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We do want to bring in the voice of Congresswoman Abigail Spanberger, who I've been looking forward to talking with, of course, congresswoman from Virginia's seventh congressional district, the Democrat from Virginia former CIA case officer, is with us now
on Bloomberg Radio. Congresswoman, welcome back. I don't want to turn you into a legal analyst, but last time we spoke, you had pretty strong feelings about the classified document case against Donald Trump, and I wonder if you think, between the special counsel and this case in Georgia, if there is a strong enough indictment against him following the events of January sixth.
Well, I think you just need to look to the grand jury. This is a grand jury that sat and listened to the evidence and voted to indict, voted to move forward with these indictments. And certainly, I think to anyone reading the indictments that are publicly available, whether their attorneys or not. Every I is dotted and T is crossed.
And most importantly, these are not just the simple decisions of prosecutors, but the work of a grand jury that sat and heard witness after witness and determined that, yes, there was ample information and evidence and testimony of witnesses that would lead them to believe that these indictments are appropriate.
Well, we're hearing about a lot of weaponizing of government double standard here, weaponizing of the DOJ, even from your own speaker, Kevin McCarthy, What would you tell mister speaker about that, now that we've seen a case emerge from the state of Georgia.
I think that these attacks on the Department of Justice, the attacks on the FBI, the attacks on public servants who have devoted themselves to upholding law, to upholding the Constitution, to protecting our communities are uncalled for. I represent Quantica, which is the FBI training facility. I represent FBI agents
across across the seventh District. They are hardworking law enforcement officers who believe in the rule of law, who work to uphold the law, and continuing to see attacks on them on the DOJ, it's an effort to distract from the very real threats that exist and the very real information contained in these indictments.
Well, you know, we wanted you to come on and talk about the work of the Congress, and I'd like to get to a couple of specific issues here. But do you worry that this starts to hang over Capitol Hill and in fact makes things even less productive.
I think it's been hanging over Capitol Hill for years. If you'll remember, under for President Trump's presidency, he had regular attacks against the intelligence community, the very people who are risking their lives and living overseas and collecting vital information so that we understood the threats that emanate from Russia and from Iran and from China very real terms. Threatened the men and women of the FBI and impugned
their work. And they're the folks that keep us safe from terrorist attack and investigate problems here at home and everything from bank robberies to international terrorism to narco trafficking, etc.
Etc.
So this has been occurring for quite some time, and it's certainly wildly inappropriate, and the role of Congress is clear oversight to make sure that these agencies are fulfilling their mission. But the fact that those oversight capacities are in any way being used as a distraction method because we have a former president who's now been indicted in four separate jurisdictions for an array of alleged crimes. It's
pretty sad reality, frankly on Capitol Hill. But I continue to be proud of the extraordinary public servants who I represent.
Well, I'll tell you when you come back to work, it's going to be fast and furious. I can really only imagine what's going to happen as we talk about the possibility of a government shutdown. The House has a lot of catch up work to do with the Senate when it comes to getting actual appropriations bills, assuming that is going to happen this time around. But you know, as we hear members of the Freedom Caucus say, don't
fear the shutdown. That was what Bob Good said. It's actually going to be good for Washington to just shut it down because we do bad things here. Chuck Schumer showed up on cable news this morning and said he's got a deal in principle with Kevin McCarthy for a short term solution. Is that enough to avoid a shutdown? Or does it just prolong one.
Hopefully it's enough to avoid a shutdown, a short term cr and move forward.
You know.
Related to Congressman Goods comments, he is from Virginia. Virginia is the most impacted economically impacted state in the country when there is a shutdown. The fact that any representative who represents the Commonwealth would say there's nothing to fear in a shutdown shows an absolutely outrageous lack of understanding of what it means to have a government shutdown occur. And the reality is we must do everything to avoid one.
And you look to the Senate. The Senate has already passed all twelve of their appropriations bills out of committee with overwhelming bipartisan support, And certainly, I think the reality of kind of looking to the Senate for their expediency in moving things along is a comical state of play.
But the reality is that we should follow their lead, recognize the work that they have done, and move bills in the House that are reflective of what has already garnered the broad bipartisan support necessary to pass through the Senate, because likewise those bills would through the House.
It does seem like the House the Senate are in different orbits. Right now, is it possible to avoid a government shutdown? Or is it inevitable?
It has to be possible. We have to avoid a government shutdown. It is an absolutely outrageous abdication of the responsibility of Congress for any member of Congress to act as though a government shutdown is an inevitability. The job of the Speaker of the House is to preserve and facilitate the function of Congress, and frankly, our primary responsibility
is to ensure the function of our government. And so the idea that anyone would accept that a government shutdown is just going to happen needs to find a new line of work. That absolute sort of abdication of responsibility is offensive to me as a former federal employee, and certainly as someone who represents thousands of extraordinary public stas urvans and the larger economy that works with them. That's government contracts, that's restaurant owners who are in, you know,
places frequented by public servants. That's the appliance store that sells microwaves and refrigerators to federal employees. Right in our district and in our state. A shutdown is absolutely catastrophic and for anyone who wants to make some economic argument. I have been at the table when government employees have
to sit down. As a former intel officer, right, I was serving in a station overseas, and you sit around the table and say, okay, well, you're meeting with the terrorists next week, and you're a meeting with the you know, the nuclear proliferation source next week, and you're meeting with so and so from X four and government. Which one of those can we push until Congress gets its act together.
The idea that anyone anywhere in the world is pushing or determining what's quote unquote essential versus non essential, when it might be somebody's Social Security payments or they're VA processing or their passport, let alone, you know, investigations of transnational criminal organizations. The idea that any of that has to get delayed or that somebody wastes a minute determining kind of how we rack and stack these priorities because Congress can't do its job on time is grotesque to me.
I've never heard you fired up like this before.
Abigail s about Tommy Tubberville and I'll come you know.
That's coming, but I'll tell you what you're speaking the language of Virginia. Here're you sound like somebody who might be governor of Virginia. Is that where we're going?
You know? I sound like somebody who is deeply passionate about a functional government and the idea that somebody is going to play politics with whether or not one of the senior citizens in my district gets their Social Security check, or whether a veteran in my district is processed through the VA, or whether or not, you know, a family who have long planned for a vacation can actually get their passports in order, or whether or not public servants who work day in and day out to serve their
community can actually get paid. Or whether a small business who went out on a limb put their life savings into it and are doing small government contracting work, whether they go for a month without payment and see their business collapse. I sound like a person committed to all
of those people. And I'm going to continue to be aggressive on this issue because the negligence on the part of some of my colleagues hurts the people that I represent, and Virginia is the most economically impacted state in the case of shutdowns, and I will defend my state, and I will defend the constituents I represent, of.
Course, and I hear you, but our listeners should know that there's going to be a term limited exit here in a moment. And I wonder if it is true reports that you're considering a run.
I'm certainly always considering how I can best serve my constituents and my state. But right now I am focused on getting us through September without a government shutdown. And We've got exciting elections here in the Commonwealth, and I'm supporting so many great candidates who are on the ballot.
In November, you mentioned your friend Tommy Tuberville. I didn't even have to bring him up, but I noticed that you tweeted about Senator Tuberville's one man show, you right, has now left the Army, Navy, and Marines without confirmed leaders for the first time in history. This, of course, is the blockade that alone senator is holding up military promotions at the Pentagon here and that boy, we're above three hundred now, I believe, including top brass here. Congresswoman,
what's the solution here? Because he shows We've talked to him repeatedly, no signs of backing down, and the Senate Majority leader doesn't want to bring each one of these nominations to the floor and set that precedence. That's go on forever.
Let's talk about what's at stake right now. Our enemies are watching right Russia's watching, China's watching, Iran is watching. I don't want to hear a single China Hawk say anything about China without them saying. And this is why we need to have top leadership in our military. Let's
talk about what we're talking about. The designated new Chairman of the Joint Chiefs can't get confirmed chief of Staff for the Air Force, chief of Staff for the Army, Chief of Naval Operations, the commandant of the Marine Corps, which has its headquarters at Quantico in my district, and the Vice Chief of Space Operations, as well as more than three hundred people across the country and the world in top leadership positions. Seventy three positions in DC, impacted,
thirty nine in Virginia, impacted, thirty five abroad. And if this doesn't end, we are on pace to see approximately six hundred and fifty positions unfilled and unable to be confirmed because of Tommy Tuverville that's six hundred and fifty out of eight hundred and fifty two, right, like that is rageous. And we're going to talk about the threats that exist on the global stage, and yet one man is going to be able because of his culture war and one man march. He's going to keep our military
from being ready to address the threats that exist. It's unbelievable to me. This is unacceptable. It's absolutely outrageous. What does it say to the men and women in the military, not just those who are impacted, but those who got in. Maybe they're at year fifteen and they're trying to determine do I stay in the military, do I commit? Do I try to go to one of those flag officer positions with They know that every step of the way, one one ridiculous person could stand in the way of
their ability to serve our nation. I mean, the ramifications are unbelievable, and this needs to come to an end.
You know.
The bottom line is he has already set a horrible precedent. So the bad precedent's already been set. If I were if I were queen for a day, I would call every single Senator in and I would make them vote every single day, seven days a week, because the bottom line is this man will break under the pressure of a whole host of his Republican colleague saying, I was supposed to do this in my district. I'm supposed to go to so and so's wedding. I'm supposed to do
this golfing trip or whatever thing they might have planned. Yeah, and at that point in time, that's how you actually get him to bow under the pressure, because apparently doing the bidding of China and Russia isn't enough for him.
Wow, Okay, I think I know what you mean by that. But until you do become queen for a day, it's just us in the media asking questions. Congresswoman. And this is what he told Bloomberg last time we hit him in the hallway.
We're sticking with what we believe in. It's an illegal bill, and they're trying to make an n run in the NBA and all that. It's not gonna work. They got change policy, back illegal policy, get a standalone bill on Flora's vote on it. That's how we're going this thing.
It sounds like he wants to have a vote too.
Yeah, he wants a vote on the NDAA, so have him vote against the NDA. Right, this is what he's doing. He is waging a culture war because he doesn't like what the policy of the Department of Defense is. Sure, then put forth an amendment that you want to change the policy to Department of Defense. It will fail in the Senate, frankly, but that's democracy. It was put forth on the House side. It passed out of the House, so you know, maybe that will make him happy, but
it will fail in conference. Because the bottom line is the United States military their obligation is not to make one man from Florida slash Alabama happy. Their mission is to protect the Unitited States and our readiness. And if that means ensuring that service members can travel for the healthcare access that they need, that is their obligation. And that's how they keep the best and the brightest and the most ready military fighting force that the world has
ever seen. And this man, because he cares about dictating what the DoD is doing relative to the health needs of its women, soldiers and airmen and marines and all of our service members, because that is his priority, he is willing to threaten our military readiness to the most egregious degree. And so let him put forth amendments when
they fail. That's democracy. I'm sorry for him. He can do as many television interviews as he wants, but the reality is what he's doing to our military is absolutely dangerous and our adversary nations are watching well.
It threatens military funding potentially as well.
That's right.
Are we going to see this supplemental request for Ukraine past? Are we going to see the Pentagon fully funded? In this next budget fight?
It's going to be a question of whether Speaker McCarthy puts a bill on the floor. The bottom line is that there are the bipartisan votes to fully pass a National Defense Authorization Act that can pass the House, pass the Senate, and go to the President's desk and get signed. There are also the votes to pass the Ukraine supplemental. It's really just a question of whether or not the Speaker is going to be willing or have the courage to deal with the pressure from his right wing flank
about whether he puts it on the floor. He seems to live in eternal fear that they will call for a vote to vacate the chair, and that's impacting what he's willing to put on the floor. The votes are there in the House and in the Senate, but we need a speaker willing to bring it to the floor.
Congress, when I haven't even asked you about the Inflation Reduction Act yet, this has been quite a conversation here.
That's the happy topic.
Well, you know, I guess it is. It depends who you talk to. Of course, Democrats say that it is. The White House says that this is a generational investment. Republicans say, we don't even know what it is, and voters in many cases never heard of it. What does the President have to do in the next year to change that?
If they say they don't know what it is, I'm wondering why they voted against it. Maybe they should have taken time to read the bill. Because this bill made major impacts across the board for the people that I represent. And I'll just focus frankly on prescription drugs because that's where we are already seeing the impact on constituents. It gave Medicare the power to negotiate some of the most expensive and most used drugs in Medicare party that lowers prices.
It kept out of pocket costs for Medicare beneficiaries to two thousand dollars per year. And if if you're a retiree, that's extraordinary. That is so helpful. It created penalties. We want to talk about inflation. It created penalties for transnational pharmaceutical companies, these big pharmaceutical conglomerates that have been historically
raising their prices faster than the inflation rate. And to say, wait a second, you know, we recognize that these companies are moving with markets, but if you are increasing your fees far past the inflation rates, there's going to be a fee for that. It made necessary vaccines like the shingles vaccine free for hundreds of thousands of Virginians who use Medicare. They capped the price of insulin at thirty five dollars a month for Medicare beneficiaries.
Something voters need, an owner's manual, and.
It's also already we've seen some pharmaceutical companies pass on this cap to others. And really, this is the number one issue that I continue to hear, particularly I mean from families across the board, but particularly from seniors. You're living on a fixed income and you're feeling the impacts of the inflation. We've experienced over the past few years.
And the idea that any senior or any person would be choosing to cut their medication or not take their medication at the right rate because they have to save money and they're choosing between putting food on the table and their medicine. That's just outrageous.
So what you're telling me is you read the bill.
I read the bill, and I voted for the bill, of course, and seniors are saving money. It's exciting.
Congress Swimming. It's great to have you back, Abigail Spanberger. We weren't supposed to. We broke all kinds of rules. I kept you late, we didn't play commercials. There A lot of things happened while we were talking, but I learned a lot and I would love to stay in touch with you on this. When you do make a decision on the next chapter, we're going to come to Virginia to see you as well. Abigail Spanberger from Virginia, seventh many thanks for being with us here on Bloomberg's
sound on Wow reassembled a panel. Rick Davis and Max Burns are with us. Rick, that sounded like a whole new Abigail Spanberger in a lot of ways. I could ask you about a lot of the issues that we discussed, but is this is this someone aiming for higher office?
Well, if we did a word count on Virginia and my constituents, I think we'd be impressed by the factor into the home game. Yeah. Look, I mean she's obviously been able to get re elected to an incredibly difficult district and show her political prowess both legislatively and politically. So you know, there's a there's a there's probably a future for that congresswoman somewhere in state of Virginia. But we'll see where she winds up going in the meantime.
I mean, so much to unpack from that great interview, Joe, well done.
Well geez, Yeah, sometimes you'll learn a lot when you talk to a lawmaker. Max. Of course, the congresswoman has to first win reelection, I presume. And there's a Republican named John Maguire, a former Navy seal state lawmaker, who says he will be running for that seat as well in the Richmond suburbs. Will this be a tough fight if that happens.
Well, he's certainly in for a fight. I mean, Abby Spamberger is the definition of a fighter. I mean, I've lived and worked in Virginia politics for a dozen years over in the eighth district, and she was always one of the politicians who seem to be in it because of the policy and to be an honest collaborator in making people's lives better. And Virginia voters really like that.
I mean, remember, Glenn Youngkin won in part by framing himself as not as much of a big personality as Terry mccauloffe, but more of a get things done pragmatist. And that is Abbie Spanberger to a t.
What do Republicans think if you can even answer that rick of Abigail Spanberger. She survived a very difficult election in twenty twenty, and it might be in for one again.
Yeah. Look, I mean it's a competitive district, and frankly, without some support of Republican voters on the margins, I don't think she could get reelected. So I think that she makes it clear that she's not playing the partisan card when she does these things, and that opens up some of the Republicans in her district, who you know, would be more moderate than what we see in other more rural areas of Virginia and if she does look statewide, she'll have to figure out what her messaging will be
to them. But prigmatism is something she's known for, and there are a lot of Republicans who reward that.
All right, quick swing with both of you. I've only got about ninety seconds here. But she was most animated about this military blockade. We've talked about Tommy Tumberville's effort many, many times. This is, of course, in protest of the Pentagon's abortion policy. When's it going to end? Max?
Well, Tommy Tumberville likes to say he's just representing his constituents, but nearly sixty percent of Alabama voters say they want him to stop threatening military preparedness. I mean, this is the definition of ego gratification at the expense of national security. And now even Republicans are telling him to cut it out. We saw Nicki Haley called it low to hold a military hostage. And if Nicki Haley is criticizing you, you know you've messed up.
Does this go on straight through the holidays?
Here?
Rick?
How does this send?
Yeah?
I actually don't see a reasonable exit for for Tommy Tubberbill the coach hasn't put himself in a position where he can gracefully change his position, and so it's it's kind of like a slow moving train wreck. And I think until his constituents really start to put the pain to him, which I think exactly as Max said, they'd be inclined to do if they really understood what the what the requirements of office are there. You know, he's he's going to hold his ground until he feels a pain at home.
Well, that was something. This is why you want to subscribe to the podcast if you're not always with us live a fascinating conversation with Congresswoman Abigail Spanberger. Great analysis from Rick Davis and Max Burns on some pressing issues here who says the news gets slow in August.
You're listening to the Bloomberg Sound On podcast. Catch the program live weekdays at one Eastern on Bloomberg Radio, the tune in up, Bloomberg dot Com, and the bloom Business app. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa, play Bloomberg eleven thirty.
As I put in the headlines here in the terminal, most FED officials saw significant upside risks to inflation. This is straight from minutes from the last Federal Reserve meeting, right, you get the fly on the wall view here. This is the stuff you wish you knew when it happened. But there's more where that came from. Maybe one seems obvious following what I just told you, inflation risks could
require further tightening. But more importantly, two Fed officials favored holding rates steady in July, So we've got some maybe discord here is certainly some disagreement inside the FOMC, and that's where we want to start with marxx Andy Delighted to have Mark with us, the chief economists for Moody's Analytics, on this first anniversary of the IRA. We have a lot to talk about, Mark, and great to have you to catch up a bit. I know that these are
just breaking now. We're just getting a look at these Fed minutes. Maybe none of this sounds surprising to you, but if most Fed officials see significant upside risks, what does it mean when two officials favor holding rates steady in July? Does that bring us back to the pause or the skip knowing that there might be further increases?
Well, Joe, it's good to be with you. Thanks for the opportunity. Yeah, I suspect that the FOMC is done. It's right hikes. I mean this was minutes for the meeting at the end of July. Since then, we've gotten more data, inflation data, economic data, and they all point to an economy that's moderating and inflation that's kind of coming back into target in.
A reasonably graceful way.
So you know, if that data continues, and I expect that it will by the next so FOMC meeting in September, I would anticipate that they would pause at that meeting and that would be the end of the right hike. So this is looking in the rearview mirror a bit given the data flow, so I wouldn't read too much into it, And it feels like everything's moving in the right direction for the FED to end.
It's right hikes.
Well, like that's maybe better FED staft scraps recession call. Some saw small jobless rate rise. That's just like what we've been hearing from every Wall Street bank over the past couple of weeks. Mark what was the turning point that brought all these smart people to think there would be no recession.
I think it was the inflation data. And by the way, I'm just going to toot my horn, I never said recession.
Actually, thank you. By the way, our listeners should understand you've been entirely consistent on that, and now the world is moving toward Mark Xandy.
That doesn't mean I'm right what is being written here, but but people are changing their views, and I think it goes to the inflation statistics.
They're they're they're they're very good.
I mean, just to give you one, overall consumer price inflation UH is a year over year through the month of July, is UH, you know, excluding housing down to one percent. Core consumer price inflation, so excluding food and energy, you know, exclude housing is down to two and a half percent.
Joe.
That's that's inflation at targets. So the only thing that needs to happen here is for housing inflation to come back into something that's more typical.
And that's going to happen.
We know that with a high degree of confidence because that's tied to market rents, and we know rents are flatted down since the end of last year. So you know, the forecast for inflation to get back to the fed's target by this time next year is a really pretty
good one without any more rate hikes, without recession. I think it's that kind of realization that you know, that that that inflation calculation that is changing people's minds that Okay, you know, maybe this economy can get inflation back in the bottle without having to suffer a recession.
The question, then, I guess becomes, you know, for how long and if we don't see you know, cuts coming anytime in the near future, could this just be the new normal?
Yeah?
I suspect the bar is really high, you know, in the minutes would suggest the bar is you know, really quite high for rate cuts.
I mean we, I think the Fed.
I mean next year, you know, just the foreseeable future. Could we be at these levels for years years?
No, I don't think so.
I mean, if i'm if I'm you know, reasonably right about inflation, you know, coming into defens target and growth, you know, remaining around the economy's potential about two percent,
give or take. I think at that point the FED will come to the conclusion that, you know, we don't need short term interest rates at you know, five and a half percent, which is where the federal fund rate target is today because you know, most estimates of it is an estimate, so there's a lot of debate, but most estimates would put the neutral federal funds rate target, that rate that's consistent with monetary policy neither supporting or restraining growth, at about two and a half to three.
So if you're at five and a half, that it's going to start doing some damage. So I suspect that once inflation is within spitting distance of the Fed's target, and again I expect that by this time next year that they'll start to slowly ease monetary policy, bring interest reachs down, not quickly, but you know, slowly over time.
Mark Sandy hold that thought, we're going to go straight to the FED for just a moment with Bloomberg's own Kaylee Lines, who was in the lock up for all this stuff and has all of this this breaking news for us. Kayley, is great to talk to you. I wish you were here in the room, but it's great that you're at the FED to get this breaking news. The FED staff scraps recession call kind of jumping out of the terminal to me here, but we're clearly still in for more rate hikes.
It sounds like, well, we could be Joe. And of course we knew because Chairman Palell had told us at the podium after last the FED meeting in July that the staff had scrapped that recession call. But we're getting a little bit more detail on the staff's economic thinking, noting that the staff observed that indicators and real activity had come in stronger than expected. Basically, the data has just been holding a lot up, a lot better than
they previously anticipated. That said, they do still expect growth next year in twenty twenty four, and in twenty twenty five is going to run below their estimate of potential output growth, and they think there will be a small increase in the unemployment rate relative to its current level.
So there are still risks here. And of course, participants in the meeting, according to the minutes, did note that risks to achieving its goals, meaning two percent inflation target had become more two sided.
Of course, you know, Mark just made the point, Kayley, this is rear view mirror. So how much stock should we put in what was said at the last meeting.
Yeah, it is a really good point, because of course this is backward looking by three weeks, we've gotten a lot of data, including a very important CPI print in the interim. But the minutes do say that participants think they needed to see more data on inflation and more signs that aggregate demand and supply were moving into better balance in order to be confident that those inflation pressures
were abating. Theoretically that data could have suggested. It suggested that to them in recent weeks, but still when they're noting the upside risks to inflation, which is what they were talking about when most participants said that those upside risks could require further tightening of monetary policy, that's really what they're wary of. What the data is suggesting now is one thing they are worried though, that there is still upside risk that could be present in the future.
It says a lot, though, at least to me Kayley, that we're dispatching Kaylee lines to the FED and the whole world is holding its breath when the minutes come out. It just speaks to the world that we're in here, the data dependent world that we're in when it comes to everything involving interest rates.
Yeah, that's exactly right. Anyone is looking for any semblance of clarity they can get in regard to the Fed's thinking. And luckily, now that we've got the minutes today, they don't have to wait too much longer for even fresher views because Jackson Hole is next week. Joe, I unfortunately don't get to go to Jackson Hole like I got to come down to the FED today. But you know, a girl can dream.
I bet you Michael McKee's got that cowboy at ready.
Though it doesn't he I bet he does.
It's great to have you from the Fed, Kaylee. We'll see you back here in the bureau. Kaylee lines Bloomberg's very own who we normally spend time with every day in this hour, and I want to bring Mark Zandi back again, the chief economist for Moody's Analytics, to I don't know if it's possible to put a bow on this mark, but I'm I'm pointed to mortgage rates thirty year hitting seven point one six percent last week, the
highest since two thousand and one. Incidentally, the first that was the year I bought my first home, and that seemed pretty good back then. It seems outrageous now.
Indeed, indeed, well, you know.
With a ten year at four and what four and a quarter? You the spread again, it's mortgage rates are awfully high, about three hundred basis points.
That's how you get to seven and a quarter.
You know.
If what I've noticed is that if you're at seven percent, we're above that's when the housing market really takes it on the chin.
You know, people pull back.
Yeah, this is is this the breaking point?
Yeah?
I think if we stay over seven, I think we all start to see. You know, we had been seeing some stabilization in the single family housing market, right because mortgage rate take gotten back down closer to six and felt like that was breathing some life back into the market. But when you're seven percent plus and it now it feels like we're going to be here for a little bit.
You know, affordability is now completely out of reach. And I wouldn't expect the markets start weakening again and we'll start to see some house price declines here in your futures. But you know, that's part of the process. I mean, the Federal Reserve is working hard to slow the economy's growth by raising rates. The most rate sensitive secretor of the economy is single family housing.
So you know, if single family housing.
Isn't taking it on the chin, then you know what is and the Fed's not going to get what it needs, you know, or what it wants in terms of slowing growth and getting inflation back down to target. So this is you know, it's no fun, it doesn't feel good, but you know, this is I think by design, part of the process.
As the yield curve gets back to something more normal, though, what does that mean for mortgage rates?
Go, well, that that would be great, right, then then we'll start to come in. That spread I mentioned between mortgage rates and the ten year tursury or the three inner basis points that's almost double what it is typically and there's lots of you know, technical reasons for that, one of which is going.
Back to the inverted Yell curve.
So you know that spread is going to mean very, very wide until you know it's clear that you know that y'll curb is starting to move in, and then I expect the spread to come back in, just just to put a stake in the ground. I think in the long run, you know, abstracting from the ups and downs in the economy and everything else, the thirty year fixed mortgage rate should be somewhere between five and a half and six, so you know, seven is too high.
But but you know, I don't think we should expect anyone should expect to see mortgage rates back down to like into the threes, which is where we were before if I started raising rates.
I hope everybody's taking notes. You're not selling the five point five from Mark Zandy. So Mark, it was one year ago today now. The signing of the Inflation Reduction Actor was a big moment for Joe Biden. God they even played Hail to the Chief. Joe Manchin shared the stage with him at the White House. There's been an issue ever since then and people understanding what the heck
it is and why it matters. And I remember talking to you going all the way back to this thing called Build Back Better, which they took the pieces from that turn it into the IRA. And I wonder if you feel us upbeat about things now as you did a year ago, knowing that it's going to take time for a lot of this stuff to take hold. There are also new questions about what it might cost.
Yeah, I still feel really good about it.
I mean, at the end of the day, the Inflation Reduction Act was really about climate, climate risk, climate mitigation, trying to take a step in the direction of reducing our CO two emissions, because that's critical, I think here to ensure that temperatures don't continue to rise and we don't have more economic loss due to hurricanes and heat stress and everything else. So you know, I think this is vitally critical and we got to get going, and I think this was a good, strong step in the
right direction. It's it's not the IRA is not using sticks to get people moving on col reducing CO two emissions. That would be like a carbon tax. We we just aren't politically able to do that. This is all about carrots, you know, tax credits to get the private sector to move in the right direction here to address climate risk. And it's working. And actually the interesting thing, as you
point out, is it's working much better than anticipated. The private sector is all in on these tax credits, and it may end up being more more expensive. But you know, there are pay fors in the IRA, meaning you know, there were efforts to raise revenue and cut other spending to pay for the IRA. It doesn't look like that's going to happen, at least not in the next ten years, but if you know, you extrapolaid out or twenty twenty five years, then then it is very very much paid for.
And then after that the benefits are quite enormous because it does go to reducing you know CO two missions and temperatureize, which is really going to be important, you know, as you move towards the mid part of this century.
But it's called the Inflation Reduction Act, Yeah, have a different name.
Well, as you may recall, you know, we were in the middle of the inflation raging was just ragings. Yeah, you need to do something to get across the finish line politically, and I think that's what it was. There were some elements, other elements of it that did reduce the cost of living for people. I mean there was you know, things related to Obama Care subsidies, so to make it more affordable to afford health insurance, and some things to reduce the cost of prescription drugs, those kinds
of things. So it's not completely devoid of you know, efforts to reduce inflation. But you know, obviously that was a marketing you know ployee more than anything.
Hey, it's great to catch up with you, Mark Marks Andy, the chief economists for Moody's Analytics on a score of topics. Happy Birthday, I guess Ira, you're.
Listening to the Bloomberg Sound Podcast. Catch us live weekdays at one Eastern on Bloomberg dot com, the iHeartRadio app, and the bloom Business app, or listen on demand wherever you get your podcast.
We bring you back to Kaylee Lines with some final thoughts fresh back from the Fed. And as they say, Kaylee, uh, time is money, and if you're the Secretary of State, you don't have a lot of time. This is true, and so when it comes to the matter of Barbenheimer, it's pretty tough to get there, right three and a half hours plus two something hours. Yeah, I haven't seen a half day commitment right exactly, but you better believe this came up at the briefing today at the State's Department.
A related note, have you seen Appenheimer yet?
And if you have, what do you think?
I'm glad that these are two very distinct questions To take your second question. First, No, I've not yet seen Apahira. I'm trying to find the what three and a half hours necessary?
That's fird to watch it.
But it is so expensive if you do the iMac.
Well it isn't the cards, or we'll wait till it starts streaming.
But imagine the soul crushing sound for Christopher Nolan to hear the Secretary of State indicate he may watch it streaming, streaming on his phone. Maybe, but what about the other movie?
I also look forward to seeing Barbie, Yes, but no set plans to do that again. Have to find have to find the time. Maybe we can do a double feature in briefing room. That's for those who've seen neither movie.
Okay, Christopher Nolan and Greta Gerwig need to get him like a copy before the DD comes out. Send it with him on the State Department plane for the next time he travels. Has a really long flight halfway around the world.
That's a perfect and that's what you can watch. That's he's got nothing but time ye where nobody's trying to call him or anything that on a plane to some summit in another country. But I think we know what the weekend plans are for Anthony Clincoln.
Thanks.
I don't think he wants to see Oppenheimer. I think we know what movie he wants to see. He was very animated when he talked about the other films. Maybe a pink jacket for the Secretary tie.
Maybe his next trip will be to Barbiewell.
That would be fantastic. With apologies for the earworm, I just had to play around for one minute with my friend Kaylee and of course the Secretary of State. Thanks for listening to the Sound On Podcast. Make sure to subscribe if you haven't already, at Apple, Spotify, and anywhere else you get your podcasts, and you can find us live every weekday from Washington, DC at one pm Eastern Time at Bloomberg dot com