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Speaker 1: The economy.

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Speaker 2: You know, our United States economy is driven by GDP,

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it's by spending money on goods and services. Seventy percent

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of our economy is GDP driven. So as goes the consumer,

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as goes the economy.

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Speaker 3: You're listening to Carrie Lutz's Financial Survival Network, where you

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get valuable information you just can't find anywhere else to

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thrive in today's trying times. You need the Financial Survival

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Network now more than ever. Go to Financial Survivalnetwork dot

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com and get your free newsletter and gift. Financial Survival

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Network now more than ever.

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Speaker 4: And welcome you are listening to and watching the Financial

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Survival Network. I'm your host, Carrie Lutz with US economic

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expert fellow attorney Anthony Sakaro's with us.

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Speaker 1: Anthony, great to have you back on.

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Speaker 4: We're getting some economic numbers coming out of the Do

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You Think Tank here the VIEWERU of Labor Statistics and

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Commerce Department. All that consumer confidence what does it mean? Yeah, Hi, Kerry,

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thanks for having me back.

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Speaker 1: For sure.

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Speaker 2: The Consumer Confidence Index report really talks about how consumers

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are feeling about what's going on today in the economic environment.

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It looks at what's going on today, how are they

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feeling today?

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Speaker 1: And then.

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Speaker 2: A different index, the expectations index built into that report,

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has them looking at what they think is going to

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happen in the next six months, and it's ticked down

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since August by a couple of points. I wouldn't say

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it's necessarily meaningful, but it seems that confidence has dwined,

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and you then really have to ask yourself, like, why

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has it you know, why has it gone down? Why

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is consumer confidence declining? Because the stock market is at

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all time record highs, and I think it ties back

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to the labor market, and I think the housing market

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have something to do with it as well too.

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Speaker 1: Inflation is you know, stuck around.

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Speaker 2: Three right, just depending on the measure that you look at,

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and the Federal Reserve is kind of, you know, in

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a little bit of a quandary because their target is

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too so we're fifty percent above their target, and yet

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they can't wait till it gets to two to start

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making action. They want to see it come down, but

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it actually actually come down, it's actually ticked up a

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little bit. The labor market, though, is where I think

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a lot of the issues are, both with the reason

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that inflation is sticky and also with regards to what

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the Federal Reserve has to do, because unemployment is starting

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to tick up at this point, I think the latter

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is reading on employment is four point three percent, So

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it's not out of the range by any any means.

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We're not, you know, heading towards a catastrophe at this

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point with four point three there's nothing wrong with that,

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but it is.

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Speaker 1: Starting to tick up.

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Speaker 2: And under the Federal Reserve mandates, right, it's it's you know,

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keep inflation reasons, will keep employment reasonable. So with the

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labor market a year and a half or two years ago,

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there were something like two jobs available for every one worker.

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Now that number is normalized now it's like a one

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to one ratio and people are having a harder time

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finding jobs. But I had to give raises to my

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employees within the last couple of years, raises I normally

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wouldn't have given because they could go out and find

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another job because it was a very strong market. Well,

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that has to be passed on to the consumers, and

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if it's passed on to the consumers, that is a

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part of inflation that's sticky. You know. Grocery stores can

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adjust their prices based on commodity prices at any given

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point in time. But you know, imagine what would happen, Kerry,

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if I tried to go back to one of my

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employees and say, hey, guys, sorry, I gave you a raise.

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You know, that was when the labor market was tight.

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Now I get to take it back with everything's loosened up.

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It just doesn't work that way. So that's a part

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of why it's sticky. So the Federal Reserve has competing

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interest at this point. They've got unemployment taking up a

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little bit, which they got to keep an eye on,

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and they have inflation that's sticky, and so what do

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they do? So they decided the lower quart of a point.

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It's expected that there'll be another quarter of a point

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or maybe half a point by the end of the year,

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but they will be data dependent, as their favorite term is.

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Speaker 1: Okay, So.

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Speaker 4: But when all this is happening, you know, the Federal

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Reserve has another mandate. It's a stealth mandate, and that

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is to never let the stock market go down, right,

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I mean, isn't that what it's all about? Because it's

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the stock market's going up, then you can always say, well,

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the economy is doing great, because the stock market's doing

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great and you have the wealth effect.

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Speaker 2: Well, that's right, that's the Trump mandate part of the

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Federal reserve, right, And it's interesting how he's trying to

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manipulate with Lisa, I think, and you know, get the

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you know votes that he needs to have interest rates

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go in the direction that he wants.

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Speaker 1: So you're absolutely right.

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Speaker 2: It's it's not a mandate, and there really is a

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legitimate question as to whether Jerome pal is buckling under pressure,

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whether the Federal Reserve really does buckle and it I

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think there's lots of different opinions across the board. I

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don't think they do, but I will say it's just

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an opinion. The wealth effect is interesting too. The wealth

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effect is simply saying that when people feel good about things,

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then they spend money, and the negative wealth effects says

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when people don't feel good about things, they don't spend

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a lot of money, and consumers have still been resilient

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the economy.

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Speaker 1: You know, our United States economy is.

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Speaker 2: Driven by GDP. It's by spending money on goods and services.

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Seventy percent of our economy is GDP driven. So as

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goes the consumer, as goes the economy and throughout COVID

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that time period, consumer saved a lot of money. There

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was a lot of free money given to them, and

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so they still have money to spend still, but the

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savings rates are going down, debt rates are starting to climb,

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and so the consumer is starting to crack, and you know,

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that then causes the wonder as to whether or not there,

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you know, are they going to crack so much at

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some point to where we are going to tip into

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a recession.

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Speaker 1: They're not out of the recession woods yet, but there's

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also nothing there that tells us that we're going into

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one for sure.

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Speaker 4: All right, So you know, if you're a betting man

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like me to some extent certainly that went through our

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portfolios and our personal wealth, what are the odds we're

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going into a recession here? Stock market crash give me

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a percentage?

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Speaker 2: Well, from research that I've done in looking at even

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though where there's just the course of the last few days,

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economists and professionals are putting the odds of a recession

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that somewhere between twenty and twenty five percent in the

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next twelve to eighteen months.

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Speaker 1: So that's what they're saying.

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Speaker 2: So it's not it's not a small chance, but it's

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also not a large chance as well too. One thing

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I think that people have to consider those that recession

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is not bad. It's it's almost like this our word

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and the media makes it like we don't want a recession. Well,

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the reality is that it's not true. It's there are

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booms and bus there are good times in bad times

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in life. There are good times in bad times in business,

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good times and bad times in economics, and it's not

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bad when we go through a time where it's just

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takes us a little bit of time to reset. Businesses

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going to reset, you get us at your personal expenses.

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Things can't go up.

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Speaker 1: All the time. This is not the way life works.

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Speaker 2: But we try to do everything we can to avoid

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a recession, and that falls back into the mandate of

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what the federal Reserve doesn't want. They don't want a recession,

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and Trump doesn't want a session because then it happens

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to fall on that president and you know he would

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not get his third term right if there's a recession.

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So the reality is is that it's not bad, but

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no one wants it.

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Speaker 1: Everyone seems to be running.

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Speaker 4: Away from it, right, So it's just that old saying.

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You know, difference between a recession and a depression, recessions

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when you're out of work, depressions when I'm out of work.

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Difference between minor surgery and major surgery. Minor surgery surgery

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that you have, major surgery surgery that I have.

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Speaker 1: But I do agree with you that.

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Speaker 4: Recessions are there to clear out the excessive speculation and

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to basically forced liquidation of bad business decisions. Because but

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look good at two percent interest rates or no percent,

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doesn't look so good at five percent, And all of

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a sudden you have this come to Jesus moment where

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the debt just isn't sustainable. But speaking of debt, what

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about the national debt here shows no signs of abating.

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Although maybe if we have a government shutdown and it

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lasts for quite a while, we can reduce the debt

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that way. The president's threatening to eliminate whole departments and

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basically get rid of hundreds of thousands of people, fire

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them what he evidently under the shutdown legislation, he's got

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that right to do it.

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Speaker 2: Yeah, it's interesting, let's defund the police while we're at it.

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Speaker 1: To go back to that movement, that. I don't even

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know if that's still around.

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Speaker 2: But you know, the reality is it's it's a silly thought,

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right to just go fire everybody. You have to do it,

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you know, systematically if you want to not with that that.

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Don't get me wrong, I think there was a huge

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amount of government waste.

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Speaker 1: You know, doge getting rid of all that government waste?

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I think it is.

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Speaker 2: I think it's a good move, but in a you know,

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you don't just go fire everybody. But we also know

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that Trump is a lot of I don't want to

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say talk, I don't want to say hot air, because

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he's shown it, right, he's done.

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Speaker 1: But he's just he's bombastic, Yeah he is.

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Speaker 2: And that's a great way of saying it. He is

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a negotiator, right, and and that's a good startup negotiation.

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I mean, you know, there were what one hundred and

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fifty company our countries that we're going to have tariffs

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on and they were all going to be this massive things,

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and you know, the stock market dropped three thousand points

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in a day or you know whatever that was that

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happened back on Liberation Day and then it just you know,

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I was interviewed on that day by some network I

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don't remember, and I basically said, it's going to smooth

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all out. It's just a negotiation tactic, and that's exactly

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what it is. And now Trump area is he's kind

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of gotten his way and I feel like things are

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a little more on a level playing field. And he

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does talk a lot. But you and I both those

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attorneys at a part of negotiation is talking and how

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you say something right. You know, you can say something

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in a believable manner or not, and you know he

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tends to be believable. So of course we do have

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a lot of trillions of dollars of debts. That's one

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of the arguments for why he wants the Federal Reserve

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the lower rates. For every quarter point that they lower rates,

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there are still hundreds of millions of dollars an interest

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that are being safe, you know, in that federal debt.

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So that's part of his argument. What I think maybe

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a lot of people don't understand, though I get this

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question a lot from consumers, even clients, and that is

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that you know, by not having that, by not having

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the taxes where they are, you know, keeping them suppressed,

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which is I mean, obviously individuals want that but then

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it increases the national debt. Right, The reality is that

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that the explanation I seem to have had to have

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a lot is explaining to people that look, when when

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you're productive and when you have a economy that's running

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strong and you have a lower tax rate, the dollar

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amount of taxes is actually higher because you've got a

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strong economy. So a lower percentage of tax on a

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higher dollar amount equals a higher dollar amount. And I

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almost feel like sometimes people don't understand that I'm in California.

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You know that is left as you can get, and

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so people tend to let their ideology and their their

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their political points of view, I think kind of cloud

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their judgment is to realism. And you know the reality

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is that as we grow, you can still keep taxes low.

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You can still have a healthy, threave, thriving economy, people

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working inflation intact low tax rates and still be doing

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very well and eventually lower that debt.

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Speaker 1: But it also takes time.

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Speaker 2: I talk to people all the time that we put

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their money in certain investments, and three months later they're

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asking me how my investments are doing.

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Speaker 1: It doesn't work like that. It's this is the lug

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run and it's the same thing here. It's the long

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and the challenges.

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Speaker 2: Then one term expires, and now you get into another

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president with a different philosophy, and by the time they're

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just getting rolling, their term expires and you don't seem

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to go anywhere. But you know, the stock markets that

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record highs as a result of that, and we do

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seem to.

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Speaker 1: Be doing okay. So I'm not going to argue, but

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you know, I'm glad taxes are lower and staying low. Sure.

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Speaker 4: So, well, we had a couple of tax cuts that

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appeared in that bill. Number one was maintaining the tax

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cuts and the bonus depreciation from Trump's first tax bill,

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no tip on taxes somewhat, no tip on, no tax

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on Social Security somewhat. And then I think, I don't

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remember if they got it together or not. Did they

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raise the state and local tax exemption.

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Speaker 2: That twenty If I'm not mistaken orty, I believe it was. Yeah,

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was a health prey. Yeah, So it was a healthy

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raise that they did throughout that bill, and I was

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excited about that personally.

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Speaker 1: Yeah. So, but you know that.

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Speaker 2: Did And the other thing that they did too, is

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they got rid of the windfall elimination provision in the

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government offset provision in Social Security. And you know, if

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you're a teacher or government worker, you know exactly what

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that means, because they really were penalizing you on your

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Social security if you had work sometime in a private

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sector or the corporate sector where you paid into Social Security,

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but then you became a teacher and you were paying

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into cal PERSA, you became a government worker, you were

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paying into cal stirs the retirement systems for those different entities.

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And what would happen is if you made, if you

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got such a good pension from sturs or pers, then

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they would ding you on the Social Security which never

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really made sense to me, because why should you be

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why should you be rewarded over here and then penalized

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over here if the numbers work and something got rid

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of all that. That was under the tax one of

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the tax bills that came out, I think it was

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January fifth of this year that went into play. And

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the nice thing too is it wasn't an opt in

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or opt out. It happened automatically, you know, so that

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they regroated it back to twenty twenty four, and so

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you know, the teachers and government workers got up checked

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for the previous year and then you know, will not

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be being going forward. So I think it makes a

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lot of sense. And yeah, but add tax bill capt

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rates lower. But they also added these other benefits as

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well too, so.

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Speaker 4: That's going to add to the debt, no doubt. But

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on the other hand, we got these tariffs and they

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are offsetting and effectively the tariff regardless who pays it,

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it doesn't matter in the end if it's not being

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paid by the consumer because the exporter ate it. Basically,

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then theoretically the price could have been lower on those goods,

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so the consumer's paying it, and if they raise the price,

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then the consumer's paying it. Effectively, it's almost a vat

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tax or an import duty tax without having to try

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to get it passed through Congress.

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Speaker 1: Yeah, I agree.

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Speaker 2: I mean that you know, tariff tax gets passed down

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to the consumer, you know, one way or another, especially

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when you positioned it kind of the way that you've

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positioned it. I don't know that you know, if there's

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a ten percent tariff that you know, the product's prices

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go up ten percent for the consumers overnight because it

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might be eaten, you know, in in that that that

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export process by the manufacturers and and ultimately not come

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down to the consumer.

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Speaker 1: But when you when you look at it from the.

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Speaker 2: Other angle, that this means they could have had blower

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prices all along, you know, then yeah, I guess that

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you could look at it as the consumer is overpaying

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at the end of the day, though it does get

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passed on to the consumer, and it certainly, you know,

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it certainly could help offset the tax loss deficit that

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has been been increased or or that potentially will increase

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as a result of the tax bill.

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Speaker 1: So I haven't studied those numbers.

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Speaker 2: To see, you know, what offsets the other, whether it's

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an equal reduction.

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Speaker 1: But I do know the general underlying foundation that if

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you're growth oriented, you grow the economy, you incentivize companies to.

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Speaker 2: Grow it, then it works out really well as opposed

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to government spending. You know, even within my own business

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is the fact that taxes are lower. I have employees,

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and I've had to make decisions in the past years

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of you know, do I pay the tax or do

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I hire another employee. It literally comes down to a decision.

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And I'm a small business. When when those decisions go

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up to fortune five hundred companies. You know, really that

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that tax has the ability to urge companies to hire

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more people, which is great for the economy, more people

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spending more GDP and so on.

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Speaker 1: Or those tax increases can cause layops.

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Speaker 4: You know, it's the same thing like the Social Security tax.

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You see it as an employee and your paycheck, but

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your employer is matching it, and then it's like you're

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paying both sides of it. It's just you're not seeing

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the other side because if you weren't paying, if your

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employer wasn't paying it, that money could be available for

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your paycheck and you'd be getting higher earnings as a result.

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So the tariffs are kind of the same way. One

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other thing, Doge, the Trump administration announced that by January twentieth,

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twenty twenty six, that's the anniversary of Trump's inauguration for

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his second term here, that they're going to be cutting

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one hundred thousand rules and regulations from the Federal Register.

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I guess, effectively the CFR Code federal regulations, assuming they

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can do it, which I have no doubt they can,

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if the desires. They're using an AI tool to go

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through every single rule and regulation all the outdated. What

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effect do you think that's going to have on the economy.

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Speaker 2: Yeah, so when you know mentioned one hundred thousand, I'm

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thinking that's it, that's that's all fifty percent.

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Speaker 4: There's two hundred thousand REGs. Fifty percent of the rigs

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go out the window. We've already seen with mining, highway projects,

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infrastructure projects. Streamlining has you know, taken projects take ten

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sometimes twenty years and move them up to two, three,

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four years. So we got rid of half all the

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regulations and ignored the rest. Where does that leave us?

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Speaker 1: Yeah?

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Speaker 2: The problem is that you know these regulations exist because

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you know and I know as attorneys that it's the

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letter of the law all the time.

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Speaker 1: Right. You can't have a subjective rule because then companies

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are going to try to bend the rule. At least

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that's what that's the idea behind having.

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Speaker 2: And that's why when you look at a contract that

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basically says you and I are going to do business

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and I'm going to pay you this and you're going

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to do this work, you know it has to be

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a fifteen page contract that identifies everything. So the reality

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is that if they're going to cut these regulations, I

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mean Trump's done that before and it's worked out well.

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Speaker 1: It hasn't been a problem.

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Speaker 2: I don't think it's almost one of those trust but

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verify things. I think it does need to be well

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rounded so that there are guidelines. You know, as a

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financial advisor with Providence Financial Company I started twenty six

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years ago, the SEC has some rules and regulations in there,

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but it's subjective.

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Speaker 1: There are windows.

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Speaker 2: So if you can't do anything deceitful, right, but the

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seitful is a subjective word, what's that mean?

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Speaker 1: Right?

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Speaker 2: So it has to be within boundaries, and I think

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if the rules of regulations had more boundaries around them,

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I think that companies will abide with those boundaries, just

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like most financial advisors abide within the boundaries that they

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are given.

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Speaker 1: And ultimately it's great for the economy. Let us do

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our job right, let us get out there and serve

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the consumer.

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Speaker 2: Let us get out there and help people. Are there

401
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going to be mistakes that we make?

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Speaker 1: Yes? There are.

403
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Speaker 2: You know. In California where I'm at, the employment laws

404
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are absolutely ridiculous. If I do one if I do

405
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one thing wrong, literally, the employment laws can put me

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out of business just for a mistake.

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Speaker 1: It's like the vehicle code.

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Speaker 2: I was talking with the police officer the other day

409
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and he threw out that there's like fifteen thousand codes

410
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in the vehicle code and he basically said, oh yeah,

411
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I know, right, and he said, you can't follow them all.

412
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It is impossible to follow them all. It's the same

413
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thing with employment law. It's impossible to follow them off

414
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with the new PAGA rules and oh my gosh, it's

415
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just it's ridiculous and the same thing.

416
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Speaker 1: You hinder us from doing business. So many people are leaving, right.

417
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Speaker 2: I think Elon Muskt left California if I because of

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the rules and regulations. Let us do our job, Let

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us go serve people. We're not out trying to screw everybody. Guys,

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you know, and I understand that there has to be

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some rules of regulations and that that are the one offs.

422
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There are the Bernie madeoffs out there, right, But the

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reality is those guys go to jail, and when you

424
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calculate the percentage of one Bernie madeoff or however many

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of those individuals are relative to the several hundred thousand

426
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advisors out there, what you're really doing is regulating everybody.

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Speaker 1: Because I'm the one person.

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Speaker 2: Right, It's like the whole you know, one sailor is

429
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drunk on the corner and the whole navy's drunk, right,

430
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and let us do what.

431
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Speaker 1: We got to do.

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Speaker 2: So cutting the regulations, I think is a healthy step

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for growth. If I know that, I can go and

434
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hire someone, just realistic example. If I know and I go,

435
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I can hire someone, and if they don't work out,

436
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I can fire someone.

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Speaker 1: I will take a more chance on more people.

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Speaker 2: But the fact is firing someone in the state of

439
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California takes work, and there's a lot of liability there.

440
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So it comes back to hiring. I have a gal

441
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right now, I'm thinking about hiring that that is potentially

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a liability. If I have to fire her, I may

443
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never hire her in the first place.

444
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Speaker 4: Just look at Europe. You can't fire anybody in Europe

445
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and e youth. It's all but impossible. What Volkswagen's going

446
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through now getting rid of one hundred thousand employees is

447
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you know, the stuff of nervous breakdowns.

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Speaker 1: So getting rid of these regulations.

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Speaker 4: A lot of them are out of date, a lot

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of them are obsolete. They serve the contrary purpose to

451
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why they were passed, and a lot of them are

452
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illegal now under the the repeal of the Chevron doctrine

453
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of basically giving deference to regulations that are passed by agencies,

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and kind of the court's looking the other way. Well

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that's no longer the case. So we got really interesting

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things because I think it's plausible that it could happen,

457
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and that could unleash a tidal wave of growth in

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the economy. Couldn't it just compliance? Let's forget about not

459
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being able to do what you want to do, but

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just trying to comply with one hundred thousand regulations is

461
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billions upon billions of dollars, isn't it.

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Speaker 2: Oh my gosh, it's just it's ridiculous. It's silly. And

463
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I think they should. I mean, I think they could,

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and I don't think a lot of I don't think

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a lot of people would notice. I mean, I think

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the employees will notice, the people that had affect. But

467
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I don't think there's going to be a negative. The

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positive is that economy is going to grow. We you know,

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get out of our way, let us go round our businesses,

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and the economy is going to grow, that's for sure.

471
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That's going to be felt, but I don't think that

472
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it would be felt on the back end as any

473
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type of negative. What negative is going to come of that?

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You know, I had to I had to terminate a

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high level employee multiple months ago, and once we had

476
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let this individual go, the rest of my leadership team

477
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was looking around, going what did he do?

478
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Speaker 1: There was no hole. Normally, when you let someone go,

479
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there's a hole right has to be filled. I don't

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think there's going to be a hole.

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Speaker 2: I think there's going to be billions that allars saved

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by companies like mine and you know on other companies

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00:23:35,960 --> 00:23:37,440
out there. I think there's going to be a net positive,

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00:23:37,440 --> 00:23:38,720
But I don't think there's going to be a whole.

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00:23:38,759 --> 00:23:40,480
I don't think anyone's going to be looking around going go,

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oh my gosh.

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Speaker 1: We built that regulation win so now we can't know

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00:23:43,839 --> 00:23:44,799
it's not going to work like that.

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Speaker 2: I think it's just going to happen. The economy is

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00:23:46,400 --> 00:23:47,960
going to grow as a result of it, and let's

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move forward.

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Speaker 1: I love it.

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Speaker 4: Well, Hey, from your mouth to God's ears, Anthony, just

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00:23:52,960 --> 00:23:54,200
tell us where do we find you?

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00:23:54,240 --> 00:23:56,160
Speaker 1: How do we connect with you on the web? Yeah?

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00:23:56,200 --> 00:23:58,920
Speaker 2: Absolutely, A couple of ways you go right to my website,

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00:23:59,000 --> 00:24:03,680
Anthony Sikard. You go to Providence Financial ink dot com

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00:24:03,799 --> 00:24:08,480
or just search for Providence Financial Woodland Hills, California, Los Angeles, California.

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00:24:08,480 --> 00:24:10,599
Speaker 1: We come up all over the place, so thank you

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00:24:10,759 --> 00:24:11,960
Carrie excellent.

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00:24:12,039 --> 00:24:15,480
Speaker 4: Hey, any questions comments, shoot me an email kl at

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00:24:15,559 --> 00:24:19,480
Carrie Let's Anthony will give you an answer, I promise,

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00:24:20,039 --> 00:24:24,039
And while you're at it, go to Financial Survival Network

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00:24:24,079 --> 00:24:27,359
dot com and sign up for the free newsletter. We're

505
00:24:27,400 --> 00:24:31,599
on substack now. No more maintaining websites and watching them

506
00:24:31,640 --> 00:24:35,039
break and slow down and get corrupted in all that

507
00:24:35,079 --> 00:24:39,599
good stuff, and sign up like over seventy thousand of

508
00:24:39,640 --> 00:24:43,920
you have done, actually it's closer to eighty. And you'll

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00:24:43,960 --> 00:24:48,359
get some useful information regularly. We promise you that. Anthony

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00:24:48,400 --> 00:24:50,440
appreciate you coming on. We'll talk to you again soon.

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00:24:50,759 --> 00:24:52,240
Speaker 2: Thank you, Gerry, glad to be here.

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00:24:52,400 --> 00:24:56,559
Speaker 3: Thanks for listening to Carrie Letz's Financial Survival Network, your

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00:24:56,640 --> 00:25:00,440
solution to today's trying times. For the latest, go to

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00:25:00,599 --> 00:25:06,519
Financial Survivalnetwork dot com. Financial Survival Network now more than

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00:25:06,599 --> 00:25:06,839
ever