America's Talking - Episode 44: U.S. economy shrank in Q1, raising concerns about stagflation, possible recession

Episode Date: April 29, 2022

Join The Center Square's Executive Editor Dan McCaleb and D.C. Bureau Chief Casey Harper as they discuss: U.S. economy shrank in Q1, raising concerns about stagflation, possible recession. Americans more worried about inflation than they have been in decades. Biden administration faces mounting Title 42 concerns. Critics raise alarm over new DHS ‘speech police’. Support this podcast: https://podcasters.spotify.com/pod/show/america-in-focus/support Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

This is really troubling. This is not what experts expected. It has big implications for the economy, big implications for the future and for everyday Americans. Welcome to American Focus. I'm Cole McNeely, general manager of America's Talking Network. American Focus is production of America's Talking Network. You can listen to America and Focus and all of our podcast at AmericasTalking.com. That's America's Talking.com. Now here's your host, Dan McAulow. Thank you, Cole, and welcome to the America In Focus podcast, powered by the Center Square. I'm Dan McAulib, executive editor of the Center Square Newswire Service. America In Focus is a production of America's Talking Network. You can find all of the Center Square's great podcasts at Americastalking.com.

Joining me again today is Casey Harper, Washington, D.C. Bureau Chief for the Center Square. Casey, we are recording this on Friday, April 29th. The NFL draft is underway in Las Vegas. Casey, are you a draft nerd? I am not a draft nerd. I haven't been a big fan of drafts since I got, you know, picked last for kickball every week for a few years. So I don't know about you. On the elementary school playground, you were always the last one picked?

Yeah, that's where men are forged, legends are made, and here I am. But, you know, those hardships brought me to where I am today. All right. Yeah. Well, you missed out then, Casey. See, a lot of activity last night in the first round of the draft. Seconds and third rounds will be tonight. I'll be tuning in a little bit anyway, checking in and out my Browns.

Yes, I'm a bronze fan. Didn't have a first round pick last night. So this is usually our Super Bowl. Right. I was going to say this, it makes sense now why you're so interested in the draft because when you're a Browns fan, it's always a rebuilding year. It's always like this is our year to start rebuilding. So the draft is really...

Not any more. This team is built for championships. Okay. All right. Yeah. Just one more draft is all we need and then we'll be ready. That's right. All right.

We actually have some news to talk about today, Casey. One, a bit of a shocker. First quarter GDP numbers came out and the American economy actually shrunk. Experts were expecting lower GDP growth, but they weren't expecting what the report found. Tell us about this. Yeah, this is really troubling. This is not what experts expected. It has big implications for the economy, big implications for the future and for everyday Americans. And so it was projected that the economy would actually grow. Actually, the economy almost always grows unless there's something crazy like COVID. The economy actually needs to grow

just to keep up with the increasing population. And of course, the ever increasing debt. you know, it's worth pointing out, and it's part of context of the story is that the federal, you know, debt has surpassed GDP, which is a new benchmark. So it was kind of worrying what does that mean when the federal debt passes the nation's GDP and now the GDP is shrinking, which is not good. But so the Bureau of Economic Analysis, which keeps track of these kind of things, reported this week that the economy shrank by 1.4%. Now, it was projected the economy would grow by 1%. So that's more than a two-point swing. Last year, this is a big change from last year, we actually saw pretty significant GDP growth, almost 6%, which is high. But a lot of that was because of the bounce back from COVID.

So all the businesses were shut down in 2020. And so when they came back, there was kind of a natural GDP growth. But now, despite trillions in federal spending last year, government programs to accelerate the economy. We saw this quarter that it actually decreased, even as inflation and the federal debt continues to increase. Now, we're about a month already into the second quarter. If the GDP, if the economy shrinks, the GDP is in negative numbers, again, is that an actual recession? Well, it's an indicator that would be heading to a recession. The GDP is a weird number.

In some ways, you know, the GDP is a bit detached from reality because, you know, the overall size of the economy is such a, is really hard to calculate. It's kind of nebulous. So it's really just an indicator. The economy is so complex that you don't ever know anything for sure, but you have these indicators, these red flags that can go up. And so it's not that the, you know, economy shrinking a certain amount would be a recession. It's more that this is a sign that things are going in the wrong. direction. And yeah, if this continued into the next quarter, that would be really worrying, especially just because there's been so much federal spending to stimulate the economy.

And presumably we should still be in some kind of COVID rebound, right? I mean, we should still be recovering from COVID and businesses coming out, flourishing. But we're seeing that the pressure has been too much. And Americans are actually more worried about inflation. They have been in decades, you know, which we covered some this week. but inflation is at the highest level in like 40 years. And so all these are, again, these are all just red flags. And we kind of cover these individual red flags.

The Fed is raising interest rate. But eventually, these start to add up to a pretty troubling picture. And today you're talking to an economist who has some significant concerns about this week, sort of tying all of the economic news together and what it means for Americans and looking forward to that. any insight into, I know you haven't had that interview yet, but any insight of what you're going to talk about and what his concerns are? Yeah, well, it's all against this backdrop of forgiving student loan debt as well, you know, so Biden has been talking a lot about forgiving student loan debt, are canceling it. That's, you know, politically, you could see some of the motivation.

I mean, you would think that a grateful millennial generation would turn out in droves for the Democrats if Biden did that, or at least that's the reasoning for those who support it. the opponents say that, I mean, this is going to further increase inflation. There's been, you know, a recent poll that showed Americans think that. But, you know, there's kind of one of the problems when federal spending is so rampant, the mentality kind of shifts to, well, if they're going to spend all this money, I might as well get mine, right? I might as well get mine.

If we can spend, you know, $1.9 trillion on a COVID bill. And I'm not really sure what that did for me and my family. Why can't we at least forgive student loans? We cancel student loans. It's like $1.6 trillion. It's actually less than the COVID bill that was passed seemingly so easily last year. So all that goes against the backdrop of this really struggling economy. One thing we're going to look at is what the Federal Reserve, when I talk with this expert,

what the Federal Reserve can do to address it. Federal Reserve doesn't have a great track record on this. They raise interest rates to try to curb inflation, but inevitably when they raise interest rates, it can cause a recession or at least economic decline. So what are these Federal Reserve interest rates going to do to the economy? And, you know, we've even seen mortgage rates increase. If you were open to buy a home, you probably should have done it a few months ago because the mortgage, the interest rates are steadily increasing.

That's one evidence of what the Federal Reserve has done. So when the Fed tries the rain and inflation, it can work, but it comes at a pretty hefty economic cost. So if the president is talking about canceling student loan debt, why not just cancel mortgages, pay off everybody's mortgages if we're handing out. Dan, don't give them any ideas. Honestly, the spending under this administration right now is just, I don't know what the adjective is I'm looking for. It's just out of control. It's just alarming.

All right. Well, let's talk about inflation a little bit more. Casey. You covered, there was a new poll out that Americans are significantly worried about the rising costs of just about everything. Tell us about the pool. Yeah, so this poll addressed the very question we've been discussing. And it asked Americans, you know, about their spending habits. We have a couple ones, but it's from Gallup. And it's so that Americans say the economy is the most important problem in their mind, which is important. Actually, that if I try to kind of add some political flavored all these just as we head towards the midterms.

Republicans are generally a little more trusted on the economy while Democrats are more trusted on issues like health care and climate change. But the poll found that Americans' confidence in the economy remains very low. This is a quote. And mentions of economic issues as the most important problem in the U.S. are at their highest point since 2016. Inflation, which registered as a top economic problem last month and continues to be, was previously at this level in 1984.

So Americans are more worried now about inflation than they have been since the 80s. So, you know, this show, this is, you know, one, this is just shows how Americans are perceiving the economy. It obviously has some political implications for November, but also has to do with consumer confidence. It affects how Americans invest. It affects whether they're willing to take risks or buy that house that might be a little outside of their budget. It makes them play it safer. And, you know, all the consumer confidence markers we've seen show that people are more concerned. And also, you know, the most biggest way this hits home for a lot of people is gas prices.

And Biden, President Joe Biden is not getting by unscathed. You know, another Rasmussen reports poll found that 61% of voters blame Biden for these gas prices. So when you look at what the American people, how they feel about this economy, they're very very worried about it. They're very worried about inflation. The economy is top of mind. They're very worried about gas prices. And despite President Biden's attempts to blame Vladimir Putin for gas prices and inflation, they don't buy it. They are the majority blame President Biden and his policies. And so obviously this has big implications for November. And it also just has implications for how the, how aggressive the Biden administration thinks they need to be

in addressing this inflation. And when consumers express this level of concern about the economy, they do get safer with their spending. Generally speaking, they do maybe not buy that whatever, anything. Stereo system, TV, whatever. Don't go out to eat as much. Don't go out to the movies or any entertainment venues as much. And that also has a future impact on the economy. If Americans stop spending on things like this, that's going to affect the economy in the future.

too. Yeah, not everyone can maintain the Dan McAulb lifestyle. And as this economy gets worse and worse, the entertainment, the nightlife, you know, they can't do it. Sorry, guys, Dan is infamous for his nightlife. Yeah, my nightlife at home with my wife. Yeah. Watching TV land. Watching the NFL draft. NFL draft. That's right. Watching the NFL draft. But you're absolutely right that, again, this is another red flag. So, people often in reporting, they try to boil reporting the economy down to one thing and say, oh, because of this one inflation marker, everything is so bad. But I try to be a little more balanced in my reporting and try to get people the fuller picture

and say, well, there's this. There's these other economic indicators. This is how it's working together. But right now, they're all working together in the wrong direction. And, you know, federal spending is really, I've been talking a lot about the role of federal spending in this. but it's because no one is really talking about it. And it's this stat, I'm trying to bring this statistic up more and more.

But this is, to me, the biggest statistic that's being ignored in pretty much all of American politics right now. And it's that the total U.S. money supply has increased by 40% in the last two years. If the total number of dollars is increased by 40%, so we can say inflation has increased, you know, 10% or depending on the different metrics, but the money supply has increased 40%. So depending on how you measure inflation, I mean, how much is inflation really increased? And if all that money is floating around out there, how long can you really pull it back? And are we just now, are we going to continue to feel the effects of that increased money supply for months and even years? The economists say that inflation will very likely head into 2023. So this is going to be around for a while.

Democrats are going to probably pay a price for it in November based on all the polling we're seeing. And Americans are really worried about it. Another major concern of Americans is this ongoing spike in illegal immigration. It's been an issue really since President Biden took office and he eased some of our border policies, including something he put in place earlier this month, and that is the end of Title 42 enforcement. Title 42 was a policy put in place under President Trump during the pandemic that allowed border patrol agents

to immediately expel illegal immigrants who are crossing the border that are seeking asylum. President Biden wants to end that next month. A federal court judge has issued a temporary, restraining order against that decision, but it's still an ongoing concern. You wrote about this topic this week. What's going on with it? This is one of a few immigration policy changes that have really come to ahead in the last few weeks. Illegal immigration has absolutely soared since President Biden took office. In the month of March alone, there were 220,000 encounters that Border Patrol had with

illegal immigrants coming across the border that of course doesn't account for those who got in undetected and who knows how many that was. But you can ask yourself if you're listening, if your town has more than 220,000 people living in, does your town have a population of more or less than 220,000? The town I grew up in had a population of about 70,000. So just thinking of my entire town coming across the border four times every month, the entire population of my town, four times every month. These are really big numbers. They've increased a lot. And the more overwhelmed border patrol gets, and they are overwhelmed. And actually, I'd love to hear you talk a little about that, Dan, in a moment because I know you've been working with other reporters on a lot of great border coverage.

So I know you have some more like context out of this. But the more the border patrol gets overwhelmed, the more people are getting by that they're not detecting. Right. And so the more of one, they are, the less reliable their numbers are in a way because they can't. an account for how bad things are getting. But this is getting really bad. Title 42 is a big legal battle over it right now. As you said, the idea was to keep illegal immigrants out of the country because they might have COVID.

Now, the Biden administration has tried to lift it, but the judge just said maybe they can't do that. There's a few lawsuits against the Biden administration for their kind of lack of rigorous enforcement of some of these immigration measures. But it's all coming to a head right now because the the numbers of the legal limits is so high. I don't know if you wanted to share anything, Dan, about kind of what you're seeing there and the different reporting about kind of the chaos of the border right now.

Sure. Well, first, the Department of Homeland Security Secretary testified before a congressional committee this week, and he painted a picture that everything's under control, that they have a plan in place in case there is a surge on top of the surge if Title 42 is, in fact, lifted. but our correspondent at the border, Bethany Blankley, has talked to both current and former patrol agents who painted a far, far worse picture of what's going on there. In fact, everyone she talked to within Border Patrol and a retired Border Patrol agent said that essentially we have lost operational control at the border as well as operational awareness. And what we mean by operational awareness is they've got no clue who's coming over the border. How many, who these people are, whether they're criminals or what, and that if there is another surge on top of the current surge, that it's going to be chaos.

And some are already saying it is already chaos. And what happens to these people when they cross the border? It's really concerning. Yeah, I mean, loss of, would you say operational awareness? Operational awareness. They have no clue who's coming across the border, how many are coming across the border. Yes, they log encounters. There were more than 2 million encounters by Border Patrol agents, law enforcement at the border last year.

But that does not account what they call, it's their term, gotaways, the ones who weren't detected. Because miles and miles and miles, hundreds of miles. of the border aren't protected or there aren't law enforcement agents observing and able to monitor the border in those stretches. And they have no idea how many people have entered the country illegally undetected. Yeah. Loss of operational awareness. I think I think that's what they call it when Biden gives that blank stare in the middle of his speeches. But no, I want to add one more thing. on this topic, though. I was at the Supreme Court on Tuesday because there's another, the remain in Mexico policy, which is somewhat related, similar. And it's definitely related. It's about

having, you know, asylum seekers and different people wait in Mexico for their court proceedings because a lot of people don't know this, but for those who are, you know, caught, even those who are caught by Border Patrol, they often will just get a piece of paper telling them, you know, please come back for your court hearing on this date. But, the vast majority of them never come back for the hearing. They disappear into the country, right? And no one really goes looking for them, ICE, Immigrations and Customs Enforcement. Biden has instructed them to really only target, you know, those with criminal records.

So, and even those, they don't get all of them. So, you know, if you come across the border illegally, unless you are, you know, like have really, like, murdered someone or committed some kind of violent crime or something, you can get your little court date and, you know, head up to California or anywhere, anywhere you want. Yeah, anywhere you want, any state. And that's why, you know, I brought up being the Supreme Court because I was able to ask a question to attorney generals from Missouri or Missouri in Texas. And, you know, one of the things has become a talking point is we're all border states now. That's what they're saying because people are just, there's so many people and they can go anywhere they want.

And the other thing of this is the fentanyl. You know, fentanyl is a huge crisis in the country right now. Dangerous. That's dangerous. Yeah. There's been so many overdoses. It's becoming so prolific. And, you know, so much of it is coming across the southern border.

And so while, you know, states like Missouri and New Jersey, they may not have the same levels of migrants. They're all struggling with these fentanyl use. And so that has kind of helped raise this issue to even more national prominence and made states that our border states get really involved. Yeah. As a matter of fact, last week at the Center Square in Washington State, we covered a talk by a Washington U.S. congressional member who said the fentanyl crisis in the state of Washington, the far northwest corner of the country, is out of control. So it does, it's not an issue that just impacts border states like Texas and Arizona. Well, that's another, that's concerning. And, of course, we expect developments on this front in the next several weeks,

and we'll be covering it at the center square.com. Another sort of an, I don't know, interesting story, unusual story with the Department of Homeland Security, where they are creating a new board within the DHS that's going to combat disinformation. People are calling it speech police. what's this about? Yeah, this is a very, very, as you said, interesting story. It's kind of alarming. As DHS struggles pretty mightily to handle the fentanyl, the border crisis, as we just spoke about at length,

they announced this week that they are starting a disinformation governance board, is what they call the disinformation governance board. And it's basically to put the full law enforcement power of, of DHS behind monitoring and policing certain things that are deemed, you know, disinformation. Now, what they cite- Yeah, they called it a threat. Yeah, they called it a threat. And they call it a huge threat, actually. Mayorkas did. DHS Secretary Alejandro Mayorkas said it was a huge threat. And they stood up this, you know, this government governance board. And what they said it was for

is to target Russian disinformation. And then they talked about migratory disinformation. There's some, you know, people who basically take advantage of illegal immigrants a lot because, you know, of the language barrier, different things. They're a pretty vulnerable population when it comes to scams and trafficking and different things like that. So there is, that's what those are the two issues they pointed to. But a lot of people were really quick to say, wait a minute. This just, you know, this sounds a lot like what we see. We saw like in the Soviet Union or, you know, fascist states, a sort of ministry of truth. where you have a government agency with law enforcement power that's in charge of deeming which speech is okay, what speech isn't.

And of course, there's always this kind of noble motives that are attributed to those agencies by the government. But we've seen in history that that's been really dangerous. So a lot of people up in arms in this. Mark Rubio called it a Soviet-style censorship agency that's come basically, you know, undermining the First Amendment. He said that this, they called it. Well, he calls them speech police, basically. He said, guys, it's time to wake up. This is a quote, if you don't think these people are coming after free speech.

If you don't think they're coming after freedom, you better believe it now. One thing that made this criticism even worse was Nina Jekowitz, who is helping out with who's going to be on this board. She said on Twitter she'd be on this board. She was tweeting about the Hunter Biden laptop and disinformation during the 2020 election. And so that's a great example of how this could really come. Meaning the 100 Biden laptop, the New York Post story about it was disinformation, even though it's large parts of that story have been proven true. Yeah.

And she's tried to kind of defend her comments and say that she wasn't actually saying that. She was kind of quoting one of the candidates at the time saying that. So she kind of backpedaled from it. And, you know, so it is a little muddied. but it's a great example of why this is so controversial. So a lot of people when that Hunter Biden laptop story came out said this is Russian disinformation and it was censored by Twitter, you probably remember. But now as time has gone by, we've seen more and more evidence come out to confirm that story.

And the New York Times has confirmed that the laptop exists. And so that obviously swayed the presidential election. I mean, who knows if it actually was enough to affect the outcome? We'll never know. But the creation of this disinformation governance board, the timing of it is also a bit curious. Yes. It happens within a week of billionaire Tesla founder Elon Musk purchasing Twitter saying he was going to make free speech was going to be his guiding force and leading Twitter because of the years of censorship on Twitter. So I don't know that they're connected.

I don't know if you have any insight into that. but it just seems curious. It does seem very curious. A lot of this is often politically motivated. It's coming from the top. And so it could be that this has been a discussion for a long time. And then Musk's purchase has just elevated it to the top of the to-do list for the, for the administration. We won't know for sure.

But they are definitely, the timing is very interesting. And I think this is going to be a big story to watch because whatever this agency does, I mean, I think this could be on the chopping. like if Republicans get power to shut it down. They're pretty upset about it. And they've really taken on this mantle of free speech. So this would be an easy opportunity for Republicans to actually do something legislatively to defend it. Because they haven't had a lot of control over what social media companies do.

But this is something actually a lawmaker could address. Well, thank you for your insight, Casey. But that is all the time we have this week. And a reminder for our listeners. So you can find all of the things. underscores podcast at americastalking.com take a look please subscribe there is no cost that's americas talking.com for kacey harper i'm dama caleb we'll talk to you next week