Kevin Hassett says "consumer sentiment" should be renamed "political sentiment"

[0:00] We turn now to the director of the National Economic Council, Kevin Hassett, who joins us from the White House North Lawn. [0:07] Kevin, thank you so much for being with me. [0:08] Great to be here. Thank you. [0:10] I want to start by getting your take on the state of the economy because a kind of confusing picture emerged this week. [0:18] The Dow Jones hit an all-time high, and yet consumer sentiment hit an all-time low. [0:22] Mortgage rates hit a nine-month peak. [0:25] Inflation is up. Earnings at big-box stores like Walmart are up, in part because people from across the income spectrum are being drawn to low prices right now. [0:34] Are there storm clouds gathering in the economy? [0:38] No, I don't think there are storm clouds gathering at all. [0:40] And, in fact, let's start with the consumer sentiment number because that was a number that was very striking to me and to you, I know, when it came in very, very low. [0:48] And what we did is we went to their website and we looked that they actually break it out by political affiliation. [0:55] So they have it for Democrats, Independents, and Republicans. [0:57] And if you look at it, consumer sentiment at the sort of peak of the Biden inflation, the stagflation, was way above 100. [1:04] And it's dropped all the way down into the low 30s now, about the lowest it's ever been for Democrats. [1:09] But for Republicans, it's held about steady. [1:11] And if you look at it, Independents and Democrats are really highly correlated, which suggests to us that their sample is Democrats. [1:18] And so if you go to consumer confidence, which is something that's actually, I think, a more scientific survey, the consumer confidence is consistent with all the other positive numbers we're seeing right now. [1:28] But you don't dispute that the war has taken a toll on parts of the economy. [1:32] Right now, consumer confidence is the highest it's been since the beginning of the year. [1:38] And so you don't see a toll of the war on consumer confidence, which is the conference board survey. [1:43] But again, GDP now, the Atlanta Fed's estimate of second quarter GDP is north of 4%. [1:48] We've got initial claims for unemployment insurance as low as they've been since the 60s. [1:53] And so there's so much going on that is really, I think, surprising people that think that the disruption from the Middle East is going to harm the economy. [2:01] It's just not there in the data, except for the consumer sentiment data. [2:04] But I actually think that we should stop calling it consumer sentiment and start calling it political sentiment, because the variables really are it's really a political variable, not an economic variable. [2:13] The data on gas prices is pretty undeniable. [2:15] Memorial Day weekend, gas prices are at a four year high. [2:18] AAA says they'll remain elevated throughout the summer, at least. [2:22] Last month, you said that high gas prices would be a temporary phenomenon. [2:26] Did the White House paint too rosy a picture of the impact that this war would have by emphasizing that this was going to be a four to six week excursion? [2:38] Well, I think the four to six week was an accurate description of like when that sort of active kinetic events were going to happen. [2:45] Right now, you know, I'll let the president decide on whether he thinks the deal is ready to go this week or not. [2:51] But the bottom line is once the Straits are open, then the tankers are going to go back and they're going to refill the refineries almost right away. [2:59] A tanker goes about 300 nautical miles a day. [3:02] And so the places like India and Pakistan, which are close to the Straits, are going to get their oil and then turn it into refined product right away. [3:09] Singapore, which is one of the places where jet fuel prices are the highest, is going to get its stuff just about right away. [3:15] But if you're down in New Zealand, it'll take a little bit longer. [3:18] But really, like between a month and two months, we expect everybody to have all the oil they need at every refinery on Earth. [3:23] Well, we know that things will get better once the strait reopens. [3:26] The question is, when will it reopen? [3:29] Right. [3:29] Well, that's something for the president, Marco Rubio, and the Iranians to work out. [3:34] I realize that as director of the White House Economic Council, this $1.8 billion anti-weaponization fund is not part of your portfolio. [3:44] But the backlash to that fund did derail a bill this week that included funding for ICE and the CBP. [3:51] And government funding is part of your portfolio. [3:54] So what is the administration doing, if anything, to try to cool members of the president's own party down on this issue? [4:02] They seemed really angry and really blindsided. [4:05] Well, I don't know if across the board they were, but there are certainly some people who felt that way. [4:09] And our head of Ledge Affairs, James Braid, is a real professional. [4:14] He's been talking to everybody. [4:16] He's been arranging for phone calls with those of us in the White House that want to talk to people and hear people's concerns. [4:22] But the bottom line is that, you know, we expect the progress that the president wants to see in Congress to happen. [4:28] Congress has delivered over and over under the leadership of Mike Johnson. [4:32] And so I understand that, you know, there's something that was a little bit different this week than maybe you expected, but I don't expect that to go on. [4:38] And one thing we've seen from primaries is that people that buck the president, you know, generally regret it politically. [4:44] The Wall Street Journal editorial board really took a swipe at the president over that fund, over the ballroom on Saturday. [4:51] They said, quote, Republicans don't want to say this publicly, but privately they do. [4:57] President Trump's personal political obsessions are hurting his presidency, hurting the chances for further foreign policy gains, [5:04] and putting control of the House and Senate in jeopardy. [5:08] Does the president realize that he is putting Republicans in a tough spot by forcing them to take votes on things that are unpopular, [5:16] like the fund, like the ballroom, like the war, in a midterm election year? [5:21] Look, look, I respect the Wall Street Journal very much. [5:24] I saw Paul Gugot at the Kevin Worsh signing in on just on Friday. [5:27] But the bottom line is the president believes that the ballroom is something that should have been there for a long time, [5:32] and he's using his own money and the money of donors to make it so that the taxpayers don't have to pay for that ballroom. [5:40] And as far as weaponization, I don't think that you or I would disagree. [5:42] Well, they would have to pay a billion dollars, correct? [5:44] No, it's not for the ballroom. [5:46] That's for securing the entire White House. [5:47] And my goodness, to argue about that after we were all here yesterday, I actually wasn't here. [5:52] I was at my home a couple blocks away when the shooting happened. [5:54] Of course, we've got to make the White House more secure. [5:57] But on the $1.8 billion fund for weaponization, I don't think you would disagree, right? [6:02] The previous administration and the Obama administration weaponized government against President Trump. [6:08] And what he wants to do is make sure that never happens again and compensate the people who are the targets of the destruction of their lives. [6:15] What they would do is they would call people in to Jack Smith's office and then bury them in subpoena requests and bankrupt them. [6:23] And that's something that should never happen again, never. [6:26] And I think that I doubt that there's anyone that disagrees with that. [6:30] Kevin Hassett, the director of the National Economic Council, appreciate your time this morning. [6:33] Thank you.