Episode summary
Powell Probe Stirs GOP Concern, Threat to Stop Trump Nominee | Bloomberg Businessweek
Bloomberg Businessweek Daily
· · 33 min · Hosts: Carol Massar, Tim Stenovec · Guests: Heather Long, Aaron Kennon, Paige Smith, Wadhams
Summary
The show centered on the escalating fight over Federal Reserve independence after Jerome Powell publicly pushed back against a Justice Department probe. Heather Long of Navy Federal Credit Union said the reaction from Republicans was striking, especially the possibility that lawmakers could block Trump Fed nominees until the issue is resolved. She also argued that Powell is an institutionalist who may stay on in some role if he believes the central bank’s independence is under threat.
Long said the U.S. economy still looks distinctly K-shaped. She described strong spending among households earning above about $170,000, flat-to-slightly-up spending in the middle class, and weakness at the bottom of the income distribution, where some consumers are spending less than in 2019 in inflation-adjusted terms. She did not see an immediate recession, but said the “jobless boom” and weak wage gains are keeping pressure on Main Street.
Aaron Kennon of Clear Harbor Asset Management said the Fed fight and the White House’s push to cap credit card rates at 10% could be counterproductive, even if the affordability message plays politically. Paige Smith of Bloomberg News said the credit-card cap could reduce credit availability and hurt lenders like Capital One, while benefiting buy-now-pay-later firms. The program also covered unrest in Iran, where Nick Watams said protests are larger and more sustained than past waves, but warned that regime change is still highly uncertain.
Key takeaways
- Heather Long said Republicans including Thom Tillis and Lisa Murkowski could block Trump Fed nominees until the Powell probe is resolved.
- Long argued the U.S. is in a K-shaped economy, with households above roughly $170,000 still spending 6% to 7% more while lower-income consumers weaken.
- Kennon said attacks on Fed independence and the proposed 10% credit-card cap could be counterproductive and may push markets higher rates if sustained.
- Paige Smith said a 10% credit-card cap could shrink available credit and hit issuers like Capital One and JPMorgan Chase.
- Smith said buy-now-pay-later firms such as Klarna and Affirm could benefit if credit-card economics are squeezed.
- Nick Watams said Iran’s protests are more sustained than earlier waves, but a democratic breakthrough remains highly uncertain.
Notable quotes
“last night the gloves came off and he really pushed back strongly”
“basically the new dividing line in America is around $170,000 and that's the top 20%”
“I believe we're in a jobless boom right now”
“these are banks. They're very focused on their bottom lines”
How the episode opens
Bloomberg Audio Studios, podcasts, radio, news. This is Bloomberg Business Week Daily, reporting from the magazine that helps global leaders stay ahead with insight on the people, companies, and trends shaping today's complex economy. Plus, global business, finance, and tech news as it happens. The Bloomberg Business Week Daily podcast with Carol Masser and Tim Stenbec on Bloomberg Radio.
Well, as I mentioned, we want to go all in on not just the consumer in this economy, but also the latest with how people are viewing that probe into the Federal Reserve. I want to bring in a name that's absolutely familiar to our audience, Heather Long. She's chief economist at Navy Federal Credit Union.
She spent years at the Washington Post and before that she was at CNN. She's watched the Federal Reserve for many, many years. And and Heather, we had booked you a long time ago before we knew what would happen uh before we found out what would happen over the weekend with the Federal Reserve.
I just want to get your reaction to what many consider an unprecedented move on the Fed's independence.
Yeah, it was really something to see last night that video from the Fed from Fed Chair Powell coming out so strongly. You know, he's known as Mr. Congeniality in Washington DC.
He always has been striking a very diplomatic tone, but last night the gloves came off and he really pushed back strongly. Uh this this was the breaking point for Fed Chair Pal and his congeniality in Washington. Uh you know, I think a couple of things really stand out to me going forward.
Number one has been the strong reaction as you all were talking about earlier from some Republicans, not just Tom Tillis, but also Senator Marowski from Alaska.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- fed independence
- gop opposition
- doj investigation
- credit card interest cap
- iran military action
Companies and tickers mentioned
- Navy Federal Credit Union
- Clear Harbor Asset Management
- Bridgewater Associates
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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