'Really, really squeezed.' CEOs sound alarm over weakening consumer spending

0:01 It is time now for Money Power Politics.

0:02 And this evening, the president's trade policy took another hit.

0:04 The U .S.

0:05 Court of International Trade ruled against

0:07 the president's 10 percent global tariffs,

0:10 saying they are invalid and unauthorized by law.

0:13 Remember, back in In February,

0:14 the president signed an order imposing these import taxes just hours after

0:18 the Supreme Court struck down most of his first round of tariffs.

0:22 Brooke Masters joins me now.

0:23 She is the U .S.

0:24 managing editor for The Financial Times and our boy Justin Wolfers,

0:28 professor of economics and public policy at the University of Michigan.

0:31 And guess what?

0:32 This little boy is starting a brand

0:34 new media company all his own, Platypus Economics.

0:37 Congratulations to you, Justin.

0:38 But you are not getting the first question.

0:40 What do you make of this decision, Brooke?

0:42 I think it was in some ways predictable.

0:45 They have been trying to use 1970s laws to do things that no

0:49 president has done in the 50 years since those laws were passed.

0:53 Yeah, because it didn't make any sense.

0:54 It's certainly an interesting interpretation of the law.

0:57 Justin, the administration hasn't even finished

1:01 refunding the billions from the previous tariffs.

1:04 How significant is this?

1:04 Like, what's the actual IMPACT.

1:08 WELL, IT'S A BIG DEAL WHICH IS IT MAKES A DUMB TARIFF A LITTLE BIT

1:12 MORE DUMB AND MOVES US TO THE NEXT DUMB STAGE OF THIS DUMB TRADE WAR.

1:16 SO THE LEGAL AUTHORITY they were relying on was one

1:20 that applied whenever there was a balance of payments deficit.

1:24 Now, there hasn't been a balance of payments deficit of any

1:28 size in the United States for at least 50 years.

1:31 Literally, it's impossible, our balance of payments deficit is $0.

1:35 This was always a stopgap measure.

1:37 The original tariffs are unconstitutional.

1:39 These ones are unconstitutional.

1:41 And eventually they're going to have to get

1:43 round to a whole bunch of other tariffs

1:44 that are a bit more work and a bit more of a pain in the ass,

1:47 and they're not very good at getting their homework done.

1:48 There is a secret way around this.

1:51 If you've got a good idea, I've heard,

1:54 you can take it to Congress and pass a law,

1:56 and the Supreme Court gave Congress the power of the tariffs.

2:01 The Supreme Court may have given Congress,

2:03 but they're forgetting Congress has decided to stop

2:06 doing their jobs for the last few years.

2:07 I want to cover a new topic, though,

2:09 because let's talk about the markets, which are different from the economy.

2:12 We've seen strong corporate earnings.

2:14 We know AI and the future of AI are not just keeping the markets afloat,

2:18 they're keeping markets very high.

2:20 But I want to share some things we learned today.

2:22 McDonald's CEO said on their earnings CALL, MCDONALD'S.

2:25 THE CONSUMER SPENDING IS GETTING A LITTLE BIT WORSE.

2:28 THE CEO OF PAPA JOHN'S SAYS HIS CUSTOMERS

2:30 ARE NOW TRADING DOWN TO SMALLER PIZZAS.

2:33 THE CEO OF CRAFT HINES TELLS THE WALL STREET JOURNAL THAT CONSUMERS

2:36 ARE QUOTE literally running out of money at the end of the month.

2:41 And Whirlpool said today that they haven't seen demand this soft since 2008.

2:46 What does all that tell you?

2:47 K-shaped economy.

2:48 People at the bottom half of the and so therefore what we are

3:06 seeing is most consumers who don't have extra money are really, really squeezed.

3:10 Then help me understand this.

3:12 And Justin, I'm coming to you in one second.

3:14 I've been saying it all week.

3:15 I just came home from the Milken conference, right?

3:17 Filled with the most successful investors who are

3:20 talking about this like these are the go-go days.

3:23 So beyond this K-shaped economy is the ultra,

3:27 ultra 1%, so disconnected from the rest of the world.

3:31 If you take the Forbes 400, right?

3:33 Richest people in the world at the end of the Biden economy,

3:36 their wealth has exploded in the last two years.

3:42 Absolutely.

3:44 And they are more and more isolated from it.

3:45 If you look, people are living in penthouses and in gated communities,

3:49 and they don't even ski with the rest of us.

3:52 They have to have their own ski lifts.

3:54 They're not going to the same airports.

3:56 They're not going to public doctors.

3:57 They're truly living in another dimension.

3:59 They absolutely are.

4:00 And another thing to remember is that stock market boom,

4:03 if you look at the S &P 500, it's the narrowest boom we've had in history.

4:09 It's all dependent on a few companies and if you

4:11 happen to be a part of those companies, great for you.

4:14 If you don't, bummer.

4:15 Justin, it feels like so many people,

4:18 so many actual economists just like you business

4:21 leaders that run real companies with real consumers.

4:24 are sounding the alarm.

4:25 I just mentioned, I was with Wall Street

4:27 investors that are in this land of everything

4:29 is great and the other people who think that are our leaders in the White House.

4:33 Watch this.

4:37 THE FIRST TRUMP TERM AND THE SECOND TRUMP TERM ALL ABOUT

4:40 LOWERING ENERGY PRICES AND AN INCREDIBLY SUCCESSFUL RECORD IN DOING THAT.

4:44 YOU SAW YESTERDAY ENERGY PRICES CAME DOWN BELOW $100 WE'RE IN A GOOD PLACE.

4:52 WE'RE IN A GOOD PLACE?

4:53 I GUESS MAYBE SEAN, MAYBE I'D LIKE

4:56 TO THINK SEAN DUFFY WATCHES THIS SHOW BUT MAYBE

4:57 HE DOESN'T AND DOESN'T REALIZE THAT GAS

5:00 IN CALIFORNIA IS OVER SIX BUCKS A GALLON.

5:02 BUT HE'S WELCOME TO WATCH OR COME ON.

5:05 I JUST LOVE THE IDEA OF AN ENERGY SECRETARY BOASTING IN A MOMENT LIKE THIS.

5:09 I MEAN, JUST IT'S It baffles someone.

5:11 Look, Steph, I actually have a PhD in economics.

5:16 I studied for years.

5:17 I've read thousands of research papers and right now I'm

5:21 on television trying to tell the energy secretary that energy is expensive.

5:28 It's not that hard.

5:29 But then explain what's happening.

5:34 Explain to us what is happening that you are watching the energy secretary,

5:38 the transportation secretary on TV speak to the American people

5:42 and say the opposite of what our actual lived experience is.

5:46 You heard me just rattle off to Rook what we're hearing from McDonald's,

5:49 from Papa John's, from Whirlpool.

5:52 Look, Steph, you just turned me from enjoying

5:53 a laugh to actually a deep sense of angst.

5:57 This is the post-truth moment.

6:00 Some of us believe there is a thing that's called the truth.

6:04 And if we can't speak to it, if we can't recognise it,

6:09 if we can't see the problems of our neighbours, we can't address them.

6:14 This is a profound shift in how American politics works.

6:19 It's one that throws all expertise out the window,

6:21 but it's not just expertise, it throws out reality.

6:24 And more than anything else, that really fundamentally offends me.

6:32 For the past two years,

6:33 the Trump administration has talked about an economic boom.

6:36 They have talked about this new golden age for America.

6:39 Brooke, that golden age has not come to pass.

6:42 It has come to pass for exactly the group you and I were just talking about,

6:45 this sliver of the wealthiest of the wealthy.

6:49 Given that, how is this going to land with voters?

6:53 Because that wealthy sliver of voters that I'm

6:55 talking about are panicked about a wealth tax,

6:58 but they're not realizing the reason that wealth tax could

7:02 be knocking on their door is because their wealth is exploding

7:06 and the average voter is watching a president and an administration

7:09 making billions of dollars for themselves while people can't make ends meet.

7:13 You'd certainly see it in the popularity figures.

7:16 Trump's popularity is at lows for this administration and a lot of that are

7:21 the independents and some of the Republicans

7:23 who voted for him on pocketbook issues.

7:25 So I think it is starting to come home.

7:27 It's worth remembering it's going to be very complicated to see how

7:30 this shows up in elections because of all the redistricting that's going on.

7:34 But yes, I think the voters are starting to feel that there is a difference

7:38 between what they're hearing from the Trump

7:41 administration and what they're seeing in their lives.

7:43 Justin, how do you think it's going to land with voters?

7:45 Because sort of the people that it's really working

7:46 for, the wealthiest of the wealthy are experiencing this boom,

7:51 are experiencing this golden age.

7:53 But it's a tiny sliver of very wealthy Americans versus the rest of the country.

7:58 Matt, it's not just a let-the-meat-cake moment.

8:00 It's like, let's grab them in headlock

8:02 and stuff some damn cake down their mouths.

8:04 It's not just that you add on to this, like at this moment,

8:11 gas prices are high, food's expensive,

8:13 it's hard And the Obamacare subsidy is expired.

8:17 Very hard for a lot of working middle-class families to get by.

8:19 At this moment, the Senate Republicans are

8:23 looking for a billion dollars for a ballroom.

8:27 We used to have an East Wing of the White House.

8:29 Someone knocked it over without legal authority to do so, and it's in a rubble.

8:33 As soon as I find out who did that, I'm going to be very, very angry.

8:37 Well, good news for you, Justin,