.159 Gee, where where are you seeing rates? 0:17:39.320 --> 0:17:41.320 As much as we know Donald Trump to be a 0:17:41.440 --> 0:17:44.159 low interest rate guy, I'm glad to hear from Nancy 0:17:44.320 --> 0:17:47.719 that a lot of his staff is setting him up 0:17:47.760 --> 0:17:49.840 to be a little bit disappointed. I do not think 0:17:49.840 --> 0:17:51.880 that we are going to get any interest rate cuts 0:17:51.880 --> 0:17:55.320 from the Fed through year end. I expect also to 0:17:55.359 --> 0:17:59.160 get a significant amount of jawbwning from our central bankers 0:17:59.600 --> 0:18:03.920 that's more hawkish in nature to try to anchor inflation. 0:18:04.080 --> 0:18:07.520 Expectations and to try to buy quite a little bit 0:18:07.560 --> 0:18:11.240 of time and credibility on the inflation price stability front. 0:18:11.680 --> 0:18:14.240 And so it is good to hear from Nancy that 0:18:14.520 --> 0:18:16.439 folks in the White House and the Treasury have been 0:18:16.480 --> 0:18:20.400 clearing a path to allow Kevin Walsh to maintain policy 0:18:20.480 --> 0:18:23.639 rates where they are and to try to assert his 0:18:23.720 --> 0:18:28.080 independence and to try to retain some price stability and 0:18:28.119 --> 0:18:33.119 inflation credibility, which hopefully could lead to a little bit 0:18:33.160 --> 0:18:36.000 of softening of long term interest rates over which they 0:18:36.040 --> 0:18:38.680 only have loose control, which of. 0:18:38.600 --> 0:18:40.880 Course would also then help anyone who's getting a new 0:18:40.920 --> 0:18:43.639 mortgage or remortgaging. Nancy, I'll give you the sort of 0:18:43.680 --> 0:18:45.200 last word. As I said at the start, I don't 0:18:45.200 --> 0:18:47.280 think this will be the first conversation we have on 0:18:47.280 --> 0:18:49.920 this topic. But you know, we have the summer. Congress 0:18:50.000 --> 0:18:53.160 is now out, we have the summer, we have there's 0:18:53.160 --> 0:18:56.239 going to be sort of mad July fourth celebrations. I 0:18:56.280 --> 0:18:58.320 was just hearing from colleagues how hard it is to 0:18:58.320 --> 0:19:01.240 get around DC at the moment with all the Ferris 0:19:01.240 --> 0:19:05.159 wheels and the construction works and everything else. But we 0:19:05.240 --> 0:19:08.720 have that assuming that you end up that you're still 0:19:08.760 --> 0:19:12.199 in a sort of uneasy stalemate when it comes to 0:19:12.400 --> 0:19:16.080 the Iran situation, where no one feels particularly good about it, 0:19:16.119 --> 0:19:21.040 but all price is stay reasonably low. How Democrats are 0:19:21.040 --> 0:19:22.560 going to play this in the summer. Are they just 0:19:22.600 --> 0:19:24.640 going to keep on banging the drum for everything that's 0:19:24.640 --> 0:19:27.359 happened so far and they're convinced that the bad news 0:19:27.440 --> 0:19:30.240 is going to stick even if the headlines get a 0:19:30.280 --> 0:19:34.359 bit better, or is there an opening for Republicans to 0:19:34.359 --> 0:19:35.200 make this a bit better. 0:19:36.359 --> 0:19:38.800 I think that there's an opening for Republicans to make 0:19:38.840 --> 0:19:42.280 this better than people are anticipating, just because the Democratic 0:19:42.359 --> 0:19:45.720 Party continues to be in such disarray since the twenty 0:19:45.760 --> 0:19:50.360 twenty four election. There's just an extraordinary amount of infighting 0:19:50.400 --> 0:19:53.119 in the Democratic Party right now. There's no clear leader 0:19:53.160 --> 0:19:55.040 of it, not that there would be at this point, 0:19:55.400 --> 0:20:00.439 but there's major disagreements over policy, particularly over the like 0:20:00.560 --> 0:20:03.880 support of Israel, how far people should go on the 0:20:03.920 --> 0:20:07.320 cost of living agenda. And what we're seeing is there 0:20:07.440 --> 0:20:11.280 in primaries, particularly in Colorado for instance, there are people 0:20:11.320 --> 0:20:14.159 who are part of the Democratic Socialist Party, this is 0:20:14.200 --> 0:20:16.760 the party Mayor Mandami's part of in New York that 0:20:16.800 --> 0:20:20.080 are winning primaries, and there's these major upsets in these 0:20:20.119 --> 0:20:24.359 Democratic primaries, and what that does is it a makes 0:20:24.359 --> 0:20:28.000 centrist Democratic voters really uncomfortable, but b it furthers this 0:20:28.160 --> 0:20:31.719 notion that Republicans are trying to advance that Democrats are 0:20:31.760 --> 0:20:34.920 super super liberal. And so there's just huge infighting between 0:20:34.920 --> 0:20:37.000 the progressive wing of the Democratic Party and the more 0:20:37.040 --> 0:20:40.240 moderate wing. And I think that is going to potentially 0:20:40.280 --> 0:20:43.800 hurt them in the midterms because the more left leaning 0:20:44.119 --> 0:20:47.880 candidates who end up running for House and Senate races, 0:20:48.240 --> 0:20:51.800 it's just going to potentially alienate swing voters who are 0:20:51.840 --> 0:20:54.359 really up for grabs. Some of what Stuart was talking 0:20:54.359 --> 0:20:57.960 about with these young men and black men and hispanics, 0:20:58.000 --> 0:20:59.920 those are voters that were part of the Trump colid 0:21:00.240 --> 0:21:03.280 in twenty twenty four, but they were, you know, I think, 0:21:03.880 --> 0:21:07.280 sort of borrowing them. They're not solidly Republican. And so 0:21:07.400 --> 0:21:10.440 in order for Democrats to appeal to a wider coalition, 0:21:10.600 --> 0:21:13.560 they need policies that are a little bit more centrist 0:21:13.600 --> 0:21:16.880 or moderate. And I think that Democrats just continue to 0:21:16.960 --> 0:21:18.480 tear each other apart just. 0:21:18.400 --> 0:21:19.920 As a final thing. But those of us who thought 0:21:19.960 --> 0:21:23.000 once every four years was really enough for conventions. You're 0:21:23.040 --> 0:21:25.560 going to have the delight of a midterm convention, is 0:21:25.600 --> 0:21:26.000 that right? 0:21:26.400 --> 0:21:29.719 That's right. This is President Trump's idea. The Republican National 0:21:29.720 --> 0:21:33.040 Committee had to change their by laws in January to 0:21:33.720 --> 0:21:37.679 accommodate this new idea. And really, normally conventions are a 0:21:37.720 --> 0:21:43.000 place where the party nominates the candidate who's actually going 0:21:43.080 --> 0:21:46.520 to run for president. Trump really wants a made for 0:21:46.680 --> 0:21:52.119 TV showmanship party that he can put on TV before 0:21:52.160 --> 0:21:54.280 the fall when voters really make up their minds who 0:21:54.280 --> 0:21:56.439 they're going to vote for. And so it's going to 0:21:56.440 --> 0:21:59.880 be two days in Dallas, Texas, September ninth and tenth. 0:22:00.320 --> 0:22:02.320 And it's really there's not going to be party business 0:22:02.359 --> 0:22:04.439 that's conducted. No one's going to sign off on a 0:22:04.480 --> 0:22:08.040 party platform, no one's going to nominate a candidate. It's 0:22:08.080 --> 0:22:11.600 really just something to try to juice Republican voters to 0:22:11.640 --> 0:22:12.359 go to the polls. 0:22:12.520 --> 0:22:14.919 What's the difference between that and all the other Trump 0:22:15.359 --> 0:22:16.639 sort of rallies that he does. 0:22:17.200 --> 0:22:19.719 It's going to be like a two day rally in Texas, 0:22:19.800 --> 0:22:23.760 and Texas has a huge number of Republican donors, huge 0:22:23.760 --> 0:22:26.560 oil and gas industry. This is a new thing. This 0:22:26.680 --> 0:22:29.280 midterm convention and we'll see how it goes. Stephanie, you 0:22:29.320 --> 0:22:30.360 should come to Dallas. 0:22:31.880 --> 0:22:33.879 I'm just looking at my calendar. I don't think I 0:22:33.960 --> 0:22:37.159 think it's looking terribly busy in that week, but I 0:22:37.160 --> 0:22:40.840 will leave it to you, NATSI, Stu, Paul, Natcy Cook. 0:22:40.880 --> 0:22:46.879 Thank you so much, Thanks Stephanie, thank you, thank you, 0:22:53.720 --> 0:22:57.159 Thanks as ever for listening to Trumponomics from Bloomberg. It 0:22:57.200 --> 0:22:59.560