Bloomberg Talks
00:00:45 · Kevin Hassett
[00:00:45] S0: Well, I think that let's look back at the week because it was really one of the better jobs weeks that I've ever seen because we had initial claims for unemployment insurance go down even from about the lowest levels since World War II. We had the jobs openings data say there are a lot of jobs openings. And also that the quit rate went up, which means that people are so confident that if they leave their job, they're going to get a better job, that they're even quitting. And now we have a jobs report that was way more than double expectation. And the upward revisions were ginormous for the last couple of months. And so what we've got is a job market that's hitting it all cylinders. And what I believe, and I think what the White House believes, is that that Kevin Warsh had it right when he gave a speech about growth like this, where he said that if you have supply-side growth, then it's not necessarily inflationary. And if you have demand-side growth, then of course it is. And that since we've done so much to increase supply by having expensing for capital goods and so on, we've got 120,000 in this jobs report. It's now 120,000 people building new factories, that's a big positive supply shock. It isn't necessarily inflationary. And what Kevin has said publicly is that he's going to watch the inflation data and watch it like a hawk and respond more to that than to growth when we're seeing such high growth that's potentially supply shock driven and productivity driven. You saw the productivity this week was also through the roof.
00:02:10 · Mike McKee, Kevin Hassett, Dani Burger
[00:02:10] S2: Well, Kevin, the numbers you cited for this week and the number we got today that you saw last night, did you go into the Oval Office and tell the president, look, forget about the idea of rate cuts, just not going to happen? [00:02:24] S0: I didn't talk about rate cuts with him, but I did spend almost 45 minutes with him last night. His spirits are high. I got a veto hat, which I guess is his new hat. And we talked about a lot of things. But the fact is that he's concerned that the positive momentum that we built... is something that could be upended by Democrats now that they've taken more power. But I think that they're going to have a real hard time repealing all the great policies that have created this strong job market because the president will veto it. And we have a huge amount of executive authority to do other things like deregulation to make sure that the momentum keeps going. [00:03:02] S1: Well, Director Hassett, I'm happy you went there because that's where I wanted to go. This is an American electorate that voted on Tuesday that clearly they are unhappy with something. All of the exit polls showed number one issue over and over again is inflation. Is this a White House that's prepared to change its economic policy, shift anything in order to address those voter concerns?
00:03:02 · Dani Burger, Kevin Hassett
[00:03:02] S1: Well, Director Hassett, I'm happy you went there because that's where I wanted to go. This is an American electorate that voted on Tuesday that clearly they are unhappy with something. All of the exit polls showed number one issue over and over again is inflation. Is this a White House that's prepared to change its economic policy, shift anything in order to address those voter concerns? [00:03:24] S0: Well, the White House, of course, you know, you can listen to voter concerns. But as an economist, you also have to look at the data. And the data are very strong on growth. And inflation has been decelerating. And so I think that the policies that we've been pursuing, the supply side policies, are give us prosperity, great job creation, without creating Phillips curve effects that would run away inflation. And that contrasts with what happened under President Biden, where they basically helicopter dropped money down to people after the COVID crisis was over. And that's like a classic example of what creates the inflation and the inflation that you saw. So I don't think that we think that we have a policy change that we need to play at. I think that the policies are working. The growth is there. Inflation is coming down, but it's coming down from a high level. Remember, that was like 22 percent total inflation under President Biden. And so if you go up 22 percent and then you get it down to going up three percent, say that it's still going up. And so the frustration that people feel is real. But we're making great progress.
00:03:24 · Kevin Hassett, Mike McKee
[00:03:24] S0: Well, the White House, of course, you know, you can listen to voter concerns. But as an economist, you also have to look at the data. And the data are very strong on growth. And inflation has been decelerating. And so I think that the policies that we've been pursuing, the supply side policies, are give us prosperity, great job creation, without creating Phillips curve effects that would run away inflation. And that contrasts with what happened under President Biden, where they basically helicopter dropped money down to people after the COVID crisis was over. And that's like a classic example of what creates the inflation and the inflation that you saw. So I don't think that we think that we have a policy change that we need to play at. I think that the policies are working. The growth is there. Inflation is coming down, but it's coming down from a high level. Remember, that was like 22 percent total inflation under President Biden. And so if you go up 22 percent and then you get it down to going up three percent, say that it's still going up. And so the frustration that people feel is real. But we're making great progress. [00:04:31] S2: Well, the inflation rate was lower when President Trump took office than it is right now. So is it any surprise that people voted the way they did on Tuesday? Do you think if they'd seen these jobs numbers, it would have made any difference?
00:04:31 · Mike McKee, Kevin Hassett
[00:04:31] S2: Well, the inflation rate was lower when President Trump took office than it is right now. So is it any surprise that people voted the way they did on Tuesday? Do you think if they'd seen these jobs numbers, it would have made any difference? [00:04:46] S0: You know, I'm not a political scientist, but I could say that the top line inflation numbers are, of course, being driven by energy prices, which are related to the situation in Iran that the president says he has no regrets about. And if you look at what happened prior to the last CPI, then core inflation was back to around the Fed's target for the previous three months. And so I think that we've succeeded at creating growth and helping inflation go down.
00:04:46 · Kevin Hassett, Dani Burger
[00:04:46] S0: You know, I'm not a political scientist, but I could say that the top line inflation numbers are, of course, being driven by energy prices, which are related to the situation in Iran that the president says he has no regrets about. And if you look at what happened prior to the last CPI, then core inflation was back to around the Fed's target for the previous three months. And so I think that we've succeeded at creating growth and helping inflation go down. [00:05:15] S1: You know, Director Hassett, I would say some in your party don't necessarily agree with that. And I would point to what the Senator Ted Cruz put on an X the other day saying that this is very real pain for real Americans and too many Republican politicians seem like they don't understand or they didn't care. Food is too high. Gas is too high. Diesel is too high. Insurance is too high. Life is too high. Tariffs have made everything expensive. And the war in Iran has dragged on for too long. This is Republican Ted Cruz saying... that tariffs are a problem for inflation and the war is a problem for inflation. Director Hassett, will the White House do anything different on both those accounts to reduce their contribution to inflation? Or are you expecting more pushback from the likes of Republican senators who themselves say that they are heeding a call from voters?