♪♪ >> Eric: DID YOU, DOES YOUR VALENTINE'S DAY CHOCOLATE COST A LITTLE EXTRA THIS YEAR?

INFLATION COULD BE THE REASON.

IT'S UP 3% FROM LAST JANUARY.

LAYOFFS HAVE BEGUN FOR SOME FEDERAL WORKERS IN INCLUDING SOME IN MINNESOTA AND MOVING TARGETS ON TARIFFS HAVE ADDED TO THE MIX.

HERE TO SORT THROUGH THE ECONOMY WITH US, KRISTINE WEST, PROFESSOR OF ECONOMICS AT ST. CATHERINE UNIVERSITY.

AND LOUIS JOHNSTON, PROFESSOR OF ECONOMICS AT THE COLLEGE OF ST. BENEDICT AND ST. JOHN'S UNIVERSITY.

PROFESSOR, WHAT ARE THE IMPLICATIONS OF ALL THE TURMOIL THAT'S GOING ON?

>> TURMOIL IS NOT WHAT WE LIKE IN THE ECONOMY.

WE LIKE THINGS THAT ARE PREDICTABLE AND STEADY AND CAN BE COUNTED ON, GENERALLY I THINK UNCERTAINTY IS NOT ANYBODY'S FRIEND INCLUDING FOR THE WORKFORCE.

>> Cathy: I WONDER, HIRING, LET'S TALK ABOUT THE WORKFORCE.

HIRING HAS SLOWED, DOES THAT SURPRISE YOU?

>> YEAH, THE UNEMPLOYMENT RATE IS AROUND 4% WHICH IS PRETTY HEALTHY.

I DON'T HAVE IKE MAJOR CONCERNS AROUND THAT.

RIGHT NOW I THINK YOU TEED UP A COUPLE THINGS ABOUT PRICED AND INFLATION THAT PROBABLY GETTING A LOT MORE ATTENTION RIGHT NOW THAN THE JOBS NUMBERS.

>> Eric: INFLATION WAS A PROBLEM FOR PRESIDENT BIDEN.

>> DEFINITELY.

>> Eric: PROBLEM NOW FOR PRESIDENT TRUMP?

>> WELL, I WOULD THINK SO SINCE IT'S HIGHER BUT IT DOESN'T SEEM TO BE - HE SAID DURING THE CAMPAIGN THAT NOT ONLY WAS HE GOING TO SLOW INFLATION DOWN BUT THAT HE WAS GOING TO BRING PRICES ACTUALLY DOWN.

SO THAT ISN'T HAPPENING YET.

I WAS JUST THINKING ABOUT THE HIRING AND THE EMPLOYMENT TOO, THE FED IS IN THIS SITUATION WHERE THEY NEED TO BE CAREFUL NOW BECAUSE THEY'VE GOT INFLATION A LITTLE HIGHER THAN THEY WANT IT BUT UNEMPLOYMENT'S ABOUT WHERE THEY DO WANT IT.

SO THEY HAVE TO BE REALLY CAREFUL RIGHT NOW ABOUT WHAT THEY'RE GOING TO DO IN TERMS OF INTEREST RATES.

THE >> Cathy: HOW MIGHT THAT SITUATION BE A LITTLE TRICKIER WITH THE MASS LAYOFFS OF SO MANY FEDERAL EMPLOYEES?

>> THAT -- I MEAN, AS KRISTINE SAID A MOMENT AGO, UNCERTAINTY.

I THINK THERE'S A LOT OF PROBLEMS WITH BUSINESSES JUST KIND OF FREEZING AND SAYING, WELL, WE NEED TO SEE WHAT'S GOING TO HAPPEN HERE.

AND SO INSTEAD OF JUST SAYING, WOW, THERE'S THESE REALLY QUALIFIED FEDERAL WORKERS THAT WE COULD JUST SNAP UP, THEY'RE GOING TO JUST HOLD BACK FOR A WHILE AND JUST SAY WE NEED TO SEE WHAT'S HAPPENING.

>> Cathy: PROFESSOR WEST, WOULD YOU LIKE TO MAKE A COMMENT ABOUT THAT?

>> AGREE.

I THINK SOME OF THE WHEN YOU GET INTO THE WEEDS ON THE NUMBERS BUSINESS INVESTMENT WAS A LITTLE BIT SOFTER.

IT LOOKS LIKE MAYBE PEOPLE ARE WAITING OUT THE UNCERTAINTY.

I THINK WE DO THIS WITH OUR HOUSEHOLD DECISIONS, WAIT OUT UNCERTAINTY AND THINK ABOUT MAYBE WE'RE NOT SURE ABOUT THAT PURCHASE AND THINK WE'RE SEEING BUSINESSES DO THE SAME THING.

>> Eric: ARE ECONOMISTS OF ONE MIND ABOUT THE TARIFFS?

>> YEAH, ECONOMISTS ARE PRETTY - UNIFIED THAT TARIFFS INCREASE PRICES.

WE CAN HAVE A DEBATE ABOUT HOW MUCH OR WHERE THAT FALLS BUT I THINK TARIFFS IS GOING TO HAVE AN EFFECT.

>> YEAH, THE THING THAT CONCERNS ME IS THIS IS BREAKING 80 YEARS OF POLICY IN THE UNITED STATES.

EVER SINCE THE SECOND WORLD WAR WE HAVE BEEN ON A DETERMINED COURSE TO TRY TO LOWER TARIFFS, MAKE TRADE EASIER, TO TRY TO EXPAND IT, MAYBE EVEN 90 YEARS, SINCE THE MID '30s.

THIS WAS A SHARP BREAK WITH THAT AND AS WE ALREADY MENTIONED ABOUT UNCERTAINTY IT'S GOING TO CREATE MORE UNCERTAINTY, IT'S GOING TO CREATE MORE DIFFICULTY IN THE GLOBAL ECONOMY AND IF I WAS A BUSINESSPERSON, I WOULD NOT WANT THAT ON MY PLATE ON TOP OF EVERYTHING ELSE THAT I HAVE TO DEAL WITH.

>> Cathy: I WONDER HOW DIFFICULT THIS IS FOR CERTAIN SECTORS AND I'M WONDERING SPECIFICALLY ABOUT THE AGRICULTURAL SECTOR BECAUSE THAT IS AN AREA THAT TARIFFS, IMMIGRANT WORKERS.

>> MM-HMM, YES.

>> Cathy: ALSO THINKING ABOUT THE MARKETS WERE ALREADY REALLY DIFFICULT TO BEGIN WITH.

>> I'D BE REALLY -- I'D BE REALLY WORRIED ABOUT WHAT'S GOING ON BECAUSE IT'S NOT CLEAR WHETHER YOU'RE GOING TO HAVE THE PEOPLE YOU NEED TO PICK VEGETABLES, TO WORK IN DAIRY FARMS AND THINGS LIKE THAT.

ARE THE MARKETS FOR SELLING THE THINGS, THAT YOU'RE PRODUCING GOING TO BE THERE OR ARE THE TARIFFS GOING TO HURT THAT?

AND THEN ON TOP OF THAT YOU'VE GOT FARM PRICES HAVE BEEN KIND OF SHAKY.

AND SO YOU'VE GOT ALL OF THAT MIXED TOGETHER, THAT WOULD WORRY ME A LOT.

>> Eric: DO WE HAVE A DEFINITION OF TRUMP-ONOMICS YET?

DO WE KNOW WHAT THE POLICY IS WRIT LARGE?

>> YOU KNOW, I THINK WE'RE STILL WAITING TO SEE WHAT IS TALK AND WHAT IS ACTUAL POLICY.

AND SO AS WE SEE ACTUAL POLICY TAKE EFFECT, THEN THAT CAN BE THE DEFINING FEATURE.

>> YEAH, I THINK IT'S KIND OF A GRAB BAG RIGHT NOW.

I WAS WONDERING IF YOU MIGHT ASK THAT QUESTION TONIGHT AND I WAS THINKING WE'VE GOT SOME POLICIES THAT ARE PULLING IN ONE DIRECTION, WE'VE GOT OTHER POLICIES THAT ARE PULLING IN OTHERS, AND SO RIGHT NOW THERE ISN'T A CLEAR DIRECTION FOR WHAT THIS IS ALL ABOUT.

THERE ARE SOME THINGS THAT ARE GOING TO MAYBE EXPAND THE ECONOMY IF WE KEEP TAX CUTS, FOR EXAMPLE.

BUT THEN IF YOU SLAM TARIFFS ON, THAT'S GOING TO SLOW THINGS DOWN.

IF YOU'RE GOING TO RESTRICT IMMIGRATION, THAT'S GOING TO HURT LABOR MARKETS, BUT ON THE OTHER HAND, IF YOU'RE GOING TO DO THINGS TO REDUCE TAXES ON LABOR, THAT'S GOING TO -- I MEAN, IT'S PULLING IN ALL THESE DIFFERENT DIRECTIONS.

>> Cathy: THEN WHAT DOES, SAY, THE FED DO WITH THIS -- >> I SHOULDN'T LAUGH.

>> Cathy: WITH THIS -- MESS.

>> HOLD STEADY I THINK RIGHT NOW.

JUST KIND OF SAY, ALL RIGHT, WE'RE NOT GOING TO RAISE, NOT GOING TO LOWER.

>> Eric: AND SUPPLY SIDE ECONOMICS IS BAD?

THEY'RE LINKING UP -- THE HOUSE IS LINKING UP THE DEPTH OF THE SPENDING CUTS TO HOW MUCH THE TAX CUT WILL BE AND TRY TO PERSUADE PEOPLE TO CUT SPENDING AND THEN GET A BIGGER TAX CUT.

>> YEAH, THIS IS AN OLD CONVERSATION IN ECONOMICS, RIGHT?

AND WE COULD HAVE A LONG CONVERSATION ABOUT SUPPLY SIDE AND DEMAND SIDE BUT GENERALLY GOVERNMENT SPENDING IS AN EXPANSIONARY USE OF FUNDS, LIKE IT HELPS ECONOMIC GROWTH.

LIKE THE DOLLARS THAT WE SPEND FROM OUR TAXES ON THINGS LIKE RESEARCH OR INVESTMENTS IN OUR FUTURE, ON OUR SCHOOLS AND THE LIKES.

AND SO I TEND TO THINK THAT THE CUTS ARE PROBABLY GOING TO DO MORE HARM THAN GOOD.

>> Eric: WE'LL HAVE YOU BACK.

>> Cathy: AND WE'LL TALK ABOUT PENNIES THE NEXT TIME.

>> OH, YEAH, WE FORGOT PENNIES.