Moneybeat: The cost-of-living coalition

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JENNY ROUGH, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: It’s time now to talk business, markets and the economy with financial analyst and advisor David Bahnsen. David heads up the wealth management firm the Bahnsen Group, and he is here now. Good morning to you.

DAVID BAHNSEN: Good morning. Nick, good to be with you.

EICHER: David, The New York Times carried the strangest political headline of the week: Donald Trump and Zohran Mamdani—“the fascist and the communist”—suddenly acting like two guys from Queens starring in a buddy movie.

And what a movie! I was following the White House feed Friday afternoon with the two of them laughing together in the Oval Office, patting each other on the arm, batting away tough questions, and bonding over the very thing they supposedly agree on:

New York’s cost of living.

The two commiserated about sky-high utility bills, real-estate costs, and the need for more housing construction in New York—all issues Trump campaigned on, and all issues Mamdani built his own political rise around.

So Marjorie Taylor-Greene is out and Zohran Mamdani is in—left-wing socialist and the right-wing populist suddenly unified. Is there a single economic theme in here you want to comment on?

BAHNSEN: Yeah, I mean, I think that there is an economic theme behind the fact that many on the right and the left are, of course, looking to governmental solutions and governmental policy as part of the economic ills. I don’t know that the friendly rendezvous in the White House is necessarily indicative of that.

I think it has a lot to do with President Trump’s media savvy, that he didn’t want to get… you know, Mamdani is a really clever guy. He’s energetic, he’s young, he’s quick on his feet, and I don’t think President Trump wanted to go into an adversarial situation with cameras rolling with a young, media-savvy guy like Mamdani. So I think he played a little excessively nice, and I don’t know that’s necessarily just because there’s more policy overlap than I wish there were.

I think it was more everybody being careful to avoid a gotcha moment on camera. But all that said, I am concerned that there is more and more of the economic framework on the right that is actually more compatible with Mamdani, where it used to be that the economic framework of the right existed to oppose things like greater price controls, rent controls, governmental ownership of certain elements of production, things like that. So overall, I wouldn’t say I’m very encouraged by any of it.

EICHER: David, the GLP-1 gold rush seemed to hit a new peak this week. Eli Lilly — a 150-year-old Indiana company — became the first health-care firm ever to reach a trillion-dollar valuation, almost entirely on the strength of weight-loss drugs. Big Pharma is getting fat on getting Americans thin. Is this a durable economic story, or just a very expensive moment on the way to something else?

BAHNSEN: Well, look, the one that’s a bigger competitor than Louis Novo that makes Ozempic is down over 50% this year, while their sales are up, I think, 130%. So it’s actually been a debacle of a performance from those peak levels.

And Lilly is a very different story, because while it has one of these big weight loss drugs—I believe it’s called Zepbound—that is a competitor to Ozempic, Lilly is a multi-multi-drug and category pharmaceutical company, where some of these others, they’re really kind of living off of one drug, and they lack that diversification. And that’s what you’re going to end up seeing, much like what Lilly has done de novo.

Amgen has a product in development. Pfizer’s working on one. Merck is working on one. So competition ends up pushing a lot of these stock prices down, but that the medical technology exists for these different weight loss drugs is out there, and it’s created a bubble. It’s created a burst, and there’s still at this point some winners.

But no, I mean, I think that there is a lot of downward pressure to think about too, because not only are you getting pressure for reimbursements in terms of the insurance companies, but now you have competition as well, and they can’t all win at once at the same level.

EICHER: David, in Dividend Café you were pretty direct about the two stories that matter most: jobs and GDP. On jobs, you said you’re somewhere between mildly cautious and genuinely concerned—not a collapse, not a panic, just a labor market that is clearly softening.

Then on GDP, you’re equally sober: you’re expecting economic growth to come in at maybe 1.8 to 2.1 percent for 2025 … and it does fall roughly in line with the muted 2-percent trend of the post-crisis economy. Not strong, not collapsing. But a long way from the campaign promises.

If that is the trajectory, it is hard to imagine either the White House or Republicans being thrilled heading into the midterms.

BAHNSEN: No. And I would say it’s actually a little worse than that, because the big expectation was that there would be something. And so if you just sort of hold the line and it doesn’t get better, doesn’t get worse… and we already see this in the polling, by the way, that the voters do seem dissatisfied.

Now, sometimes that can just be because of impatience, or there are other factors outside of anyone’s control. But I think in this case, a lot of it is self-induced. For example, manufacturing employment is going down, and many people were told the tariffs are going to bring manufacturing jobs back. There’s less factory construction.

And it isn’t like, well, you know, we’re seeing a few of these things go backwards, but at least we’ve gotten prices lower. The year-over-year inflation rate is higher now than it was when Biden left office—not by much, but by a little. And some of those things are tariff-related.

And you know who agrees with me on that is the White House, because they’ve come out and said, okay, one of the things we’re going to do to address affordability is we’re going to get rid of the tariffs that we put on coffee and bananas and certain grocery items. And I’m very glad they’re doing it. I think they’re doing the right thing to get rid of them, but those were self-induced policy mistakes.

So the question going into 2026 is going to be what wins out in the upside opportunity of some of the foreign investment that’s supposed to be coming into the country as a result of some of these trade deals, versus the downside of constrained trade and a $300 to $350 billion higher tax on the U.S. economy from these additional tariffs. Those two things are in a tug-of-war, and I’d be very skeptical of anybody—including myself—who, if they were to claim that they know how it’s going to play out. I don’t know how it’s going to play out, but I think that that’s the tension.

And I think that that’s, as you point out, Nick, it’s in a backdrop of already a sort of unsatisfactory level of economic activity. We know the Fed’s going to be cutting rates more, but there just isn’t a great catalyst to see improvement in affordability or much pickup in economic growth. And so that muddle-through place from the baseline we’re at is going to leave some unsatisfied at this point.

EICHER: Before we go, one more thread from Dividend Café—and it loops back to that Trump–Mamdani moment: Affordability. You noted that housing remains one of the biggest constraints in the entire economy. Want to touch on that before we wrap?

BAHNSEN: Yeah, because I think that with housing—much like almost everything in Mamdani’s policy portfolio and where President Trump stands now—trying to address things going in a midterm year, one of the scariest things is that when politicians say, “Okay, we’ve got to go do something,” where sometimes what they’re going to do is going to make it worse.

And so some of the ideas that have been thrown out because of housing—every politician recognizes we have an affordability issue with housing—but then you throw out ideas like a 50-year mortgage, or you throw out Vice President Harris’s idea about supplementing down payments. These are all things that are not only going to not make it better; they will make it worse. And that’s what I get worried about.

So for example, people say groceries are too expensive, rent is too expensive in New York City, let’s go try the 1970s playbook. That all makes it worse. You have to incentivize more production, and you can’t build more housing stock when people believe they’re going to come in and take away your ability to make money with rent freezes.

We’ve talked about this before. You know they’ve made it very difficult for landlords to want to be landlords. And so on a federal policy level, I just want the administration to be careful that they don’t, in the name of doing things to address problems, do things that make it worse.

And there’s an expression that we portfolio managers have that turns the popular idiom “Don’t just stand there, do something.” Very often the best thing to do is “Don’t just do something—stand there.”

EICHER: All right. David Bahnsen—founder, managing partner, and chief investment officer of The Bahnsen Group. He writes at DividendCafe.com and at WORLD Opinions. David, hope you have a great week.

BAHNSEN: Thanks so much, Nick. Good to be with you.

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