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Trump Vows Retaliation After Two U.S. Soldiers Killed in Syria Attack; Masked ICE Agents Tackle Somali American Man in Minneapolis; Ex-Michigan Football Coach Charged with Home Invasion, Stalking; Deliberations Resume in Brian Walshe Murder Trial Monday; American Families Facing Affordability Crisis; Federal Reserve Cuts Interest Rate By Quarter Point; New Polls Show Americans Face Higher Prices While Holiday Shopping. Aired 4-5p ET

Aired December 13, 2025 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

FREDRICKA WHITFIELD, CNN HOST: It's his birthday today, 100. He's also known for classic movies like "Bye Bye Birdie" and " Chitty Chitty Bang Bang," again, favorites. Van Dyke starred in several TV shows, along with lending his name to the "Dick Van Dyke Show," another favorite, that one in the early '60s and beyond. He then went on to star in the long running show "Diagnosis: Murder" in the '90s.

During his career, Van Dyke won four Primetime Emmy Awards, a Tony, and a Grammy. And he was inducted into the Television Hall of Fame in 1995.

Happy birthday from all of us to you right here in the NEWSROOM.

ANNOUNCER: This is CNN Breaking News.

WHITFIELD: Hello again, everyone. Thank you so much for joining me. I'm Fredricka Whitfield.

And we continue to follow our breaking news. President Trump is vowing retaliation after two U.S. soldiers and a civilian interpreter were killed in an attack in central Syria earlier today. The Pentagon says they were killed in an ambush by a single ISIS gunman. Three others were wounded. Syria's national news agency says the attack happened while the soldiers were on a joint patrol with Syrian forces.

CNN correspondent Julia Benbrook is at the White House for us.

So, Julia, what are you hearing?

JULIA BENBROOK, CNN CORRESPONDENT: Yes, President Donald Trump actually spoke with us here at the White House before he went to Baltimore for the Army-Navy game. He said that he is mourning the lives lost. That includes two U.S. Army soldiers as well as one civilian interpreter. He also said that he is thinking of those who were wounded, and said that they are doing well at this point.

He called this attack an ambush. He said it was an ISIS attack against both the United States and Syria, and he promised retaliation. Take a listen.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We will retaliate. This is an ISIS attack on us and Syria. And again, we mourn the loss and we pray for them and their parents and their loved ones. Very, very sad.

(END VIDEO CLIP)

BENBROOK: Now, just moments after he made those remarks, the president reiterated that point on social media. He said that there would be, quote, "very serious retaliation." He also said that this attack took place in a dangerous part of Syria, that they do not fully control, and that Syria's president was angered by what took place.

Now, according to Syria's official national news agency, this attack happened. The U.S. soldiers came under fire while they were on a joint patrol with Syrian forces, and that U.S. helicopters intervened to help evacuate the wounded.

Now, I do want to pull up a statement from Sean Parnell. He's the chief spokesman at the Pentagon. He provided some more context here. He said, quote, "The attack occurred as the soldiers were conducting a key leader engagement. Their mission was in support of ongoing counter ISIS counterterrorism operations in the region. The soldiers' names, as well as identifying information about their units, are being withheld until 24 hours after the next of kin notification. This attack is currently under active investigation."

Now, in another separate post, the Secretary of Defense Pete Hegseth said that the attacker was killed by partner forces. He went on to say this. "Let it be known if you target Americans anywhere in the world, you will spend the rest of your brief, anxious life knowing the United States will hunt you, find you, and ruthlessly kill you."

So you have the president of the United States, as well as the secretary of defense, promising some sort of response to this -- Fred.

WHITFIELD: All right, Julia Benbrook, thank you so much.

All right. And now, newly released video showing a disturbing incident here in the U.S. in Minneapolis, where Somali American man is being chased and detained by ICE agents. The 20-year-old was then put in the back of an SUV, even though he says he told agents that he is a U.S. citizen. Minneapolis Mayor Jacob Frey has strong words for agents carrying out the Trump administration's immigration crackdown in his city.

(BEGIN VIDEO CLIP)

MAYOR JACOB FREY (D), MINNEAPOLIS: Minneapolis is not going to stand by this kind of crap. We won't stand by federal agents that are conducting this kind of pathetic operation.

(END VIDEO CLIP)

WHITFIELD: CNN's Rafael Romo is joining me now with more on what you're learning, Rafael. RAFAEL ROMO, CNN NATIONAL CORRESPONDENT: Yes, we were talking a couple

of hours ago, Fred, you and I, about how he tried and tried and tried to prove that he was a U.S. citizen, and he wouldn't -- they wouldn't let him do that. And now, by his recollection, by the detained men's own recollection, he was under federal custody for at least two hours.

[16:05:00]

And it was not until the very end, he says, that he was finally allowed to prove that he is an American citizen. The confrontation began when the 20-year-old stepped outside into the snowy Minneapolis winter weather to take his lunch break. The man, who was asked to be identified only as Mubashir says he was a masked -- he saw a masked federal officer running toward him at what he called full speed.

Within seconds, the agent tackled him, forced him into the back entryway of a restaurant, and restrained him, according to Mubashir's account and video footage of the incident.

After being handcuffed by two agents, Mubashir says one of them put him in a choke hold while he was on his knees on the snow covered street before forcing him into a gray SUV that appeared to be unmarked. Onlookers can be heard yelling out in protest. At a news conference hosted by Minneapolis Mayor Jacob Frey the day after the incident, Mubashir said he's grateful that there's video evidence of what happened.

(BEGIN VIDEO CLIP)

MUBASHIR, DETAINED BY ICE: If this is what's happening to a U.S. American citizen on camera, imagine what could happen to your loved ones when there's no one around to witness what they're doing. But thankfully, my incident was caught on cameras. It was posted all over social media. This shouldn't be happening to anyone. We shouldn't feel targeted just because we're Somalis.

(END VIDEO CLIP)

ROMO: After Mubashir made his statement in front of the cameras, Minneapolis Police Chief Brian O'Hara personally apologized to the Somali immigrant who arrived to the United States when he was 4 years old.

(BEGIN VIDEO CLIP)

CHIEF BRIAN O'HARA, MINNEAPOLIS POLICE DEPARTMENT: I apologize that this happened to you in my city with people wearing vests that say police. That's embarrassing.

(END VIDEO CLIP)

ROMO: And you may remember this, Fred, during a Cabinet meeting at the White House earlier this month, President Donald Trump described Somali immigrants as, quote, "garbage" who should go back to where they came from. Over the past few months, the Trump administration has continued its sweeping deportation push of immigrants with a surge of federal agents flooding the streets of blue cities such as of course Los Angeles, Washington, D.C., Chicago, Charlotte and, of course, New Orleans.

WHITFIELD: All right. Rafael Romo, thank you so much.

ROMO: Thank you.

WHITFIELD: All right. Former University of Michigan head football coach Sherrone Moore is out of jail today after posting bond on Friday. During his first court appearance yesterday, prosecutors charged Moore with felony home invasion, misdemeanor stalking and breaking and entering. They also released troubling details of the alleged incident that led to his arrest on Wednesday.

That arrest came just hours after the school fired him with cause, saying there was credible evidence that he was in an inappropriate relationship with a staffer. Shortly after Moore's termination, prosecutors said he confronted the staffer at her home, which led to his arrest.

CNN's Leigh Waldman is joining us right now.

Leigh, bring us up to speed.

LEIGH WALDMAN, CNN CORRESPONDENT: Well, Fred, we know that the former University of Michigan football coach, Sherrone Moore, is out on bond this weekend. He was fitted with a GPS tethered and given a strict instructions not to have any contact whatsoever with the woman who is involved in this case.

Now, we saw him appear in court there, dressed in white, his hands folded, not saying much. But let's take you through those charges. Like you mentioned, a felony charge for the home invasion. That's punishable with up to five years in prison and a $2,000 fine. A misdemeanor stalking charge and a misdemeanor breaking and illegal entry charge as well. Now, the judge entered a plea of not guilty on Moore's behalf. And we know that he's going to be back in court on January 22nd.

But let's take you through what led up to all of this. An alleged affair between Moore, who is married with three daughters, and a staffer at the University of Michigan. The prosecutor says that that woman ended the relationship that had lasted a few years on Monday, and she said that Moore began texting, calling, harassing this woman. And then she took the complaints to the University of Michigan on Wednesday.

That's when Moore was fired. And hear what the prosecutor had to say in court about what happened just moments after he was fired.

(BEGIN VIDEO CLIP)

KATI REZMIERSKI, PROSECUTOR: He then at some point soon thereafter came to her apartment in the address that is alleged in the complaint, barged his way into that apartment immediately, then proceeded to a kitchen drawer, grabbed several butter knives and a pair of kitchen scissors, and began to threaten his own life. "I'm going to kill myself. I'm going to make you watch. My blood is on your hands. You ruined my life."

(END VIDEO CLIP)

WALDMAN: Now, the prosecutor in that case went on to say that the woman involved, she was terrorized. We also have a statement from the university's interim president that he sent out to students and to staff.

[16:10:00]

It said in part, quote, "There is absolutely no tolerance for this conduct at the University of Michigan. None. I have been in close communication with the Board of Regents, and we are united in committing to doing what is right."

And Fred, sources say that this was a known relationship for years between Moore and this woman involved in this case, that many people across the university knew about it. There was an investigation by the university that led nowhere. And at this point, the university has hired an outside firm to begin this investigation.

WHITFIELD: OK. Still more to come. Leigh Waldman, thank you so much.

All right. Still to come, jury deliberations begin in the murder trial of Brian Walshe. He denies killing his wife, but admits to disposing of her body. We'll have the key moments from the trial. And later, we'll have a panel of economic experts ready to answer all of your money inquiries. You'll want to stick around for this.

(COMMERCIAL BREAK)

[16:15:38]

WHITFIELD: All right. Deliberations are set to resume Monday in the trial of a Massachusetts man accused of killing and dismembering his wife. Brian Walshe is charged with first-degree murder and faces potential life in prison. The jury, guess what, is unaware that he already pled guilty to illegally disposing of Ana Walshe's body and misleading police during the investigation.

So in closing arguments Friday, the defense said there is no proof that Walshe plotted to murder his wife, repeating the argument that Walshe found her inexplicably dead in their bed. Well, prosecutors told the jury that it defies common sense that Anna just died unexpectedly. So take a listen.

(BEGIN VIDEO CLIP)

LARRY TIPTON, DEFENSE ATTORNEY: The Commonwealth must prove to you beyond a reasonable doubt that a homicide occurred. That a killing occurred. Nothing proves that beyond a reasonable doubt on the facts and circumstances and the evidence presented to you.

There's evidence that he lied to the police. There's evidence that he searched the internet. There's evidence that he disposed of her body. But there is no proof in all of the evidence that you have heard and been presented that he ever once thought about harming the woman he loved.

ANNE YAS, ASSISTANT DISTRICT ATTORNEY: Ana Walshe dying a sudden death from natural causes defies common sense. She was in great shape. The defendant told police that Anna was a sturdy Serbian woman. Listen carefully to his recorded interviews because those are his words after her death.

(END VIDEO CLIP)

WHITFIELD: I mean, really intriguing case.

Here with me now for more legal perspective is "Court TV" anchor and former state prosecutor Julie Grant.

Great to see you. Last time we're talking, you know what, the chances looked pretty good that he was going to testify. He didn't.

JULIE GRANT, ANCHOR, COURT TV: Right.

WHITFIELD: But this threw everyone off, didn't it?

GRANT: Oh, it did. Even the judge, Fredricka, even the judge was stunned. You could hear it in her voice when she asked defense counsel, do you still intend to call your client?

WHITFIELD: Really?

GRANT: Even the way she worded it, do you still intend? And he said, no, your honor, we do not. And she said, you do not? It was -- it was a moment. Everybody is going, what? Something happened.

WHITFIELD: How important would it have been for him, for his defense? And really the burden is on the prosecution.

GRANT: Right.

WHITFIELD: But why did it seem that he might lean toward, you know, testifying, defending himself?

GRANT: Right. That's an excellent question. You know, I think it was important because he could have gotten into the evidence, the facts that his attorney floated out there in opening statements that after their lovely dinner, he goes upstairs and just finds her unresponsive in the bed. He doesn't understand what happened. He doesn't know what to do. So he then panics, and that's when he proceeds to do what we know. He definitely did dismember her, scatter her remains, and lie about it. So --

WHITFIELD: We know this because he did plead guilty.

GRANT: Correct.

WHITFIELD: To dismembering her body or, you know. But wait a minute. How is it that the jurors didn't know this?

GRANT: Great question. Because it would then prejudice them against him, knowing that he did those acts, they might say, well, once a criminal, always a criminal. They don't want those things to be held against him, and for jurors to be focusing on that. And, you know, that was a battle. You know, his defense team, of course, wanted it in because it would be favorable for them to say, look, he's owning these crimes. These crimes, yes, he did, but he didn't do the homicide.

Whereas the state was saying, you've got to keep it out so these jurors aren't hung up on that and thinking that, well, that's enough, he pleaded, that's enough. He must have done those things. And, you know, they don't want anything coming back on appeal. They want it to be cleaner.

WHITFIELD: Sure. So then what are the things that the jurors have to consider? There is some physical evidence, right, that, I mean, in terms of her death and what happened, we just still don't know the cause of death because there is no body.

GRANT: Bingo. You're exactly right. This is what the prosecutors have wrestled with, because they have to really develop a theory. Juries want a theory. They don't just want to figure it out themselves. And it's dangerous as a trial attorney if you let your jury figure it out themselves. And so here, it seems to me, based on the evidence that I listened to, Fredricka, that after this dinner, something occurred.

[16:20:01]

And from the state's point of view, it's that he decided to kill her and that it probably happened in the living room because of that rug we know about. And the jurors --

WHITFIELD: And in fact jurors wanted to see more about that. What is it that they -- what is it that they want a second look at?

GRANT: Right.

WHITFIELD: As it pertains to this rug.

GRANT: I think that the story, I think it kind of takes them back in time because you see, Ana, the victim laying on the rug, she's alive at the time so this is not a crime scene photo, to be clear.

WHITFIELD: Right.

GRANT: You know, this is when she's alive, but it shows that that rug once was in the living room of the house. It's no longer there. Why? It was found cut up in dumpsters with blood soaked all through it. And so it's part of the story, the scenario that, was there some kind of a physical altercation in that living room on the rug where he killed her? Perhaps. And then did he take that rug, roll up her body, bring it to the basement? We know the basement so investigators say is where he laid down the plastic, wore the Tyvek suit and did the dismemberment, Fred. WHITFIELD: Wow. OK, 50 witnesses, eight days of testimony. What were

the real, I guess, standouts, or were there moments where the prosecution was like, oh, yes, we got this in the bag, or maybe the defense, you know, was like, oh, no, we got this?

GRANT: Yes. You know, I think when Ana Walshe's lover testified, that was gripping because suddenly this other life that she was living came to life in the courtroom. It's one thing to hear about someone being unfaithful in their marriage, but then to see the person they were unfaithful with walking right by the defendant. And we noticed Brian Walshe got kind of flushed in the face when the lover walked by and when he would pass him, but he wouldn't make any eye contact with him, would not seem to think.

WHITFIELD: Jurors notice things like that, don't they?

GRANT: They do. They notice everything. They'll notice if your shoes were shined. They'll notice, oh, my gosh. Jurors are very perceptive. And so you can bet they were watching.

WHITFIELD: Oh, my gosh. So they're deliberating now. Nobody ever wants to predict anything. But are there any feelings about whether this is going to be a long, deliberative process? I mean, just by watching the jurors, perhaps even.

GRANT: Right. You know, and that's a tough one, because you're right. Sometimes even when you watch them, you know, Fred, it's hard to gauge. Sometimes jurors seem like they're with you. They're nodding along and seem like they're with you and then they're not.

WHITFIELD: It's amazing how jurors suddenly become like professional jurors.

GRANT: Right.

WHITFIELD: Like suddenly they know, even if it's the first time you've done it, somehow they now know how to have poker faces and be a difficult read.

GRANT: Yes, yes. So it's always hard to guess as you know.

WHITFIELD: Yes.

GRANT: I think this is anybody's case. I really do, because it was well tried. Number one. Excellent lawyers on both sides who know the law, knew how to argue. Brian Walshe was in great hands with those defense attorneys. They had a tough job defending him. I could see the jury finding this was a premeditated murder for a couple of reasons. Premeditation can happen in an instant. That quickly, he could have decided I want to kill her, and then he can't benefit legally from discarding her body.

So in in one way, the prosecution gets to really lean into that argument and say, hey, you shouldn't let him get away with this just because he dismembered her. And then from the defense side, we know there is no body. As you pointed out, no autopsy, no definitive cause of death. And they found this really narrow road to just challenge the causation and say she just suddenly died. And the jurors have to question that.

WHITFIELD: Wow. It's fascinating. OK, you keep us posted. Come back.

GRANT: Thank you.

WHITFIELD: Julie Grant.

GRANT: Always my pleasure to be with you.

WHITFIELD: Thank you so much. Appreciate it.

All right. Still to come, we're taking an in-depth look now at the economy. It impacts everybody.

(BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER: I wonder what grade you would give our economy.

TRUMP: A plus.

UNIDENTIFIED REPORTER: A plus.

TRUMP: A plus, plus, plus, plus, plus.

(END VIDEO CLIP)

WHITFIELD: That's a lot of pluses. Really? The average American, do they feel that way? They're giving the president a much lower grade in fact. A look at the affordability issue next.

(COMMERCIAL BREAK)

[16:28:22]

WHITFIELD: All right. Welcome back. Amid surging economic anxiety across the country, President Trump so far remains reluctant to talk about it. In an attempt to reassure voters ahead of next year's midterms and fight back against Democratic attacks, Trump embarked on an affordability tour this week. But instead of empathizing with voters' concerns, Trump brushed off an issue that he said he would solve upon retaking office.

(BEGIN VIDEO CLIP)

TRUMP: They say, oh, he doesn't realize prices are high. Prices are coming down very substantially, but they have a new word. You know, they always have a hoax. The new word is affordability.

(END VIDEO CLIP)

WHITFIELD: All right. Here with us now to discuss consumer spending, analyst Hitha Herzog, business journalist and host of "Full Disclosure," Roben Farzad, and executive director of the Budget Lab, Martha Gimbel. Thanks to all of you for being with us.

MARTHA GIMBEL, EXECUTIVE DIRECTOR, BUDGET LAB: Thank you for having me.

WHITFIELD: OK. So, Hitha, let's begin with you. I mean, the struggle for affordability. I mean, it is real. Everyone feels it. How should we be looking at it?

HITHA HERZOG, CONSUMER SPENDING ANALYST: I think there's only really one way to look at it. And that's the K-shaped economy. We've heard this over and over again, but both things can be true. When we hear President Trump saying, oh, the economy is fine, yet the average consumer is feeling the pinch because we go to the grocery store and find strawberries at $8 a bin and can't afford it, those two things can be true.

And the reason why is because the wealthier, the people who are higher earners, they are price agnostic. They are not price sensitive. And you have the lower income earners who are extremely price sensitive. So, yes.

[16:30:00]

Affordability is certainly an issue. But when you have higher-income earners, it's going to be less sensitive for them.

WHITFIELD: And, Martha, I mean, inflation is ticking up. I mean, contrary to what the president has been saying, now sitting at three percent. Residential electricity prices increased by 7.4 percent over the 12 months ending in September. Natural gas is nearly 50 percent more expensive than at this point last year. Grocery prices have climbed more than 30 percent since 2020. I mean, consumers do feel like there is no end in sight, is there?

MARTHA GIMBEL, EXECUTIVE DIRECTOR, THE BUDGET LAB: Probably not, unfortunately. I mean, one thing to keep in mind is that only a portion of the price increases from tariffs have been passed on to consumers. You have a lot of companies saying that they're trying to get through the holiday season and waiting for the usual repricing in January to really outright passing on a lot of those cost increases.

So, I think a lot of people may be in for a little bit of a -- I don't even want to say shock in January, because if you ask consumers, they are expecting prices to go up really substantially over the next year. And so, I think part of what's stressing out consumers is they have seen these really substantial price increases since COVID. They don't see them going anywhere. And they don't think it's going to stop anytime soon.

WHITFIELD: Right. I mean, it's kind of a -- you know, a depressing view. But yes, people are feeling rather pessimistic as opposed to feeling optimistic about what's around, you know, on the horizon. So, Roben, I mean, everywhere you turn, you know, it's going to cost you more in some capacity. So, what's your best advice on how people can stretch that dollar? I mean, I know that that is the thing everyone's always trying to do, but this seems particularly difficult. So, where does one begin?

ROBEN FARZAD, BUSINESS JOURNALIST & HOST, FULL DISCLOSURE: Gosh. I mean, have you been to an Aldi or a 24-hour Walmart? It's kind of hand-to-hand combat.

WHITFIELD: Yes.

FARZAD: Everybody's trying their best.

WHITFIELD: Yes.

FARZAD: Because wages have not kept up with inflation. I mean, even three percent, which is less than the what, nine percent peak we saw in 2022. That's still above trend. You're not seeing wage gains. In fact, there is seems to be this more stealth worry about joblessness and unemployment that's not reflected in the Bureau of Labor Statistics.

I mean, I sound like an after-school special. What am I going to say? You know, do pushups, drink milk, stay in school, save more money, and invest. And it's very coldly comforting when you just can't make basic ends meet. You see the stats out there about how many paucity of Americans that can afford a $1,000 emergency expense, and that's only feeling worse now.

WHITFIELD: Right. And then, Martha, talk about healthcare. I mean, that's always, you know, a big expense, whether you're insured or not. And then when you talk about this real chance that subsidies for Obamacare will expire at the end, you know, of this year, forcing tens of millions of recipients to pay steeper premiums, people are going to make some difficult choices.

Do they even, you know, pay those premiums? Do they go ahead and continue to embark on being covered, or do they do, you know, without? So, how might this -- these kinds of choices impact the economy overall?

GIMBEL: Before we get to healthcare, I do want to push back a little bit on the wages, not keeping up with inflation. It has actually been the case for the last year or two that they have. In the aftermath of COVID, you know, it was absolutely the case that on average, workers were falling behind. That is no longer the case. You are seeing real wage gains.

But I think one of the things that's important to keep in mind is if you're a worker, a wage increase is something you've earned. Inflation it feels like something that has happened to you. And it is really hard when you do get, you know, that wage increase, and then you go to the store. And even if you are coming out ahead to feel like it's being eaten up by inflation, is really, really hard. And I do think it's part of why people are so frustrated.

On the health care front -- FARZAD: One -- you really buy those theoretical numbers. I mean, it's BLS. I'm talking real world. You know, the federal minimum wage -- the statutory minimum wage might be something. The prevailing minimum wage now, nobody's going to work in a diner or a hotel for less than $15 an hour.

And even then, it's not enough to meet your rent nut. It's not enough to meet healthcare. It's not enough to fill the grocery cart, auto insurance, all the various other things that have gone up. Don't you see that there's a detachment from what Washington is telling us versus what we're actually feeling on the ground level?

GIMBEL: I'm not talking about, you know, whether or not people who are, you know, lower-earners in this country are earning enough. They are obviously struggling. But I do think it is not helpful to say that on average, wages are not keeping up with inflation when they are. I think we have to be really clear about the numbers that are coming out of the Bureau of Labor Statistics, which are incredibly trustworthy.

WHITFIELD: All right. Hold that thought. We're going to take a short, you know, break right now. We're going to resume with our panel. We're going to be talking a little bit more about that and interest rates when we come back.

This week's rate cut shows up on your monthly bills. Then what? And what will it mean for the housing market as well? Don't go anywhere.

[16:35:00]

(COMMERCIAL BREAK)

WHITFIELD: All right, welcome back. This week, the Federal Reserve lowered its benchmark interest rate by a quarter point. Well, some Fed officials objected, saying it should be prioritizing the high-cost of living instead of lowering rates. Chairman Jerome Powell said inflation is top of mind for the Fed.

(BEGIN VIDEO CLIP)

JEROME POWELL, FEDERAL RESERVE CHAIRMAN: We hear loud and clear how people are experiencing really costs. It's really -- it's really high costs. And a lot of that is not the current rate of inflation. A lot of that is just embedded higher costs due to higher inflation in 2022 and '23.

(END VIDEO CLIP)

[16:40:16]

WHITFIELD: Let's bring in our economic panel back with us now. Hitha Herzog, to you first. I mean, are we all going to feel the effect of a Fed rate cut? I mean, will we see it in our everyday lives?

HERZOG: I think in some ways, yes, and in some ways no. Jerome Powell was in the footnotes, said that part of the reason why they decreased the rate is because of the labor market. Because the labor market seemed unstable. There are jobs being eliminated right and left. So, they lowered that rate in hopes to ease that a little bit.

And in those Fed notes as well, they were saying that the tariffs are going to get worse before they get better. In fact, the tariff situation and the pinch that the consumer feels is going to probably hit peak in Q1 of next year and then start to get a little bit better. So, for the consumer, it's going to get worse before it gets better.

What does that mean in terms of credit cards and in terms of loans that are out there? Even credit card -- consumers with large credit card balances they may feel a little bit of relief. But, you know, it's -- like I said, the consumer -- the prices are starting to come down, but not as fast as we need them to come down. So, even if we do have a little bit of relief on those credit card balances and home loans as well as auto loans, it's not going to be enough to really feel the impact just yet.

WHITFIELD: Roben Farzad, you know, how do you see it potentially changing the landscape or not, especially for anyone who is looking for the opportunity to buy a house going into the new year?

FARZAD: Yes, the $16 trillion question for me is it --is this stimulative on balance, or is the Fed in kind of its defense going back to what neutral is, whatever normal neutral was coming out of that pandemic and the rate hikes that we had to sustain in 2022? And I think that if anything, you look at the markets right now, you look at real estate, which is tight, you look at maybe what the gold and silver markets have been telling us, do you really need stimulus in this environment? Certainly, capital holders are very happy.

You know, what he then asked -- we're here talking about people at the lower end, the working class who desperately needs that. And I was never convinced that the interest rate, it's enough of a surgical tool to help people at the lowest end where we had other things, such as the earned income tax credit or targeted fiscal stimulus, or incentives for people to hire and keep workers out there.

So, I wonder -- and I wonder how it's going to play out in the housing market, where if you've been waiting on the sidelines, if you don't want a seven percent mortgage or a 6.5 percent mortgage, and you're commencing the idea of a five, 5.5 percent mortgage, well, you're still competing with other people while prices are really high. And certainly, the stock markets have been doing well with interest rates where they have been. So, I really, really wonder about this.

WHITFIELD: Martha Gimbel -- OK, yes. Go ahead.

HERZOG: Interest rate is very high still. It's very high. I mean, five percent interest rate is not low if you think about it.

WHITFIELD: Right.

HERZOG: I mean, think about it, but it was like four --

WHITFIELD: But we're still enjoying that three percent. Right.

HERZOG: Yes. WHITFIELD: And so, Martha. Yes, go ahead, Martha. You know -- I mean, there was disagreement, you know -- you know, within the Fed, people who were like, wait a minute, why are we doing this right now? Help people understand the argument on both sides.

GIMBEL: You know, I do think that there is a strong possibility that this really accelerates inflation. You know, we've seen, yes, a weakening, but still a relatively strong labor market. Historically, speaking, layoffs have remained low. And you know, inflation is still quite high. And so, you know, I do think you saw people being really concerned that this could move prices back up even faster.

I think the other thing I really want to make sure people keep in mind is markets are a little bit skeptical of this cut, and a lot of the stuff that is happening in Washington right now. And you have seen cuts from the Federal Reserve this year, but that has not been fully reflected in mortgages because they are worried about the long-term trajectory of what the Fed is doing and what Washington is doing. And so, if you're seeing the news and thinking this is going to be so great, I'm going to see a lower mortgage rate, maybe a little, but very possibly not as much as you think, because a lot of people in the markets think that this maybe wasn't the right decision.

WHITFIELD: Yes. All right. More on the economy and how it's playing out this holiday season. Is the affordability crisis forcing families to cut back on their Christmas giving?

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[16:49:11]

WHITFIELD: All right. Welcome back. This holiday season is not shaping up to be so merry for shoppers. According to new polling from the Associated Press, more than 60 percent of Americans say they have noticed higher-than-usual prices for holiday gifts. And roughly half of Americans say it's harder than usual to afford the items that they want to give as holiday gifts.

Let's bring back our panel. Hitha, let's begin with you. I mean, you know, we see this polling and keep hearing that costs are out of control. But Black Friday sales were up this year. More than four percent. Clearly, people are still spending money for the holidays. But, you know, what's with the disconnect here?

HERZOG: And again, we go back to that K-shaped economy. It's clearly the higher earners that are pushing the buttons when it comes to spending in this economy. They're moving it forward.

The NRF reported out that they're expecting holiday spending to be around a trillion dollars, which is really great. But we have to remember that the National Retail Federation is a lobbying group. And when you look at the numbers, at least from -- not from a lobbying group, from -- but from, you know, people that are reporting this out, BCG was saying that five percent -- that spending for the holiday was going to be down five percent, and 78 percent of the American consumer is looking for cheaper alternatives. So, you're absolutely right. There is that disconnect. But we have to remember that these higher earner is the one that is spending the money on the credit cards, paying off the credit cards after the month is over, and they are not feeling the pinch from the rising prices at all. Doesn't matter if those strawberries are high. I don't know why I keep going to the price of strawberries. I just bought some shock -- sticker shock really happened here.

But also, you know, it doesn't matter what the strawberries or the iPhone. They are priced agnostic. Meanwhile, in the lower end -- lower-income earners, they are price-sensitive.

WHITFIELD: All right. So, Roben. I mean food, gifts, travel, all of it, very expensive. So, help people. Where are the areas where perhaps you can save money or, you know, pinch your pennies, so to speak?

FARZAD: I hate to be such a bearer of bad news. It's so dire. I mean, look at what people are looking down right now. If the House and Senate don't agree on some format of extending special extraordinary subsidies for the Affordable Care Act, you're going to get the enormous or you're going to anticipate the enormous sticker shock of your premiums going up.

And so, where do you cut corners after that? You had a near-death experience recently with SNAP, where people are literally recharged to recharge on their SNAP cards. Again, go to a 24-hour Walmart when, you know, people are waiting literally at midnight. 12:05. I've done stories on this to buy essentials, bananas, diapers, milk, and everything.

What are you trying to do? You're trying to save the house. If you do own a house, you're trying to make rent. You don't want to send the keys back to the bank. I mean, what are you going to do? Unsubscribe to various services on your e-mail thing. They're all -- there's only so much you can do. This is --

WHITFIELD: This is a whole lot of money. Right. Comparatively.

FARZAD: This is painful medicine -- painful medicine, especially at the lowest kind of blue-collar end of that key that he talks about.

WHITFIELD: So, Martha, while the Fed, you know, expects inflation to recede maybe to 2.4 percent next year, down from 2.9 percent. I mean, what kind of difference will that make? Or are you that hopeful, too?

GIMBEL: I am unfortunately not that hopeful. I'm very concerned about inflation next year, particularly in an environment where you may see the administration pushing for interest rate cuts that aren't necessarily warranted. You know, I do worry that we have kept trying to say that this is the end of this inflationary period, and it just keeps going.

WHITFIELD: Yes.

GIMBEL: So, you know -- and again, I come back to a lot of the price increases from tariffs have not yet been passed on to consumers. And so, I do wonder if part of the reason why you're seeing particularly strong spending right now is, you know, yes, people have the money, but also they are anticipating price increases coming. They're going out and spending. That then sends the message to merchants. They can raise prices even further. And you get into that inflationary cycle.

WHITFIELD: OK. And so, then --

FARZAD: Yes. Can I have a question for you, Martha?

WHITFIELD: Yes, go ahead, Roben.

FARZAD: Yes, I'm really curious about this. When we're comparing the inflation we saw in '22 and '23 to the worst maybe since the early '80s, didn't the Fed effectively have to hike rates so much and throw the economy into a deep recession to really break the back of that inflation for the longest time possible? And I'm not - we haven't seen any sort of deep economic pullback coming out of that. Is that necessary to break this kind of inflation? Do you need to see that kind of demand destruction for prices to finally stop increasing?

WHITFIELD: Martha?

GIMBEL: I don't -- I don't think so. And I think that this has been, you know, sort of a bad narrative that you've had. Like, we have to have a recession to bring inflation under control. I think you shouldn't do things that make inflation worse, like preemptively cutting interest rates. I don't think that you should raise tariffs.

You know, there's a range of things coming out of DC that are making affordability worse right now. But if you think about where we expected to be this year, you know, you mentioned earlier that inflation currently is about three percent. People expected it to be 2.4 right now. It's not. And that's I think largely because of actions that have been coming out of DC. And so, part of this -- all of this is a question about the economic governance that we're getting as well.

WHITFIELD: OK. And, Hitha, last word, you know. You know, what should consumers expect going into the new year? Should they be optimistic, and are you?

HERZOG: I hate to be the bearer of bad news as well. I'm not that optimistic, mostly because I think we're going to see the worst of it at the beginning of the year. I think prices to everyone's point are not really going to come down that fast. And the consumer is feeling the same way.

I think the lower-income earner has to pare down, really, bare for a pretty bad storm that's about to happen. And, you know, that sort of FOMO spending that we're seeing, right? That has to curb itself, because if people don't stop that, or at least somehow reel it in, it's really going to hit them hard, not just in Q1, but Q2 and Q3 and pretty much through the rest of 2026.

[16:55:17] WHITFIELD: All right. We'll leave it there. Thanks to all of you. This was really important and instructive. We wanted to focus this last 30 minutes of this hour to the number one thing on everybody's mind, which is the economy, their pocketbooks, you know, how much further can their pennies and dollars go and what the outlook is. And you all helped us so much really paint a very strong picture.

Martha Gimbel, Hitha Herzog, Roben Farzad, appreciate your point of view and your time today.

GIMBEL: Thanks for having me.

WHITFIELD: And thank you, everyone, for being with us. I'm Fredricka Whitfield. The CNN NEWSROOM with Jessica Dean is next.

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