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Brigid Bergin: It's The Brian Lehrer Show on WNYC. I'm Brigid Bergin, senior reporter in the WNYC and Gothamist newsroom. Happy Friday, everybody. I'm filling in for Brian today, he'll be back on Monday. Later in the show, we'll hear an update on the now quite late New York State budget with WNYC's Albany Reporter, Jon Campbell. Then we'll ask for reactions from Catholic listeners on a new report from the Vatican that decries war, poverty, and the struggles of migrants, but also, gender theory and surrogacy.

We'll want to hear from you, especially if you or a family member identifies as Catholic and LGBTQ. We'll send you into Friday afternoon with a conversation on the Black roots of country music inspired, of course, by Beyonce. We'll play some country music and talk about the country music industry and the history of Black musicians in country. First, for President Biden, the economy giveth and the economy taketh away.

Last Friday's job growth numbers exceeded expectations by a large margin, but Wednesday's inflation report did too. Here's how former President Trump characterized that report as he got off a plane so there's a little background noise.

President Trump: Biden has totally lost control of inflation. It's back. It's raging back. The number today was very high, very bad. It's actually much higher because they exclude various categories.

Brigid Bergin: In case you missed that, he said, "Biden has totally lost control of inflation. It is raging back." President Biden, for his part, had a different view.

President Biden: We have dramatically reduced inflation from 9% down to close to 3%. We're in a situation where we're better situated than we were when we took office, where inflation was skyrocketing, and we have a plan to deal with it, whereas the opposition, my opposition, talks about two things. They just want to cut taxes for the wealthy and raise taxes on other people.

Brigid Bergin: To talk about the state of the economy, how consumers and voters think it's doing, and how both parties are addressing it, we're joined by John Cassidy, New Yorker staff writer who has a column about economics and politics. Welcome back to the show, John.

John Cassidy: Thanks very much for inviting me on. Glad to be here.

Brigid Bergin: John, after that jobs report, but before the new inflation numbers on Wednesday, you wrote a column titled, "Will Historic Job Growth Bring an End to the Vibe Session?" By Vibe Session, do you mean a disconnect between the health of the economy and people's perception that things are bad?

John Cassidy: That's exactly what I mean. The phrase Vibe Session came into vogue a couple of years ago and it's just a way of expressing exactly what you said. If you look at a lot of the economic figures, including the job figures and including inflation figures until the most recent ones, they've been very positive over the last year or so and just doesn't seem to be. It is reflected in some economic sentiment statistics, but not in the poll ratings and certainly, not in Joe Biden's approval ratings.

Brigid Bergin: As you start to touch on it, how does this inflation report potentially change the outlook for you?

John Cassidy: Well, that's a good question. Obviously, Trump and the Republicans have leaped upon it because it did show a slight increase over one month, but it's not that big a deal economically speaking. Basically, what happened was this consumer price index, which is a measure of all the consumer goods in the economy, rose by 0.4% last month. On Wall Street, they'd been expecting 0.3%. That was an increase over expectations of 0.1%, which is pretty much nothing really on a month-to-month basis.

It was the third month in a row that the number has come in slightly higher than expected. Instead of being on a downward trend now, inflation is basically seems to have bottomed out in the low threes and is not heading to 2%, which is the Federal Reserve's target. In economic terms, people can live with 3% inflation. It's not hyperinflation or anything like it, but politically, it's a very awkward narrative for the Biden administration.

Brigid Bergin: Well, let's do a little Econ 101 for our listeners. I know the stock market didn't respond particularly well to the inflation news because it likely means the Fed is going to keep interest rates where they are longer instead of maybe cutting them as early as June. Can you talk a little bit about why that is?

John Cassidy: Yes. There's two different stories here. That's one of the problems with this narrative. One is how's the economy at large doing? Number two is what about the financial markets and the Federal Reserve? Most people, the first story is a lot more important than the second one, but the media tends to focus on the second one because that's where the news is and the Federal Reserve meets every month or whatever. Anyway, the Federal Reserve has been promising to cut interest rates starting in June, most people thought.

Most people thought there'd be three interest rate cuts this year. At the moment, the rate is over 5%. That would bring it back down to maybe 4.5%. Again, not a huge deal, but it would be a big signal to the financial markets that interest rates are coming down. The stock market has been zooming ahead on expectations of this interest rate cut. What's happened is that's now changing because people on Wall Street think the Federal Reserve won't cut interest rates or won't cut them as quickly because inflation is not coming down as quickly as they had expected.

That's a big financial market story. If you've got a lot of money in the stock market, it's a big story to you, too, but most people don't have a lot of money in the stock market and they're more concerned with how the economy is doing at large. There's a bit of a different two sets of narratives here. I'm not saying inflation doesn't matter. Of course, it does, but I think the larger economic story is really one about two conflicting things going on.

Number one, in terms of GDP growth and jobs and spending, the economy is doing pretty well, very well, in fact. Since Biden came to office, there have been 15.2 million new jobs created. The unemployment rate has been below 4% for, I think, more than two years now, which is the first time that's happened since the 1960s. They're both very good statistics. Now, on the other side of the equation, consumer prices, gasoline, especially food, obviously, zoomed up a year or two ago.

I think that's still very much in people's minds. When they go to the supermarket, they still see that things like eggs and meat are a lot more expensive than they used to be. The fact that inflation is coming down doesn't make any difference to the level of prices, because inflation is a measure of the rate of change of prices.

If eggs have gone up from $2 for a dozen to $4 a dozen, and then they stop and just stay there at $4 a dozen, people still think, "Oh, that's inflation." It's actually not inflation. Inflation was a couple of years ago, but it still makes people feel bad. I think that's what the most common explanation of the so-called vibe session is. Even though the economic statistics for now look good, people are still basing things on the big inflation boom we had a year or two ago.

Brigid Bergin: Listeners, as we unpack the latest economic news, we want to hear from you. We've never had a problem getting folks to call in with examples of higher prices. We'd love to hear from you. Give us a call today and let us know where you think the blame lies. Is this an issue of just greedflation? Is that what is causing inflation to continue? Have you quit buying some things because of how much they cost? Since we're looking this through the lens of politics, which presidential candidate do you think can do a better job with the economy and why?

Call us at 212-433-WNYC. That's 212-433-9692. If you can't get through on the phone, you can always text at that number or tweet us @BrianLehrer. John, I just want to go back for a moment. I know you described that we've got these dueling narratives going on when we look at this economic news, but just to put a fine point on it, when we think about the potential for how interest rates impact consumers, can you talk a little bit about how that may impact some of their spending decisions?

John Cassidy: Yes, sure. The most obvious one is mortgage rates. One of the big developments in the last couple of years, mortgage rates were down around record lows for years. Down around three, you could get a 30% mortgage, I remember, for 3%, which is incredible, really. Now they've gone up to 6% or 7%. In fact, I think some of them touched 7% again yesterday because the mortgage rates are basically tied to the ten-year interest rate on treasury bonds, which is tied to what the interest rate that the Federal Reserve sets.

Expectations of the Federal Reserve not reducing interest rates feed through to higher mortgage rates. That's a very direct impact on people. A lot of people who want to move apartments, for example, have put it off because they know that if they buy a new one, they'll have to take out a new mortgage and they may be locked into a mortgage at 4%. They don't want to change to a mortgage at 7%, et cetera.

Brigid Bergin: Sure.

John Cassidy: There are other interest rates, of course, throughout the economy, like interest rates for new car loans, interest rates on consumer debts, but I think the mortgage interest rate is the most visible one for anybody who owns a home.

Brigid Bergin: As we started to discuss, this is an election year and consumers/voters don't seem to be particularly happy with the economy, polls are showing they have President Biden to blame for that.

John Cassidy: Well, again, there's a contradictory narrative there. If you look at indexes of consumer sentiment, the University of Michigan, for example, has a monthly survey. It's like an opinion poll, really, where they talk to I think 1000 or so people and ask them how they're feeling about the economy in various ways. These are consumers and their index of consumer sentiment is actually up nearly 30% over the last year, which is a big jump that suggests that most people actually are feeling in their own lives a bit better about things and about how the economy is going as they perceive it in their own lives.

If you ask them how the national economy is going, you do still tend to get 50% or 60% say it's going badly, and somewhere in the 30% say it's going well. That's the problem for the administration. The improved consumer sentiment hasn't fed through yet into the poll ratings. Of course, the Republicans are now seizing on the new inflation figures to try and arrest that movement.

There have actually been some change in the polls over the last few weeks. Biden is doing a bit better in the polls and the polls are basically tied now, whereas a few weeks ago, Trump was leading by two or three points. That may be linked to how people are thinking about the economy it's not clear yet, but certainly, if you just ask people, "Do you approve of Biden's ratings or how Biden is handling the economy," their findings are still universally, not universally, but almost universally negative.

Brigid Bergin: Well, I want to play a little bit from a project WNYC has going, it's called Suds & Civics, and we're chatting with people about politics in laundromats in the region. Here's a recent example of a conversation with Chris in Beacon, New York.

Chris: The economy is horrible right now. That costs me an entire paycheck to buy groceries and stuff like that, you know what I mean? That's all tied up in politics and the greed of the corporate machine. We just try to stay positive.

Brigid Bergin: John, in this case, Chris is blaming the system, the "corporate machine." President Biden in a written statement, acknowledged, "We have more to do to lower costs for hardworking families," and added that he's calling on corporations, including grocery retailers to use record profits to reduce prices. Is there any way to determine how much of the higher prices are companies passing along versus thinking, "Hey, let's just see how high we can go for before people quit buying?"

John Cassidy: Yes, that's a very good question. There's certainly been a substantial increase in profit margins in some sectors over the last few years. I actually wrote a piece a couple of weeks ago about an investigation the Federal Trade Commission is now doing on big grocery firms like Amazon because they own Whole Foods and Walmart and Kroger's, the big supermarket chain.

The FTC has produced figures showing that their profit margins, even as inflation has come down, they've still been going up and have been making record profits because basically, their cost inputs are going down. The cost of where they get their food from has gone down a bit maybe. They keep the prices up because, as you say, they doesn't seem to have hit their demand. Even though people are economizing a bit, they're still selling enough products to make profits.

Certainly, padding profit margins has been part of it. It's very difficult to break it down into exactly how much of the inflation rate is due to that and how much is due to changes in costs. It's certainly been a factor. The Biden administration, I think, was pretty slow to get on this. There were some economists out there who were pointing this out even during the peak of the inflation because this profit padding started pretty early.

Biden administration over the last few months has pivoted and made this a bigger part of its messaging about the economy. I think at the end of that, that's perfectly justified because you just have to look at the figures or look at the profit reports or corporate statements. There has been some profit padding here, no doubt about it.

Brigid Bergin: If you're just joining us, I'm Brigid Bergin in for Brian Lehrer today, and I'm speaking with the New Yorker's, John Cassidy, about the economy and the politics of the economy. We're taking your calls about some of the ways that you are feeling the economy, maybe things that you've stopped buying, are you experiencing the impacts of this inflation report that just came out? We're going to start with Jane in Port Washington, New York. Jane, thanks for calling WNYC.

Jane: Thank you for taking my call. I'm interested in the list of credits that your guest gives to Mr. Biden. My question is, with all of us who are interested in voting and talking to the other side, I'm a Democrat. Wouldn't it be wise for us to ask our fellow Republicans how they feel about the fact that the big earners are not paying their fair share of taxes, not their businesses, but their own personal taxes? How does that skew with these folks? I don't understand. I shake my head every day about it. Can your guests answer that question?

Brigid Bergin: Jane, thanks so much.

John Cassidy: Not directly on inflation, but it's certainly a political issue which the Biden administration will be trying to exploit. I'm sure you saw in the State of the Union, Joe Biden has proposed quite hefty tax increases on parts of the rich including the very highest earners there. There'd be a new millionaires tax there. It's a very good question why that doesn't have more political resonance with certain parts of the population.

I think if it gets into a campaign, it'll be very interesting to see as we get into the campaign, how that does resonate especially given the fact that the Republicans and Trump will be running on a ticket over cutting taxes because they want to make permanent older tax cuts for the wealthy and corporations, which they passed during the last Trump administration, the 2017 Tax Cut Act, which Paul Ryan headed up, but Trump signed into law.

There's going to be a very clear bifurcation there on the stump between the Republicans saying, "Cut taxes for the rich," or basically, enshrine forever the tax cuts, which were put through in 2017 and Biden saying, "Let's raise taxes on the rich and corporations."

Brigid Bergin: John, we're getting a lot of listeners texting in. Anna texts, "Inflation is an international issue and far worse elsewhere, so it's fairly silly to blame it on the president. As for how it's impacted me, I've mostly stopped buying lunch out, instead, I bring a thermos of leftovers in my backpack and feel like a 2nd grader." John, any response to Anna's point though, that this is not necessarily just a domestic issue, this is really an international issue, and that we're not feeling it in the same way as other parts of the world?

John Cassidy: She's exactly right. I've been writing about this for years. If you just look at the international statistics, you see that there is a big inflation increase everywhere. Actually, you suggested that perhaps we're not feeling it like other people. We are, governments around the world have been hit by high inflation. That's a point I try to make in my columns as often as possible. We think this is an American-- We tend to be a bit locally based in the US and we don't look around the world, but there are other governments.

For example, a good example is Britain and Germany. In Germany, you have a center-left government. In Britain, you have a center-right government. Both of them their ratings have gone into the-- Poll ratings have gone into the tanks since inflation spiked in Britain and Germany. People tend to blame the government indiscriminately when price rises go up. Jimmy Carter found that in the '70s, and a lot of governments have found it now.

Now, as your caller infers or your text inferred, it's not necessarily Joe Biden's fault. He didn't have anything to do with the supply chain shock, which resulted from the Coronavirus pandemic, which was by far the biggest factor in the inflation spike, but because he is in office when it happened, he got blamed. As I said, the same thing has happened to governments in other countries. Your caller or your text makes a very good point.

Brigid Bergin: John, another listener texts, "Is any of the current inflation due to the Inflation Reduction Act," and what this listener text describes as runaway spending.

John Cassidy: Well, there's a huge debate obviously about how much or whether at all the Biden spending bills impacted inflation. You can find people from across the political spectrum usually to argue that it was all due to the higher spending. That's the Republican point of view. Some Biden people said nothing to do with the spending. It was all a supply shock.

I think most people, the Federal Reserve is for example, as I said that higher spending did have something to do with it, but it wasn't the major factor, and it wasn't the Inflation Reduction Act. The big stimulus to the economy was the original American Rescue Act, which was introduced in March 2021, immediately after Biden took over. That's the controversial one. The Inflation Reduction Act, which was largely to do with green spending has had very little to do with inflation, I don't think.

Brigid Bergin: I am speaking with the New Yorker's, John Cassidy. I'm Brigid Bergin in for Brian Lehrer, and we're talking about the economy and the politics of the economy. We need to take a short break, but we will be back to continue this discussion plus more of your calls right after this. It's The Brian Lehrer Show on WNYC. I'm Brigid Bergin in for Brian today.

My guest is John Cassidy, New Yorker staff writer who writes about the economy and politics. John, I want to jump right back in with a caller. Let's go to Carl in Staten Island. Carl, thanks for calling WNYC.

Carl: Good morning. Thank you for taking my call. I'd like to know why we're not talking about during the Trump administration that we put tariffs on our biggest trading partners, why Biden didn't remove those tariffs when he was elected, and why we're not talking about Trump increasing those tariffs if he is elected.

I believe he said he was going to increase tariffs on Chinese products by 100%. Now, I think he's stupid enough to know that you can't increase them by 100%. I think he meant to say 10% or 20% or something. Why aren't we talking about that?

Brigid Bergin: Well, Carl, let's talk about it. John, he raises a good question related to tariffs on some of our exports. Tell us a little bit about-- put that question in a little context for us.

John Cassidy: Yes, a good question there, Carl. As he said, Trump introduced a whole range of tariffs including on the-- I presume he was referring to the European community, which is one of our largest trading partners, but also China as well. That, obviously, if you increase putting tariffs on is basically just charging importers attacks when the goods cross the border, so that makes things more expensive. If you are buying a computer made in China, or a car made in China, or whatever, it becomes more expensive because there's an import tariff on it.

Now, Trump has said he hasn't put out his formal economic program yet. I would imagine they'll wait months before they do that, but in his speeches, he's been threatening to raise the tariffs on Chinese goods to 50%, which would be a very large tariff. If the good cost $100, there'd be a $50 tariff on it, so it costs $150 to an American consumer. That in itself obviously would raise prices, which would raise inflation.

The caller also asked why the Biden administration hasn't got rid of the Trump tariffs, which is a very good political question. The reason is, I think they realized that Trump tapped into a pretty strong political force here, which is resentment at China's rise and a feeling the Chinese have been cheating to some extent the Americans because it's very hard to sell American goods in China.

It wasn't until recently, anyway. The Biden administration, to some extent, has adopted this economic nationalism that Trump introduced. Now, they've done some more substantive things as well, a lot of more substantive things through the Inflation Reduction Act and trying to expand the semiconductors and green manufacturing, et cetera. The caller is right. They didn't get rid of the Trump tariffs.

Brigid Bergin: John, we have another listener who texts, "Have we reached a point where the Fed's high-interest rates are actually causing the unexpected increase in inflation, specifically because mortgage rates are higher and tied to high Fed funds rates and the higher than expected housing inflation cost?"

John Cassidy: That's another good question. Higher interest mortgage rates don't feed into the consumer price index directly. Higher interest rates and the Fed is not the reason why the inflation weight went from 3.2% to 3.5%. Actually, there's some very puzzling things going on, for example, despite higher rates and the fact that rental inflation-- well, you never know this in New York, but across the country, rental inflation seems to come down a bit for new renters as interest rates have gone up, what's happened in the official statistics, the cost of shelter, which is a big part of the consumer price index has still been rising.

Actually, the main reason inflation went up in the most recent report were two things. One, gas prices have gone up because of the situation in the Middle East, and people worried about now a war between Israel and Iran and the oil price went up again this morning and is now $90, and you see that at the pump very quickly. What happens in the oil markets get fixed through to the pumps within a week or two.

Gasoline prices have gone up, and the cost of shelter, which is basically rents, mortgages, et cetera, went up a bit as well. Most economists expect it not to come down. They were the two reasons why inflation rate went up. Now, most economists would say they are temporary things and they're going to be reversed in the next few months, but we just don't know. Who knows really what's going to happen in the Middle East?

Brigid Bergin: I have a listener with another text. We're getting a lot of really great texts to this question. Question is for you, John. Thematically, I just want to note that a lot of listeners have talked about the cost of food and the cost of groceries and how that has become a real issue, but this listener texts, "I notice people complaining about inflation, but still spending.

They complain about gas prices, but by huge gas-powered trucks, they complain about restaurant prices, but it is still hard to get reservations. They complain about airline and hotel prices, but travel is booming. Why the disconnect?"

John Cassidy: That's all true. Everything the person or the listener said is true in that text. It's a very good question. As I say, it's part of this vibe session debate. If you just look at people's spending patterns, spending's been very strong, but job growth being very strong, you would say, well, people should feel better about things. As I said, I think it goes back to this inflation shock. You've got to remember for the last 20 years, really, we got used to having virtually no inflation.

I'm old enough to remember the last big inflation in the '70s and '80s, but most people aren't. They grew up, or they've spent the last 20 years in an environment where when they went to the store, the prices were pretty much the same as they were a year ago, and, in some cases, had fallen. Then, suddenly, inflation spiked up to 9% overall, and in some particular cases, including some very salient goods like meat, and eggs, and milk the prices really did spike up a lot, 30%, 40%, 50%, 100% maybe for some people.

It seems, to me, that my price of my local eggs has definitely went up 100%. I think that's the disconnect. People still are mad about the increase in consumer prices for certain goods. In terms of restaurants, that's another thing which has definitely gone up, and New Yorkers like to eat out a lot. That will have impacted that fast food. Even the cost of taking takeout is also one of the items which has gone up quite a bit. Now, in terms of our overall consumer budget, that's not that big a deal, but again, it's a thing, and I think it feeds into this whole vibe session.

Brigid Bergin: Sure. We've talked about these dueling narratives, how we've seen record job growth. Is there any link between the high job growth and inflation as well?

John Cassidy: There doesn't seem to be, no, because until very recently, we've had record job growth and inflation's been coming down. That's the remarkable thing. You raise a very good point. Economists for years believe that, if unemployment went down, inflation would go up. That relationship is called the Phillips curve and has been around for 50 years, named after a New Zealand economist, actually, Bill Phillips, at the LSD. Anyway, that's getting off-topic.

Economists thought that as unemployment come down, inflation would spike as a general thing, but what we've seen over the last couple of years, the inflation rate spiked in, I think, June '22 was the peak at about 9%. Since then, unemployment has come down steadily, as I said, and it stayed very low. We've had more than two years of unemployment below 4%, which is a record going back to the late 1960s, and inflation hasn't. It's been coming down, it's gone up a bit.

Again, we're talking small changes here, a couple of tenths of percent. We'll just have to see if it's the start of a bigger jump. In terms of economics and welfare, two or three-tenths of percent on the inflation rate is just not that big a deal. If it turns into a huge spike and we get back up to 10% and 9% inflation, obviously, that would be a huge deal.

Brigid Bergin: Sure.

John Cassidy: It's one of two or three-tenths of a percent on the CPI doesn't make much difference to people's lives. As I said, we're in an election season, and every tenth of a percent is going to be fought over and magnified and propagandized on both sides, et cetera.

Brigid Bergin: At one point, people within the administration had started using a term Bidenomics. Back in January, I spoke with Stephen Benjamin, he's a senior advisor to the president and a director of the Office of Public Engagement, and he defended and defined the term.

Stephen Benjamin: Bidenomics means that we are focusing on a strategy that caught marshals, all of our better instincts to put people to work in this country and build the American economy and we're seeing the fruits of those labors.

Brigid Bergin: John, is that a term you hear anyone use anymore and do you think it helps or hurts the administration and what are the ways that they are trying to stop inflation?

John Cassidy: Again, a very good question. I think Bidenomics didn't poll very well, so they don't use it as much as they used to do. The president did try to embrace it at one point and used it in his speeches, but that seems to have stopped a bit. I think the president himself is very proud of his record on various things and has some reason for that. If you point to the industrial policy that they've introduced, reshoring jobs, getting the huge semiconductor manufacturing plants, the big one just opened in Arizona last week.

That manufacturing employment is gone up at about 800,000 or 900,000 since he took over. That's the thing which Trump talked about, reshoring American manufacturing, but never actually did anything. You remember him arguing with the Chairman or the chair rather of General Motors and various other auto plants and steel manufacturers, et cetera, that they should reopen plants in the US, but nothing really happened.

Under Biden, it has started to happen both through the semiconductor manufacturing and the big grants for green investments, which have led to big investments in electronic vehicle plants all across the country. Biden's got a lot to advertise. The problem is, every time he opens his mouth about the economy, people say, what about the price of eggs? What about the price of groceries? There's been a big debate, I think, inside the Biden camp about this.

You even saw, there was a report a couple of days ago about Ron Klain, former White House Chief of Staff, and a very senior advisor to the president still, I think, who was basically saying, like I just said, that there's not very much point talking about the economic record when people just say, well, I just been to the grocery store and prices have gone insane.

Brigid Bergin: Right.

John Cassidy: It's a very difficult narrative to sell. I think Klain and some other people think that Biden would be better, the campaign will be better off focusing on other areas, especially the threat that Trump represents and the abortion issue, and basically, non-economic issues rather than making Bidenomics the central issue in the campaign.

Brigid Bergin: Well, I want to make sure we also touch on what former President Trump, any proposals he may have for addressing inflation but I want to go to Peter in Great Neck who has a question about the Trump tax cut from 2017. Peter, thanks for calling WNYC.

Peter: Hi. Thank you for taking my call. I'd like to address the fact that I think the economy that we're living in today, and I understand I want to preface this by understanding that the stock market is not the economy and vice versa. The economy that we're living in today is largely in my view benefiting from the Tax and Jobs Act of 2017 which reduced corporate tax rates.

Created a vast incentive for companies to stay in the country and not reshore, and also invest in create all sorts of incentives to invest in R&D and other types of corporate investment. I am not a partisan person. I don't think Biden is responsible in any real meaningful way for inflation, but I think the benefit of the act of 2017 is what we're experiencing today in terms of corporate competitiveness and profits.

Brigid Bergin: Peter, thanks for your call. John, any reaction to the point Peter raises?

John Cassidy: Well, obviously, that is one take on the 2017 Tax Act. There's very little empirical evidence to support it, but certainly, the economy did do well after the 2017 Tax Act, but it was already strong going into it. Unemployment was already low, we had very low interest rates at the time, et cetera. I don't think there's any evidence that after the 2017 Tax Act, you saw a huge surge in corporate investment or corporate reshoring. That seems to have happened under Biden, the big announcements about manufacturing plants and reshoring.

Now, the caller could argue this is all delayed, and it is the real reason they're doing it is because the tax cuts in 2017. It's the way economics works, it's almost impossible to contradict that definitively, but if you just look at the timeline, most of the big corporate announcements have come during the Biden administration, especially after the Inflation Reduction Act and the infrastructure bill, et cetera, all of which were more specifically targeted at reshoring and domestic manufacturing, et cetera. I think on this one, Biden deserves the credit.

Brigid Bergin: Then let's look at anything that we can see that Trump has proposed for addressing inflation going forward. We've talked a bit about raising tariffs. Is there anything else to his economic plan that he's presented for his reelection?

John Cassidy: There isn't an economic plan yet. He just spouts on the stump various things, but there's no Trump economic program yet. I'm not sure when they'll put that out. The big elements that seem to be there so far we've touched on. Number one, making permanent the corporate and high-income tax cuts in the 2017 Republican tax bill, which we just talked about because it was so expensive that bill at the time, they only did it for 10 years with the sunset provision because the budget-busting aspect of it, it would've been too much at the time if they did it in perpetuity.

Now the idea is to make those tax cuts permanent. That's one side of it and that's the Paul Ryan side to Trump. The other side to Trump is, of course, protectionism, America First, let's stick it to the Chinese. That's on his stump, he's talking about 50% in tariffs on Chinese goods, tariffs on goods from Mexico, even cars coming in from Mexico, keeping or even raising the rates and tariffs on the EU. Basically, it'd be back to the early 1930s it looks like when there was a big shift towards protection in the US.

I'm enough of an orthodox economist to think that that would have negative rather than positive impacts on the economy, and maybe that he wouldn't do everything he says on the stump. Obviously, you can't take everything Trump says literally, but raising tariffs and basically being more protectionist, taking America First economic policy does seem to be very central to his platform so he'll certainly do something.

Brigid Bergin: Just before we let you go, John, I'm wondering how immigration figures into the economic picture. The current migrant situation here in New York City has been a significant drain on the budget, but historically, immigrants have fueled economic growth, haven't they?

John Cassidy: Oh, definitely, yes. The whole immigration issue is-- I think there have been some recent studies suggesting that one of the reasons actually inflation has come down at the same time as unemployment has also come down is immigration. That there's actually more work-- as I said, most people think that if there's high pressure in the labor market, a lot of people looking for workers, wages should go up, which would drive prices up as well. That hasn't happened, and it didn't happen in this most recent inflation report. The reason wasn't higher wages.

In fact, in the employment report, which came out last week, wage growth came in at the lowest it's been for two years, 4.1%. It isn't the higher wages which are driving up inflation to the extent inflation's going up a bit. Now, why is wage inflation moderating, at the same time unemployment is very low? Because, as I say, if you can't find workers, the obvious thing to do is to offer them higher wages, and that should lead to higher wage inflation and could feed through to inflation to consumer price inflation.

One of the theories is that actually there's been considerably more workers out there than officially counted because of undocumented migration. The Census Bureau and the Congressional Budget Office, which both try and count the size of the labor force disagree on this. The Census Bureau basically isn't counting a big influx of migrants over the last couple of years whereas the CBO thinks that the labor force is bigger than officially estimated and that's one thing which has helped inflation to come down.

To that extent, it's not the full story, but if that story is true, then actually, the [unintelligible 00:39:51] undocumented migration over the last couple of years has helped keep inflationary pressures down in the economy.

Brigid Bergin: Well, we're going to have to leave it there for now. I want to thank John Cassidy, New Yorker staff writer who has a column about economics and politics. Thanks so much for joining me.

John Cassidy: Thank you. I enjoyed it.

 

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