00:06:53 · Scott Galloway, Ed Elson, S1
[00:06:53] S0: Right. Should we bass into the show? [00:06:55] S4: Let's do it. And by the way, if you like the show, please be sure to hit follow wherever you're listening or subscribe to us on YouTube and hit the bell icon to get all of our latest episodes. Thank you very much. [00:07:06] S1: Is the time to buy. I hope you have plenty of the wherewithal. [00:07:12] S4: September's personal consumption expenditures report showed inflation continuing to climb. Both headline and core PCE hit their highest annual rates since May with headline inflation rising 3.6% year over year. That data came in just a day after the Fed decided to hold rates steady. Nonetheless, two officials dissented in favor of a quarter point hike. Chair Warsh also noted that financial and credit conditions have tightened for some businesses and households. So inflation remains a persistent problem, and the Trump administration has faced plenty of blame for the state of the economy. But at the midterms tomorrow, we will get a better sense of how Americans really feel about this administration and how they have handled things. So, Scott, inflation keeps going up. Not really any surprises. PCE rose to 3.6%. Gas prices continue to go up. Diesel prices are up 77% year over year. Real wages fell point 7% in September. That was the sixth straight month of declining earnings. Not great. And on Tuesday, I think it's gonna be a referendum on those numbers, how how upset people really are. What are your expectations, going into Tuesday?
00:08:32 · Scott Galloway
[00:08:32] S0: Well, that's the correct question, but what... What's weird is it feels like the mother of all bad things and all the moons are lining up against Republicans and four Democrats. And that is according to the Washington Post, six in 10 families can't afford the basic costs of living in the Battleground District. So the place that the president is... Or the current policies seem to be having the most damage are in swing states that are in play. The share of households that could not cover the basics rose by 2.1 percentage points in Republican held districts and 1.7 in Democratic held ones. In the past three years, rents in Republican held battlegrounds have risen 9% compared to 4% in Democratic held ones. So it it just feels as if inflation is not only peaking at the exact wrong moment, or not inflation is peaking, but the the the people feeling of the impact or the negative sentiment on inflation, but it's especially bad in close races or in toss-up districts. Kalshi puts the odds of a blue wave as defined by Democrats win at least 218 house seats and at least 49 senate seats in the November midterms at 82%. What was even interesting is there's now a technical term for tsunami, and that is Democrats get both the House and the Senate, and that's at about somewhere between, I saw in Kalshi, between now 6567%. So there's a two and three chance now that there's a, quote, unquote, tsunami for Democrats. And then they have a new category called super tsunami where they get 54 seats in the Senate and a massive pickup in in the House. I had on Prof G Nate Silver, and he pointed that when Democrats last got a bunch of seats mid cycle twenty eighteen, it was d plus seven. Now d is polling plus nine. Typically, as you get closer, whoever's down closes. In other words, it tightens. What's unusual, it's so far... And the polls might be off. So far, it looks like it's not tightening. It's actually the Democrats are expanding, their lead. And let's talk about voters in rural parts of America. Six in 10 rural voters disapprove of how Trump is handling the economy. The average Republican constituent drives 26% more miles than a Democratic constituent, so they're feeling the pain of higher gas prices. So this is just... It's just... It's like the the sum of all fears for the Republican Party. I don't see any I don't see any sort of bright spots right now.
00:11:08 · Scott Galloway
Do you have any thoughts on this?
00:11:10 · Ed Elson
[00:11:10] S4: I'm in total agreement. I mean, you you look back to the beginning of the year, if you were to say that the Democrats were gonna take the house and the senate at the midterms, people would say you were nuts. And and you can look at the the the data on that where it was... I think it's doubled over the course of the year. So there has been a massive sea change, and it's obvious what the problem is. It's inflation, and people know how tariffs affected inflation. We saw that immediately. And then he doubled down on higher prices with the war in Iran. And so when you look at Trump's approval rating, you know, yes, it is hitting all time lows, but the the topics on which he is most underwater are the economy and also inflation. And I just think that this is such a unique situation, such a unique moment because usually when when a... When an economy is struggling or when you're seeing inflation, you're seeing higher prices, usually, it's a little bit of a blame game on, like, who's responsible. And and it's very difficult to pin down who is actually at fault because economics is complicated and it's nuanced and there are multiple factors. You can never really pin anything down, but that's not the case this time around at all. Like, we know exactly who's responsible. We know exactly what caused this. It's Trump. It's his tariffs and his war in Iran, and everyone knows this. Usually, there's debate, but literally everyone on both sides understands what the problem is. And I think your point is an important one, which is the people who are getting most screwed by his decisions are his base. It's the people who have historically supported him. It's the farmers who have to deal with diesel prices being up nearly 80% over the past year, which, of course, is a necessary input for fertilizer and therefore for growing crops, which is why farmers are struggling right now. It's as you say, the rural voters who are the frequent drivers, you point out how much more those those those voters drive compared to, Democratic districts, and gas prices are up 40%. And then I think the other one is is the real crucial demographic, which was so important in 2024, which is young men who have seen their wealth, fall over the past four or so years by about 23%. And, of course, the boomers have seen their wealth rise by about 37%.
00:13:45 · Ed Elson
And this is gonna be a big problem because 55% of young men voted for Trump in 2024, and now the polls are saying that actually this time around, it's gonna be 26%. So all of the key demos have gotten screwed. And, usually, like, I say this all the time because I think that Trump really, really has screwed over the middle class and screwed over poor people, unlike any other president, at least in recent memory. But a lot of people say, well, they don't understand that. Like, the American people try getting the American people to, like, understand the facts. But this time, I think they do because the facts are so obvious. It's so clear what went wrong here. So I'm I'm with you. I I think it's a sweep. I think the Democrats take the house. I mean, certainly take the house. Question is, will they take the senate? I think they will, and we can go into some of the state level data here because that's what's gonna matter here. It's gonna be the... It's gonna basically rest on a few swing states like Maine, like Texas, Michigan. Those are those are gonna be the important states. But I I think the Democrats crush it in all of those states because, again, as you say, they're getting hit the hardest.
00:15:05 · Scott Galloway
[00:15:05] S0: Yeah. When you see Trump campaigning in Kansas or in South Carolina, that's not the map is tilting. The map is imploding. And they're pulling money out of what usually are battleground states because they've just given up on them. What's interesting, and you touched on this, it's really fascinating to see which cohorts pivot from one party to the other in between elections or, in consequential elections or sequential elections. And one of the biggest pivots from blue to red in 2024 was was young people. And now people ages 18 to 29, get this, in 2024, forty six percent identified as Democrats, 47% Republicans, which shocks me. 18 to 29, the majority in 2024 or more identified as Republican. Today, it's Democrats or 54% of eighteen to twenty nine year olds people your age identified with Democrats and 38% Republican. It's... I love this. We're now... It feels like the majority of the pollsters are saying it's a toss-up between a tsunami and a super tsunami. And Fox News even just flipped South Carolina from likely Republican to toss-up. And it's like nothing indicates insecurity like a company or an organization that has a vested interest in things going in the other way covering its ass by saying, oh, this might go blue. So this is... I mean, I'm I'm still holding my breath waiting for what he's gonna try and do next, whether it's, I don't know, offer people a million dollars if the Republicans, hold on to the senate. I'll be curious what he tries to come up with. But this feels... And, again, what's interesting is a lot of the voting... I wonder what it is. I think it's about a third. The voting has already been decided. People like... I've already... Have you already voted? I've already voted.