One way a bad boy might deal with a bad report card is to claim the teacher is lying or doesn’t know what she is talking about. Most bad boys, however, would be smart enough to figure out they can’t sell that excuse to mom or dad. Yet, that is the flimsy excuse Trump’s economic chief Hassett gave today for the bad report card delivered by the Fed over the damage being done by the Trump Tariffs to American businesses and consumers.
White House economic advisor Kevin Hassett said Wednesday that the authors of a recent New York Federal Reserve paper that found U.S. companies and consumers are shouldering most of the tariff burden should be “disciplined.”
Bad teacher. Should be spanked for giving me this bad report card.
The National Economic Council director ripped the report, saying that central bank researchers ignored key aspects of how the duties worked and instead simply focused on prices.
Well, that was their purpose—to see what tariffs are really doing to prices. This is like the bad boy arguing to mom that the teacher’s report card on his spelling skill was badly flawed because his math was really good. (Only Hassett’s math also turns out to be really, really bad.)
The Fed researchers were checking to see if it was true that tariffs are not causing any inflation as the Trump administration keeps claiming … which is also to say, “as Hassett keeps claiming.” Their report effectively called the administration out on its constant lies about tariffs causing no inflation. That sent Hassett’s own lying to desperate extremes when he claimed, the problem is that the Fed’s researchers failed to look at the positive impact tariffs have had on wages, and I’ll show you how desperate that was.
First, wages are not prices, in case Hassett fails to grasp that. The Fed was quantifying Hassett’s longstanding argument about inflation, which is especially important now that all the government reports on inflation are, as I’ve been pointing out recently, lying more than ever before (and they weren’t all that good ever before!) Only after you know what tariffs are doing solely to prices can you evaluate whether wages are rising enough to offset that price inflation.
More specifically, the researchers were trying to find out to what extent foreign entities were lowering their prices to US importers in order to offset the tariffs that are imposed when products reach the US. What they found was that more than 94% of tariff costs were absorbed by the US importer, and only about 6% of tariff costs were being absorbed by the foreign sellers via price discounts.
Here is Hassett’s lie, repeated in three forms:
“Prices have gone down. Inflation is down over time. Import prices dropped a lot in the first half of the year….
All completely untrue. You can say it three times in different ways but that doesn’t make it any more true.
While government reports have been rigged to make it look like inflation is down, as I’ve laid out clearly here in recent months, we also have plenty of non-government studies that show inflation is way hotter than the government is reporting. I’ve even pointed out the new flaws in the administration’s math that crept in through the government shutdown.
From there, we have had many major corporations announcing to the world that they will be raising prices a lot this year, saying they held out as long as they could by absorbing the cost of tariffs (NOT by getting price discounts from their foreign suppliers), but now they are passing on those tariffs that they have been absorbing, which is fully a cost born by Americans. Nearly all companies have made it clear all year that their costs have been rising due to the tariffs; but Team Trump won’t stop repeating the lie.
Then we come to the worst lie
… and real wages were up $1,400 on average last year, which means that consumers were made better off by the tariffs,” he said.
That is the most corrupt lie because Hatchet is lying by telling the truth. It is what he is implying with this truth (the manner in which he is applying it) that is completely deceptive. A $1,400 pay increase would make consumers better off if prices had actually dropped or even held flat. But that didn’t happen. They would also be better off if wages rose more than prices, but that didn’t happen either! He even claims the $1,400 increase is due to tariffs! It is not!
The willingness of people to keep believing the lies must be waning, however, because Hassett tries to drag a red herring across the tariff trail to send the dogs off the hunt, claiming wage growth more than compensates for those big losses by Americans to tariffs. Then he assassinates the character of the people who did the study:
“I mean, the paper is an embarrassment,” Hassett said during the “Squawk Box” interview. “It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve system. The people associated with this paper should presumably be disciplined.
The caricatures who constitute Team Trump, whether it is Blondi or Cash Pastel or Hatchet, like to lie and smile “bigly” at you as they do it because, apparently they find lying fun! Hatchet, as I’ll now call him, after this hatchet job of a report on the report, compares the authors of the Fed’s report to an Econ 101 class. While that assessment of the Fed could be accurate, and I sure wouldn’t spend time arguing against it, Hassett’s claim that tariffs have benefited wages doesn’t stand up at all.
First, it doesn’t even pass the common-sense test. Everyone knows this is a no-job-growth economy, so it makes no sense to think that—when hiring has clearly stagnated for months at recessionary levels—companies are offering higher and higher wages. Economics doesn’t work that way. Companies offer higher wages when they are hiring quickly and have to offer more in order to attract enough workers to fill their opening positions—not when new jobs and new hires are languishing.
Fortunately, on the same day when Hassett’s multiple indecent lies were published (without any argument put up by the reporter who, in fact, corroborated them by parroting the administration’s garbage reports on inflation), the following article came out:
Some economists, like Mickey Levy, aren’t optimistic that rising productivity can continue to carry the US economy if it’s not passed on in the form of higher wages. Right now, that’s not happening — wage growth has been decelerating as workers have lost bargaining power in negotiations with their employers.
And that statement does square with common sense, so I’ll take it as the likely truth, rather than Hassett’s self-serving claim that offers no basis of support. (But I won’t stop at what makes sense. I’ll explore that deeper.) So, yes, there has been wage growth. There usually is wage growth. But it is pathetic wage growth.
My first thought when I read Hassett’s claim was, “$1,400 is not a lot of increase for a year’s wages, given how inflation has risen; so, is it any more than what happens most years. The answer I found is that it is less wage growth than what had been happening prior to Trump’s tariffs. Wage growth is decelerating. There is still a little growth, but it is not keeping up with inflation.
Here is the first table showing wage growth in recent years that came up in my search. You can see that wage growth surged during the Biden years, but that was largely due to fiercely competitive hiring that had to happen after the Covid lockdowns damaged the economy by convincing millions of workers to leave the work force for good and because screaming inflation forced wages to rise in order to find enough replacements. In 2022, wages increased about $3,100 over the prior year. In 2023, they increased about $4,200 over the prior year. In 2024, they increased about $2,600. So, $1,400 is peanuts! It’s a joke that is worse than any of the Biden years shown in the chart.
$1,400 wage growth is a red herring in that it does not even come close to matching recent years’ wage growth, and certainly doesn’t make up for current inflation. In fact, the growth you do see in Hassett’s $1,400 number can probably be fully attributed just to the built-in COLAs, set by the government and followed by many companies in many jobs, which are, themselves, always less than true inflation. Inflation has been running gradually hotter, so there is still some wage growth just due to cost-of-living adjustments, NOT DUE TO TARIFFS! In fact, Levy concluded by saying,
“Economic growth will be slowing significantly to reflect the stagnant labor markets.”
So, lies, lies, all lies. That’s all you get out of this government. They all lie to your face and smile about it as they do. Most transparent government ever. Transparent lies that is.
Read the full article here