BREAKING: Worst Consumer Sentiment in History; DOJ Drops Criminal Probe of Chair Powell | Receipts

The Department of Justice's criminal investigation into Federal Reserve Chair Jerome Powell, initiated by Donald Trump, was a politically charged attempt to influence Fed policy and replace Powell with a more compliant chair, Kevin Worsh. The 'curtailment' of the probe is seen as a strategic move to satisfy Senator Tom Tillis, who blocked Fed appointments until the investigation was resolved, without fully abandoning the threat of future prosecution.

The hosts state that Donald Trump, via Janine Piro, launched the investigation because he was 'really mad at Jerome Powell for not cutting rates as much' [00:01:52]. They also note that Senator Tom Tillis blocked Fed picks until the investigation was 'dead, until it is gone there, you know, with with great finality' [00:02:36]. Piro's statement that she 'will not hesitate to restart a criminal investigation should the facts warrant doing so' [00:01:02] indicates the ongoing threat.

Kevin Worsh, Trump's pick for Fed Chair, failed to explicitly condemn the political investigation into Powell during his confirmation hearing, raising concerns about his willingness to safeguard the Fed's independence under political pressure. This silence suggests a potential vulnerability to future presidential demands, particularly regarding interest rate policy.

Katherine Rampel notes that 'nobody asked him like, 'What would you do if Donald Trump deployed the same weaponry that he's deployed against Powell instead against you?'' [00:07:01] and that Worsh 'would not even condemn the political investigation into Powell' [00:07:42], instead saying 'I'm not commenting on any of that' [00:07:54].

Historically low consumer confidence numbers, such as those from the University of Michigan and Gallup, are heavily influenced by partisan affiliation. Republicans tend to report worse economic conditions when a Democrat is in the White House, and vice versa. This partisan bias creates a disconnect between stated preferences (surveys) and revealed preferences (actual consumer spending), making these metrics less reliable indicators of the true economic situation.

Katherine Rampel explains, 'Republicans are more likely to say bad things about the economy when there's a Democrat in the White House, vice versa' [00:16:20]. She contrasts 'stated preferences' (surveys) with 'revealed preferences' (people 'spending lots of money' and the 'boat indicator' being at an all-time high) [00:17:47].

Donald Trump's proposed bailout of Spirit Airlines, a company struggling due to high jet fuel prices (exacerbated by Trump's own policies), exemplifies a shift towards a 'command economy.' This intervention prioritizes political connections and presidential whims over market forces, leading to capital misallocation and undermining the rule of law, ultimately resulting in worse long-term economic outcomes and living standards.

JVL states, 'the president can't do bad stock picking because the president wields so much power over the economy that people will always do what he tells them to do' [00:26:30]. Katherine adds, 'this is a huge distortion of how markets allocate capital' [00:27:43] and that investors are looking at 'what political connections do they have to the president' instead of product quality or management [00:28:36].