Inflation was up in January as the Biden Administration came to close. Meanwhile, President Trump has announced major economic changes as part of his agenda. We speak with financial expert Eric Schiffer about the impact these changes could have on inflation, trade and American industry. Get the facts first with Morning Wire.
Chapter 1: What economic changes has President Trump announced?
President Trump has rolled into office announcing seismic changes to U.S. trade, energy and economic policies, including reciprocal tariffs, slashing regulations and downsizing the federal government. The changes come as the final inflation report from the last month of the Biden administration showed an uptick in inflation, including 4 percent increases in housing costs.
Chapter 2: How will Trump's policies impact inflation and trade?
In this episode, we talk with financial expert Eric Schiffer about the impact Trump's policies will have on inflation, trade, and American industry. I'm Daily Wire Editor-in-Chief John Bickley with Georgia Howe. It's Saturday, February 15th, and this is a weekend edition of Morning Wire. The latest inflation report for January came in higher than expected, up 0.5% with housing up 4%.
President Trump is calling it Biden's inflation. Joining us to discuss is Eric Schiffer, CEO of the Los Angeles-based private equity firm, the Patriarch Organization. Eric, first, thank you so much for joining us. It is my pleasure. So look, we've got this recent inflation report that's come out showing inflation ticking up last month. What numbers jump out to you?
Chapter 3: What does the latest inflation report reveal?
What should the American people know?
Look, there are some concern about elements within the report that may be lasting. But in reality, some of the report is likely to change in a good way for the market and for the economy in that housing typically has a long delay. So what you're seeing is likely to go down and you can't read anything over one report.
I mean, and it's largely what you saw in terms of the reaction from the market was consistent with that, which is that the market has discounted one report. I think if we saw some of the indicators like housing, for instance, or shelter that was unlikely to begin to recede, it would be another thing.
Now, look, tariffs can short-term create some challenges, but I think there are also other factors at play here that will allow inflation over the next year to be largely within a range that's manageable for the economy.
There's a lot you said there that I want to unpack. First, why are you optimistic about the housing situation in particular?
I think in part because of the way the data is recorded. So there's a lag period. And if you look at some of the more recent data, it's far more beneficial in terms of numbers. And again, it's structured on a delayed system. So you're not getting real time data. You're getting sort of an accumulated set of data. And I think it's optimistic for the future.
Again, you know, you can have these spikes and it doesn't mean that we're heading back into a period like we did with the pandemic where, you know, the inflation was draconian and it was very powerful and caused a lot of challenges, including the Fed. And you saw the way the Fed reacted to this. I mean, they they didn't say that. things wouldn't get under control.
What they said is we're just going to have to watch it more. And I think that's the case. I don't think that there's anything at this point for investors or certainly consumers to be concerned about.
You mentioned the Fed there. We had several interest rate cuts last year. Jerome Powell testified earlier this week that he doesn't know when we may have another one. Where do you fall on cutting rates? Do we need another cut?
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Chapter 4: How do tariffs affect the economy?
Chapter 5: What is the role of interest rates in economic growth?
What they said is we're just going to have to watch it more. And I think that's the case. I don't think that there's anything at this point for investors or certainly consumers to be concerned about.
You mentioned the Fed there. We had several interest rate cuts last year. Jerome Powell testified earlier this week that he doesn't know when we may have another one. Where do you fall on cutting rates? Do we need another cut?
Chapter 6: How does the administration plan to manage the deficit?
I don't think you need to have to cut rates just yet. One of the considerations that I think the administration is looking at is how do we take down the 10-year rate? And the tenure is ultimately going to sort based on how well the deficit is managed.
And when you have Elon, who's going to town, taking out all of the junk and the corruption and what has been systemic overspending, that message to the market, I think it also will help to take So you'll see financial engineering in which I think the tenure will come down. And ultimately, the Fed will drive rates down in time as they get comfort that inflation is not going to rear itself.
But in reality, when you think about interest rates, the tenure has a bigger driver on mortgages and other kinds of financing. And that's something the administration can control. They don't need Powell to do anything with that. And they control it through some of the mechanics that is underway, which is reducing the deficit, which is a good thing for the country.
You said something interesting there. It's the sort of the symbolic nature of some of the signals, the message being sent from the White House and how cutting costs on a federal level could impact the economy. Can you unpack that a little bit more for us?
What it does is it tells investors that there's less risk, right? So it signals to the investor community that the risk is being reduced, that America is stronger financially. And that allows you to be able to have debt that sells at a lower interest rate overall. And that's the underlying fundamental of this.
And so anything that can be done to prove out, to show evidence that we are fiscally stronger serves the tenure.
And President Trump has really gone all in on tariffs. You mentioned tariffs at the top. We have the tariffs on China, tariffs on steel and aluminum, threats of tariffs against Mexico and Canada. There's some concern that this may cause inflation to worsen. You mentioned that maybe there's some short-term effects on this. What's the truth? Are these tariffs beneficial in the end?
Will there be pain? How do you see it playing out?
I think it will depend upon what each government chooses to do and how and what the political situation is in the various governments. So when you do have some governments that may come back with more draconian industry specific tariffs, then, yeah, you can see secondary effects of that. And that can mean higher prices in certain verticals, for instance, it
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