1/21/26 Economic Reality Check with Dr. Richard Gearhart

The Moneywise Radio Show and Podcast Wednesday, January 21st BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management Guest: Dr. Richard Gearhart, Professor of Economics at CSUB website: https://rgearhart1.wixsite.com/csubeconomist The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Richard Gearhart and their company are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management].

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  Live from the basement inside the historic Woolworths Building in downtown Bakersfield. Call or text in at 661-396-1000.

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  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

• 0:37Speaker 00

  Now, let's start the MoneyWise Show.

• 0:42Speaker 02

  That's right, this is the MoneyWise Radio Show, running into the studio.

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  Coming in hot.

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  Like a chicken with my head cut off.

• 0:49Speaker 00

  Coming in hot.

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  Still getting used to the new studio being downstairs. The programming on the elevator that it requires you to go upstairs before you go downstairs. It is just a lot of learning and a lot of chaos and a lot of good things, but we are very happy to be in our new studio. So, thank you for listening, thank you for joining us, thank you for the comments and questions that already came in. I'm your host today for the MoneyWise Show, we're hoping to make it a great one. My name's Chris Pelster, I'm joined with?

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  Seth Perry, happy to be here, KP.

• 1:17Speaker 02

  Happy to have you here, happy to take a deep breath and it's funny, it's like I get to slow down on air. It's kind of weird.

• 1:23Speaker 00

  Been a busy morning, for sure.

• 1:25Speaker 02

  Been a busy morning, taking care of a lot of things, trying to work hard for our clients. A crazy, crazy day on the markets yesterday, markets moved negative a little bit. So, we'll go into the markets a little bit, see what they did after a day like yesterday. We'll get into that in a second, but also always behind the glass over there, the beautiful face of Mr. Steven Nicholas. How are you doing, Steven?

• 1:43Speaker 00

  I'm good, I'm good, we got Dr. Gearhart coming in here shortly.

• 1:46Speaker 02

  Oh, the local economist, so he's gonna, he's gonna shed light on it all. He's gonna be able to tell you exactly what's going on, why it's happening, how it's happening, and exactly what, well, maybe not exactly what to do, but we're gonna talk about what's going on.

• 2:00Speaker 00

  A PhD in economics, that's not just a... Yeah, and I will put money on it, he's a, he's a New York Football Giants fan.

• 2:07Speaker 02

  Oh.

• 2:07Speaker 00

  So, I would, I would put a dollar on, a doll hair, that he brings up Harbaugh in some fashion.

• 2:15Speaker 02

  Uh, did you see his little speech yesterday?

• 2:17Speaker 03

  Uh huh.

• 2:17Speaker 02

  Whoa.

• 2:18Speaker 03

  Tell me about it. I'd missed it.

• 2:19Speaker 02

  He's lighting the fire. He's lighting the fire.

• 2:21Speaker 03

  Under New York fans or what?

• 2:22Speaker 02

  Oh, yeah.

• 2:23Speaker 03

  He's the new Giants head coach, so. I know that. He moved from the Ravens from 17 years, I believe. Long time.

• 2:30Speaker 02

  Just talk about bringing the world championship to New York.

• 2:32Speaker 03

  Just like that.

• 2:33Speaker 02

  Yeah.

• 2:33Speaker 03

  Not one. Not two. Not three. Oh, man, that's great. Well, yeah, the market's definitely rebounded today. Um, everything's, they're all about the same, up 1.2%. That's the S and P 500. That is the Dow Jones and that is the NASDAQ, all up around 1.2%. So year to date, the S and P 500 is pretty much flat, Chris. It's 0.3%, but the one-year return, S and P 500, the biggest 500 companies by market cap in the U.S. is up 14%. So still looking pretty good.

• 3:13Speaker 03

  One of the things that happened was Trump calling off the European tariffs. And so the market rebounded back today. That's one thing that keeps happening is everyone reacts very quickly and abruptly one way or the other to the latest news headline. But underneath, underneath it all, earnings, interest rates, that's kind of what, what really matters. And so it's, it's interesting. We'll have an economist on today to talk about that. It's pretty, pretty good stuff. I wanted to talk to you guys about a place called Kamchatka. Can we start with that?

• 3:45Speaker 02

  Excuse me? Bless you.

• 3:47Speaker 03

  Kamchatka?

• 3:47Speaker 02

  Say what? Bless you.

• 3:49Speaker 03

  So for our listeners out there in radio land, I think our last, they did a poll and we're at about four and a half million across the U.S. listeners. When you Google Kamchatka, what it is, is it's a city in Russia and they saw some severe snowfall. Biggest snowfall in 40 years, I believe. And so I got hyped this morning as I was reading my morning articles, seeing people sledding down like 10-story snowdrifts. And then I come to find out some of it was AI. So I think that's good. Radio, a good topic to discuss really quickly. What do you think?

• 4:29Speaker 02

  What do you mean? Just AI like being careful about what you're watching or reminding people? Or what do you mean?

• 4:35Speaker 03

  I mean, it was a crazy snorestorm and it looked absolutely real. I still believe that the, there's like kids sliding off of a 10-story building, but the snowdrift is 10 stories. They're just sliding like 80 feet, right? And it looked real, but then allegedly it might be AI. So I don't know, man. I don't know what to believe anymore and

• 4:51Speaker 02

  Yeah.

• 4:52Speaker 03

  Gosh darn it.

• 4:53Speaker 02

  Yeah. Yeah, definitely for the listeners.

• 4:56Speaker 03

  I hate to drift into a different topic.

• 4:57Speaker 02

  Oh, this guy, this guy in the dad jokes. No, it's absolutely a very important topic. AI videos, you can't even, you can't even believe what you see anymore. Like you have to be so cautious and I hate to be that way. But absolutely. But the one video that I did see, now that you mentioned this, I didn't know about this storm, but it was a little, like a little meme, not a meme, but like a little reel. And it was these like three guys in this van and they were dancing, but you could tell like the windows were covered in, in snow, like so, which is not uncommon, right? But then it like backs out.

• 5:31Speaker 03

  That's the one of the ones I saw. That one has to be real.

• 5:34Speaker 02

  Dude, that one had to be.

• 5:34Speaker 03

  They dug their way down into their car. This is like some of the biggest snowfall in history.

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  And then there, then the, the camera backs out of this like 10 or 15 foot tunnel. And then it goes up on top of this just mountain of snow.

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  20 feet of snow and there's some guy with a shovel up top. And I'm thinking, guys, that's not the smartest idea if that snow collapses in on you. But yeah, you guys check out the footage, let us know what you think. Again, that's K A M C H A T. K A Kamchatka.

• 6:01Speaker 02

  How are you, how are you moving forward? How are we as consumers of media, consumers of social media, online content? How do you now? Cause it used to be like, I need to see it with my own eyes and now you can't even technically.

• 6:19Speaker 02

  Believe what you see with your own eyes. What a wild world that we're living in where.

• 6:23Speaker 03

  It's a scary rabbit hole, to be really frank with you, because in theory, everything I'm watching, we've got a TV station playing right now showing Trump, economic forum, making his case for Greenland. What if that's not even happening? You can go in kind of some dark places mentally. I try not to. I just kind of take it day by day.

• 6:42Speaker 02

  Steven, why are you crying?

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  That's just me.

• 6:46Speaker 03

  That's just you?

• 6:47Speaker 00

  I just look that way.

• 6:49Speaker 02

  He cuddled up on his couch in there and like, no. It is just a reminder just to be very careful. I mean, the one thing I will say is every time you're going to send something because it grabs your attention, I would almost say like anytime something grabs your attention, you're like, oh, you know, like, oh, I want to share this. Or like, that should almost be a thought, because that's the whole point of AI is trying to put something out there that's going to cause your attention. It's going to grab your attention and it's going to cause you to want to share, click, put it out there, right? And so anytime you see something that right now is going to make you want to share it or whatever, like, okay, wait, hold on a second. Is this real? Can I verify that this

• 7:31Speaker 02

  has actually happened? Some of it's just harmless fun and it's not a big deal, but you can see how it is definitely could be very, very scary because you can't even necessarily. I mean, even to the point of, what's the new famous Landman? Landman's a show that's on Paramount right now or whatever. And a friend sent me that Billy Bob Thornton, it was Billy Bob Thornton talking about how he's not going to be on season three because he got in a fight with the director and this and that. And I sent back to this guy, I said, are you sure that's not AI? And he goes, oh, I think you're right. And I'm like, I'm like, you can't, you can't trust anything. You have to be careful. And it's just, it's just being wise, being prudent, like be careful before you share information, really try

• 8:13Speaker 02

  to verify certain sources. And you know, some of it's could be considered harmless, but it is training us all to like, not even want to think that we need to verify what it is that we're sharing, even harmless little videos that might be AI. And me and my wife were actually. Watching a video that was, uh, it was basically all these Ring cameras announced stuff that we have on our front door. So it was sharing a lot of this stuff that was like, got caught on these Ring cameras. And it was like, almost like a, a, a, America's Funniest Home Videos new version that is caught on basically doorbell cameras, which is insane. And there's a lot of funny things that happen on people's front doorsteps, by the way. But, um, one of them I know for sure was either AI or it was a social media influencer that was doing a fake,

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  like a fake thing in their front yard.

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  Yeah.

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  But they were sharing it that says it was like caught on camera. And I'm like, that, I think that was actually a social media influencer, person that did this dumb video in their front yard to try to, you know?

• 9:11Speaker 03

  And this actually does relate to what we do as financial advisors, helping families here in the Bakersfield and greater Kern County area. Is a lot of the scams, they're using audio, AI voice. All you need is someone could record my voice right now for 20 seconds on air and then put that into the AI software and it could call a credit card company asking for a balance or a new credit card.

• 9:33Speaker 02

  Loved one of yours.

• 9:34Speaker 03

  Or call a loved one. And a new scam I've heard about, not to freak everyone out, but, uh, fake kidnappings. Have you heard of this? People calling saying, hey, we have your son or daughter, right?

• 9:45Speaker 02

  And. Or I'm in jail in Tijuana and I need bail money. Send 500 bucks. My, my, uh, my grandpa actually got a call back in the day and they're very good about, they might not know my name, but they'll say, this is your grandson. And then, uh, not, not knowing grandpa or grandma or papa or whoever it is, might say, Chris, is this you? Yes, it's Chris. And then they have your name. So then it becomes even more believable because you threw out their name. Oh, they, they were using your name. Well, yeah, because you said, Chris, is this?

• 10:12Speaker 03

  It's very defensive, uh, one way, one very easy, smooth defense is ask very specific questions. If you have any hesitation whatsoever, say, hey, Chris, uh, what was your pet's name? You know, if it's your kid, say, hey, I'd say, hey Beckham, what was our first cat's name or something like that? And if they stumble around, hang up, you know? It's weird that we live in a world like that. Chris, we were class of 98 and. We were just getting computers back then. So my, my, my, my, how things have changed.

• 10:39Speaker 02

  Yeah. And I will throw out there that um, just, just you want to be cautious. You want to use uh, you know, there, there are scams out there. Be very cautious and uh, and don't be afraid, even as scary as it might sound, if it is serious enough and you hang up and it is serious enough, they're going to call back or you know, it's going to be, you know what I mean? And sometimes people will get caught and the not hanging up part is, is what's critical for them keeping you in this heightened state of panic and sometimes hanging up and calling somebody and say, what do you think or whatever? And then, you know, or call me back or whatever, uh, get a phone number. But yeah, be cautious, um, because that's the world we live in now.

• 11:19Speaker 03

  So let's go ahead and dive into one of those questions. So here we go. Is there any truth of Trump lowering credit card rates? If so, how would some of us with high rates with their cards? I'm going to read that again because it's a little choppy. All right. Is there any truth of Trump lowering credit card rates? If so, how would that help some of us with high rates with their cards? So Trump can't directly go in and affect credit card rates overnight. But what they can do is influence the federal funds rates and, and the rates that banks get their money that they then loan out, but it's going to take a lot of time.

• 12:03Speaker 03

  If I were you, listener, dear listener, I wouldn't worry so much about what Trump might do with credit card rates and I would put a solid game plan together to get yourself out of credit debt. Wouldn't you agree, Chris?

• 12:14Speaker 02

  Yeah. And, and I'm, I'm not sure. I haven't dove into this too much, but technically there, there could be a limit on how much they can charge because there is limits on what they call predatory lending. So like there's, there's, you know, for, for short-term loans or cash money loans, they call them. There's a certain amount you can't charge over and then on credit cards, there's the highest amount you can charge on credit card limits. So I think what they're talking about is that Trump steps in and goes, hey, we're not going to allow anybody to charge over 10%. Obviously be much lower than historical norms because a credit card company is going to say, "Hey, we're offering a service. We're offering liquidity to people. We're offering people the access to funds and cash."

• 12:56Speaker 02

  And it's a risk. We're taking on a risk because not everybody, it might be a shocker to people. Not everybody pays back their credit cards. Did you know that? Yeah. Yeah. Some people don't pay their credit cards back. So they're taking on risks. So they're charging interest for that risk that they're taking. Now, if he does lower it down to 10% and every credit card company out there can't charge more than 10%, hopefully it would be that you don't have to do anything. Your 27% credit card now dropped to 10%. What I would say is keep paying the same amount per month. Because now, an extra 80 bucks instead of going to the credit card company is going to be going towards your debt. Get out of debt, climb out of debt, beg, borrow, steal, get out of debt as quickly as possible. And now, instead of extra money going to the credit card company,

• 13:41Speaker 02

  it's going to be going towards the debt payment, the debt service that you're trying to climb yourself out of. So that would be one way to take advantage of it is you have this much lower interest rate where the minimum payment is going to drop from 300 bucks a month, maybe down to 180. Well, keep paying 300.

• 13:57Speaker 03

  Yep.

• 13:58Speaker 02

  And that's extra payments going towards the interest.

• 14:00Speaker 03

  The minimum payment is usually only, what, 2 or 3%? So if you're just making minimum payments, you can run the calculators online. A $1,000 credit card bill, it can take years to pay that thing off. And so, yeah, I overlooked that, that I don't know that I like that. I don't know. I really appreciate what a lot of the Trump administration is doing and the economy is relatively strong. The stock market obviously is crushing it, but I don't know how much I like about tapping in and telling banks what they can and can't charge.

• 14:28Speaker 02

  Yes. And let's also talk about another downside potential. If this is a temporary drop in interest rates and you convince everyone that credit cards aren't as bad. And everybody like, oh, it's only 10%. Everybody cranks up usage of those credit cards because it's only 10%. And then a year from now, it goes back up to 27.

• 14:47Speaker 03

  Or new administration comes in or anything happens. They could change their mind. But again, again, Trump warns of economic disaster or JP Morgan warns of economic disaster, but Trump's backs off the credit card rate cap. So it's just, it's hard to keep up with the news. It's always been this way. You've been on this radio show a lot longer than me, Chris. It's always bobbing and weaving like this.

• 15:07Speaker 02

  Since, since the beginning of the radio show, we've always tried to say like talk, breaking through the, the fog, breaking through the junk, the noise, you know? And because ultimately we talk about all this stuff. And like you said, uh, you know, yes, like it'd be great if they drop interest rates. That'd be a wonderful, it'd be icing on the cake. If you're someone who's trying to get out of debt and pay off credit cards, it'd be icing on the cake. But at the end of the day, you just have to stick to tried and true methods of what builds successful, long-term wealth. You keep doing the right things, right? And all those other things can help you. Sometimes they can hurt you a little bit, but just keep doing the right things. And in the long run, you have a very, very high probability of success, putting together

• 15:51Speaker 02

  a financial plan that's going to weather storms, that's going to help you navigate certain life circumstances and get you ready for retirement, whatever that retirement is that you want it to look like. You're going to be able to live off your nest egg. You're going to be able to have a little bit of income from social security. You're going to have hopefully debts paid down or paid off and you're not going to need a ton of income because you've worked this long-term plan. And even though sometimes people think long-term's plan are boring or it's outdated or this or that, it is still the highest probability and the most likely for success. You're not going to crash and burn. It has so many safety nets and stuff built into it where you're going to, like even if you lose your job and you're doing this, nobody wants to go in and have to tap some of their retirement monies or something like that, but you have access to that where you're

• 16:35Speaker 02

  not having to use high interest card debt. You're not having to borrow against things. You actually have your own resources to be able to navigate some of those things. So.

• 16:43Speaker 03

  Is this microphone on? Can you guys hear me okay? Cause I have a message loud and clear, loud and clear for Donald Trump. Yeah, I said cure. Loud and clear. Don't worry so much about this focused more on our focus more on our so folks listen full transparency. Four and a half hours of sleep, Stephen, just letting you know, a little tired. Mind was spinning this morning, so jumbling the words a little bit, but that's okay. Cause I have a message for Donald Trump. Focus more on education. Get rid of algebra. Get rid of trigonometry. Get rid of geometry in high school. I have every right to say that I was a math teacher. And to be honest, a huge part of it's a waste of time. In my opinion, unless they're going to be an engineer or something like that. Let's teach financial concepts from a very young age. Don't wait until high school.

• 17:28Speaker 03

  And here California is just now getting ready to make it a requirement. No, this should be a requirement, starting in elementary basics of saving. Basic of how these accounts work. Share the horror stories of credit like I used to do with my students at West High. And focus less on this. It's, it's a Band-Aid 10%. It's a Band-Aid. Let's, let's, uh, work on what's creating the problem.

• 17:49Speaker 02

  Yeah. I, I thought for sure Stephen was gonna start playing like soapbox music, soapbox music like.

• 17:56Speaker 03

  Is that when they get somebody to stop talking?

• 17:58Speaker 02

  Well, you're, you're just, you know, I mean, you were making a speech. You were making a proclamation.

• 18:02Speaker 03

  Oh, yeah, man. I'm fired up about it. I'm fired up about it.

• 18:05Speaker 00

  I had my violin ready too.

• 18:06Speaker 03

  Honestly, man.

• 18:07Speaker 02

  Okay.

• 18:08Speaker 03

  Come on. Well, is anyone with me out there? Radio listeners, text in, tweet in.

• 18:13Speaker 02

  Yeah.

• 18:13Speaker 03

  Add in.

• 18:13Speaker 02

  Let's, let's take a quick break and we come back, we're going to get into a couple of the comments that did come in. And you also, yep. And when you go, when you come back, you also can join the conversation or send in your question or comment. 3961000. Uh, get that going 3961000. Send that into Stephen, he'll get it to us. Stick around, we'll be right back.

• 18:41Speaker 02

  Welcome back.

• 18:44Speaker 02

  We good, we good?

• 18:50Speaker 02

  So, we are joined by now, the one, the only, Richard Gearhart, our local economist extraordinaire. Is this your first time in the news studio?

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  This is the first time in the news studio. You've relegated me to Zoom and...

• 19:05Speaker 02

  Yeah, welcome.

• 19:07Speaker 04

  This is phenomenal. This is awesome.

• 19:09Speaker 03

  Beautiful, right?

• 19:10Speaker 04

  This is beautiful. Yeah, after this, I'm gonna go have some lunch at, or early dinner at Woolworths because my wife told me what she was cooking and I don't want any of that.

• 19:19Speaker 02

  There you go. It's too healthy. You're like, no.

• 19:22Speaker 03

  Meatloaf?

• 19:23Speaker 04

  No, it's like Walmart bag. I have no idea.

• 19:28Speaker 02

  So you're going for it upstairs.

• 19:30Speaker 04

  Oh, absolutely.

• 19:31Speaker 02

  Your secret is, uh, safe with us and all the listeners and the internet.

• 19:36Speaker 03

  This is a safe place.

• 19:37Speaker 02

  We won't tell anybody.

• 19:38Speaker 04

  She's just over on F Street, so just avoid driving there.

• 19:42Speaker 02

  Yeah, so, uh, so here we are. We're, we're, we're closing out on the first year of, of President Trump. And the, uh, Business Insider like crunched some numbers and looked at some different things. And they have some, you know, some, some charts and some different things, how the economy's doing. So from your perspective, what, what, what are your thoughts? Like, just as an economist who's been watching all this unfold, we talked a little bit about it at the break. It's kinda hard to break through so much noise and rhetoric and different things. So like, the economy, how's it going?

• 20:19Speaker 04

  It's an interesting place because I think if you asked, people who have stocks, people who are investing in the market would probably say it hasn't been that bad of a year. If you talk to people who don't invest, who rent, um, who are getting hit with products that have a lot of tariffs, I think that they would say it's pretty bad. I've heard the term K-shaped economy a lot, uh, which is just a very fancy way of saying that the people who are doing well are doing really well and the people who aren't, aren't. But to me, it's one of those things where I think the underlying economy is doing well.

• 21:03Speaker 04

  There's just so much noise and so much nonsense that kind of dominates it and, you know...

• 21:10Speaker 04

  Inflation is relatively is relatively down. It's 2.7%, which is within the error of margin for the Federal Reserve. The labor market's running hot. GDP is gonna grow at 5.4% in quarter four of 2025, which is astonishingly high. It's just, it's one of those things where if he would just cut back on talking 90% of the time, I think most people would be cool with what's happening. It's just the fact that every day it's something new, like a tariff.

• 21:49Speaker 03

  It's emotional. It's like an emotional roller coaster for the listeners. You know, it's highs and lows and what did you call it? Trump, uh, Trump and dump?

• 21:58Speaker 04

  Yeah, Trump and dump.

• 21:59Speaker 03

  We've used that expression before here, exactly.

• 22:01Speaker 04

  Yeah, because Friday we were talking about maybe going to war over Greenland and we had 10% tariffs going up to 25% and today it's nothing.

• 22:12Speaker 03

  He's like, I'm not gonna do that.

• 22:14Speaker 02

  Yeah, it's exhausting.

• 22:16Speaker 03

  It is exhausting.

• 22:16Speaker 02

  Exhausting. So I'm curious, I'm curious from your perspective because you know, you have some of your own personal opinions. You have studied economies or, or, you know, the basics of economy and all these different things. What is the sentiment amongst young people, young adults that are finishing up education and, and, and looking to like enter the workforce? Is there a sense of, of hope? Or is it like doom and gloom? I mean, what is the sentiment of the folks that are in your classrooms that are, you know, trying to better themselves with education and trying to get out there and you're, you're, you're teaching these folks? Like, how are they feeling?

• 22:58Speaker 04

  To me, it's a repeat of like 2007, 2008, that graduating cohort. When you went out and you're like, there's no jobs. Or the jobs that were available didn't match with the skillsets that they were learning. I, I think it's a lot of pessimism and it's a lot of consternation. They're worried about what types of jobs they have. Will it be a career? And how stable will it be?

• 23:25Speaker 04

  It's one of those where older Americans right now aren't retiring like we expected the boomers to retire because they either don't have the retirement savings to be able to do that, or they're worried about switching from private health insurance to Medicare and losing their doctors. So there's, it's almost like this phenomenon called job lock, where they're just not leaving their jobs and that's what typically drives a healthy labor market. Unemployment's at 4.5%, which is about what you would expect in a fully booming economy, but there's not really many jobs being created for college educated

• 24:06Speaker 04

  young adults. A lot of the job openings are either in healthcare, or in kind of those blue collar trades that we've kind of pushed them away from. So I think, I think it's worry.

• 24:18Speaker 02

  Yeah.

• 24:19Speaker 03

  Is that just, you think locally here in the Bakersfield area, or is this across the nation?

• 24:22Speaker 04

  I've seen it across the nation. You know, talking here with local students in Kern County, a lot of them don't want to work for ag, a lot of them don't want to work for oil. And those are the two predominant industries here in Kern County. That's 20% of our GDP is just in those two sectors. And unless you're getting a specialty medical degree, you know, it's an area where you're competing against remote workers from the Bay Area, or Los Angeles, for sort of these, you know, AI-driven jobs. And so, it's just, things will get better, you know, in two years, this will be, we'll look back at this

• 25:06Speaker 04

  and go, oh, this was nothing. But for individuals graduating today, they're, they're worried about what the next two years will look like.

• 25:14Speaker 02

  Yeah. Yeah. And I mean, everything is, obviously, technology is changing so fast, and I can't imagine, like, trying to think where your career's going to be in five or six or seven years. I mean, even, even here in this office, even money-wise, you know, I mean, technology is changing, financial advising, and working with clients, and the technologies that we use to do all kinds of things, some of it's making us Better advisors, but then, you know, some of it is greatly changing a whole lot of things, including, you know, robo advising has been around for years and it's made some impact. But I think ultimately, at the end of the day, people, a lot of our clients, they still want to work with a human individual that they know and can see in those things. So everything is changing so fast. We don't know really how that's all going to unfold. But one of the

• 25:55Speaker 02

  things that I wanted to ask you, you know, people have an opinion on like the tariffs and stuff like that. So, and I think we've talked about it for a long time on the radio show. This has been the first time that things have actually been implemented like this, like since we've had you on the show and different things. And so how do you now look at things as far as the good thing about the tariffs is you have this revenue stream now to our government that's not necessarily through taxation directly, but there's unintended consequences or there's there's other things that are impacted. So how do you start to dig through the data or look at things as far as, okay, like, hey, we have this new income stream coming into the government

• 26:36Speaker 02

  through the tariffs and how is that impacting the other areas? How do you start to look at that? Or if somebody was to say, do you think the tariffs are doing a good thing? Or what are the bad things that you're seeing about the tariffs? What do you look at to kind of judge

• 26:49Speaker 04

  that? Yeah, so, you know, it really goes back to just kind of getting a feel of consumer sentiment, business sentiment, and just looking at the raw data. And what it's telling us right now is that we're generating a couple hundred billion dollars of new tax money each year, which is great. The problem is, is that the government is using this additional tax revenue to pay down the debt or pay down the deficit. They're just using it to expand spending. I think the numbers came in and fiscal year 2025, we have added about 2.3 trillion dollars to the debt, which we're approaching 40 trillion dollars.

• 27:30Speaker 02

  That's crazy.

• 27:31Speaker 04

  Not great. So, you know, tariffs are useful when they're used to protect domestic industries from foreign predation. So, computer chips would be a great industry and are a great industry to levy tariffs on, I would, you know, tariffs on

• 27:54Speaker 04

  Natural resources, lumber, oil, gold, those sorts of things are great. But it really hasn't led to a manufacturing renaissance. Manufacturing is basically seen a decrease in employment since 2018. We haven't arrested that fall. And it hasn't really impacted growth positively or negatively. Pretty much the only thing I can say about tariffs is, you know, let's be smart about how we use the money that we're generating. Because we're not really seeing inflation. We're not seeing these significant job losses. But it's just, what are we doing with it? What's the end goal?

• 28:38Speaker 04

  And that's what I would like to see. That I just don't really know how we're going to unwind from this position.

• 28:45Speaker 03

  Have you ever been too scared to ask a question? Because I'm a little nervous to ask this, but where do you see it in your professional opinion? This 40 trillion that's just, if listeners, if you haven't gone, go to, I think it's debtclock.us or whatever, but it shows how rapidly, right? Where do you see this ending? I know there's been rumors of, oh, well, we'll just do the great reset. That's a whole nother show topic, right? But if you had a, if you had to guess in five years, 10 years, what's going to happen?

• 29:11Speaker 04

  So, so long as we don't keep pissing off Europe and the rest of the developed world, it's not that bad of a thing because we're the world's reserve currency. People value dollars. We're the safe haven. We're the safe haven for, you know, capital flight that would come here.

• 29:33Speaker 04

  And so, so long as, you know, people still view the US as a reliable trading partner, a reliable ally, I don't think the debt's going to have that much of an impact. Because if you look, debt to GDP has actually fallen in the first two quarters of 2025. Now, that's after it spiked during COVID to unprecedented levels. And we're still not back to pre-COVID levels. So I'm not too worried about it. The issue becomes if our credit gets downgraded by Moody's or Fitch or any of those other credit ratings agencies, or if the world starts to move away from dollars, where we start have to paying a little bit more interest on our debt, that's going to spike

• 30:18Speaker 04

  the issues with our debt because we're going to end up, the third highest payment for our debt is interest. It comes after Medicare and it comes after social security. And that shouldn't be it. And that's the worry, is if we have to pay a little bit more on our debt.

• 30:35Speaker 02

  Yeah. So if some of this tariff money was, was fiscally being used towards paying down the debt a little bit and those things, then, then even if interest rates went up, we would be leaving ourselves a little bit of wiggle room.

• 30:48Speaker 04

  Yeah, we'd be at no worse of a situation than we were pre tariffs and pre 2025. It just seems like we're gonna spend 500 billion more on military and cap credit cards at temper. It just seems like we're doing a lot of things that don't actually help and that will-

• 31:10Speaker 03

  Band-aids, medicine, but not the-

• 31:12Speaker 04

  It's not the right medicine. It's, you know, they amputated the wrong arm. It's like, whoops, should have drawn on the other one.

• 31:18Speaker 03

  Yeah. What do you, what do you see with the businesses here locally in California? You know, again, just none are coming to mind right now, but we do know there's a lot of people leaving the state. Is there any chance of any coming into Kern County? Or do you have heard of any big companies setting up here to bring more jobs?

• 31:35Speaker 04

  Yeah, so it's, it's a weird thing because if Kern County was in Texas, I think we'd be a very desirable place to live. Relatively cheap cost of living relative to the rest of the state, relatively educated population, but that's able to do both blue collar and white collar jobs. And, you know, ag and oil, we have the resources. The problem is, is we're in a high tax state that is considering even higher taxes, facing a budget deficit that's only growing. So I think you're going to continue to see an exodus out of California from the Bay Area and Los Angeles that-

• 32:15Speaker 04

  You know, before we announced the billionaire tax and before we saw the minimum wage hike again, and before we saw income tax rates rise, again, businesses were considering Kern County to relocate to, but now they're looking at it and going, why?

• 32:30Speaker 02

  Yeah.

• 32:31Speaker 04

  It's, you can still run operations in California and locate yourself in Arizona, or New Mexico, or Texas.

• 32:37Speaker 02

  Yeah.

• 32:37Speaker 04

  Or any of these other places. So I, I think we lost our opportunity to attract a lot of the talent, because we did have people leaving San Fran and LA, working remotely here in Kern County. You would naturally expect business to follow, and it just hasn't. And I think it's kind of the antipathy towards business that the state has.

• 32:58Speaker 02

  Yeah. Yeah. So you mentioned earlier inflation, and you know, it's kind of bounced around. I think it peaked out at about 9% in 2022. The target, Fed's target is around 2%, and so we're, we're higher than that. It's kind of bounced back and forth. You know, we, we used to talk about the word sticky inflation and different things. So why don't you talk a little bit about what your thoughts are on inflation? What has been sticky? What have you been surprised? What that's like stuck around that you thought would have maybe came back down? Or where do you see inflation numbers?

• 33:35Speaker 04

  Food inflation is where I'm really concerned. And food inflation has been consistently above 3%, and that's grocery store or eating at restaurants. And that, that's visible to consumers, because you're pretty much, you have to eat every day.

• 33:50Speaker 02

  Right.

• 33:50Speaker 04

  Well, hopefully you have to eat every day. Depends on if your wife is putting on a diet or not. And so that's the worrisome inflation that's kind of persistent, that's sticky. Healthcare has also been relatively persistent, relatively sticky. The only two categories in inflation that have seen declines recently are gas prices, which is again, good, because that's things you regularly see. And in the state of California, where again, we're a dollar and a half to $2 higher than the rest of the country.

• 34:27Speaker 02

  Yep.

• 34:27Speaker 04

  Finally seeing some gas prices sub $4 is a good thing. But used cars prices have plummeted.

• 34:35Speaker 04

  And I'm not relatively sure whether it's because of the tariffs on new cars, or because people aren't going out to buy cars anymore. But used car prices fell 5% in the recent inflation report. And that's $1,000 per used car. That's a heck of a savings. So what I'm watching are those three. It's the worrying part to me about inflation is how they're getting the data. Because before, in 2018, 2019, they would send people out to stores and actually log the prices

• 35:16Speaker 04

  in like a Vons or an Albertsons and then base their estimates off of that. Nowadays, they are using this fancy statistical technique called like cell imputation. They're no longer sending people out to stores and they're using historical values and then what certain metro areas are looking like. So some people say that the inflation numbers are under-reported and that inflation is closer to 3%. But Jerome Powell says it's 2.5, 2.6. So that's, I think, going to be the next big fight is how we report inflation. Because 2026, the BLS is actually changing a lot of how they report it.

• 35:59Speaker 04

  It's been a long, kind of, long-awaited change. But it's coupled with the government shutdown and Doji and you have all the conspiracy theories on the left now. You can't trust the numbers. Yeah, you can.

• 36:10Speaker 02

  Yeah. Another thing that you mentioned, the K-shaped economy. And one of the things that I read about was talking about spending. And so the wealthier Americans are spending more. And then the people, you know, in the lower income levels and different things have been spending less and it's kind of created a K-shaped economy like you mentioned. How long can that, because that's, that's maybe what's kind of propping up the economy? And it seems like that might run its course, like you can't do it forever. Wealthy Americans, you know, are maybe spending a little bit more right now because they can or whatever. But it seems like that would, would kind of have a tailing off at some point. I mean, what's your thoughts on spending?

• 36:54Speaker 04

  Yeah, I would. And consumer spending has been incredibly resilient. And it's been surprisingly resilient, but even lower income Americans spent relatively similarly on Christmas this year, when it was expected that they would probably cut down on spending. So spending is one of those things where every time I see a report that suggests that, oh, things are looking a little bit dicey because hours worked are falling and the number of people collecting unemployment benefits is rising. It's just remained resilient. So it's one of those things that's almost

• 37:35Speaker 04

  invariant to economic conditions. I do know the one thing that is driving GDP right now is AI investment. And that's driving a lot of the consumer spending. Yeah. And Jason Furman, who was on the Council of Economic Advisers way back under Obama, found that if you took AI investment out of GDP, GDP would have risen only by like 0.3, 0.4%. It's just the spending on AI data centers and the electricity. But that has the downstream effects of a lot of blue collar workers are seeing a lot of construction jobs in these areas and are able to spend. So it's one of those things where we've been talking for a while about,

• 38:20Speaker 04

  oh, at some point this gravy train has to end, you know, the probability of a recession hit 50% last year. And as of now, there's nothing in the cards that suggests we're going to see a slowdown in consumer spending, business investment, government spending, any of it. It's, we've been a surprisingly resilient economy and we've been that way since COVID.

• 38:44Speaker 03

  Awesome. I wanted to bring you in on some of the, some of the discussion here. So I made a comment prior to the break about, in my opinion, Trump should focus a little bit more on, let's get rid of algebra, trigonometry, calculus, this guy thing. And we have for high school students and a listener replied, and I appreciate the listener sharing. So I can, I can clarify a little bit. It says, I totally disagree. I'm in the construction industry and algebra taught me to solve for unknowns. Algebra and right and report writing and kindergarten coloring are things I've used daily for 40 professional years. So to clarify, there's, I absolutely think we should keep, you know, up to about a pre-algebra or very beginning level of algebra

• 39:29Speaker 03

  one. Because when you move beyond that, again, this is for the general, for the general population, and then you replace those with, so to clarify, I didn't mean, let's just ditch algebra altogether. I use algebra at work and everything. But when we start talking about solving linear equations, graphing linear equations, putting two equations together, polynomials, factoring quadratic equations, higher degree polynomials, I'm just listing through the top 10 topics that our kids are spending all this time on radicals and roots, rational expressions, logarithms, the inverse of exponentials, this is stuff that very few people learn. If, if, well, first, what's your thought on that? And then if you could

• 40:10Speaker 03

  change our education system below the, the college level, what would you want to see? Is it personal finance? Is it more economics? Is it economics taught a different way?

• 40:20Speaker 04

  So let me answer the second one first. What would I like to see more of? I'd like to see more kind of creative writing. Just give them a prompt and let them write whatever. Because that, that's really a skill that I think is getting degraded a little bit by the AI platforms where you can type in a question, it just gives you the answers. Because I think a lot of problem solving gets done when you're writing out ideas. That's what I would love to see is much more heavy focus on that creative writing. With regards to the math education, I think it's important, but I also think we do a terrible

• 40:59Speaker 04

  job telling kids why this stuff matters, or where you're gonna use this stuff. They just see, you know, a bunch of equations on the board, then they zone out, and then three years later, it's gone.

• 41:14Speaker 03

  Even as a teacher, I would research, okay, because I'm trying to more or less sell them on doing these math problems, and then I'm trying to find, okay, where is this? Because they're asking me, where is this stuff used? You know, aeronautical engineering, a very small fraction, and then the computers are doing the heavy lifting.

• 41:29Speaker 04

  Yeah.

• 41:30Speaker 03

  It's important to know how the equations work, but...

• 41:33Speaker 04

  Yeah, and so, it's, for 50, 60 years, the way we've done math education is, here's a problem, here's how to do it step by step, don't deviate from these steps, and then if there's any deviation, which is what real life is, real life is just deviation from anything, they just, it's panic. They have no idea what to do. Rather than learning how to, like, take a math problem and break it down into components and solve those components to build it up differently, it's, again, it's almost eliminating some of the, what are the functional forms, or what can you do with this polynomial, or the quadratic equation, which if you asked me to replicate it right now, it's minus b

• 42:16Speaker 04

  plus or minus the square root of something, divided by two. There's some other numbers in there. It's the way we teach this stuff, and it's hard, because, you know...

• 42:28Speaker 03

  And the kids that can't do it, man, they get so discouraged, and then they get that in their mind, I'm not a math person, and then, then, then they figure, well, I'm not a math person, so I'm not a money person, so I don't, I'm just gonna have debt, and I'm not gonna know how to pay it off. It's really unfortunate.

• 42:41Speaker 04

  It really is, because if you sit there, if you could teach algebra, telling them, you have $20 in your pocket, and the burger's $5, how many burgers can you buy? Well, that's algebra, that's just basic algebra, but no one presents algebra in that way, and then, you know, it's just, oh, I have three equations and three unknowns, and it's just like...

• 43:03Speaker 04

  The problem is, is that, you know, we built textbooks, we built an education system that didn't take into account this kind of massive and rapid technological advances. And now we're getting it and we're kind of skipping. Now kids know that they can just enter it into a computer and they'll get an answer rather than, it's the creative aspect of it. It's like thinking outside the box and we do a terrible job of teaching kids.

• 43:30Speaker 02

  I have to, I have to share a work experience that cracked me up because you hear about this stuff, but I actually worked with Kern County Roads Department for a small little window of, of, you know, my, my career path. And it cracked me up because in the roads department, you do like compaction testing on soil as they're, you know, doing asphalt. And then once, I forget if it was once a week or every other week or something like that, they would actually get all the engineers together and we would have a class like a certain morning and we'd go down to the Kern County offices and it was like a full-on math class where they were, they were going over real world math because like there's laws or rules on like the grade of a, when you, when you exit the freeway and you do

• 44:15Speaker 02

  the loop, like because of energy and if you're going a certain speed and the, the curvature of the road that it has to be and all this stuff. So it's all the math that you're talking about that, when are we ever going to use? Like every time you get on and off a freeway, you're using a math equation of how that road was built and they build it to certain specs because if it was too, too angled up or too angled down, you might fly off one side or you would be too stuck to it and it would be very difficult to make the turn. Um, you know, it's just one of those things where it like was cracking me up because every time I would drive away from that hour-long class with these engineers and we'd be going through these math problems, I'm like, well, there you go. I got my little, you know, my, my, my math calculator, you know, and I'm driving back

• 45:00Speaker 02

  to the office that I worked in, but I'm like, and I was just like a, like a intern almost. Um, and I was kind of like trying to learn that stuff because I was thinking maybe I wanted to go engineering route, you know, and you can get some pretty great jobs with the, with the county as an engineer and work your way through.

• 45:15Speaker 03

  Shout out to our listener, listening to you guys talk and, and everything like it's not that I stand corrected, but it does open my eyes to a lot more that is used, you know, getting on a, getting on a freeway on ramp, I'm going to think about that differently the next time. I don't know if you guys heard about what happened with out on White Lane where the gentleman was coming around the tur coming around the on-ramp and a and he had a keg of beer in the backseat and it it tilted over onto the car seat next to him.

• 45:46Speaker 02

  Oh.

• 45:48Speaker 03

  Yeah, it it was light beer, though.

• 45:52Speaker 03

  So.

• 45:54Speaker 03

  Let's move on.

• 45:57Speaker 02

  That didn't land. That didn't land.

• 46:00Speaker 03

  Is that a swing and a miss?

• 46:00Speaker 02

  Yeah, swing and a miss, dude, on air. I love it. So there you go, you know, not all are home runs, not all are home runs.

• 46:06Speaker 04

  Oh, no, I I I I barely hit bunts.

• 46:10Speaker 02

  Yeah. Well, here here's the thing, though, like, I like what you were saying, though, because, like, making all, you know, students go through certain levels of of math, maybe not, but absolutely, like, it did crack me up. I think I was 20 years old or something and I was I just cracked up leaving that because I'm like, you know, when am I ever going to use this math? Like, literally, I just for an hour and a half was doing math problems. It was my job. And I think what they were doing was they were trying to they invite a bunch of employees that are not engineers yet, but like, just to try to introduce them to the problems that they're doing to put together plan maps and different things to if you wanted to continue on that. Because even I think I was considered an engineer, even at the compaction testing lab,

• 46:54Speaker 02

  which is where I worked, which even that was like such a trip because it's mathematics and you have to certain moisture levels and different things that you're doing. And then you have to drop a a certain weighted stick on the, you know, and then you you bake the the dirt to do all it just it cracked me up. It was all math. It was all math problems. And, you know, it was a great job at the time. I had benefits. It was a full-time job. And for for my young, about-to-get-married family was a big, big deal. So anyways, yeah, interesting to get your your take on the education world. And I have a history in education. You just, you know, recently stepped out and became full-time advisor. So so, yeah, we we're passionate about our kids and their our future and all those things.

• 47:39Speaker 02

  So but one of the things that I was going to ask you is your opinion on like.

• 47:47Speaker 02

  Starting off Trump's presidency was Doge and cutting wasteful spending and all this stuff and it was like the big thing in the news and then it just kinda like disappeared. And, and like, it cracks me up because I'm like, I don't know what happened and it was like a weird breakup between Musk.

• 48:04Speaker 04

  Yeah, it was like a Twitter battle where he was like, "Release the files because you're in them."

• 48:09Speaker 02

  Yeah, and I don't even know what happened with it all, but at the end of the day, like, do you think, do you think some of that stuff was a, was a good thing for our economy? Was it a good thing for our government to, to get rid of some spending? I did see that government jobs is down like 9% or something. So unfortunately for your college graduates, government jobs are even harder to come by now and some people might think that's a, that's a win. Some people might, you know, step back and go, "Well, now these college graduates don't have good jobs to go into if they..." Some of them are needed, you know? I don't know if you've called a governmental agency lately. It's, you know, like, there are some people we need working jobs for different reasons, but what's, what's your

• 48:51Speaker 02

  thought on Doge and how that's transitioned a year out and it's kinda like been ghost town as far as what that even did for us?

• 48:57Speaker 04

  Yeah, I'm in general a fan of reducing government waste because government wastes a lot of money and they waste a lot of time and it's relatively poor service, especially when you get up to like the state and federal levels. Try calling like your student loan servicer and I'd rather go to the dentist every day of the week.

• 49:22Speaker 02

  DMV?

• 49:23Speaker 04

  Oh, I would, oh, hmm.

• 49:25Speaker 02

  Yeah.

• 49:26Speaker 04

  Yeah, don't get me started with the DMV. Real ID.

• 49:30Speaker 02

  I think you hit a nerve.

• 49:32Speaker 03

  I got him.

• 49:34Speaker 04

  You see the vein popping out of my forehead? But, so that was the good thing. And the problem is, is we've done it before and we did it under Clinton, we did it under Obama, we just decided it to label it something different and let in a bunch of people that really didn't know what they were doing just kinda into the systems and oops, the social security data is now gone. So...

• 50:00Speaker 04

  It's it's one of those where to me, I think the actual implementation of what Doge did ruined it for future efforts to streamline the federal government because every time from now on, you hear, we need to reduce spending, or we need to cut out waste, you're going to see just a picture of Elon doing his salutes and driving a Tesla.

• 50:28Speaker 03

  That's a good point.

• 50:30Speaker 04

  They didn't, it seems like they didn't really do anything for how much debt has still been accumulating.

• 50:38Speaker 03

  It kind of fizzled out when they had their falling out, you just don't hear about it as much, it's not as popular.

• 50:43Speaker 02

  You mentioned that the debt to GDP is not grown at as aggressive of a rate, which is good, but when you think like, oh, well, we were cutting spending with Doge, and then we have an increased income from tariffs, you would think that we would have made headlong success, like in paying down debt, and we would have made big, big strides in that area, but it seems like we're still kind of in the same boat a little bit.

• 51:12Speaker 04

  Yeah, and to me, the worry is, I know we've cut federal jobs a lot, which is good, the worry is, we've just accelerated the natural retirement process that was going to occur over the course of the year or the next year anyway, because we don't have the workforce to replace all of the aging boomers that are slowly aging out of the labor force, which is why, you know, I tell young people, don't worry, there's going to be a lot of retirement soon, jobs will open up, but you're also going to be supporting more people on Social Security and Medicare.

• 51:47Speaker 02

  Right.

• 51:48Speaker 04

  So, yeah, to me, if you want to do Doge, get someone in there who knows government systems and who is incentivized to reduce spending over a longer term timeframe, over multiple administrations, rather than someone who's tied at the hip to a single administration, because, you know, politicians don't care, because in four years, Trump will be 80.

• 52:18Speaker 04

  Four.

• 52:20Speaker 02

  I don't know if he's that old. Is he that old? Seventy-nine, eighty-three?

• 52:24Speaker 03

  He's up there. He's up there.

• 52:26Speaker 02

  Sharp as a tack.

• 52:27Speaker 03

  Oh, yeah. We got less than a minute, ten-second advice for, economic advice for, for listeners, young or old. If you had ten seconds, what would you tell them in all your experience?

• 52:36Speaker 02

  America is still the economic world power. Yeah, we just are. Yep. Well, and that's what we've always tried to say here on this, this Money Wise show. Like, we talk about some of these things. We talk about the news because it's part of all of our lives, but as much as possible, break through all that noise, break through all the junk, educate yourself, become money wise yourself, and start making smart decisions, one small decision at a time. You keep adding those up, and you can win with money. You can prepare yourself for your future, even in the middle of some economic struggles and difficulties that we do have as a country. So, thank you, Stephen. Thank you, Dr. Gearhart, for joining us. Thank you for having me.

• 53:11Speaker 03

  That was awesome.

• 53:12Speaker 02

  Yeah, thanks for coming down to the dungeon. Hey, be smart, be safe, be money wise.

• 53:22Speaker 01

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