Morning Wire XX
[0] The U .S. has hit another inflation milestone, reaching 7 .9 % for the first time in 40 years.
[1] Which industries are most affected, and how are Americans changing their spending habits?
[2] I'm Georgia Howe with Daily Wire, editor -in -chief John Bickley.
[3] It's March 12th, and this is your Saturday edition of Morning Wire.
[4] As the world emerges from a COVID recovery, the U .S. is hit with challenges on multiple fronts.
[5] inflation, supply chain issues, and now a war in Europe.
[6] We talked to a financial expert about all the factors impacting the health of the U .S. economy.
[7] And Seattle's homeless situation continues to worsen.
[8] Tent camps occupy the sidewalks and public drug use is rampant.
[9] How are police dealing with the Pacific Northwest homeless problem?
[10] I'm curious to see where this is going to go now because we're starting to see crime, you know, spiraling out of control.
[11] Thanks for waking up with Morning Wire.
[12] Stay tuned.
[13] We have the news you need to know.
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[20] New data from the Labor Department shows that inflation last month continued to soar, reaching levels not seen since 1981 as prices on vital goods spiked across the board.
[21] Here with more on the latest numbers and how it will impact Americans nationwide is DailyWire's Cabot Phillips.
[22] So Cabot, you've been tracking this story all year and it's starting to feel like we've done this story a few times.
[23] If it feels that way, it's because we have essentially done this story before, four months in a row, actually, because each time new inflation data comes out, new records are being broken.
[24] So each month, the Department of Labor releases data on the consumer price index, which basically measures the price of common goods that people buy for day -to -day life, think food, gasoline, health care, stuff like that.
[25] And it found that in the last year alone, the cost of those goods has increased 7 .9%.
[26] That is the biggest annual job.
[27] jump since 1982.
[28] It never even got that bad during the 08 recession.
[29] So where is this being felt the most?
[30] What products are really going up in price?
[31] Well, it might be easier to give a list of the products that haven't gone up this year.
[32] Obviously, gas prices have gotten the most attention.
[33] They're up 38 % over the last 12 months, but pretty much everything else is up as well across the board.
[34] Grocery prices are up 8 .6 % over the last year.
[35] That's the largest price since 1981.
[36] And if you're thinking of eating out to avoid groceries, the price of food at restaurants also saw its largest 12 -month increase since 1981.
[37] Shelter costs are up 4 .7 % in the last year.
[38] That's the largest jump since 1991.
[39] Now, there was a hope that prices would start to go down a bit as supply chain backups were addressed.
[40] But now with the Russia -Ukraine conflict raging and those supply chain delays still persisting, the opposite is actually happening.
[41] It's continuing to get worse.
[42] So do we expect things to improve anytime soon?
[43] You know, I'm an optimistic guy.
[44] I would love to say yes.
[45] That's just not what the numbers are saying, though.
[46] It's worth pointing out that not even the Biden administration is saying that things are going to get better.
[47] White House Press Secretary Jen Saki actually warned on Wednesday that they're expecting things to get even worse in March, especially in the energy sector, as well as travel and dining.
[48] And because prices are going up, people are simply having to spend more money in their day -to -day lives just to get by.
[49] One really stunning figure that underscores that point is credit card and debit card spending.
[50] The average American last month spent 15 .7 % more on their debit and credit cards than the same month last year, 15 % in one year.
[51] So people are really having to dig deep into their pockets.
[52] And in some cases, they're going into debt just to get by.
[53] Now, earlier you mentioned that we didn't even see numbers this bad during the 08 recession.
[54] So what's the reality here?
[55] Are we heading into a recession?
[56] Yeah, as we talked about on the show yesterday, unfortunately, a recession is seeming like more and more of a possibility with each passing day.
[57] Obviously, it depends on who you ask.
[58] Economists are notorious for disagreeing on pretty much everything, but a growing number are predicting a recession by the end of 2022.
[59] For example, Kevin Hassett, the former chairman of the Council of Economic Advisers, said this week, quote, we now believe the chances of a recession starting in the second quarter of 2022 have risen to 60%.
[60] There's also a growing expectation among economists that as inflation and consumer prices continue to skyrocket, the Federal Reserve will respond by raising interest rates, which historically has resulted in recession.
[61] So not trying to sound all doom and gloom here, but things are not looking great.
[62] Well, I guess let's hope the experts are wrong.
[63] Yeah.
[64] But definitely a lot of concerning signs.
[65] Cabot, thanks for reporting.
[66] Anytime.
[67] That's Daily Wires, Cabot Phillips.
[68] Coming up, rising costs and slowing growth.
[69] It's a recipe for stagflation.
[70] An expert joins us to explain.
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[75] Rush's attack on Ukraine has had an immediate.
[76] impact on the U .S. economy.
[77] The average American has probably noticed spiking gas prices and food prices, but there could be more long -term effects yet to be seen.
[78] Joining us to talk about the larger economic impact of the war is Joseph Lavornia, former chief economist of the National Economic Council.
[79] So, Joseph, how susceptible are global markets right now to recession?
[80] Recession risk is on the rise.
[81] I've had a very weak forecast for some time.
[82] I thought 2021 would be a strong year for growth because of the V -shaped recovery that it began in the prior year, although I didn't like the excessive spending that we had last year, which arguably worsened the inflation backdrop by artificially boosting demand and aggravating the supply disruptions, which were also a function of various COVID restrictions and such.
[83] So this year was always going to be a weaker year.
[84] It was going to be a payback year, what I've dubbed a Keynesian hangover year, too much spending in one year, too much partying, if you will, leads to hangover in the second year.
[85] well that's certainly the case but this hangover might be a lot worse because of what's happening on the inflation side and the fact when you have higher prices that eats into incomes so that after inflation those numbers are weaker or in this case negative we're actually have negative wage growth we've got very good wage growth 5 % wage growth in nominal terms that's pretty healthy but when you adjust it for inflation it's negative 2 3 % that's simply what you see in a recession so recession risk has risen and the longer these prices both food and energy the long of these prices stay elevated, the greater the risk that there is recession.
[86] And we also have to worry about the Federal Reserve, because while the events in Ukraine have certainly taken front page headlines, and understandably so, the Fed recently has been on this mission to raise rates perhaps aggressively so as to slow the economy to deal with this stagflation.
[87] But that in turn could create even more demand destruction, because not only we contending with higher food and energy costs, We're also contending with a less friendly Fed, which means less liquidity, higher interest rates, which is going to be bad for risk assets, stocks and bonds.
[88] So that's another factor that could depress demand and therefore lead to recession.
[89] So while I'm not in the recession camp yet, those risks are growing, and it may not take much at this point for us to tip into a recession, given the stagflationary backdrop we've seen.
[90] So you mentioned the term stagflation.
[91] Now, some people might not be familiar with that term.
[92] Can you explain, first of all, what it is and why it's so significant?
[93] Stacflation is simply when the inflation rate is above the economy's real growth rate.
[94] So, for example, if real GDP is growing at 2%, which is typically the underlying trend, and inflation, as measured by the GDP deflator, is growing at 3%, then you'd say technically there'd be some stagflation.
[95] But that'd be stagflation with a very small ass, not very much.
[96] In fact, you probably wouldn't even worry too much about stagflation.
[97] But if GDP is still growing at 2%, and your inflation rate moves up to 5 or 6 or 7%, then the stagflation really kind of comes into the vernacular, or comes into the marketplace as a discussion point.
[98] And that's what we've seen recently, with inflation running around 7 in GDP looking like it's only 2%, maybe even less.
[99] In the 1970s, inflation was upwards of 12, 13, 14%.
[100] So that's stagflation with a big ass.
[101] But the fact that we're talking about it now tells investors that they're more worried that the situation we're in could get noticeably worse, which to my way of thinking, the way to deal with it is to increase productive supply, bringing back U .S. energy independence would certainly help.
[102] And that would be one way to fix some of the inflation problems we've got.
[103] I'm not sure we're going to go down that route.
[104] You mentioned that the Federal Reserve is planning to raise interest rates.
[105] How does this affect everyday Americans?
[106] What would they see in terms of direct impact from interest rate hikes?
[107] The direct impact has already been seen, and again, the Fed hasn't even moved, which tells you expectations are key.
[108] So what have they seen?
[109] Mortgage rates have gone up 100 basis points, which means that rates you can get long -term mortgage at 3%, now it's around 4%.
[110] That's one factor.
[111] The other factor is the equity market.
[112] Their 401ks are down.
[113] They're down quite substantially.
[114] Still high relative to where we were, but certainly down substantially.
[115] And it's possible they can go down significantly more if the economy answers into a recession.
[116] So those would be the two areas where people are already seeing it.
[117] Higher costs of borrowing and lower asset prices.
[118] Less wealth.
[119] Less wealth is definitely not good.
[120] No, it's not good at all.
[121] Joseph, thank you so much for discussing all this with us.
[122] That was Joseph LaVorna, former chief economist of the next.
[123] National Economic Council.
[124] The homeless crisis in Seattle is getting worse.
[125] Scenes of open -air drug use are trending on social media, while homeless encampments crowd public sidewalks.
[126] The crisis has caused some residents to give up on their businesses in Seattle.
[127] Meanwhile, law enforcement says they have few options.
[128] Daily Wire investigative reporter, Marade Allardy, is here to tell us what's going on.
[129] So, Marade, what's Seattle looking like these days?
[130] Well, it's an emergency state.
[131] It's a mess.
[132] In terms of drugs, homelessness.
[133] All of the above, the drug crisis, the homeless crisis, and a significant 20 % uptick in violent crimes.
[134] That's a 14 -year high, according to a new report by the Seattle Police Department, which was just released in February.
[135] The images and video coming out of Seattle are shocking.
[136] People strung out on drugs, lining the streets, and this is in parts of the city where public drug use wasn't really seen until recently.
[137] homeless encampments on public sidewalks and outside people's businesses and homes, and at the same time, it's now almost impossible to get arrested for illegal drugs in Washington State.
[138] And that's thanks to policies that require drug addicts to be caught and released multiple times before the police can take legal action.
[139] So what's the city doing about these problems?
[140] Well, the city has tried a few things, building more affordable housing and new litter cleanup programs, for example, but none of it has really seemed to make a significant dent in the homeless crisis.
[141] I talked to a reporter for Como News in Seattle.
[142] He's been covering homelessness in the city, and his videos of the worsening situation have received a lot of attention.
[143] Here's what reporter Jonathan Cho had to say.
[144] I've been covering Third Avenue.
[145] I told you this crazy drug den, illegal activity, stolen merchandise being sold.
[146] The police came in the other day.
[147] They moved in and swept people out, but no one was getting arrested.
[148] And that's the problem.
[149] Basically, lawlessness is what he sees, but he says that's been unpopular to point out.
[150] The whole defund the police movement that's emerged in the past year and a half, that is now starting to lead to some unintended consequences.
[151] We've got to ask ourselves, are we going to continue to, you know, shine a light, or are we just going to capitulate and be scared and not cover what the public demands and needs for this community, this democracy, to thrive?
[152] Speaking of democracy, how are people in Seattle reacting to this?
[153] Well, some are now losing hope.
[154] One bakery owner who's an immigrant talked to a local reporter on March 7th.
[155] She'd set up five locations in Seattle, and now she says she's giving up pushing for change.
[156] She called it such a waste that she had come to America and experienced such success, only to watch her once thriving city fall apart around her.
[157] On March 9th, the Seattle police attempted to clean up a homeless encampment and were confronted by activists.
[158] the activists berated the police, claiming they didn't give the homeless enough prior notice.
[159] So there are definitely conflicting visions of how the homeless situation should be handled.
[160] Well, hopefully the city's able to make some changes.
[161] Mairee, thanks for reporting.
[162] Thanks, Georgia.
[163] That's Daily Wire investigative reporter, Marade Allorty.
[164] For updates on Ukraine, here's Daily Wires, Ian Howarth.
[165] Yeah, thanks, Georgia.
[166] Concerns over human rights abuses continue to grow in Ukraine after the United Nations Human Rights Office said that it had received credible reports of several cases of Russian forces using cluster bombs, including in populated civilian areas.
[167] And this is pushing the Biden administration and other allies to ramp up pressure on Russia, this time moving to end normal trade relations with the country.
[168] Meanwhile, Russian forces continue to push into Ukraine, with forces looming in on the capital city Keeve.
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