America's Talking - Inflation Rises in Latest Data

Starting point is 00:00:00 Hello and welcome to America in Focus powered by the Center Square. I'm Dan McAulb, chief content officer at Franklin News Foundation, publisher of the Center Square Newswire Service. Inflation was elevated again in January, leading to new concerns about the cost of goods for consumers. President Donald Trump continues to announce new tariffs on imported goods, something some economists think will lead to even more inflation. But there's also optimism that Trump's energy policies essentially drill, baby drill will lead to lower energy costs at some point in the future. Joining me to discuss this today is Casey Harper, Washington, D.C. Bureau Chief for the Center Square.

Starting point is 00:00:40 Casey, Trump has been moving at breakneck pace, which is leading to some uncertainty about the economy. Let's start with energy prices. You interviewed the executive director of Power the Future, an energy workers advocacy group this week. What did he say about Trump's policies and the price of energy going forward? That's right. I spoke to Daniel Turner, Executive Director of Power the Future, future. You know, my takeaway, Dan, is of course we are in a lot of economic uncertainty, but if there's anything we can be certain about, it's that Trump is going to open up domestic drilling, which is going to help lower energy prices and gas prices as well. Now, it's complicated by his tariffs. But, you know, Daniel Turner was explaining to me that it's not just the drilling

Starting point is 00:01:21 that affects the energy prices. For instance, there's really a delay in the how long it takes oil to get to market. And so actually the oil that we are consuming now was drilled years ago. And so it's really, the prices, there's lagging, there's lagging indicators here. And so I think there has to be a little bit of patience when we expect these prices to come down. But what we do have is when energy companies can predict that the regulatory framework is going to be favorable when there's not going to be a bunch of new regulations, then they lower their prices and anticipation of that. Also, when it's easier and cheaper for them to get money, to get capital, because of lower regulations and to get leases, then that can also lower the prices more quickly. Now, so I think we will see some,

Starting point is 00:02:12 and I'm not at it, we will see lower energy prices from because of the lower, the less regulatory environment under the Trump administration. With that being said, if these tariffs do kick in, particularly on Canada, that could really complicate things because we import a lot of lot of energy from Canada, oil and different things. And so, you know, of course, those tariffs have been delayed right now. Many say that Trump is just using them as a bargaining chip to pressure Canada and Mexico and doesn't actually plan to have long-term tariffs with those countries. We do have trade deals with them already. And so that's an interesting thing. I mean, so far that's really proven true. We have not instituted those tariffs and therefore not seen the higher prices

Starting point is 00:02:54 that would come as a result of them. And, you know, Trump has gotten some concessions. from both Canada and Mexico. Trump's critics will say they were, the concessions weren't very good, but they have been used as a bargaining chip. And we have a few more weeks here before we really see if it continues to be a bargaining chip, if the road can get kicked down the road on these tariffs, or if they're actually going to become reality. Trump has indicated that he plans to use reciprocal tariffs where he works with these countries

Starting point is 00:03:20 to put tariffs on them, other countries around the world, to raise revenue for the U.S. And he's very bullish. He's very optimistic that he can raise a lot of money with these tariffs and bring us into a new golden age where we can lower other taxes. To your point about uncertainty, Dan, before I hand it back to you, you know, there's a lot of projections, a lot of predictions, a lot of speculations about what these tariffs can and cannot do. But we really have no idea because we have not had, you know, widespread tariffs in the U.S. for over 100 years. There's a lot of externalities. There's a lot of unintended consequences. is how the market will react, how other countries will react, what Trump is able to get in these

Starting point is 00:04:01 negotiations and trade deals that could offset some of the higher prices for Americans. It's uncharted territory, a lot of uncertainty, and we haven't seen anything like in a hundred years. So, hey, Dan, all the more reason to keep listening to this podcast to stay in touch, right? That's right, Casey. You wrote this week that inflation in January ticked up again. Consumer prices were up a half a percent in January for 12 months over the past year. That was 3 percent inflation. The Federal Reserve likes inflation to be closer to 2 percent. So that does complicate the Fed's plans to lower interest costs, which went up significantly during in 2022, 2023, during the height of inflation under the Biden administration. What's going on there?

Starting point is 00:04:56 Yeah, but so we are seeing a little bit rise of inflation. We're up to 3%, which is, you know, I think it is a rise. It is notable to put it in context. I mean, it's nowhere close to the explosion we saw under Biden. So I don't want to create this false equivalency that the inflation under Trump is the same as the terrible inflation we saw under Biden. That's not true. I mean, it could get there. We'll see.

Starting point is 00:05:16 But we're really not even close to that level yet. It's just something to keep an eye on. I would say, okay, inflation's a little up. We need to keep an eye on this. It's mostly driven by increased housing. shelter costs. That's one of the biggest drivers. Energy, you know, can be a pretty big factor in inflation costs as well. So, you know, we'll be covering that. We'll be keeping out on it. It does mean that the Fed is probably going to hold off on lowering interest rates more. But back to the

Starting point is 00:05:44 question about energy and their ability to access capital, it's not just reliant on the official Federal Reserve interest rates. They have kind of a different, a different market, a different kind of access to capital that's not really relative comparable to the average American homebuyer. So I think that you could still see easier access to capital from these oil and other energy companies, even with federal interest rates staying the same. Casey, thank you for joining us today. Listeners can keep up with this story and more at thecentersquare.com.

America's Talking - Inflation Rises in Latest Data

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