00:00We've been talking about this fog that we're in when it comes to the economic data, the fact that we're not getting it.
00:04Now, as we start to get these very delayed releases, a lot of questions about quality, a lot of questions about reliability.
00:12And I wonder, in your view, is the fog going to clear at all?
00:17You know, great question. And I don't totally know the answer.
00:22So, for example, you know, I was National Economic Advisor during the last long shutdown in 2013.
00:31And at that time as well, the data did not come out on time, but it came out about as many days as the shutdown lasted.
00:42Now you have the situation on the jobs numbers where the person in my former job, Kevin Hassett, is suggesting that maybe we will get the payroll and establishment jobs, but maybe we will never get the household survey, which tells us what the unemployment rate is going to be.
01:02And I do think it's difficult looking at the private data, because if you look at ADP, they tell you that we probably gained 40-some thousand jobs in October.
01:13Not great, not horrible.
01:15But now they have a new weekly index that suggests by the end of October, we might have actually been losing 10,000 jobs.
01:23Now, you heard Chairman Powell say, when you're in a fog, you drive slower.
01:28And so I think that's why people are not as confident about this cut in December.
01:34And then I think the other thing is that, you know, I think the administration has hurt itself by kind of doing things that are essentially stagflationary.
01:44So immigration and the tariffs, they're harder than a lot of things for the Fed, because they both have negative inflationary effects, and they tend to hurt growth at the same time, which makes you have to weigh which is the worst.
02:02And again, you know, I think that the tariffs are more likely to keep having inflationary pressures.
02:12I think the big retail stores are doing it more slowly, so we haven't had the big boom.
02:18But you still have an economy that was projected last January to be at 2% inflation, and it's at 3%, and you don't know what's going to happen with the Supreme Court.
02:29And you have a lot of reason to think that big stores are going to continue to gradually raise prices for maybe the next several months.
02:38Right. Well, when it comes to inflation and just the lived experience of Americans, the case could be made that one of the reasons why the Democrats lost the presidential election was that they downplayed those cost of living pressures.
02:50And you could make the argument that that is what the Trump administration might also be doing here, falling into the same sort of trap.
02:57And, Gene, I wonder from where you're sitting what the White House could actually do at this point to alleviate some of those cost of living pressures, which are still very high.
03:05Well, you know, you're right, and I think for many of us in the Biden White House, we've been very surprised by how, not even how much they haven't seemed to care about connecting with people on inflation,
03:21but doing something like the kind of erratic tariff policy, which a stunning number of Americans know about, will report in the University of Michigan Consumer Competence Survey and will say they're raising their prices.
03:36I mean, you know, in fairness, Joe Biden had an economy where you had booming job growth, you had booming GDP, inflation was coming down, and even still, people were so upset that the price levels were so much higher than they remembered before the pandemic.
03:56Now you have an economy that's not doing that great, you have a job market that's not that great, this would be a time where you think you'd be very focused on connecting with people.
04:07And I think they're just stuck.
04:09You know, the president is pushing certain policies that are somewhat inflationary.
04:15And, you know, the best I've heard is Secretary Besson say, hey, we'll pull back on coffee and bananas because we don't make them here.
04:23And, like, that's kind of admitting that wasn't a very smart policy.
04:27And, yes, it was raising prices.
04:29Yeah, I mean, the bananas, coffee and tomato thing, probably one of the most ridiculous walkbacks that's seen by this administration.
04:34But on a more serious note, it gets to this idea of those inflationary pressures, which have never really dissipated.
04:41To a certain extent, they've been exacerbated.
04:44And that kind of segues into this idea, Gene, of going into the next year with people not only focused on food costs, but also energy costs.
04:52We saw those prices go up significantly, primarily because of the AI data center buildout.
04:56And we saw that become issues in at least two campaigns this year in Virginia and in New Jersey.
05:02How does either party address that, if at all?
05:05Well, so that's interesting because that, in some ways, does connect more with the Biden White House experience.
05:12Because, as I said, we had a lot of things to brag about with jobs and GDP.
05:17But people didn't care as much if the price levels were still higher than they remember.
05:23Now you have the administration.
05:25They have kind of one positive surprise that's happened in 2025.
05:29And that has been the GDP impact of AI.
05:33And yet, they may be missing the fact that that is putting greater pressure on, as you say, electricity prices.
05:43And, you know, then you combine that with health costs likely to go up.
05:48And then you combine that with, you know, Moody's and Bank of America thinking some costs will go up because of inflation.
05:56I think it puts you in a difficult situation.
05:59I think if I were in the White House, I would not, you know, learning from the Biden experience, you wouldn't be just bragging about the AI, the billions of dollars.
06:09But you would let people know, hey, we want to lead an AI.
06:14We want to beat China.
06:15We want to do it in a way that's more humane, pro-jobs.
06:18But we also want to do it in a way that, you know, you're not seeing people make hundreds of millions of dollars while your electricity costs are going up.
06:26Well, that's what I'm curious.
06:27And I'm not really seeing that being articulated by either side.
06:30And as you know, as somebody who's been in the White House, most people, rank and file people, they don't know what GDP is.
06:35You can say, OK, you're contributing to GDP.
06:37They don't care.
06:38They don't care about those high-level numbers.
06:40They care about what they can see on a day-to-day basis.
06:42On a day-to-day basis, they're still struggling, Gene.
06:45Then they look at AI, or they at least look at the media coverage, and they see stories about job losses and all the negative effects of it.
06:52So we're basically in an election cycle now, Gene.
06:55So it gets to this idea as to then, if at all, how do you change that narrative so that it's more palatable to regular folks, not just, you know, people on Wall Street?
07:06Yeah, no, it's a great point.
07:08And they put themselves in a trap.
07:09And so I actually do think rolling back the tariffs, particularly on consumer goods, on things that will never be number one on or compete on, I really don't think there's a lot of, you know, if Nike Air Jordans go up $40, I don't think people are going to go, great.
07:29They're, you know, encouraging more production to shift back.
07:33They're just going to be angry.
07:37So, you know, I think that we always knew that gas prices had a very negative effect on presidents and politicians.
07:46But it turns out it's not gas prices per se.
07:49It's what you just said.
07:51It's everyday prices that you see every day.
07:54And what happens is when your job market's great, that's helping some people.
07:59But when your prices are high, that's hitting everyone.
08:04So, you know, but I think the hard part is, you know, the best thing the president can do is roll back the things he's done.
08:12That means admitting that wasn't a good idea.
08:15That means admitting that, yes, tariffs are attacks on consumers and raise prices.
08:19So they may face a little bit of a choice of how much do they want to connect with everyday people, you know.
08:29And is that worth perhaps stepping back on some of the claims that most economists have never accepted about the idea that tariffs on ordinary goods were not going to hit people's pocketbooks?
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