00:00Mike, I do want to start with Greg, where Greg left off. And if we do hear from the Supreme Court,
00:04and the Supreme Court indeed undercuts the president's signature economic plan,
00:08what's the backup plan for tariffs if IEPA is ruled unconstitutional?
00:11Well, the White House hasn't said specifically, but they've given every indication that what
00:17they would do is rely on a number of other trade laws that Congress has passed to give the president
00:23powers to impose tariffs. Some are on national security, some are on unfair trade.
00:28But basically, they all require the administration to make a case to come up with a reason that the
00:36tariffs are being employed on either a country-by-country basis or a product-by-product basis.
00:43And so that takes a while. Now, obviously, the administration, knowing that this is a possibility,
00:48has been working on those kinds of reports, and it probably wouldn't take them too long to put them
00:54out there. There's also one other section in the trade law that allows the president, if he can
01:00determine that there has been unfair discrimination against U.S. products, he could impose tariffs for,
01:05I think, 120 days. And so he could do that unilaterally. And so probably what would happen
01:11if the court struck it down is he would try to put as many tariffs as would fit under that
01:14into that 120-day period and then use that time to come up with the other justifications for different
01:21tariffs. Some tariffs will go away, but there would still be a lot.
01:24So other levers for him to pull? I mean, so what does it mean for the U.S. economy in terms of how
01:30this plays out? Because it sounds like no matter what, we are going to be paying, continue paying
01:36higher costs for things, right? Because we just are, right?
01:40Because tariffs are a tax on us. Yes, we're going to be paying higher costs. The interesting thing is
01:46that the total cost has not been, and you've seen it in the inflation numbers when we get them,
01:52they haven't been as dramatic as a lot of people thought. And one reason- Why is that?
01:57Well, one reason for that is that the president has backed off on a lot of tariffs. Another is that
02:03so many companies stocked up on goods before the tariffs went into effect. So there have been a lot
02:10of reasons why they haven't been as bad. But they're still up there, and we would still be paying.
02:16But probably the biggest impact would be just extending the confusion and the uncertainty about
02:25the impacts and how it's going to affect company decisions for longer.
02:29Yeah. So the question is, let's say the tariffs are left in place. Companies run through that inventory
02:37that they bought before these tariffs went into effect. Does that mean we will start to see
02:43some increases and maybe inflationary issues start to rear its head later this year?
02:49That does seem to be the case. Companies have started more and more to say,
02:54we're probably at our limit of what we can absorb, and so we will have to raise prices. Nobody wants to
03:00be first. So there's kind of a holding off on that.
03:03And I would imagine companies don't really want to say we're raising prices as a result of tariffs.
03:07No, and I won't even mention the products, but I did notice in the store the other day that a certain
03:12product is in a smaller bag now. So you're going to see shrinkflation. But there was a recent study
03:19by Gita Gopinath, who was the former IMF chief economist and a couple of other authors that found
03:26that Americans basically are paying something like 98 percent of the tariffs. The idea that other
03:34countries are absorbing them is not happening right now.
03:36So if they were struck down, the president didn't pull any other levers, there would be more money
03:40in people's Americans' pocketbooks.
03:43Yes. Now, part of the reason he's been able to be successful at this is we're talking about product
03:49by product, and it's very small amounts at a time, and companies haven't come out and put a sign up
03:55that says we're going to be charging you more because of the tariffs. If that were the case,
03:59then people would be angry. But we're still upset about the price of things.
04:03Right.
04:04We're just not associating it necessarily with tariffs.
04:06Companies, though, don't usually cut prices, do they, like once they hit?
04:09Well, that's why the idea that you can bring prices down is incorrect. You can bring the rate
04:16of inflation, how fast they go up, down, but you can't bring the prices themselves down.
04:21Anecdotally, buying a pair of mittens Saturday morning for my son, I was in a store, balked at
04:26the price, and the person behind the counter said, those tariffs hit this stuff really hard. So,
04:31yeah, this stuff is getting expensive. Hey, Mike, before we let you go, the decline in energy
04:37prices and oil prices, does that offset if Americans are paying less at the pump? Does
04:42it offset if they're paying more for other stuff?
04:44It does to a certain extent, yes. The money that would have gone to the gas station now
04:50can be attributed to something else. It's not the president's policies that are bringing
04:55down gas prices, though. It's basically the oversupply of oil that is out there. But that
05:01is something of an offset, as will be the additional tax refunds that people get this year.
05:07because of the tax cut bill they passed last year. So there is some tailwind to the headwind
05:14that we're going to be getting.
05:16Hey, one other thing before you go. It's kind of a big week when it comes to economic data,
05:20right? We get the monthly jobs report on Friday. We've also had a bunch of Fed speakers out there.
05:25Bill Dudley has a column about the Fed's six big challenges in 2026. What's important this week?
05:31Well, jobs is literally everything this week. It's the first clean read we've had since September.
05:38And so there's going to be a lot of study of that and what it tells us. What's interesting is we've
05:44seen this decline in the number of jobs created each month, which would give ammunition to those
05:50who want Fed rate cuts. But we were also expecting the unemployment rate to go down, at least according
05:55to the Bloomberg survey consensus. And if that happens, it says, don't cut rates anymore. So
06:00we're going to get some interesting data and it'll give us a clearer picture of where the economy is,
06:05but it probably is not going to give us a clearer picture of where rates are going.
06:10So Governor Stephen Myron, who says that a full point of rate cuts is needed this year,
06:14you don't think that'll happen?
06:15No, that's not going to happen.
06:16Even if a dovish Fed chair comes in?
06:19Even if a dovish Fed chair comes in, I would say that, yes, it could happen if we go into
06:23recession or something terrible happens. But barring that, the majority of the Fed seems to
06:29think we're very close to neutral. And they've forecast one rate cut this year. They could do
06:34two maybe, but you're not going to get really more than that.
06:37When are we going to know about the Fed chair? I thought we were supposed to know it before the
06:41end of last year.
06:42I guess the answer with Donald Trump is always two weeks, but we weren't supposed to get it
06:46before the end of this.
06:47Yeah. And then he said sometime in January. So we, we just really don't have any idea.
06:56He may be still trying to convince Scott Besson to take the job.
06:59Well, you know, and just since we have a moment more, you know, we're going to head out to CES
07:03and Caroline Hyde in just a second. But one of the things that caught me, I was reading through
07:08some stories on the Bloomberg. Federal student loan debt rose to nearly 1.7 trillion at the end
07:13of 2025, up 54 billion from a year earlier. More of it concentrated among large debt holders and
07:18older Americans. I keep thinking about student debt, inflation, higher health care insurance costs,
07:23you name it. I mean, Americans are increasingly being pinched.
07:27Obviously. And the K shaped economy, the bottom leg of the K is getting longer as it brings in more
07:35people. But it is true with student loans. A lot of that is people who went to medical school or
07:40law school and they had higher, higher bills. And well, I mean, they, they, in theory, have more
07:46income to pay that back. But we're also seeing ever since the student loan moratoriums ended,
07:52people kind of never picked up paying again. Yeah. So that's a problem overall. And the money,
07:58they started allocating that money to something else. And now they're kind of stuck because they
08:03bought something else with it instead of paying back their loans.
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