Transcription
Hi, I'm Steve Clemens and I have a question. More and more Americans are focusing on the rising cost of, well, just about everything in the country. But is President Trump basically telling them, "Sorry folks, that's your problem, not my problem." Let's get to the bottom line.
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He ran all last year bashing his opponent on the economy, promising to bring down costs and make America affordable again. But so far, all of President Donald Trump's economic plans have only made folks more insecure about their finances. Despite his insistence that he's doing a great job on the economy, Americans are facing a double whammy. Everything costs more, including food, furniture, housing, and even travel and movie tickets. And decent paying jobs are really hard to come by. So, will America's first billionaire president respond to the concerns and scramble to refocus his priorities, or will he keep doing what President Joe Biden did last year, just think of it as a messaging problem?
Today, we're talking with economist Peter Atwater, president of Financial Insights, and he's author of the confidence map, charting a path from chaos to clarity. Peter, thanks so much for joining us today. Look, President Trump is out there saying that the US economy has never been better. It's the golden age, uh, and things are just fantastic. What is your response to the president?
My response to the president is that for those at the top, that is exactly right. He's described what it means to be, you know, a stockholder, a major investor involved in AI today. But that is not, in fact, not by far the case for most Americans at this point. We just went through a period of the longest shutdown of government in American history. And I think a lot of Americans may not realize what the role and function of government is in their daily lives. But one of the things that became very clear was that something like SNAP benefits were in the crosshairs. But that economic divide became palpable between those people who had need and, at the same time, the president was hosting a Great Gatsby party in the White House.
I would love to get your thoughts on that and this kind of contrast of two worlds.
Sure. I, I refer to it as the K-shaped economy where those at the top are doing extraordinarily well. They have benefited from ex-, really unprecedented, uh, financial gains since co-. Meanwhile, for those at the bottom, continue conditions continue to deteriorate. They're, they're dealing with the cumulative effects of inflation and for them, that price is getting incredibly high. They, affordability is a crisis and to your point, it's not just involving SNAP benefits and the availability of food, but it now includes things like healthcare, education, child care. Those at the bottom have a really heavy weight of unaffordability that I think is largely underappreciated by those at the top.
Are you surprised that there hasn't been more, um, I would call it, you know, kind of economic shocks in relation to say, President Trump's tariff policy? I'm surprised that there hasn't been more of a kind of national upheaval and kind of an explosion over this that that it just sort of seems to be going on. Have you been surprised?
I'm, I'm not so surprised. They're, they really don't have a unifying voice. They're, they lack representation at a time when those above them have extraordinar-, extraordinary influence. So if we look at the, the inauguration or the, the event recently involving, you know, the, the visit from from Saudi Arabia, the, the media focus tends to be on what's happening at the very top, but there's very little coverage. You talk about small business, I would also say at a, at a consumer level, the attention's not there. It only gets there when you see things like we did in New York the other day where you have a, a candidate in this case, Mr. Mumdani, who is suggesting a more socialist economic policy for the city and that suddenly seems to surprise people as being out of the blue when, in fact, you, they should have seen it coming. It's, you know, a contrast. Someone who sees himself as an ultra capitalist versus someone who is the president calls a communist, but he calls himself a democratic socialist. But in this contrast, you know, you're a smart economist. You look at this. I mean, are you worried that we're going to be caught between two polls, neither of which can really deliver for the country?
So I think that both sides of our political aisle today among our establishment parties have largely ignored or have been unwilling to address the economic divide. At the same time, I know that the bottom is inherently purple. And I think that what we're beginning to see is voters not moving left or right, but they're moving down. And they're moving down not just in the United States, but in many countries around the world where this, these issues of basic fundamental needs are are pressing in in voters minds and they're, they're looking for help and I think that as I said, both parties need to appreciate the potential for someone, um, from the heartland who can truly unite those at the bottom and small business owners as well in a grass grassroots movement that says the inequality has become too great.
You know, when I think about President Trump's agenda when he came in, and we'd like to break it up with you, but one of the, you know, big issues that he put forward, you know, is is to impose very large tariffs and to rebalance the American economy so that it, you know, basically addressing the hollowed-out manufacturing that had happened over decades, trying to bring some of that back into the country, beginning to rebalance some of these, put these tariffs in because if you go back and you kind of look at neoliberal trade policies and the sort, free trade area, it was having an impact as well, uh, on the divide in America and having leaving a lot of people behind. So is this one of the areas President Trump may be getting it right?
I do, but I think we need to recognize that a lot of the manufacturing that we're seeing, particularly in the AI space, is not labor intensive. If, in fact, it's potentially labor, you know, counterproductive, particularly for those, those at the bottom. And so while we can talk about manufacturing, we need to recognize the role that robotics and technology is playing and how that's changed the landscape for folks that these kinds of manufacturing positions would have represented an improvement in terms of moving up the ladder economically.
You know, two of the other pillars of Donald Trump's policy was Doge, uh, which was to, you know, cut and slash and burn and reduce government expenditures, reduce the government payroll, you know, just reduce what government did, uh, if you will. And then the second, uh, uh, piece of that that we hadn't discussed was immigration. Uh, and you see the impact on labor in the country and farming and agriculture and hospitality and tourism. Uh, and so you see these things that President Trump has just done over a very short period of time have made real impacts and I have to admit a lot of the country was calling for these kinds of measures and steps. What do you see as the economic consequences of him succeeding at least on immigration and what do you think of Doge?
So I think im-, the, the change in immigration policy should lead to wage inflation there. There are fewer individuals competing for jobs down there. But it's also leaving gaps where Americans are not interested in those positions. And and with respect to Doge, I think what we're beginning to realize is that many of the cuts that have taken place have adversely impacted those at the bottom. We see this in in education. We see this in health and human services. And so while we can, while the benefits can be easily measured, the human impact is, I think, an a really untold story at this point.
Another element that I think is important to kind of look at is how Americans are feeling and processing this right now. Now, and you know, data that I have, uh, I think from a recent Pew poll shows that 74%, that means that's a lot of Republicans, that's a lot of independents, and certainly a lot of, you know, Democrats in the mix are just anxious about the economy. Look at the economy as fair or poor. We just saw a big election. You just talked about Zoron Mandani, the new mayor, uh, in New York, but we also saw the Democrats win governorships in Virginia, in New Jersey. How much do you think these economic, um, frustrations s are going to be a major player as we're kind of now heading into 2026 elections and not in the not too distant future?
Yeah. What I know as a researcher, Steve, is that when confidence is low, we vote out incumbents irrespective of political affiliation. And so it didn't surprise me, given where sentiment is today, that we we've seen this response in 2025. Will it remain in 2026? I think again, that will depend largely on what happens to consumer confidence. But here, I think that the, the administration needs to demonstrate that it is willing to take on tangible immediate steps that materially address the affordability crisis at the bottom and that remains to be seen.
Let me ask you a question historically, um, about the divide between the top and the bottom, the K curve that you, you were sharing, uh, and it's very clear and I've seen from all the data that those billionaires and zillionaires, you know, will be a zillionaire someday, but the people at the very, very top are, um, doing exceptionally well. But how's there not always been significant structural divides between a sort of lower class and an upper class in America? How is that looked at over time? Is one of the things that that occurs to me is the stock market, the NASDAQ, the Dow Jones, sky-high levels, hitting new records, you know, very, very high. Lots of Americans, their retirement, uh, their savings are vested in those. So, aren't most Americans at some level still benefiting from this moment?
Those with financial assets, without question, are benefiting. What is so unusual today, Steve, about the nature of our wealth is that it is intensely concentrated among those at the very, very top. I think you have to go back to the Gilded Age and the, the time of Carnegie and Rockefeller and and JP Morgan to see this kind of extreme wealth divide. And what we know looking at that period, it was a time when those at the bottom were restless. They felt powerless. They felt uncertain. And so we need to be mindful of the, the social and political consequences that arise from that.
Well, does either party have a plan to begin addressing those divides and and begin addressing what they do with a lot of people who are just finding themselves further and further behind? I know, uh, President Trump has talked about a dividend, um, that's coming from these tariffs. $2,000, you know, a person for those that are, I would suppose medium income and lower. Uh, so that they're tying it now that I would assume is going to whack all the progress they were trying to make in reducing the government budget deficit. So when you take, when you sort of take money from one pot and put it to other, and it was supposed to be the tariffs were supposed to pay down the government deficit, which is also sky-high. So, help us understand this whack-a-mole challenge. But I also want to know, is there going to be any fix that you see that's credible by either party dealing with, um, left behind Americans?
Yeah, I think we're a wash in plans from both the left and the right. What we are devoid of is action, and those at the bottom want tangible action today. And so when I look at the promises of tariff rebates and other efforts to assist those at the bottom, they have time delays that I think ignore the urgency of the matter. And I, I would encourage those on both sides of the aisle to appreciate that it's wonderful if a life, you know, if a lifeboat arrives, you know, six months from now. But what, what folks need right now is a ring, something to hold on to.
You know, another thing I'm interested in is is what President Trump once told the American people. He said, "Hey, you know, their kids don't need as many pencils. They don't need as many dolls. They don't need as much, you know, stuff." You know, I'm, it's the first time I've heard it, almost sounds like the old Soviet era where, uh, citizens in the Soviet Union, you know, had to do with less because of sacrifices for the country. I don't know if you see that as a fair comparison, but is that what Americans are facing, which is essentially as they see themselves less and less able to purchase products from abroad, our choices here inside the United States are going to diminish pretty significantly?
Yeah. I mean, it's certainly a contrast to the chicken and every pot mindset of of prior politicians. I think those at the bottom, they're already feeling scarcity. What they wonder is why is the administration, why is government more broadly demanding sacrifice from them when they see no sacrifice being demanded of those above? In fact, they see just the opposite. They see those at the top experiencing greater and greater tax breaks and more advantages to to the wealthy at the same time where they're being asked to sacrifice. I think there needs to be a clearer message that if there's going to be sacrifice by Americans, that it is a much more broad socioeconomic strategy than just taking things away from those at the bottom.
You know, when Donald Trump was running against Kla Harris, who had been vice president to President Biden, uh, Trump was very critical of the Biden Harris team for essentially, uh, jawboning, as he was arguing, through a miserable economic mess. But Donald Trump kept saying Joe Biden is just asserting things and insisting his way through an economic, you know, a miserable economic scene. And I guess my question is, is that the strategy that Donald Trump has just taken where things are clearly wobbly, but he's insisting, hey, everything is great?
Yeah, I think there, there's an element of denial and and certainly jawboning that that takes place in the White House, no matter the administration. The challenge, and I think, you know, that the prominence of the term the K-shaped economy says that it's going to be difficult for people to swallow news that that the economy is in this golden age. Those, it, it is so evident to those at the bottom that that that golden era exists above them. But I'm not sure those at the bottom appreciate that that that those at the top really see the plight of those below.
Peter, I talked to a lot of, um, innovators and leaders in the AI space and almost all of them that are proponents of the technology that's coming in the wave agentic AI, generative AI, basically see this will have an impact on workforce. It will have an impact that most of them argue that that there'll be many new opportunities and jobs created like have always happened and that that there'll be kind of an upskilling and reskilling, uh, part that comes with that economy. But then we hear people like Elon Musk and saying, hey, there will be no workers in the future. There will be no, I mean, you sort of hear, you hear the, the CEO of IBM said, yes, this is going to displace workers and we're going to begin displacing them now in IBM. We've also seen that happen in Amazon, uh, with very, very large-scale layoffs, with people that were playing these roles. So I guess my question to you is, is AI something that is going to so drastically change the productivity equation in the US economy, thus amping up productivity, which is another way of saying we're going to have a lot fewer workers pushing needles, uh, and and are part, part of that economy? And I just wonder what you think the consequences of that are.
Yeah, I'm not sure about the long-term consequences, but what is so striking to me is that when I talk to people at the top of the economy, they're vividly imagining all of the benefits that they foresee coming from AI, that they are a wash in reasons why this innovative, life-changing technology will be beneficial to them. At the same time, what I see is those at the bottom are now confronting the immediate costs of AI. And that cost could be higher utility bills. It could be the fact that they can't get an entry-level job because employers are laying off folks be-, and touting AI as the reason. And so we need to be cognizant that there's a time difference here. And for all of the, the bright unicorns and rainbows that AI may offer, those who are talking about this technology need to appreciate that it has immediate consequences to those at the bottom and they're not favorable. And I worry about the fact that AI is so abstract to Main Street that it has the potential to become an easy boogeyman, you know, something to to really unify those at the bottom against that that AI is not a, a good for them. It's a, it's a bad for them and somehow really benefits the rich. And that, that is an argument that I think could gain real traction. Could this be something that really does undo, uh, President Trump's juggernaut?
Yeah, that, the bottom is inherently purple. And as someone who's been talking a lot about the K-shaped economy, I have been really struck by the, the receptivity of concern on both sides of the aisle. Journalists from from left and right have have all reached out and are very clear that they view it as a concern. One of the other episodes that's been both fascinating to watch and occasionally entertaining is the split between Marjorie Taylor Green, uh, a MAGA Republican congresswoman from a lot of Donald Trump's policies and and definitely his favor. But one of the things she's been talking about where she's been crediting Democrats is is being concerned about the rise, um, potential rise in the cost of healthcare and that as they, they were to kind of move from Obamacare and the subsidies that are part of that Obamacare plan, it would hit her people very, very hard. We've heard some other, uh, Republicans whisper behind, uh, as well that this is something that they're very uncomfortable with and we see it. I'm interested in how you see, you know, what have always been to me, uh, uh, skyrocketing costs of healthcare year on year, you know, and and how this nation deals with it. But how do they fit into this equation of gloom that you've shared for people who need that support?
Yeah, I think I think Marjgerie Taylor Green has read the room incredibly well as it relates to not just healthcare affordability, but food access and the like, much to the consternation of many of her of her partymates. But I think that we need to appreciate that for those at the bottom, it is this cumulative effect. It is food affordability. It is now healthcare affordability. It's child care. It's housing affordability. And so everywhere they turn, things feel out of reach. Things feel unattainable. And that is, as I said, a, a uniform, [snorts] very purple message that is increasingly purple in rage.
Let me ask you, many have always argued that the impact on workers and the American middle class, you know, is less about trade and the kind of neoliberal free trade world that we're in and more because technology, particularly in the United States and technological advancement has been the bigger displacement factor. We've just been discussing AI. The president and his team are very focused on trade and they're embracing the technology. Are we going to see a real world test in whether or not what, what is left of the middle class is completely undermined by, uh, technology with the efforts by the president to protect them through trade policy?
That, that's a great question, Steve. I think that what we are likely to see first is a real confrontation between a pro and con AI, pro and con big tech. Um, there, there's a, there's a moment ahead I see where those at the bottom are going to raise their voice in unison to say enough. And I don't know how that plays out, but it is clear that the, the benefits of technology today seem to be floating to too few while too many are being disadvantaged by it.
We'll have to leave it there. What a fascinating conversation. Economist Peter Atwater, president of Financial Insights. Thanks so much for joining us today.
Thank you so much.
So, what's the bottom line? Inflation is really tough to beat. When people feel that prices in the future won't be stable, guess what they do? They tend to spend their cash. They deplete their savings because holding it means they'll be able to buy less tomorrow with what they are holding. And America's middle class, as in much of the world, just sees its economic standing slipping. Jobs are tougher and tougher to get with the cost of just staying in place rising. It's no win for them and they tend to get angry at the politicians who don't bring inflation and rising costs under control. That may be happening now in America. A majority of Americans just don't believe Donald Trump has followed through on his economic promises. His obsession with tariffs seem just to have raised prices. Cracks are beginning to show in Trump's political facade. And this economic frustration story may be the one to watch as we head [music] into the period before America's important 2026 elections. And that's the bottom line.