E.J. Antoni
Appearances
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Well, I would love to know by what metric he is using to determine that this is the greatest economy ever. I mean, look at inflation, for example. He is handing President Trump an economy with a higher inflation rate than it ever was at any point during Trump's first term. So this idea that somehow the economy is firing on all cylinders, I'm sorry, I just don't see the evidence for that.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
You know, there are fewer... native-born Americans with jobs today than there were in 2019, five years ago before the pandemic. Again, by what metric are we using to say that the economy is better now than it ever has been before? What's better now than it ever has been before is government employment. The number of people employed by the government, over 23 million.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Government is growing at an exponential rate. We're going to spend about $1.4 trillion to finance the debt in the year ahead. I mean, that's the only metric I can see that shows the economy really growing at a brisk pace.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Sure, there have been some native-born Americans, for example, that have found work over the last several years. But on net, meaning if you consider the number of Americans who have also lost jobs, that exceeds the gains. So the number there is negative. That means that all of the net job creation we have seen over the last five years is has gone to foreign-born workers.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
So what's really sad is that the Biden administration has effectively turned the American labor market into a kind of temp agency for foreigners and for government bureaucrats, because we've seen a disproportionate amount of job growth in the government sector. We've seen the economy actually lose full-time jobs, not gain them. So we're gaining only part-time jobs.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And again, if you look at the demographics, the only people who are gaining jobs on net are foreign-born workers.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
The latest on inflation, unfortunately, is that it is re-accelerating. And some of that has to do with the fact that the Biden administration continues to spend money we don't have. The Federal Reserve, in an act that I think is election interference, they took their foot off the brake and stomped back on the gas by cutting interest rates right before the election.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
These are all things that are going to contribute to higher prices. And we're only feeling some of the effect right now. Most of that inflationary impulse, though, is really going to play itself out in 2025. And frankly, I think they're handing Trump a bit of a ticking time bomb. when it comes to inflation.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And, you know, we have this notion that's fueled by the media and by Federal Reserve officials that we've been trending towards this target inflation rate of 2% per year. But that's simply not true. We haven't been trending there. We've been trending to about 3%. And we actually arrived there quite some time ago, and we have been stuck there at about 3%.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And there's no sign that we're going any lower anytime soon.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Well, unfortunately, when the government does a bad action, we don't feel all of the bad effects right away. It's very similar to if you drink too much, you know, you get that buzz first, but then the hangover only comes the next morning. And we see the exact same thing with a lot of government overspending.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Initially, we didn't get to 9% inflation right away at the start of the Biden administration. We got there about a year and a half into his term. And the reason for that was that it takes time for all this government spending to slosh its way through the financial system. But eventually it does work its way through and it ends up creating higher prices for consumers.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
That's what we're seeing play out yet again as the Biden administration not only continues the runaway spending, but now, again, we have this what I would think is election interference on the part of the Fed.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
cutting interest rates hard and fast right before the election to, I think, try to produce a certain outcome, which they obviously didn't get, but which will nonetheless produce some very bad effects for the American consumer next year. Now, on the other side of the equation, you have President Trump with a very pro-America energy policy that should help reduce prices.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Because if you increase the supply of energy, you'll reduce the price. And when you reduce the price of energy, you reduce prices throughout the economy, since everything uses energy, all kinds of goods and services. So you have one thing from the Fed that's going to help push up prices. You have another thing coming out of this administration that will help push down prices.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Which of those is going to win out at the end of the day is unclear.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
A deregulation would have a tremendous impact. And we actually saw that during the first Trump administration. There was an interesting gathering where he asked several hundred business leaders from everything from small to large businesses, what did you love most about my first term? By the way, you got to appreciate how the president always phrases these things. What did you love most about me?
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
But he gave them a choice. What was better, the tax cuts or the deregulation? Every single one of them said it was the deregulation. That provided much more benefit. And it not only provides benefits to those business leaders and to those businesses, but also to the broader economy. The reason being that when the government taxes you,
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
They take money from you, but that money is going to get spent somewhere else. So it may be less efficient, but it's not a complete subtraction from the economy. Regulation, however, is exactly that. It is a complete subtraction. It represents a loss of economic activity that's not being transferred from one person to another. It just vanishes.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And so that deregulation can have a tremendous impact on increasing economic activity, on increasing profits for businesses, and on increasing take-home pay for workers. Again, all of which we saw during the first Trump administration. And it looks like they're really willing to go whole hog during their second term. So that's a reason to be very, very bullish.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Manufacturing is a big one. People don't realize that there is a tremendous regulatory burden on the manufacturing sector in this country. And it's a key reason why so much of our manufacturing has been shifted overseas, why there has been so much corporate inversion of our heavy industry.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
For a typical manufacturing worker, let's say they're making about $50,000 a year, it's not uncommon for the regulatory burden attached to that worker that the factory owner, let's say, is effectively paying, that that regulatory burden would be $60,000. In other words, it's even more than the person's wages.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Now, you throw on a benefits package, let's say, of another $40,000 or $50,000 for that worker, and all of a sudden, what looks like a $50,000 worker is to the rest of the world is actually about $150,000 in terms of total compensation costs for that factory owner. Conversely, you can send that job overseas and avoid most of that regulatory burden, avoid a lot of that benefits package, let's say.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And you throw on top of that the fact that we tax manufactured goods at a lower rate when they come in from overseas than when they're made here at home. And all of a sudden, it's a no-brainer to send those jobs overseas. burden would be a tremendous boon for the American economy and for the American worker.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
I think so. It's very much a carrot and stick approach at the same time. We saw it in more distant history as well, and it produced exactly the same results. We forget that during America's golden age, when we saw our fastest rates of sustained economic growth, we didn't even have an income tax. The federal government fueled itself entirely basically based on tariff revenue.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And so this idea that somehow increasing tariffs or relatively high rates of taxes on imported goods is somehow going to crash the economy or cause runaway inflation, I'm sorry, nothing could be further from the truth. Again, America's golden age had exactly those circumstances, high tariffs, except we didn't have high inflation.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
We actually had slight deflation during that period of about a tenth of percent per year. So again, there was no runaway inflation. There was no widespread unemployment. It really was America's golden age. And I think it's a key component to repeating that economic success.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
No, it wasn't, and it really demonstrates her complete economic illiteracy and also her ignorance of history. Again, just recent history, because under the first Trump administration, every dollar that was imposed of tariffs, only about 19 cents out of each of those dollars was actually paid for by American consumers. The other 81 cents about...
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
was paid for by overseas producers like Chinese steel producers, for example. The reason being is that if they tried to pass the full cost of the tariff on to American consumers and American businesses in the form of higher prices, then American consumers and businesses would simply choose an alternative that would at that point have been cheaper.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
So maybe that was importing from another country like Sweden and getting our steel from there. Or maybe it was getting our steel from domestic producers here at home, whatever the case may be. So you have to always keep in mind what we like to call tax incidents, which tells us not who is actually literally paying the tax, but who is actually paying the tax.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
In other words, just because a Chinese company is writing the check to the treasury doesn't mean that they're ultimately the ones bearing the cost. Now, in this case, they were. Again, it was about 81 cents on the dollar that they actually had to pay. But that's just one example of what would happen if we continue this policy.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Now, that stands in stark contrast to domestic taxes, like the income tax or like a sales tax, where no matter where the tax incidence is, either on the seller or the buyer, it's still falling on an American.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And so the difference between tariffs here and any of those strictly domestic taxes is that the tariffs are essentially causing foreigners to help pay America's tax liability instead of putting the entire burden on the American people.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
I love it. I can't tell you how much I love it. People don't understand the amount of red tape, especially from these different government three-letter agencies like the EPA that throw up roadblocks anywhere and everywhere and make all kinds of productive economic activity. simply unviable because the regulatory burden is so tremendous.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
But again, if you can get rid of that, then all of a sudden you get rid of the deadweight loss and you can create an economic resurgence. It's difficult to overestimate just how many projects there are in this country, or I should say that there could be, in this country, but for the regulations that get in the way of entrepreneurs and people who actually want to serve their fellow man.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
Because at the end of the day, that's how you make money in this country. You provide a good or service that people want, and in exchange, they're willing to pay you for it. But when government is going to throw on this tremendous regulatory burden, it makes it impossible for people to do that. Elon Musk gave a couple of really good examples lately
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
with his SpaceX program, where the EPA and different other agencies threw up all these roadblocks, like making him conduct an ocean survey to try to determine whether or not if one of his rockets fell out of the sky, it might happen to land on a shark in the ocean. I mean, it sounds ridiculous, but those are the kinds of things that organizations like the EPA are forcing businesses to do.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And if you're a small business, you can't afford to do those things.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
I'm optimistic, but largely only because of the people that are going to be at the helm. The ship of state is going to go through some very, very turbulent waters in the year ahead. We have a lot of what I would call ticking time bombs within the economy. You know, we talked about inflation resurging. That's one of them. The commercial real estate market is on very, very shaky territory.
Morning Wire
Trump vs. Inflation: Can He Fix the US Economy? | 12.14.24
And that means that the small banking sector, which provides all of the commercial real estate loans, they're also looking at a lot of trouble coming down the pike. So again, we're facing a lot of economic headwinds. Let me put it that way. But I have a lot of confidence in leadership that they're going to be able to get us through. Great stuff. Thank you so much for talking with us.