September 4, 2025 • 9 mins
Phil Kerpen, the President of American Commitment, joined Todd Walker to assess the state of the U.S. economy.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
We welcome Phil Kirpin to the program now the President
of American Commitment, and we sort of want a status
report on the economy from a Phill's perspective. And of course,
the Big Beautiful Bill passed earlier in the year, the
tax cuts were extended, and we also saw taxes eliminated
on tips and overtime. For the most part, I guess, Phil,
(00:21):
let's start there. Have we started to see positive effects
from those policies trickle into the economy yet.
Speaker 2 (00:30):
Well, you know, in the second quarter GDP report, which
by the way, was revised from three percent to three
point three percent, so it looked pretty good. We have
seen an increase in capital expenditures and that's really good news.
That means that companies are starting to invest more in
equipment and software and facilities. And you know, I think
that happened in the second quarter. The bill hadn't passed yet,
(00:51):
but I think it happened largely in anticipation of the
bill passing and bringing back expensing on a retroactive basis,
which had now happened. And I think we're going to
see in the third quarter even stronger increases in capital expenditures,
and that's really important because when businesses are investing more
in equipment and software upgrading their facilities, that means the
(01:11):
workers who work there can be more productive, and that
when productivity rises, real incomes rise as well. And so
I'm somewhat optimistic. And I thought that it was going
to take them all year to get that bill done.
I thought we were going to be working on until
November or December. And the fact they cleared it in July,
I think is a huge positive. We've got a much
better tax environment now, we've got a pretty good regulatory environment.
(01:31):
We've got a very good energy environment. The one negative
is sort of all the uncertainty on the trade front.
But I think that overall we've got a much more
positive business environment than we had in the last administration.
And we're already we're finally, I guess I should say,
out of a hole in terms of real incomes. We're
starting to set hides record highs again for median weekly
(01:54):
income inflation adjusted terms. After the big ditch that we
were in from that huge out of inflation under Biden.
People are finally kind of out of that hole, out
of that hole, and living sentence are starting to rise again.
They're not necessarily feeling again because it was such a
deep hole. But I think that as we move forward,
people are going to start to you know, feel the
(02:15):
economy growing again and incomes rising again, and that should
turn the psychology more positive going forward. So I'm reasonably optimistic.
As I said, the one potential sort of skunk at
the party is if there's continued trade frictions and if
tariffs escalate again, that could be you know, a higher
tax burden on the economy and more uncertainty for business.
But if the President can work as magic with more
(02:37):
of these deals that resolve these things, especially if we
get more favorable terms of trade, more market access and
so forth, you know, we could potentially be in a
pretty strong environment. The Fed may finally be cutting rates
of later this month, which will mean more money is
available for businesses in the economy, get things growing stronger.
The one caution that I give people, and stop me
(02:59):
if I'm rambling to, which is if you want long
term rates to come down the ten year treasury of
the thirty year mortgage, it's not going to be enough
for the Fed to cut. We need Congress to cut
spending because otherwise the expectation is going to be that
we have more inflation in the medium to long term,
and that's going to keep interest rates high. Last year,
when the FED cut short term rates, long term rates
actually went up, not down. And so we really need
(03:21):
to push hard on spending cuts now that Congress is
back here and they're going to be dealing with that
this fall.
Speaker 1 (03:26):
Sure, But talking with Phil Kirpin from American Commitment, you
talked about the trade deals and the tariffs. Of course,
there are some big ones unresolved that China most notably,
but the deals that have been struck still, the tariffs
were higher than they used to be, and people see
that generally as a negative. But I guess evaluate the
(03:46):
trade deals we have seen, like the EU and the
UK and some of these others, and what about the
ones yet undone?
Speaker 2 (03:54):
Well, you know, I think the key to the EU
deal in particular is the energy provision, the commitment from
the EU over the next three years to buy seven
hundred and fifty billion dollars of oil and gas from
the US. And that's going to be potentially challenging for
US to make good on. It's going to be I mean,
that's a you know, that's a big chunk of production.
(04:15):
But if we can do that, and it probably involves,
you know, expanding export terminals, maybe opening some new ones,
but if we can do that, we can make good
on that that fully replaces what they get from Russia
two hundred fifty billion dollars a year. So I don't
think that number was picked out of thin air. I
think the President was trying to send a very clear
signal to Russia that we want to be the primary
supplier of oil and gas to Europe. And you know,
(04:35):
if we can do that and do it where prices are,
and if they can continue to decline for crude and
for prices at the pump while we increase production, and
we can go up to you know, fourteen fifteen million
barrels a day, potentially become you know, really expand our
exports and expand to Europe. That's going to be a huge,
huge business opportunity for oil and gas in the US.
But it's also just as major global strategic implications, which
(04:58):
I think is the main reason President pursued it. You know, look,
I would like to see us get lower than the
fifteen percent on the deal with Europe, but the President
wants to keep that for additional leverage. We still need
to get some sort of agreement on pharmaceuticals where they
rip us off blind and get a free ride. Where
we're paying all the R and D costs and they're
using price controls to sort of ride in and get
a much cheaper deal. That's extremely unfair. We need to
(05:21):
have more negotiations on that. They're still trying to tax
the US tech companies and regulate them blind. So the President,
I think, is keeping that tariff on as much as
I would like to see zero, I think he's keeping
that fifteen so that we can have more negotiations and
ideally get a more favorable outcome on all these other
fronts and get to zero. So I'm reasonably optimistic about
(05:42):
where we are with Europe. I think we're going to
need a few more rounds of negotiation to get where
we really want to be, but this was a big one,
especially if we can actually make good on that oil
and gas plan, that would be massive. The deals with
UK and Japan, I think they're similar. I mean, we're
getting to ten or fifteen percent and the President's not
going to zero, but that's because there's still a lot
(06:02):
of other major non tariff barriers to trade that he
wants to get at that these other countries a lot.
Speaker 1 (06:07):
Where do you see it going with Mexico and Canada
in particular the trade deals.
Speaker 2 (06:13):
Well, you know, a lot of a lot of the
Mexico and Canada goods are on tariffs because they're covered
by USMCA. The President is trying to use the tariff
that he did put on as leverage to get more
cooperation on Sentinel and on you know, the gang problem
with Mexico in particular. I don't know, it's a tough problem.
(06:35):
It's a vexing problem. But you know, if you can
do something that reduces a death toll that's killing eighty
thousand Americans every year, you know that might be worth
some economic costs in the near term to get more
cooperation on that. So I'm not going to defend that
policy on the economics. I don't think it's necessarily about
the economics. But he's got, you know, important foreign policy
objectives that he's trying to accomplish.
Speaker 1 (06:55):
With those phil in connection with the tariffs and in flameation.
Inflation has remained relatively tame, but it's ticked up a
couple of points to right around two and a half
to three depending on which measure you're looking at. How
concerning is the inflation prospect.
Speaker 2 (07:14):
Well, you know, i'd like to see it lower. It's
been in that sort of two and a half to
three percent range. The target at the set is two.
My personal preference is zero. I would like the dollar
to be good as gold. And you know, even two
percent is probably more inflation than we need in my opinion.
But it's it's been very stubborn. It's been very stubborn.
And of course, you know when you're putting a bunch
(07:35):
of import taxes on, which is what these tariffs are,
that makes it difficult to keep consumer prices from growing,
particularly when you have tariff on some things that you
can't replace with US supplies, and so you know, coffee
prices are up. You know, I don't have fifteen or
twenty percent. Well, if you put a fifty percent tariff
on Brazil, which is where we get most of the coffee,
that's going to happen. And so we've got some upward
price pressures, some of them may be temporary. If we
(07:58):
can get these trade deals done and get the tariffs on,
we can get some downward pressure there is some good news,
particularly on energy. Prices are down from a year ago,
which is nice, and most forecasts say they're going to
continue to decline, although that may be challenging to do
if we're boosting production to meet that commitment to Europe,
although I think our guys can do it. That industry
has just been incredible in the last few years. So
(08:20):
you know, it's a mixed picture. It's not a great picture.
It's not necessarily where we want to be. But I
think you need to bear in mind where we were
just a couple of years ago, when it was seven
eight nine percent plus inflation. Three percent is not ideal,
but it's a lot better than where we were in
the recent past, and I think that we can have
strong real income growth at this level of inflation. The
most important thing on inflation is that it needs to
(08:43):
be lower than income growth. And incomes are growing faster
than prices, then people are getting better off. When incomes
are growing slower than prices, which is what we had
the last few years, people are getting worse off and
it's much harder to make ends meet at the end
of the month. And so we don't have that problem
right now. Incomes are outpacing prices. Prices are still growing
a little bit faster than i'd like, particularly from that
(09:04):
tariff pressure, but income growth has been stronger, so that's
a good news.
Speaker 1 (09:09):
That's Phil Kirpen from American Commitment with his analysis of
the economy. Phil, we appreciate you checking in.
Speaker 2 (09:17):
All right, Todd. Good luck to your Reds, although obviously
I don't want them to win this season.
Speaker 1 (09:21):
We'll see you
We welcome Phil Kirpin to the program now the President
of American Commitment, and we sort of want a status
report on the economy from a Phill's perspective. And of course,
the Big Beautiful Bill passed earlier in the year, the
tax cuts were extended, and we also saw taxes eliminated
on tips and overtime. For the most part, I guess, Phil,
(00:21):
let's start there. Have we started to see positive effects
from those policies trickle into the economy yet.
Speaker 2 (00:30):
Well, you know, in the second quarter GDP report, which
by the way, was revised from three percent to three
point three percent, so it looked pretty good. We have
seen an increase in capital expenditures and that's really good news.
That means that companies are starting to invest more in
equipment and software and facilities. And you know, I think
that happened in the second quarter. The bill hadn't passed yet,
(00:51):
but I think it happened largely in anticipation of the
bill passing and bringing back expensing on a retroactive basis,
which had now happened. And I think we're going to
see in the third quarter even stronger increases in capital expenditures,
and that's really important because when businesses are investing more
in equipment and software upgrading their facilities, that means the
(01:11):
workers who work there can be more productive, and that
when productivity rises, real incomes rise as well. And so
I'm somewhat optimistic. And I thought that it was going
to take them all year to get that bill done.
I thought we were going to be working on until
November or December. And the fact they cleared it in July,
I think is a huge positive. We've got a much
better tax environment now, we've got a pretty good regulatory environment.
(01:31):
We've got a very good energy environment. The one negative
is sort of all the uncertainty on the trade front.
But I think that overall we've got a much more
positive business environment than we had in the last administration.
And we're already we're finally, I guess I should say,
out of a hole in terms of real incomes. We're
starting to set hides record highs again for median weekly
(01:54):
income inflation adjusted terms. After the big ditch that we
were in from that huge out of inflation under Biden.
People are finally kind of out of that hole, out
of that hole, and living sentence are starting to rise again.
They're not necessarily feeling again because it was such a
deep hole. But I think that as we move forward,
people are going to start to you know, feel the
(02:15):
economy growing again and incomes rising again, and that should
turn the psychology more positive going forward. So I'm reasonably optimistic.
As I said, the one potential sort of skunk at
the party is if there's continued trade frictions and if
tariffs escalate again, that could be you know, a higher
tax burden on the economy and more uncertainty for business.
But if the President can work as magic with more
(02:37):
of these deals that resolve these things, especially if we
get more favorable terms of trade, more market access and
so forth, you know, we could potentially be in a
pretty strong environment. The Fed may finally be cutting rates
of later this month, which will mean more money is
available for businesses in the economy, get things growing stronger.
The one caution that I give people, and stop me
(02:59):
if I'm rambling to, which is if you want long
term rates to come down the ten year treasury of
the thirty year mortgage, it's not going to be enough
for the Fed to cut. We need Congress to cut
spending because otherwise the expectation is going to be that
we have more inflation in the medium to long term,
and that's going to keep interest rates high. Last year,
when the FED cut short term rates, long term rates
actually went up, not down. And so we really need
(03:21):
to push hard on spending cuts now that Congress is
back here and they're going to be dealing with that
this fall.
Speaker 1 (03:26):
Sure, But talking with Phil Kirpin from American Commitment, you
talked about the trade deals and the tariffs. Of course,
there are some big ones unresolved that China most notably,
but the deals that have been struck still, the tariffs
were higher than they used to be, and people see
that generally as a negative. But I guess evaluate the
(03:46):
trade deals we have seen, like the EU and the
UK and some of these others, and what about the
ones yet undone?
Speaker 2 (03:54):
Well, you know, I think the key to the EU
deal in particular is the energy provision, the commitment from
the EU over the next three years to buy seven
hundred and fifty billion dollars of oil and gas from
the US. And that's going to be potentially challenging for
US to make good on. It's going to be I mean,
that's a you know, that's a big chunk of production.
(04:15):
But if we can do that, and it probably involves,
you know, expanding export terminals, maybe opening some new ones,
but if we can do that, we can make good
on that that fully replaces what they get from Russia
two hundred fifty billion dollars a year. So I don't
think that number was picked out of thin air. I
think the President was trying to send a very clear
signal to Russia that we want to be the primary
supplier of oil and gas to Europe. And you know,
(04:35):
if we can do that and do it where prices are,
and if they can continue to decline for crude and
for prices at the pump while we increase production, and
we can go up to you know, fourteen fifteen million
barrels a day, potentially become you know, really expand our
exports and expand to Europe. That's going to be a huge,
huge business opportunity for oil and gas in the US.
But it's also just as major global strategic implications, which
(04:58):
I think is the main reason President pursued it. You know, look,
I would like to see us get lower than the
fifteen percent on the deal with Europe, but the President
wants to keep that for additional leverage. We still need
to get some sort of agreement on pharmaceuticals where they
rip us off blind and get a free ride. Where
we're paying all the R and D costs and they're
using price controls to sort of ride in and get
a much cheaper deal. That's extremely unfair. We need to
(05:21):
have more negotiations on that. They're still trying to tax
the US tech companies and regulate them blind. So the President,
I think, is keeping that tariff on as much as
I would like to see zero, I think he's keeping
that fifteen so that we can have more negotiations and
ideally get a more favorable outcome on all these other
fronts and get to zero. So I'm reasonably optimistic about
(05:42):
where we are with Europe. I think we're going to
need a few more rounds of negotiation to get where
we really want to be, but this was a big one,
especially if we can actually make good on that oil
and gas plan, that would be massive. The deals with
UK and Japan, I think they're similar. I mean, we're
getting to ten or fifteen percent and the President's not
going to zero, but that's because there's still a lot
(06:02):
of other major non tariff barriers to trade that he
wants to get at that these other countries a lot.
Speaker 1 (06:07):
Where do you see it going with Mexico and Canada
in particular the trade deals.
Speaker 2 (06:13):
Well, you know, a lot of a lot of the
Mexico and Canada goods are on tariffs because they're covered
by USMCA. The President is trying to use the tariff
that he did put on as leverage to get more
cooperation on Sentinel and on you know, the gang problem
with Mexico in particular. I don't know, it's a tough problem.
(06:35):
It's a vexing problem. But you know, if you can
do something that reduces a death toll that's killing eighty
thousand Americans every year, you know that might be worth
some economic costs in the near term to get more
cooperation on that. So I'm not going to defend that
policy on the economics. I don't think it's necessarily about
the economics. But he's got, you know, important foreign policy
objectives that he's trying to accomplish.
Speaker 1 (06:55):
With those phil in connection with the tariffs and in flameation.
Inflation has remained relatively tame, but it's ticked up a
couple of points to right around two and a half
to three depending on which measure you're looking at. How
concerning is the inflation prospect.
Speaker 2 (07:14):
Well, you know, i'd like to see it lower. It's
been in that sort of two and a half to
three percent range. The target at the set is two.
My personal preference is zero. I would like the dollar
to be good as gold. And you know, even two
percent is probably more inflation than we need in my opinion.
But it's it's been very stubborn. It's been very stubborn.
And of course, you know when you're putting a bunch
(07:35):
of import taxes on, which is what these tariffs are,
that makes it difficult to keep consumer prices from growing,
particularly when you have tariff on some things that you
can't replace with US supplies, and so you know, coffee
prices are up. You know, I don't have fifteen or
twenty percent. Well, if you put a fifty percent tariff
on Brazil, which is where we get most of the coffee,
that's going to happen. And so we've got some upward
price pressures, some of them may be temporary. If we
(07:58):
can get these trade deals done and get the tariffs on,
we can get some downward pressure there is some good news,
particularly on energy. Prices are down from a year ago,
which is nice, and most forecasts say they're going to
continue to decline, although that may be challenging to do
if we're boosting production to meet that commitment to Europe,
although I think our guys can do it. That industry
has just been incredible in the last few years. So
(08:20):
you know, it's a mixed picture. It's not a great picture.
It's not necessarily where we want to be. But I
think you need to bear in mind where we were
just a couple of years ago, when it was seven
eight nine percent plus inflation. Three percent is not ideal,
but it's a lot better than where we were in
the recent past, and I think that we can have
strong real income growth at this level of inflation. The
most important thing on inflation is that it needs to
(08:43):
be lower than income growth. And incomes are growing faster
than prices, then people are getting better off. When incomes
are growing slower than prices, which is what we had
the last few years, people are getting worse off and
it's much harder to make ends meet at the end
of the month. And so we don't have that problem
right now. Incomes are outpacing prices. Prices are still growing
a little bit faster than i'd like, particularly from that
(09:04):
tariff pressure, but income growth has been stronger, so that's
a good news.
Speaker 1 (09:09):
That's Phil Kirpen from American Commitment with his analysis of
the economy. Phil, we appreciate you checking in.
Speaker 2 (09:17):
All right, Todd. Good luck to your Reds, although obviously
I don't want them to win this season.
Speaker 1 (09:21):
We'll see you
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