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What a Banana Can Tell Us About Trump’s Second Term
CNN One Thing
Nov 27, 2024
Ahead of president-elect Donald Trump's second term, economists, retailers, and consumers are bracing for change. We examine how Trump’s plans for tariffs and tax cuts could impact your wallet and why some young people are embracing ‘doom spending’ this holiday season. Plus, what you should know about cryptocurrency as Trump embraces it.
Guest: Vanessa Yurkevich, CNN Business & Politics Correspondent
Episode Transcript
David Rind
00:00:03
Over the weekend, President elect Donald Trump finished filling out his cabinet, making his pick for the important role of Treasury secretary.
Kaitlan Collins
00:00:11
The president elect says that he is going with hedge fund manager Scott Best as his treasury secretary. Trump liked besson's Wall Street credentials. The fact that he had converted to the MAGA movement after initially working as a George Soros protege.
David Rind
00:00:26
Top CEOs and Wall Street seemed to like the pick. It was viewed as a safe choice. But then, on Monday night, in a truth Sociale post, Trump doubled down on his campaign promise to enact huge tariffs through executive order on day one in retaliation for illegal immigration and drugs coming across the border.
Erin Burnett
00:00:46
25% on every single thing coming in from Canada and Mexico. And he also said he's going to put another additional 10% tariff on china on top of what else is already there, 25% on every single thing coming in from Canada and Mexico is a seismic shock.
David Rind
00:01:06
Some economists are not so thrilled about that possibility. It could increase costs for American businesses and consumers. Things like cars, gas and avocados could all get pricier. And that's the thing for everyday Americans concerned about inflation who just want their dollar to go further as they start holiday shopping. They just want to know how will a second Trump term impact my bank account? Today, we try to answer that question with my colleagues, CNN business and politics correspondent. Vanessa, your coverage from CNN. This is one thing. I'm David Brian. How do you feel about Christmas creep?
Vanessa Yurkevich
00:01:53
Christmas creep?
David Rind
00:01:54
Yeah. Like we're recording this before Thanksgiving, right? And there are already trees up.
Vanessa Yurkevich
00:01:58
Yeah.
David Rind
00:01:59
And, yeah, people are singing carols outside. I can't stand that personally. But I guess the broader point is that people have already started holiday shopping.
Vanessa Yurkevich
00:02:07
Yeah, and technically, the holiday shopping season started a lot earlier this year because retailers brought so much of their inventory in early because they were really worried about the port strike on the East and Gulf Coast, which lasted for three days. Right. And had a decent but minimal impact. But retailers were really nervous.
David Rind
00:02:27
They thought it was going to last like months.
Vanessa Yurkevich
00:02:29
Worst case scenario, right? They were thinking, what's the worst case scenario here? So they brought a lot of stuff in early. So the shelves are stocked this year. And the National Retail Federation is projecting that 183 million people are going to go shopping over Thanksgiving weekend from Black Friday to Cyber Monday. They're saying that's a record sales, though, moderate. Right. People are going to be shopping, but maybe spending a little bit less, two and a half to 3.5% growth. So that's a sign that maybe people are pulling back a little bit.
David Rind
00:03:01
Why?
Vanessa Yurkevich
00:03:02
Well, I think there's a little bit of uncertainty. We know who won the presidential election, right? We know who the next president is. So that's calming. However, there's uncertainty about how some of the Trump administration's policies are going to affect the economy and people's bottom line.
Tik Tok
00:03:20
'For the last week, my tik-tok feed has been split between the girls who are doing the spending versus the girls who are trying not to shop so as not to like stimulate Trump's economy.
Vanessa Yurkevich
00:03:33
And this and that is where something called doom spending comes into play.
David Rind
00:03:37
In the spending. Exactly. Haven't heard about this.
Vanessa Yurkevich
00:03:39
This is something that we've all been doing forever. But this is something that social media and Tick tock has made more of a trend, so to speak, in terms of the actual wording of it.
Tik Tok
00:03:50
Anybody else like Doom buying? I feel like I'm constantly going on to talk shop and Amazon and just purchasing my feelings.
Tik Tok
00:04:00
My budget for next month is $200. I spent it last night. Doomscrolling. my God. I was like, Wow. I actually spend money on four pairs of parachute pants. Yeah, I did.
Vanessa Yurkevich
00:04:11
But doom spending is when you're not feeling very good about something. In this case, the economy. And so you decide to spend a little bit to actually make you yourself feel better instantaneously.
Kelsea Palm
00:04:25
I think it's like a week or two before Halloween, me and one of my best friends, we're kind of just talking about our fears about the election and, you know, like what that would mean for us. And we were like, Well, we need to go. We need to like, get some stuff. Like we need to go out and get some stuff for Halloween anyway. Like, why don't we just go to the store that's close to us that we really love.
Vanessa Yurkevich
00:04:48
For example, Kelsey Palm. She's a senior at Wheaton College in Massachusetts. She told our colleague Erica that she splurged on a purse in the run up to the election. She voted for Harris just to help her feel some sense of control in a situation where she feels out of control. And ultimately, she says she didn't need it, but it made her feel better.
Kelsea Palm
00:05:10
And honestly, like, I'm terrified of what Trump's going to do to the economy.
Vanessa Yurkevich
00:05:14
And so what we are hearing anecdotally is that some people are feeling bad about the election. Some people are feeling bad about the economy. Someone might say, well, you know what? I'm never going to be able to afford that house that I really wanted. So instead I'll splurge on a pair of shoes.
Kelsea Palm
00:05:30
We can vote, but what else can we do? Like, we can get a bag that'll make us happy.
David Rind
00:05:39
Isn't that counterintuitive? If you feel bad about the economy, that you're going to just start spending money on things you don't need.
Vanessa Yurkevich
00:05:44
Yeah, but then you rationalize it like, okay, those shoes were $200 versus that house with that high mortgage rate, you know, was going to be over $500,000. But the problem that financial analysts see with this is that if you do that a lot, you do a lot of doom spending that starts to add up. And we know that a lot of people are spending. But putting that money on credit cards and a lot of Americans are falling into more and more debt. There are delinquencies, which means late payments, which then you accrue interest on that. And right now in this country, there's about $1.1 trillion of credit card debt. That is a record. And it's rising almost every quarter.
David Rind
00:06:27
Yeah, it's a lot. I mean, I wanted to ask about this because ever since the election, I've been thinking a lot about how people feel about the economy as it relates to like, their personal finances. So many people said it was their most important issue. And nearly 70% of voters, according to CNN exit polls, described the state of the nation's economy as not so good or poor, despite a lot of debt to the country. Like you and I have talked about. But I don't want to discount those feelings that they feel bad. Those are real feelings. So I want to make sure we're also keeping track of like how the economy is actually doing and holding space for both of those things. So where are we in the fight against inflation and where do things stand?
Vanessa Yurkevich
00:07:07
Well, we have done an incredible job in the fight against inflation. Other countries envy the U.S. economy. And the numbers do paint a picture that the economy is incredibly strong. But to your point, you can't discount how people feel. And people feel beat down. They feel like prices are too high at the grocery store. They feel like they have not seen a break since the beginning of the pandemic. Inflation did come down from 9.1% all the way down to 2.6% in October.
David Rind
00:07:41
That 8.1 to 2.6. I just want to pause on that because that's a huge improvement.
Vanessa Yurkevich
00:07:46
Huge improvement and done really in just a few years. The issue is the last mile is really bumpy and takes a long time.
John Berman
00:07:56
And breaking just moments ago, brand new numbers on inflation. CNN's Matt Egan is with us. What do they say?
Matt Egan
00:08:04
You know, John, this is a step in the wrong direction. Hopefully, it's just a temporary one.
Vanessa Yurkevich
00:08:08
In October, annual inflation rose to 2.6% from 2.4% the month before.
Matt Egan
00:08:16
It also breaks a streak of six straight months where inflation was easing.
Vanessa Yurkevich
00:08:21
Now, that was largely expected because of housing costs. And that's where you're seeing that uptick in inflation. However, it is important to note where we came from. It's just where we're trying to go is taking a little bit longer.
David Rind
00:08:37
So where does President elect Donald Trump factor into all of this? Like once he comes into office, he has a lot of plans for the economy. How could those impact the fight against inflation?
Vanessa Yurkevich
00:08:51
He basically ran on the fact that inflation is still so bad and he is going to make it better for everyone. He has a lot of proposals. Some of them could help, but some of them actually hurt the everyday American in terms of inflation.
Larry Summers
00:09:07
I think many people hope that these policies are being used as threats to get other countries to reduce their trade barriers.
Vanessa Yurkevich
00:09:16
We had former Treasury Secretary Larry Summers on our air recently.
Larry Summers
00:09:20
We'll have to see. What I can say quite confidently as an economist is that if these policies are implemented, it will mean a substantial increase in the price level.
Vanessa Yurkevich
00:09:36
And he talked about the fact that if Trump goes ahead with a lot of his proposals, including tax cuts, tariffs, deportation, which could lead to labor shortages, those would actually have a greater impact on inflation than we saw in 2021.
President Elect Donald Trump
00:09:53
If I was Mr. Tariff, I would say, please get me a president I have to straighten out. It's one of the most beautiful words in the whole world tariff.
Vanessa Yurkevich
00:10:03
It's throughout his entire campaign, President Trump really ran on this tariff platform. He called himself like the tax man. And essentially a tariff is a tax. And he wants to tax imports from China by 60%. And he wants to tax imports from other countries up to 20%. That would be a tax on $3 trillion worth of imports.
David Rind
00:10:28
Wow.
President Elect Donald Trump
00:10:28
I said I'm going to put a 100 or 200 or 300. I'm going to put the highest tariff in history, meaning I'm going to stop them from ever selling a car engine. Yes.
Vanessa Yurkevich
00:10:37
And why that would affect the American consumer is because a lot of those imports coming in from other countries are actually brought in by U.S. businesses. So think about a sneaker. Yeah, maybe you get the whole sneaker from China. But let's talk about a piece of electronics. Maybe you just get the semiconductor chip from China that still has an impact on the U.S. product. And so we've heard a lot from corporate America on this. We've heard from companies like Steve Madden, the shoe company that says that they're going to move 45% of their business out of China to try to beat Trump's tariffs.
David Rind
00:11:13
They already said they're going to do this.
Vanessa Yurkevich
00:11:14
They're already it's already happening. It's already in play. Also, Columbia Sportswear, they said that they're buying and bringing in product now for next fall to also beat the tariffs. The one thing I will note, though, is these larger companies can make decisions like this. It's the smaller businesses who can't make decisions like this. They have to rely on imports from other countries so they can't move money around. They can't move their imports around as much as these other companies can.
David Rind
00:11:57
How else will the Trump presidency impact people's finances?
Vanessa Yurkevich
00:12:01
So let's talk about some of the more helpful policies that he's proposing expanding the child tax credit. That's something that he actually did in 2017. He expanded it by about 1000 to $2000. His running mate, Trump's running mate, J.D. Vance, suggested expanding it to $5,000. I mean, that would be huge for families. On taxes, extending Trump's 2017 tax cuts would lower taxes by an average of $2,000 in 2026. The only thing is that nearly half of the tax break benefits would go to the top 5% of households who make over $450,000.
David Rind
00:12:43
So really, really rich people.
Vanessa Yurkevich
00:12:45
Really, really rich people. And a lot of people have been wondering how the wealthy feel about the economy right now. One way to look at that is through the art market. I don't know if you've heard of the duct tape banana.
David Rind
00:12:57
I've seen pictures.
Vanessa Yurkevich
00:13:01
So there are huge auctions happening in New York in the month of November. Art auctions, a lot of art going up for sale. And a lot of people in the art industry thought that this was going to be a gauge for how much wealthy Americans were willing to spend and how good they felt about the economy.
Auctioner
00:13:19
Here it is in all its splendor. We're going to begin at $800,000 and 800.
Vanessa Yurkevich
00:13:25
The banana duct taped to the wall was originally sold for $150,000.
Auctioner
00:13:30
1,100,000 is your base 1,200,000.
Vanessa Yurkevich
00:13:34
Folks thought in this auction season it was going to fetch $1.5 million, which I will say you get the banana and the duct tape and the instructions, but then you have to replace the banana every time it rots.
David Rind
00:13:45
Again, this is just a literal banana duct taped to a wall and. Right. They call it art, right? Looking for four. There it is. $4 million.
Auctioner
00:13:53
Say five, please. $5 million. Don't let it slip away.
Vanessa Yurkevich
00:13:57
But it was like, how much is this going to get?
Auctioner
00:14:01
The world's most expensive banana at 5 million, 200,000.
Vanessa Yurkevich
00:14:06
How good are people going to feel about spending their money right now?
David Rind
00:14:10
What was the verdict?
Auctioner
00:14:11
The Catalan is yours. Congratulations. Thank you very much indeed. To paddle number 17.
Vanessa Yurkevich
00:14:20
$6.2 million.
David Rind
00:14:22
$6.2 million. For a banana they have to replace.
Vanessa Yurkevich
00:14:26
But hey, listen, it was sold to actually someone in the crypto world, but it was a gauge about how people are feeling. Maybe thinking that, these tax cuts that President Trump is proposing that might benefit the wealthy and looking at financing a lot of interest rates, people are thinking, okay, maybe they could come down a little bit more. Financing for art could be more affordable. And this was a silly but really important way to look at how a Trump presidency on the economy was affecting the Uber rich. And if this auction season was any indication, people are feeling good.
David Rind
00:15:01
That's fascinating. You mentioned crypto. What do I need to know about crypto? With Trump taking office because I've been hearing bits and pieces and generally, like the past four years, I've tried to, like, tune out crypto because it just sounds confusing and attracts a whole population that is a little wacky sometimes. So what? What should I know?
Vanessa Yurkevich
00:15:22
Yeah, well, do you have $90,000 lying around?
David Rind
00:15:25
No, definitely not.
Vanessa Yurkevich
00:15:26
Well, because that's how. That's about how much one bitcoin costs right now. It it has just exploded since President Trump was elected. And that is because he has really positioned himself as a crypto friendly president. Initially, he said that crypto was based on thin air, but since about the summer and when he started talking about crypto more.
President Elect Donald Trump
00:15:51
But I'm thrilled to be here in Nashville to become the first American president ever to address a Bitcoin event anywhere in the world.
Vanessa Yurkevich
00:16:01
He won, went to Bitcoin 2024 in July and said the U.S. is going to be the crypto capital of the world.
President Elect Donald Trump
00:16:07
The reason I've come to address the Bitcoin community today can be summed up in two very simple words America First, because if we don't do it, China's going to be doing, others are going to be doing it. Let's do it and do it right.
Vanessa Yurkevich
00:16:24
He started along with his family, World Liberty Financial, which is a crypto business. He started accepting crypto as campaign donation and he has surrounded himself with crypto friendly advisors, probably most notably.
David Rind
00:16:39
You, Musk, Elon.
Vanessa Yurkevich
00:16:40
Musk. There you go. And Howard Lutnick, who he just nominated to be his secretary of commerce. And this is crucial because crypto under the Biden administration had really had a heavy hand over it.
President Elect Donald Trump
00:16:55
On day one. I will fire Gary Gensler and appoint a new SEC chairman
Vanessa Yurkevich
00:17:00
'Including from the SEC chair, Gary Gensler, who helped take down Sam Bankman-fried of FTN.
David Rind
00:17:09
So really trying to regulate it and get it under.
Vanessa Yurkevich
00:17:12
Control as much as you can regulate something that is not under the US financial system.
David Rind
00:17:17
That's the selling point.
Vanessa Yurkevich
00:17:19
Right? However...
President Elect Donald Trump
00:17:21
I didn't know it was that unpopular.
Vanessa Yurkevich
00:17:24
The crypto world does want to be regulated in some way and brought into the US banking financial system, but with a light touch.
President Elect Donald Trump
00:17:32
And will appoint a new SEC chairman who believes America should build the future, not block the future, which is what they're doing.
Vanessa Yurkevich
00:17:41
And recently, President Trump met with Brian Armstrong, who's the CEO of Coinbase. That is the largest crypto trading platform in the U.S.. So clearly, the president's still trying to make moves and really understand is, you know, crypto something that is going to be the future or is it going to be something that, as we all know, is incredibly volatile right now? There's not a lot of regulation, as you said.
David Rind
00:18:05
I mean, that's what I was going to ask, like, should the average person start thinking about investing or using it in parts of their life if it's going to become more of a part of the way the world does business here in this country?
Vanessa Yurkevich
00:18:18
I think it's important to learn about it because it is very complicated. Bitcoin is just one form of cryptocurrency. There are many other forms. But financial experts say that maybe invest 3 to 5% into cryptocurrency. Don't put all your money there. If you're trying to buy a house, don't put all your money there because it's so volatile. And the crypto world is riding the Trump wave right now. But he could make a decision that turns everything around. He could get into a fight with Elon Musk and decide he's no longer interested in crypto. So for the average American, maybe watch what's going on. Educate yourself.
David Rind
00:18:55
Like don't put retirement accounts in it or anything like that.
Vanessa Yurkevich
00:18:58
Right. And it is quite expensive. Over $90,000 for one coin. I mean.
David Rind
00:19:03
One apply to many.
Auctioner
00:19:04
People. Yeah.
David Rind
00:19:05
Yeah. That's fascinating. Vanessa, thank you very much. Appreciate it.
Vanessa Yurkevich
00:19:08
Thank you.
David Rind
00:19:17
One thing is a production of CNN Audio. This episode was produced by Paola Ortiz and me, David Rind. Our senior producers are Felicia Patinkin and Faiz Jamil. Matt Dempsey is our production manager. Dan Dzula is our technical director, and Steve Lickteig is the executive producer of CNN Audio. We get support from Haley Thomas, Alex Manasseri, Robert Mathers, John Dianora, Leni Steinhart, Jamus Andrest, Nichole Pesaru and Lisa Namerow. Special thanks to Erika Tulfo, Wendy Brundage and Katie Hinman. Enjoy the holiday, everyone. Hopefully you have some time off from work or whatnot, maybe visiting family. We'll be back on Sunday though, with another episode as you travel back. I'll talk to you then.
