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July 4, 2025 - Sean Hannity Show
31:06
Economic Reality Check - July 3rd, Hour 2
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If you want to be a part of the program, if you're following Jerome Powell, the Fed chair, in any way, shape, matter, or form, it is clear he does not like Donald Trump.
To me, it's gotten personal, especially on the issue of interest rates, because when you look at the economy and all of the doomsday predictions have fallen flat, and it's getting a little bit frustrating to me because what he is now,
his incredible reluctance and resistance to do anything that would be wise and smart to help the economy, it just defies logic and common sense because every measure, Trump is arguing that the Fed's key borrowing rate should be at least two percentage points lower.
I agree with him, you know.
And sure enough, predictably, Powell, you know, when you know, goes on and on repeating, regurgitating things that just never have come to fruition.
And I don't blame the president for being unhappy, you know, and it is just from a financial standpoint, from the economy standpoint.
You know, if you look at Donald Trump, you know, every prediction they made about what tariffs would do to the economy and higher inflation and massive unemployment, none of this has come true.
None of it.
The CPI measure of inflation, you know, for the 12 months ending, you know, we're now at the lowest levels we've had in four years.
Consumer confidence has never been higher.
The number of jobs available for Americans, that's never been higher.
And yet interest rates remain ridiculously high.
And by the way, the one area of the economy that is hurting as a result of it is the homebuilding industry because interest rates are so high.
Nobody's going to give up their 3% 30-year fixed rate mortgage to get a 7% or 7.5% 30-year fixed rate mortgage.
And you can't blame people for not wanting to do that.
Here's what Powell said in his announcement.
Changes to trade, immigration, fiscal, and regulatory policies continue to evolve, and their effects on the economy remain uncertain.
The effects of tariffs will depend, among other things, on their ultimate level.
Expectations of that level and thus of the related economic effects reached a peak in April and have since declined.
Even so, increases in tariffs this year are likely to push up prices and weigh on economic activity.
The effects on inflation could be short-lived, reflecting a one-time shift in the price level.
It's also possible that the inflationary effects could instead be more persistent.
Avoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and ultimately on keeping longer-term inflation expectations well anchored.
Joining us now to respond, Joe Lavornia is with us, Treasury economist, and he's here to discuss Powell's inability to step outside of his own political bias and help the American people.
He's also costing the country a fortune because we're paying the higher interest rates as well.
What's your reaction to me?
It's personal and it's political.
Your thoughts.
Hi, Sean.
Thanks very much for having me.
As a counselor to Secretary Besant, we don't want to weigh in on monetary policy, but you did raise a couple of very key points, and that is under President Trump, inflation, which was one of his primary goals on the campaign trail.
He has delivered in spades.
Inflation, as you correctly said, has come down quite dramatically and is going to continue to drop in all likelihood because of what should be imminent passage of the One Big Beautiful Bill, which will help expand the supply side of the economy and continue to lift blue-collar wages, which I'm not sure if you saw this, Sean, but the White House put out earlier in the week, are growing at the fastest rate for an initial term.
I'm assuming that I'm treating this Trump term as basically a new term because of the gap in between.
It's the fastest five-month increase in real blue-collar wages we've had on record.
And the data go back 60 years.
So there's a lot of good stuff there, and the president deserves credit for it.
You know, what I'm having a hard time understanding, and it seems personal, if you look at the comments of Powell, the economy has been resilient, and part of that is our stance.
So he's like, he thinks he runs the economy, almost like he believes he's president.
Now, he'll be out in May of 26, and frankly, from my perspective, it can't come soon enough.
I think the frustrating thing is we have to wait that long, and maybe Scott Besson, his name has been floated as a possible replacement, the Treasury Secretary, but somebody that understands the economy understands, you know, we had a target rate, for example, the inflation rate of 2%.
We're at 2.1%.
So we reached that target rate.
Joe Biden brought that number up to 9.
What, 4% or 5%?
So it definitely played, you know, raising interest rates temporarily had its place, but that time has come and gone.
And frankly, the president is just apoplectic about it, and he stuck with this guy until May of next year.
When you talk about inflation and it was at a 45-year high under President Biden and the tariffs and how inflation has come down, I mean, it's remarkable how the professional analytical community, the professional forecasters, have gotten the inflation wrong.
So what I can tell you is that, and we've seen it, how resilient the economy is and how oftentimes people, when they say certain things are going to happen, there's no question you have to have higher prices because of tariffs.
And what we've seen, of course, is the tariffs being absorbed in the margins of the foreign sellers.
And it's happened as inflation has actually come down, which is very positive.
U.S. economy, Sean, as you know, is extraordinarily resilient.
And with the bill, imminent passage of that, we should be talking about 3% growth.
And I know you've talked here about the Fed, but the other thing I want to mention, though, is when people talk about deficits, because the Treasury, you know, we...
By the way, you did see the Atlanta Fed, what, a week and a half, two weeks ago.
You know, they have projected GDP growth for the second quarter.
They were up to 4.6%.
I'm not sure where it is today.
Yeah, it's around 4%, maybe a little bit less.
It bounces around.
But Sean, here's the thing: as we talk about interest rates and debt and all these other things, the Congressional Budget Office, I believe, is just much too pessimistic a forecast.
They're assuming in the next 10 years the economy grows under 2%.
If we're going to start growing at 3% plus in the third and the second quarter, maybe more, and that is the new trajectory, which seems to me to be reasonable because under President Trump's first term, before COVID, we were growing at nearly 3%.
Since then, productivity has accelerated.
We have an AI spending boom.
This bill coming through is going to lift CapEx in an even more meaningful way.
We're going to generate faster growth, which is going to give us faster revenues.
And this is an important point because I see so much financial press that just talks about these big, large deficits with no admission that the assumed growth rate is too pessimistic.
And it's just sort of like the fear sells.
Well, the Congressional Budget Office does not exactly have the best track record.
One thing that it seems nobody is factoring in is, for example, the Reagan tax cuts or the Trump tax cuts.
What happens?
Revenues to the government increase.
They don't decrease.
And they always factor that in as a decrease.
For example, in Reagan's term, revenues to the federal government doubled.
He created 21 million new jobs.
At the time, it was the longest period of peacetime economic growth in history.
The first three years prior to COVID.
In the Trump years, the president created record low after record low unemployment for every demographic in the country: African Americans, Hispanic Americans, Asian Americans, women in the workplace, African American youth unemployment.
Gas prices never once during his first term ever got above $3 an average per gallon.
Gas prices are now down dramatically.
Small business optimism, consumer confidence is up dramatically.
We have low inflation.
And the only thing that is showing signs of trouble is directly related to the Fed's interest rate policy, and that is home building.
And there's an easy explanation for that.
Who's going to give up a would you give up a three-year, I'm sorry, a 30-year, 3% mortgage to get into a new home at double the interest rate?
You'd be doubling your payment.
It's insane.
Right.
Sure.
Now, I understand your point, Sean.
But, you know, here's the thing.
Let's take 10-year yields for a minute because I spent most of my career has been in the private sector.
And the good news, and kudos to Secretary Besson, and that is we've gotten interest rates.
You know, interest rates, the market was very fearful right around Liberation Day that shortly thereafter the 10-year yields would move up to 5%.
The good news is the economy is booming.
Market rates are in the middle to maybe slightly below their recent range.
As inflation comes down more, the inflation component of that long-term interest rate will come down.
And the good news is market interest rates can still fall with President Trump's policies.
And that will help homeowners.
And then hopefully over time, we'll see those other rates come down as well.
Well, once interest rates start coming down, it'll bring the real estate market back up, and there'll be a lot of activity.
But right now, people are going to hang on to the low interest rate mortgage that they locked in years ago.
There's one other thing that we're not factoring in here, and that is Donald Trump's commitments because of his trade policies and the threat of tariffs brought this in of over $10 trillion.
We've never had commitments like that ever in our country's history before, and that's new manufacturing inside of America, and that includes things that are beneficial towards national security, that would be pharmaceuticals and semiconductor chips, but also revitalizing automobile manufacturing in the country on top of artificial intelligence and new technologies, all of that.
I mean, aren't all these industries going to be creating high-paying career jobs for people?
Well, that's it.
That's what the president's policies are designed to do is to bring back high-value added manufacturing that pay very high wages.
And as you were giving a very accurate description of how things have been playing out, as the Treasury Secretary has said, national security and economic security are one in the same.
They're interconnected.
And we talk about interest rates and getting interest needing people want interest rates lower, which I understand.
But people should also know that the tariffs, which have not led to any inflation, also right now are generating around $200 billion at an annual rate, and that number may even be a lot higher.
We're going to get a number that we don't have the full numbers for June, but the tariffs are bringing in a lot of revenue, which also ties into the notion that the president wants to rebalance, trade, reindustrialize, as you said.
And of course, those foreign capital commitments are also quite substantial.
Yeah.
All right.
Quick break.
We'll come back more with Treasury economist Joe Lavornia is with us.
And then we'll get to your calls coming up, 800-941-Sean, if you want to be a part of the program.
We continue with Joe Lavorno talking about the economy and a very stubborn Fed chair who will be replaced in May of next year.
Can't come soon enough as far as I'm concerned.
What do you think Powell does from here on out?
Is he just going to be in this Cold War with President Trump?
And because President Trump obviously disagrees with him, he's going to show President Trump who's bossed until May of next year before we can have any hope of significantly lower interest rates.
At a minimum, I think we needed a 50 basis point reduction yesterday, in my view.
I think the economic numbers warrant that.
And I think that would be just the start.
I personally agree with the president.
I think a one basis point reduction would be appropriate too.
And I think it would have the added impact of jump-starting the economy in ways that people aren't even imagining.
And if there's one big, beautiful bill comes in and manufacturing facilities, in other words, if you build a facility, I think it's 100% you get a tax deduction in year one.
I mean, that's going to incentivize everybody to build immediately.
They're not going to wait.
Yeah, no, that's right.
Well, yes, you're exactly right, Sean.
It's 100% expensing of plants and equipment in addition to factories, which we haven't had before.
That'll be very, very supply-side constructive, meaning it's not going to cause inflation.
It'll actually bring inflation down as the economy accelerates, which is what we saw, as you mentioned earlier, under Reagan, implicitly, and also under President Trump's first term where we had effectively 3% growth prior to the pandemic and inflation was 2% or less.
Look, long-term, that all supports certainly low interest rates, no question, broadly speaking.
And I'm an optimist, so I do expect the housing market to recover over time, that affordability won't remain depressed.
The income numbers, the blue-collar boom we've highlighted is certainly very positive.
So there are a lot of good things going on, and I'm going to be hopeful, Sean, that.
Well, I mean, the added supply and the higher interest rates and lack of activities is making home buying more affordable for people.
Maybe that's certainly good.
But if you really want to stimulate the home buyer market, the single best thing you can do is you've got to get these interest rates down because they're too high.
And people simply cannot afford to pay $2,000 more for a monthly mortgage payment just because Jerome Powell has an agenda and he doesn't like Donald Trump, which is where I feel we're at here.
To me, it's gotten personal.
Am I wrong on that part?
Sean, I can't comment on that.
I mean, I'd rather not say.
I mean, I understand your point, but I'd rather not say.
Is it of a strong possibility?
Well, here's what I would say.
Again, I would say that it seems personal to me.
Well, I've not talked to the president or Chair Powell on that, but it seems to me, though, that what we have right now is an environment where we've got very good growth.
Inflation's coming down.
That by itself will pull long-term interest rates down.
You know, when we talk about housing affordability, the income part is very powerful, and that's something the president has directed all over, and that's looking good.
Home prices in some places have moderated.
But I do expect over time, Sean, that you will see affordability pick up because you'll see market-based rates come down.
I got it run, but we need interest rates down.
But, Joe, I appreciate you being here.
I really do, my friend.
God bless you.
And American people need some relief with this.
You are listening to the best of the Sean Hannity Show, and stay tuned.
More memorable moments, interesting guests, and a lot of fun coming up next.
25 now to the top of the hour of Punchline and Patriots.
That is a week from this Saturday, and that's in Clearwater and Tampa.
That is at Ruth Eckard Hall.
Tickets, very limited seats left.
Same with Fort Lauderdale.
That's the 29th day after.
If you're interested, we'd love to have you.
It's going to be irreverent, crazy, fun, and absolutely politically incorrect.
That much I can tell you.
Now, we have gone over the numbers.
They are overwhelming.
And that is, you know, if you look at even fake news CNN, you got 79% of Democrats, 79% of Independents, 83% of Republicans, 79% of all adults are saying the same thing.
And that is they oppose Iran obtaining nuclear weapons.
I think the definitive poll by Robert Cahali of Trafalgar and Insider Advantage head, Matt Towery, they did a joint poll, and the question was very pointed.
What is your opinion of President Trump's position that Iran must be prevented from developing a nuclear weapon by any means necessary?
74.4% said that they approve and agree with that.
And we can go on to the Harvard Harris poll.
85%, yeah, Tehran must never, ever get the bomb.
Now, Israel has taken out two of the three sites.
There's one site remaining, and it seems that that site, the Bordeaux site that we keep talking about, would need American assistance to make this happen.
And hence the decision that the president will have to make.
And I have every confidence that the president understands.
He's been saying since 2011 that Iran could not have a nuclear weapon.
One of the more bizarre conversations to arise out of this is, well, this is against MAGA.
Donald Trump is against forever wars.
You're right.
So am I. I'm against forever wars.
And with military technology, I don't think they're ever going to be fought the same way again.
But it's the same Donald Trump that took out Solomani on the tarmac.
And That was done and all the predictions of doom and gloom and retribution.
Any military effort has risk associated with it.
But then you have to factor in the risk of a nuclear-armed Iran, the number one state sponsor of terror that has fired hundreds of thousands of missiles.
They're firing them right now into Jerusalem, as we speak.
They've been firing into heavily civilian areas, populated civilian areas like Tel Aviv, and they have sworn to wipe Israel off the map and the United States off the map.
They have made these threats repeatedly.
But it's also the same Donald Trump that wiped out the Caliphate, the same Donald Trump that took out Baghdadi and associates.
I'm not sure how some are saying that the MAGA movement is an isolationist movement, which means no involvement at all.
It's not.
It is in no way contradictory to say that this one remaining site needs to be taken out.
And if it's the United States at a time when their air defense systems are down, it's the safest it's ever going to be.
But there's always risk with any military operation.
And take it out and forever end the threat of Iranian mullahs married to their sick converter die ideology and forever remove that threat of a modern-day Holocaust to me is basic, simple common sense.
Yeah, that also would be part of the Trump doctrine.
And Donald Trump is, it's not inconsistent if you take out those sites the way you took out Soleimani, Baghdadi, and associates, and also the ISIS Caliphate, and not have a forever war.
Nobody wants that.
I definitely don't.
Anyway, Senator Lindsey Graham, South Carolina is with us.
Senator, how are you?
Good.
Thanks a bunch for having me.
Let's get your take on all of this.
To me, it's a window of opportunity.
Their air defenses are down.
The president has been clear what his policy is.
They can't have a nuclear weapon.
He's been saying it since 2011 and hundreds of times since.
It seems like the moment is here.
Yeah, the forever war started in 1979 when the IOTO replaced the Shah.
They held our embassy personnel hostage.
Since 1979, Iran has been waging war through Ahmad Hezbollah and the Houdis against Israel.
They have American blood on their hands.
So that's the war I'd like to end.
And if you don't believe Iran would use a nuclear weapon to destroy Israel, you're not listening to what they're saying.
If you don't believe they would use a nuclear weapon to come after us, the infidel, you're not listening to what they say.
November the 4th and Iran is commonly referred to as Death to America Day.
In 1987, they made that a holiday.
That was the day they took over our embassy.
We have a military for a reason, to protect our way of life, protect our homeland, and protect our allies.
You know, when my dad was drafted in World War II, the term was called the duration.
We were going to fight until we beat the Nazis, took Berlin, and took Tokyo, and we did.
In this war, we're not going to have ground troops, and it won't last forever because we have the capability to destroy the Iranian nuclear program, working with Israel fairly quickly.
We're down to one site, deep underground, about a half a mile under the ground.
We have technology and bombs and capability.
Israel doesn't.
It is my advice to President Trump, help Israel finish the job, go all in to destroy the last nuclear site.
If we take this program on and we don't finish it, it will be a disaster.
So let's finish the job.
I agree with you, and I actually think that the Israelis have done a spectacular job on their own.
Now, we have to factor in that Iran and Iran through their proxies.
And I've been to Israel a number of times, as you have been there many, many times, many, many times more than me.
I mean, I went to one border town with Gaza at the time, and I think 2015 had been hit with 10,000 rockets in 10 years.
They have withstood Houthi rebel rockets, Hezbollah rockets, Islamic Jihad rockets, Hamas rockets, Quds forces, Iranian Revolutionary Guards forces, helped develop the October 7th attack against Israel.
They provided the weaponry for that.
They've been fomenting terror not just in the region, but around the world.
There's not a single country that wants to come to Iran's defense.
And we now find ourselves with a window of opportunity to forever remove any possibility they'd have this weapon of mass destruction married to their ideology.
Now, how is that any different than taking out Soleimani, Al-Baghdadi, and associates, or beating the Caliphate?
I don't see that as inconsistent at all.
Well, I think the, yeah, you're dead right.
The primary job of being commander-in-chief, President of the United States, is to protect us, our homeland, from existential threats, and to protect our allies.
And we have no better ally than the state of Israel.
Iran has 900 pounds of highly enriched uranium that could make about a dozen bombs if they went to the last mile.
They're at 60%.
To get to 90% is weeks, not years.
They have one civilian reactor.
They haven't used any of the enriched uranium to run that reactor.
They get their fuel from Russia.
So this is weapon-grade material in large quantity.
They've been doing this for decades, and their goal is to develop a nuclear weapons force to use as part of their ideology.
I don't think Rocketman is going to attack America.
I don't believe Putin's ambition is to destroy Israel, destroy the United States, nor do I believe that about China.
I think they're mercantile.
I think they're an adversary.
But I believe this regime is founded on a religious ideology that makes them religious Nazis.
They're being told by their version of Islam to destroy the Jewish state, to drive out the infidels and to purify Islam.
They're not elected.
It's a theocracy.
They mean what they say.
Four presidents have said Iran can't have a nuclear weapon.
It will be Donald J. Trump who makes that a reality, period.
All we need to do is help Israel finish the last site and wait and see what happens after that.
Is that in your mind, and obviously protecting our interests in the region?
Is that basically the job that you want President Trump to accomplish?
For example, there are other targets.
I mean, most of their refineries are on this one island, and you could wipe out any ability of them in the future to make money.
The Israelis could do that on their own.
They don't need our help or assistance for that.
Certainly, they can knock out their gas-powered power grid, and the entire country will be without power.
That's another easy target because the Israelis own the sky over Iran.
So, you know, once the nuclear component is out of the way, I guess at that point, it's going to be up to Israel what they decide to do in their conflict with Iran.
And frankly, with all the weapons they've fired into Israel, I wouldn't put it past them to take it all out.
Well, so here's the question for Israel and really the world.
We can destroy their infrastructure to enrich uranium.
There's one site left.
But as long as the regime is in power, they'll rebuild it over time.
And President Trump is not going to be president forever.
So the question for the world, the largest state-sponsored terrorism is Iran under U.S. law.
They have a policy to decimate Israel and to reshape the entire faith in a way to exclude us.
Convert or die is their ideology.
Wouldn't it be great for the people of Iran and the world if this regime went away and people say, well, what will come next?
Here's what I'm going to tell you.
The guy in charge wants to kill all the Jews.
He wants to kill us.
They beat a young girl to death on a bus in Iran because she didn't cover her head.
I'm willing to risk it won't be any worse than that guy.
So the bottom line is, I hope and pray that the Iranian people will know freedom.
It will be up to them to take the regime down, but Israel will not tolerate living this way anymore.
The Jews in Israel are oppressed by everybody around them.
They have lived in fear.
They have lived in an oppressive environment since its founding, October the 7th.
Children were murdered.
Women raped in front of their children.
They've had it.
They should have it.
I am tired of living this way.
To our friends in Israel, do what you have to do to be safe.
And they're making us safer.
The people they're fighting want to kill us too.
And to all these people sitting in the stands, second-guessing Trump, you have no idea what you're talking about.
You would know the difference between a Sunni and a Shia than anything.
So this is a religious theocracy.
They're fanatics.
They're dedicated to killing all the Jews and coming after us.
They mean it when they say death to Israel, death to America.
So I'm hoping and praying we take their nuclear program down.
And if Israel wants to take the regime's ability to wage war down by destroying their refineries, destroying their ability to wage war, so be it.
Well, at that point, if the United States in a joint military operation helps take out this final nuclear facility, then it really comes down to the Israelis and how far they want to go.
I don't think President Trump has not expressed any desire for regime change.
He even identified that they know where the supreme leader is, but they're not going to kill him.
But he did say, and he has said consistently for now decades, that they can't have a nuclear weapon.
And that would be in the best interest of the United States.
And at that point, the Israelis, I mean, after all that Iran has done to murder and rape, and you're right on October 7th, but it's an ongoing, never-ending, you know, missile barrage funded by Iran and their proxies.
Well, so President Trump has told the Ayatollah, if you attack American bases or interest, that will be the end of you.
That will be regime change if they come after our forces in the region.
That will be the end of the Ayatollah's.
But put yourself in Israel's shoes for a moment.
What is the right response when people lob rockets consistently at civilian populations?
They raid your country.
They murder rape children, women.
They have people hostage.
What would we do if one country, if a country sent one rocket in to America?
I have to go.
One rocket.
I've been making the same argument.
We would demand immediate military action.
Senator Lindsey Graham, appreciate you being with us.
It's going to be an interesting week ahead.
There's no doubt about it.
800-941, Sean, if you want to be a part of the program.
All right, when we come back, all things simple, man.
We'll check in with Bill O'Reilly.
We'll get to your phone calls as well.
Toll-free.
It's 800-941, Sean, if you want to be a part of the program.
Will President Trump back?
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