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Speaker 1: One of the things I'd mind most about the president

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Speaker 1: is there are traditional nineteen sixties forms of masculinity, but

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Speaker 1: this is a bloke who's really willing to look at

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Speaker 1: another man and say, I think you're handsome.

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Speaker 2: You're beautiful, Yeah, you're beautiful of that.

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Speaker 1: Yeah. The work week may be over, but the economy

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Speaker 1: it never takes time off. I'm justin Wolpher's and this

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Speaker 1: is off the clock unwinding the week's economic years. There's

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Speaker 1: no one I would rather do it with than my

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Speaker 1: good friend, superstar economic journalist Stacy Vanix Smith.

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Speaker 2: Thank you, Justin. I'm very excited to be here with

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Speaker 2: you once again. I am a calmnist of Bloomberg Business Week,

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Speaker 2: co host of the podcast Everybody's Business, and as always,

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Speaker 2: extremely thrilled to be here with you talking economics on

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Speaker 2: a Friday.

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Speaker 1: What else we could do at the end of the week,

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Speaker 1: he so, what are we gonna do? We're going to

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Speaker 1: pick through the recent economic years and we're here to

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Speaker 1: tell the folks at home what you should actually be

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Speaker 1: concerned about, what you can safely ignore, and maybe along

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Speaker 1: the way we can find some silver linings. Stacey, We've

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Speaker 1: got to packed episode, so strap in. We're gonna start

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Speaker 1: off with the latest round of tariffs. And forgive me

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Speaker 1: if you think you've heard this episode before, it's actually

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Speaker 1: a new episode. It's a different round of tariffs. We

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Speaker 1: can talk about what makes them different, what makes them

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Speaker 1: more of the same, why maybe these are going to

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Speaker 1: stick around, And we're going to dig into the FED.

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Speaker 1: We're going to go and talk to Handsome Kevin and

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Speaker 1: see how he's doing over there, and then we'll get

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Speaker 1: back to the most recent GDP numbers. GDP stands for

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Speaker 1: gross domestic product, not gus d platypus. These numbers came

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Speaker 1: out on Thursday, so huge week for economics. What do

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Speaker 1: you reckon?

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Speaker 2: Stacy, Absolutely, and don't forget Justin. At the very end

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Speaker 2: of the show, we're going to have a little bit

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Speaker 2: of a competition. It's chart versus chart. I don't know

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Speaker 2: what possessed me to say yes to this, since you're

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Speaker 2: an economist, you spent all day looking at charts. But

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Speaker 2: I said yesterday and I think I'm gonna win. I

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Speaker 2: think I have the chart to end all charts.

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Speaker 1: I mean, the thing is chat versus chat. White for

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Speaker 1: this that wrongs with art versus art because a good

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Speaker 1: chat is art. You have the comparative literature genius. You

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Speaker 1: have that entire rights out of the brin so I

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Speaker 1: reckon you have you thought about your colors?

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Speaker 2: My color is like the color of the chart, Yeah,

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Speaker 2: the art of the chart. Yes, and I stand by

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Speaker 2: the color that I chose.

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Speaker 1: Well, so minoring a platypos economics theme.

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Speaker 2: Oh, mine are in the theme of the that the

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Speaker 2: government put them in. But I still stand by the

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Speaker 2: right and beige.

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Speaker 1: Fantastic. Let's get into it. Tell me Number one.

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Speaker 2: Tariffs all right, justin So, Okay, a lot has happened

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Speaker 2: with tariffs since we last talked. I know you've done

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Speaker 2: a bunch of videos about this already, and I'm very

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Speaker 2: excited to kind of break things down with you a

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Speaker 2: little bit. I was wondering if kind before we dive

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Speaker 2: into this, you can kind of lay out what is

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Speaker 2: going on with this leadst round of tariffs, as well

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Speaker 2: as also the kind of the Canada specific tariffs that

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Speaker 2: also happened. Can you kind of just get us up

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Speaker 2: to speed economically speaking?

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Speaker 1: Yeah, So to folks at home, strap in, because there's

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Speaker 1: a lot going on, all of it highly informed after

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Speaker 1: decades of careful research by one of the most thoughtful

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Speaker 1: administrations in our nation's history. Stacy, do you guys have

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Speaker 1: sarcasm in Idaho?

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Speaker 2: You know, Idaho is a more of an earnest place, Okay,

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Speaker 2: and I have often been accused of being too earnest,

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Speaker 2: But I live in New York, where sarcasm is just

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Speaker 2: the you know.

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Speaker 1: I'm going to give it the Idaho treatment. We have

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Speaker 1: had two sets of tariffs by an administration that has

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Speaker 1: an approach that it believes in, and if at first

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Speaker 1: you don't succeed, try try again. And so I feel

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Speaker 1: like President Trump has been talking with your father, and

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Speaker 1: so after his first round of tariffs has ruled unconstitutionally,

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Speaker 1: came back with a second round of tariffs that actually

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Speaker 1: just hit its xpery date. And now we're up to

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Speaker 1: the third round. And I'm sure your father, being a

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Speaker 1: true American, hates Canadians, and so he's got an extra

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Speaker 1: round of tariffs to just really have a go with

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Speaker 1: those terrible people north of our border.

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Speaker 2: Definitely does not heed Canadians. I forgot Comedians.

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Speaker 1: I just went back to sarcasm again. I'm not very

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Speaker 1: good at earn all right, Okay, let me try and

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Speaker 1: explain what's going on. The starting point is two starting points.

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Speaker 1: The president loves tariffs, he has a theory about why,

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Speaker 1: and the Constitution says that the Congress owns tariffs. So

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Speaker 1: the problem with that is if the Constitution says you've

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Speaker 1: got to go to Congress, there's actually, by the way,

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Speaker 1: it's not a problem, a very nice opportunity. And this

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Speaker 1: is Idaho earnest where he could just go to the

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Speaker 1: Congress and he could say, I've got a really good idea,

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Speaker 1: why don't we have tariffs, and they'd pass a law

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Speaker 1: and then we'd have the tariffs that have gone through

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Speaker 1: this system of government, and there'd be checks and balances,

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Speaker 1: and our related politicians would all weigh in. I'm just

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Speaker 1: a bill from Capitol Hill. Can you sing that for me, Stacy?

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Speaker 2: I mean no, but I know the song said you

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Speaker 2: can't do that to people.

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Speaker 1: I'm just a bill, bill from on Capitol Hill, and

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Speaker 1: I didn't grow up at America, so I don't know the rest. Okay,

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Speaker 1: that's what he could do, but he doesn't like that

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Speaker 1: because he doesn't like bills, doesn't like Capitol Hill, or

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Speaker 1: they don't like him. So what he needs to do

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Speaker 1: is he needs to find a time in the past

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Speaker 1: where Congress has said said, you know what, we want

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Speaker 1: to give the White House this power of a Tariff's

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Speaker 1: first attempt was to say it's an emergency. But the

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Speaker 1: emergency powers that didn't use the word tariff, and there's

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Speaker 1: not an emergency. The Supreme Court said all of those

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Speaker 1: first deliberation day tarifts for illegal were paying them back.

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Speaker 3: Then.

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Speaker 1: He says, we're in the middle of a balance of

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Speaker 1: payments crisis. Hey, fun fact, the United States the balance

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Speaker 1: of payments right now is zero dollars. It's been zero

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Speaker 1: dollars for many decades in a row. The balance of

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Speaker 1: payments always balances when your currency floats. That's one for

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Speaker 1: the one for the textbooks right there. Anyway, that was

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Speaker 1: a power that says he's allowed to impose tariffs for

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Speaker 1: six months. The sixth, the last day came up, and

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Speaker 1: all of a sudden, he discovered and I'm now going

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Speaker 1: to be sort of Brooklyn sarcastic if I may, he

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Speaker 1: discovered a deep or maybe I'm being Odaho Earnest, a

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Speaker 1: deep and abiding passion for the worlds oppressed people around

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Speaker 1: the world who are enslaved in forced labor, situations, and

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Speaker 1: there's nothing the President cares more about than that. What

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Speaker 1: he is discovered is that there's a power where if

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Speaker 1: the United States faces some form of unfair competition, he

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Speaker 1: can levy tariffs. So here's the theory of the case.

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Speaker 1: We're now putting tariffs on Australia, on Canada, on the

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Speaker 1: United Kingdom, on every country, on eighty countries around the

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Speaker 1: world based on this forced labor. Now, no one is

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Speaker 1: saying Australia has forced labor, which is good because we don't.

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Speaker 1: What they're saying is Australia is a bit sloppy and

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Speaker 1: might sometimes import some goods that involve forced labor, and

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Speaker 1: then they might export those to America, and it's unfair

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Speaker 1: that American workers have to compete with Australia, which might

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Speaker 1: accidentally occasionally use forced labor. By the way, it doesn't

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Speaker 1: look here's the real problem. When a grape comes across

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Speaker 1: a border, it doesn't actually say produced with forced labor

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Speaker 1: on it, and so it's very hard to figure out

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Speaker 1: what's going on. Okay, So then the President has put

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Speaker 1: tariff's on eighty countries based on the theory that they're

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Speaker 1: a bit sloppy and policing forced labor. It's great that

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Speaker 1: he does that. What this It's transparently obvious that this

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Speaker 1: is not actually about forced labor. Almost every country faces

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Speaker 1: the same tariff of ten percent, some get ten percent

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Speaker 1: or towven half percent. The difference is if you're less

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Speaker 1: sloppy on forced labor, it's a very small incentive to

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Speaker 1: actually care about the issue at all. So that's now

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Speaker 1: in place. Surprising by the way it a place to

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Speaker 1: eighty countries, you might say eighty what's going on there?

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Speaker 1: Or slightly over eight sixty economies when you include all

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Speaker 1: of the euear that's going to be eighty something. You

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Speaker 1: might say, way, only eighty something one of all the

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Speaker 1: world's countries. Will They discovered with Liberation Day that if

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Speaker 1: they try and list all the countries, sometimes they make mistakes,

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Speaker 1: like the Herd and McDonald Islands home to penguins, which

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Speaker 1: they put very severe tariffs on home literally only to penguins.

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Speaker 1: And so by.

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Speaker 2: Focus, I feel like the penguins had it come.

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Speaker 1: In they did. Son's a bitches always trying to outdress

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Speaker 1: the president, miss business casual and what is a penguin

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Speaker 1: where they think.

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Speaker 2: They are in tuxedos. Of Yeah, that's very funny, Ustards.

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Speaker 1: That's where we're at. Now here's the weird thing. It

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Speaker 1: might actually be legal because not a lawyer. Basically, the

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Speaker 1: law says you have to find evidence of unfair competition.

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Speaker 1: So then what you do is you open an investigation

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Speaker 1: and you investigate. And you'll be very surprised that when

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Speaker 1: President trumpass Howard Lutnik in the Department of Commerce and

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Speaker 1: the US Trade Representative to investigate whether something he hopes

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Speaker 1: is true is true, they come back and say it's true.

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Speaker 1: But the courts tend to give that a great deal

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Speaker 1: of difference. They think, well, presidents wouldn't just make things up.

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Speaker 1: They do very serious investigations. So it's very likely that

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Speaker 1: these will turn out to be legal. So all of

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Speaker 1: this very long story, they say, we used to have

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Speaker 1: tariffs around about ten percent. We now have tariffs around

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Speaker 1: about ten percent. How excited are you about that, Stacey?

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Speaker 2: It's really interesting. I mean, it's interesting that there's been

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Speaker 2: so much movement to stay the same. It's like a duck,

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Speaker 2: you know, it's like sort of sitting on the surface.

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Speaker 2: It's like the one constant is that we have tariffs

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Speaker 2: and that the sort of feet underneath the surface or

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Speaker 2: the reason for the tariffs. It's really interesting that it's

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Speaker 2: sort of the result its results oriented and not process oriented.

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Speaker 2: It's also interesting to sort of hear it from this

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Speaker 2: perspective because I hadn't actually really thought about it from

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Speaker 2: this way. But it's just like, I want to put

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Speaker 2: tariffs in please by any means that I need.

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Speaker 1: To, you know, And I think that's a critical part

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Speaker 1: of the economics of this. So the President actually had

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Speaker 1: a theory of the case. The theory of the case

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Speaker 1: was going to be I'm going to use tariffs as leverage,

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Speaker 1: and that's what he did with Liberation Day. He would

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Speaker 1: point at the Brits and you say, here's the tariff

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Speaker 1: coming for you. There's any one way to get out

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Speaker 1: of this, and that's to come and kiss the ring

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Speaker 1: and offer me some concessions. They pretended they came to

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Speaker 1: a deal. They didn't.

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Speaker 3: Really.

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Speaker 1: That's a different story for a different day. But that

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Speaker 1: was the idea. Now here's the thing. These tariffs come

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Speaker 1: out of an investigation. The investigation have found every country

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Speaker 1: except America is a bit sloppy when it comes to

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Speaker 1: forced labor. Now, when President Trump called the British Prime Minister.

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Speaker 1: First of all, it's a different blowke answering the phone now.

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Speaker 1: But secondly, he can't point at him and say, unless

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Speaker 1: you do a bunch of favors for me, this is

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Speaker 1: your tariff. These are basically uniform tariffs and they're based

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Speaker 1: on this false idea, which means the President now has

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Speaker 1: no when to be clear about that, no leverage against

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Speaker 1: any individual country. So what's happened is the President says

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Speaker 1: I want tariff stumps his feet, tells his lawyers to

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Speaker 1: get them for him, and they got them for him,

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Speaker 1: but they're not the ones that actually do the job

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Speaker 1: he wants to do, which is a rather way of saying,

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Speaker 1: I know this is going to be studying. This is

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Speaker 1: the dumbest set of tariff yet.

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Speaker 2: Wait, he can't individualize them.

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Speaker 1: Nope, why not because it's based on a legal foundation.

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Speaker 1: The legal foundation is unfair competition from this particular country,

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Speaker 1: and that legal foundation comes from the Commerce Department. Having

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Speaker 1: done an investigation and having found that every country is

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Speaker 1: bad on forced life.

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Speaker 2: Couldn't you say, like, oh, as it turns out the

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Speaker 2: UK isn't as bad as we thought, but Australia is

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Speaker 2: still super terrible, So we can keep Australia's tarif simply

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Speaker 2: and und So.

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Speaker 1: At some point you might hope that the lawyers. This

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Speaker 1: is where I'm glad I don't have a law degree,

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Speaker 1: because then i'd be a lawyer, but one might be

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Speaker 1: required at this point that you're absolutely right. There must

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Speaker 1: be some way that you could pretend your whole way there.

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Speaker 1: But as far as I can tell, he doesn't really.

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Speaker 1: At some point the courts are going to say this

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Speaker 1: is utterly preposterous. You just met with the British Prime

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Speaker 1: minister and he slipped you a bottle of whiskey in

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Speaker 1: a gold bar. While of a sudden, do you think

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Speaker 1: that they're good on forced labor and so? And you

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Speaker 1: could even if you weren't confident of my theory there,

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Speaker 1: And to be honest, I'm not because I'm not a lawyer.

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Speaker 1: You can actually see it in another way, which is

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Speaker 1: the President is not making phone calls. He has not

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Speaker 1: called the British Prime Minister, of the Korean or the

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Speaker 1: Australian Prime minister over and said lets negotiate over this.

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Speaker 1: So the White House is already acting as if these

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Speaker 1: are tariffs that just are going to exist no matter

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Speaker 1: what you know.

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Speaker 2: One of the things I find really interesting about the

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Speaker 2: fixation on tariffs is to me, it's it's sort of

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Speaker 2: a testament to the power of the American consumer, because

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Speaker 2: like US consumers, like essentially US buying stuff is not

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Speaker 2: only like one of the most powerful forces in the country,

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Speaker 2: I mean, it's most of the US economy. It's a

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Speaker 2: hugely powerful force in the world. It's like sixteen percent

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Speaker 2: of the global economy. And I think he figured this out,

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Speaker 2: that this is this powerful weapon that people are so

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Speaker 2: like the whole world's economy seemingly has become so dependent

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Speaker 2: on the American consumer that to threaten to cut people

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Speaker 2: off from that or to compromise that is just it's

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Speaker 2: a huge threat. I mean, it's tantamount to like a weapon,

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Speaker 2: and it's a weapon everybody's scared of, and you can

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Speaker 2: just kind of wield it at will. But it hurts

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Speaker 2: us too, I think absolutely.

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Speaker 1: When you cut off the access of American consumers to

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Speaker 1: foreign markets, that hurts folks in foreign markets and American consumers.

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Speaker 1: But what's great, Stacey, we found something we disagree on.

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Speaker 1: You have actually, I think very well described the view

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Speaker 1: of the administration. We hold the American consumers perse strings,

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Speaker 1: we can hold the world to ransom around that. You've

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Speaker 1: actually heard that very explicitly from Stephen Miller. In fact,

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Speaker 1: he gives numbers. Here's the thing that Miller misses. So

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Speaker 1: if you look at consumpt the share of global consumption

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Speaker 1: that comes to American consumers, you just gave a number.

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Speaker 1: I'm sure it's right. The American economy is definitely a

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Speaker 1: large one, but it's also one of the most closed economies.

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Speaker 1: Closed means we trade less than other countries do, and

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Speaker 1: so our share of global consumption is good, but our

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Speaker 1: share of how much are we consumers on the gloves

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Speaker 1: global market is substantially smaller. And you know, so I

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Speaker 1: think our trade share of GDP is about thirty percent.

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Speaker 1: It can be you know, twice that in other countries,

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Speaker 1: which means that the weight of American consumers is large,

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Speaker 1: but their weight in global markets is half as much.

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Speaker 1: Because the truth is, folks from Michigan buy stuff from Idaho.

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Speaker 1: They don't need to buy it from Ireland. I'm thinking

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Speaker 1: about potatoes. And because we're so big, we're doing a

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Speaker 1: lot of trade within US across states rather to cross countries.

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Speaker 1: That's one of the reasons you think about US as

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Speaker 1: being a somewhat closed economy.

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Speaker 2: I mean another thing to consider is not only maybe

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Speaker 2: are we not hurting other countries as much as we

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Speaker 2: think we are, but I feel like we're hurting ourselves.

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Speaker 2: I've talked to a lot of businesses and about this.

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Speaker 2: I mean, there's consumer prices. I think that's one place

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Speaker 2: where it crops up. But another place where it crops

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Speaker 2: up is especially small businesses just oftentimes are not operating

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Speaker 2: with the time the profit. And in fact I spoke

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Speaker 2: with there's a small business, Burlap and Barrel. They are

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Speaker 2: a spice importing business. They're one of two small businesses

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Speaker 2: suing the Trump administration. They sued over the first set

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Speaker 2: of tariffs, and one a few hundred thousand dollars, and

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Speaker 2: now they are suing again. So it's owned, it's co

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Speaker 2: owned by Ori Zoharan Ethan Frish. And so here is

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Speaker 2: what Ethan said about kind of where the cost of

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Speaker 2: the tariff's lands for his company, Burlap and Barrel. They

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Speaker 2: they're a spice company, so they import from dozens of countries.

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Speaker 4: I think this year already we've paid like what like

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Speaker 4: three hundred and fifty thousand dollars in tariffs even more.

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Speaker 4: And so this was this was it was really meaningful.

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Speaker 4: What we ended up doing is cutting costs wherever we could.

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Speaker 4: And so that ended up being in like how do

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Speaker 4: we cut costs on packaging, how do we cut costs

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Speaker 4: on shipping? What ends up happening, I think a little

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Speaker 4: bit ironically or counterintuitively, we realized is that the place

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Speaker 4: where we could cut cost was not unsourcing the spices

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Speaker 4: because they don't grow in America.

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Speaker 1: It was in our cost in America.

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Speaker 2: Yeah, so it's like not hiring when they would have

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Speaker 2: hired someone and other things like that. So it's hurting

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Speaker 2: the US economy and of course hurting their business and

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Speaker 2: the profits that they can make.

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Speaker 1: It makes a really important point there. And you know,

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Speaker 1: I haven't been polite about the Trump tariffs. I'm not

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Speaker 1: going to start now. I might have called them dumb.

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Speaker 1: Another way in which they're dumb is they're across the

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Speaker 1: board on every product. So if you had a rationale

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Speaker 1: for tariffs that you wanted to bring manufacturing back to America,

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Speaker 1: then maybe what you would want to do is tariffs

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Speaker 1: specific the sorts of manufacturing that we're more likely to do.

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Speaker 1: The joke I used to tell, I'm going to tell

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Speaker 1: it again. So now the joke I do tell is,

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Speaker 1: you know, tariffs on bananas are not going to bring

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Speaker 1: banana factories back to the United States. And that's his

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Speaker 1: point about spices. These are spices that literally aren't grown abroad.

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Speaker 1: They literally cannot do what the President wants them to do.

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Speaker 1: And so I think this comes to somewhat broadery issue,

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Speaker 1: and I want to be thoughtful and careful about this.

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Speaker 1: I think the current moment is telling us that the

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Speaker 1: administration's policy isn't working. You might be drawn from that

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Speaker 1: to conclude tariffs don't work. And even though I am

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Speaker 1: not in favor of tariffs, I want to be more

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Speaker 1: careful than that, because what we've had is a particularly

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Speaker 1: poorly designed set of tariffs. This set you can't negotiate

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Speaker 1: country by country. They're across the board, not product by product,

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Speaker 1: and then they're particularly chaotic. They're on on Monday, off

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Speaker 1: on Tuesday, on on Wednesday, off on Thursday. And the

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Speaker 1: chaos then means that no one's going to adjust their

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Speaker 1: behavior around a new law that just passed that's going

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Speaker 1: to get unpassed. The very next day. All of those

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Speaker 1: things are actually end up maximizing the harm that the

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Speaker 1: tariffs do and minimizing the benefit. So, look, I can

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Speaker 1: believe there's a world in which smart tariffs are smart.

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Speaker 1: I'm not sure it's true, but I could believe it exists.

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Speaker 1: But there's no world in which dumb tariffs are good

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Speaker 1: for us. And so if you're a pro tariff person,

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Speaker 1: I think the form of the argument you would want

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Speaker 1: to take going forward is the real problem is and

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Speaker 1: we have we haven't tried smart tariff share, and I

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Speaker 1: think there's something to say that.

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Speaker 3: Well.

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Speaker 2: Another thing that kind of came up in the very

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Speaker 2: beginning of our discussion is just all of the instability

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Speaker 2: around it, because if you're a bit trying to operate

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Speaker 2: a business, it is really hard. I mean, the tariffs

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Speaker 2: are changing all the time. They're legal, they're illegal, then

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Speaker 2: there are new ones that are that expire, now there

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Speaker 2: are other ones. So one of my very favorite conversations

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Speaker 2: about this happened with the seafood company. They import seafood

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Speaker 2: from all over the world. I think they import like

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Speaker 2: hundreds of thousands of dollars worth of seafood every year.

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Speaker 2: But margins are really thin on seafood, and obviously timing

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Speaker 2: is really of the essence. So I talked to this guy,

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Speaker 2: Nate Torch. She's the co president of Sense, which is

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Speaker 2: a sixty year old seafood importer. I think you will

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Speaker 2: enjoy what he said about tariffs, although there's a lot

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Speaker 2: of like not very funny truth in this.

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Speaker 3: We're dealing in eighty million pounds of seafood a year.

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Speaker 2: That's a lot of strength.

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Speaker 3: And so I'm just a little microcosm of the real

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Speaker 3: world global economy and imports into the United States. But

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Speaker 3: it is not making stense and I don't know what

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Speaker 3: my cost is going to be on containers coming in,

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Speaker 3: and it's unreal. It's unfair. The fact of the matter is,

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Speaker 3: I can tell you I don't know if I should

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Speaker 3: scratch my watch or whine my ass right now.

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Speaker 1: You know I'm going to scratch.

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Speaker 3: Operate a business and not know what your costed.

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Speaker 2: Anyway, which I really I feel like that is stuck

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Speaker 2: with me all this time, because you know, for small businesses,

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Speaker 2: it's just what do they do? Are the tariff's legal

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Speaker 2: or the illegal? I think the instability maybe as damaging

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Speaker 2: as the tariffs themselves.

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Speaker 1: Yeah, no, what a colorful turn of phrase. Doesn't know

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Speaker 1: whether to scratch his watch.

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Speaker 2: I'd never read that one before.

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Speaker 1: This is how I can till you've moved on from

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Speaker 1: National Public Radio, Stacey.

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Speaker 2: Oh yeah, I never would have. Yeah, I think ours

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Speaker 2: would have been right out.

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Speaker 1: Do you want to just get a few hosses out there?

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Speaker 1: Just because I bet you've had several decades.

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Speaker 2: I'm all sat but I appreciate that. I might take

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Speaker 2: you up on that later in the show.

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Speaker 1: Ah, you're worried about your dad and night Idaho, aren't you?

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Speaker 1: He raised your right. That's what I love about you. Hey, look,

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Speaker 1: I think it's actually a real Let me add one

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Speaker 1: more piece of the fire. Because what you were talking

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Speaker 1: about there was uncertainty. I don't know what's coming down

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Speaker 1: the track. It makes it hard for me to figure

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Speaker 1: out how to do a business. But I want to

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Speaker 1: mate another word. It's actually conceptually distinct. It takes a

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Speaker 1: moment to understand why it's distinct. Is tariff confusion? So

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Speaker 1: tariff certainly is. I know what it is today, but

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Speaker 1: I don't know what it is tomorrow. So I don't know.

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Speaker 1: You know what crops to sew? What raw materials to

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Speaker 1: get how many people to hire. Tariff confusion is a

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Speaker 1: different beasts. Tariff confusion is well, I need to make

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Speaker 1: a decision, but cracky, I don't know what the tariff

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Speaker 1: rate is. And I bet your bloke has a bit

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Speaker 1: of that. And I tell you why, I know that's

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Speaker 1: true because I do. So here's the wee thing. Let

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Speaker 1: me just confess this to folks at home. I've been

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Speaker 1: following this issue like right on edge, I bet you

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Speaker 1: have two Stacy. And then occasionally I find myself on

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Speaker 1: twov and someone will say, well, tell me about the

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Speaker 1: latest set of Canadian tariffs, and iody be like, yes.

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00:22:36,840 --> 00:22:38,680
Speaker 2: It's like which tariffs?

435
00:22:38,800 --> 00:22:40,199
Speaker 1: Yeah, And I think there was a new set of

436
00:22:40,200 --> 00:22:43,320
Speaker 1: Brazilian tariffs the other day. And then there's the tariffs

437
00:22:43,320 --> 00:22:46,639
Speaker 1: that are announced that the president forgets as well. And

438
00:22:46,400 --> 00:22:49,480
Speaker 1: the interesting thing is if you think about tariff confusion,

439
00:22:49,640 --> 00:22:52,720
Speaker 1: if a tariff rate of ten percent is one thing,

440
00:22:53,320 --> 00:22:55,639
Speaker 1: but instead you think if you think, well, the tariff

441
00:22:55,680 --> 00:22:58,640
Speaker 1: rate is somewhere between zero and twenty percent, and I'm

442
00:22:58,680 --> 00:23:02,000
Speaker 1: not really sure, that's a different form of paralysis. And

443
00:23:02,080 --> 00:23:03,720
Speaker 1: if what you do is have a rule of thumb,

444
00:23:03,800 --> 00:23:07,359
Speaker 1: like I reckon. Whatever feels bad is what it is

445
00:23:08,400 --> 00:23:11,240
Speaker 1: that might lead you to overrespond. There's a very interesting

446
00:23:11,280 --> 00:23:13,119
Speaker 1: piece of research about this, We might try and do

447
00:23:13,160 --> 00:23:17,600
Speaker 1: some more on this soon, which suggests that confusion believing

448
00:23:17,600 --> 00:23:20,280
Speaker 1: tariffs are high when they aren't is actually the worst

449
00:23:20,280 --> 00:23:22,680
Speaker 1: of all possible worlds. You believe they're high, so it

450
00:23:22,760 --> 00:23:26,720
Speaker 1: distorts your behavior, but they're not, so therefore it acts

451
00:23:26,720 --> 00:23:29,560
Speaker 1: like a tariff, but they're not high, which means the

452
00:23:29,560 --> 00:23:33,360
Speaker 1: government gets no revenue. So you know how I talked

453
00:23:33,400 --> 00:23:36,639
Speaker 1: earlier about the dumbest form of all tariffs. This is

454
00:23:36,800 --> 00:23:42,760
Speaker 1: literally the dumbest to believe there's a tariff that's not there.

455
00:23:42,920 --> 00:23:46,520
Speaker 1: There's no revenue, there's no bargaining power, and there's no nothing.

456
00:23:47,240 --> 00:23:50,400
Speaker 1: But the good news is we can move from talking

457
00:23:50,400 --> 00:23:54,680
Speaker 1: about dumb things to talking about handsome things. Stacy was

458
00:23:54,720 --> 00:23:56,280
Speaker 1: not particularly handsome in the years.

459
00:23:56,320 --> 00:23:58,520
Speaker 2: Today this week, I feel like you might have like

460
00:23:58,560 --> 00:24:01,160
Speaker 2: a small man crush on Worrise. Is this wrong?

461
00:24:02,240 --> 00:24:04,720
Speaker 1: I think everyone does. I mean the president does. He

462
00:24:04,760 --> 00:24:09,399
Speaker 1: said he was from Central Casting, when it's true. And

463
00:24:09,680 --> 00:24:12,960
Speaker 1: you know, the President's got two Kevin's and he needs

464
00:24:13,000 --> 00:24:15,439
Speaker 1: to keep track of them. And I one of the

465
00:24:15,480 --> 00:24:18,680
Speaker 1: things i'd mind mudged about the president is there are

466
00:24:18,720 --> 00:24:22,480
Speaker 1: traditional nineteen sixties forms of masculinity, but this is a bloke.

467
00:24:22,560 --> 00:24:24,760
Speaker 1: He's really willing to look at another man and say,

468
00:24:25,200 --> 00:24:26,760
Speaker 1: I think you're handsome, You're beautiful.

469
00:24:26,960 --> 00:24:27,960
Speaker 2: Yeah, you're beautiful.

470
00:24:27,960 --> 00:24:28,239
Speaker 3: Love that.

471
00:24:28,560 --> 00:24:29,840
Speaker 1: Yeah.

472
00:24:31,080 --> 00:24:32,920
Speaker 2: I think that we need more of that in our

473
00:24:32,960 --> 00:24:38,520
Speaker 2: central banking. So obviously, justin one of the big pieces

474
00:24:38,520 --> 00:24:43,000
Speaker 2: of news this week was interest rates, better Reserve met

475
00:24:43,640 --> 00:24:47,560
Speaker 2: and handsome. Kevin came and addressed the nation talking about

476
00:24:48,040 --> 00:24:50,719
Speaker 2: what was going to happen with interest rates. What happened

477
00:24:50,760 --> 00:24:55,280
Speaker 2: was exactly what was expected, which is interest rates didn't move.

478
00:24:55,320 --> 00:24:59,800
Speaker 2: They weren't raised, they weren't lowered, nothing. But it caused

479
00:24:59,800 --> 00:25:04,040
Speaker 2: all all kinds of drama and roiled the markets because

480
00:25:04,040 --> 00:25:08,000
Speaker 2: of like the kind of nothing that it was, which was, like,

481
00:25:09,080 --> 00:25:11,280
Speaker 2: there are twelve members of the FED that vote on

482
00:25:11,320 --> 00:25:14,119
Speaker 2: interest rates, and you get to see how many FED members,

483
00:25:14,359 --> 00:25:15,639
Speaker 2: you know, vote one way or the other, and there

484
00:25:15,640 --> 00:25:19,720
Speaker 2: were three people who dissented, and all three thought interest

485
00:25:19,800 --> 00:25:22,920
Speaker 2: rates should go up. Talk to me a little bit

486
00:25:22,920 --> 00:25:28,639
Speaker 2: about this, because I was I found this so strange

487
00:25:28,680 --> 00:25:32,320
Speaker 2: because exactly what everyone expected to happen happened. Nothing happened

488
00:25:32,359 --> 00:25:35,639
Speaker 2: with interest rates, but the fact that three people disagreed

489
00:25:35,840 --> 00:25:38,320
Speaker 2: was just seen as really concerning.

490
00:25:39,600 --> 00:25:43,560
Speaker 1: Yeah, so let me add one more facts. So you're

491
00:25:43,600 --> 00:25:45,840
Speaker 1: right that what people thought would happen happened. But actually,

492
00:25:45,840 --> 00:25:48,800
Speaker 1: if you look at markets, there's a betting market on

493
00:25:49,200 --> 00:25:51,280
Speaker 1: what the Fed's going to do. It's called Fed funds futures.

494
00:25:51,280 --> 00:25:53,320
Speaker 1: But you can think about it as culchhi for the

495
00:25:53,359 --> 00:25:56,080
Speaker 1: Fed if you want. They said there was a seventy

496
00:25:56,080 --> 00:25:58,120
Speaker 1: percent chance that the Fed would do nothing, a thirty

497
00:25:58,119 --> 00:26:01,919
Speaker 1: percent chance that it would And you might say, oh,

498
00:26:01,960 --> 00:26:04,080
Speaker 1: that seems like they really had a view, But actually,

499
00:26:04,119 --> 00:26:06,840
Speaker 1: normally before the meeting, it's like ninety nine to one.

500
00:26:07,760 --> 00:26:10,320
Speaker 1: Normally over the past few years, Jay Powell had done

501
00:26:10,400 --> 00:26:12,480
Speaker 1: such a good job of letting people know what's going

502
00:26:12,520 --> 00:26:16,360
Speaker 1: on that the actual meeting was often really boring, which

503
00:26:16,359 --> 00:26:19,480
Speaker 1: is really bad news for you. Stacey's an economics journalists,

504
00:26:19,480 --> 00:26:22,520
Speaker 1: because you have to breathlessly report we knew this would happen,

505
00:26:22,520 --> 00:26:26,399
Speaker 1: and it happened. But great thing about business journalism is

506
00:26:26,440 --> 00:26:32,359
Speaker 1: that's a great headline. So this was quite uncertain. Now

507
00:26:32,480 --> 00:26:33,960
Speaker 1: a bunch of reasons for it to be uncertain. I

508
00:26:34,000 --> 00:26:37,200
Speaker 1: think the two big ones are Actually it's kind of

509
00:26:37,200 --> 00:26:40,160
Speaker 1: hard to know what to do. I genuinely have sympathy

510
00:26:40,400 --> 00:26:45,080
Speaker 1: for my friends on the FED. The second is handsome Kevin.

511
00:26:45,359 --> 00:26:49,560
Speaker 1: He's the strong, silent type. He believes that the FED

512
00:26:49,600 --> 00:26:52,919
Speaker 1: should stop talking, and so normally Jay Power would let

513
00:26:52,960 --> 00:26:56,800
Speaker 1: out a bunch of what was that, mate?

514
00:26:57,000 --> 00:26:59,160
Speaker 2: Oh, I said, The man crush deepens.

515
00:26:59,280 --> 00:27:04,399
Speaker 1: Certain Yes, absolutely, I mean.

516
00:27:09,680 --> 00:27:12,160
Speaker 2: We're talking about the handsome.

517
00:27:11,880 --> 00:27:15,960
Speaker 1: Kevin and me. No, No, it's good because the thing

518
00:27:16,000 --> 00:27:18,439
Speaker 1: between handsome Kevin and me, it's not intellectual. It is

519
00:27:18,480 --> 00:27:22,560
Speaker 1: purely about the aesthetics, because I don't actually agree with

520
00:27:22,640 --> 00:27:26,280
Speaker 1: him on that much. So you know, man crushes can

521
00:27:26,359 --> 00:27:31,000
Speaker 1: be purely of that form. Holy smoke. You know, sometimes

522
00:27:31,040 --> 00:27:33,040
Speaker 1: I get invited to like Jackson Hole. I'm going to

523
00:27:33,119 --> 00:27:35,800
Speaker 1: be like in a room with handsome Kevin and he's

524
00:27:35,840 --> 00:27:38,920
Speaker 1: kind of like raise his eyebrows at me, and then

525
00:27:38,920 --> 00:27:42,280
Speaker 1: his staffers are going to run over. You're making my

526
00:27:42,320 --> 00:27:43,080
Speaker 1: life going.

527
00:27:43,000 --> 00:27:50,040
Speaker 2: To be handled. You're going to be handled, I think, Yeah,

528
00:27:50,119 --> 00:27:51,439
Speaker 2: I don't think.

529
00:27:51,480 --> 00:27:55,359
Speaker 1: The President and I both think he's got unbelievable boyish

530
00:27:55,400 --> 00:27:59,440
Speaker 1: good looks. Okay, so he doesn't talk, and as a result,

531
00:27:59,480 --> 00:28:01,800
Speaker 1: none of us will know what's going on. Okay, let

532
00:28:01,800 --> 00:28:03,600
Speaker 1: me come back to what you said, which is the

533
00:28:03,640 --> 00:28:06,240
Speaker 1: bond market had a meltdown. You have to be a

534
00:28:06,280 --> 00:28:09,280
Speaker 1: real nerd here, and so the timeline really matters. At

535
00:28:09,280 --> 00:28:12,400
Speaker 1: two pm they released the decision. The decision was we're

536
00:28:12,400 --> 00:28:14,679
Speaker 1: not going to raise rates. We thought it was a

537
00:28:14,720 --> 00:28:16,879
Speaker 1: seventy percent chance before the fact, and the truth is

538
00:28:16,880 --> 00:28:19,600
Speaker 1: markets who are just like, yeah, who cares. That's also

539
00:28:19,600 --> 00:28:21,920
Speaker 1: when they announced that it was seven to three, nine

540
00:28:21,960 --> 00:28:25,439
Speaker 1: to three the vote two point thirty is when Handsome

541
00:28:25,520 --> 00:28:29,879
Speaker 1: Kevin begins his press conference and what followed, and this

542
00:28:30,240 --> 00:28:33,960
Speaker 1: I don't want to make generalizations about handsome men, but

543
00:28:34,040 --> 00:28:38,880
Speaker 1: it was utterly vacuous. Handsome Kevin had said, we will

544
00:28:38,920 --> 00:28:43,360
Speaker 1: defeat inflation and I'm going to do absolutely nothing about it.

545
00:28:44,680 --> 00:28:45,680
Speaker 1: And it was incoherent.

546
00:28:46,960 --> 00:28:49,440
Speaker 2: I had a hard to hand following it, and fed

547
00:28:49,440 --> 00:28:52,400
Speaker 2: speeches are difficult to follow often, but this one I

548
00:28:52,480 --> 00:28:55,840
Speaker 2: really I did. I watched it, but I couldn't. Yeah,

549
00:28:55,920 --> 00:28:58,920
Speaker 2: it felt a little inscrutable, inscrutiny.

550
00:28:58,960 --> 00:29:03,440
Speaker 1: If I knew what that was, I would agree it's

551
00:29:03,880 --> 00:29:06,240
Speaker 1: I couldn't follow it. And he was like, what we're

552
00:29:06,280 --> 00:29:08,520
Speaker 1: going to do is we're going to listen to markets,

553
00:29:09,800 --> 00:29:12,240
Speaker 1: and the only way we listen to markets is by

554
00:29:12,320 --> 00:29:15,560
Speaker 1: not talking. And if I stop talking, then people in

555
00:29:15,600 --> 00:29:19,200
Speaker 1: the bond market will stop caring about the FED. That's wrong,

556
00:29:20,160 --> 00:29:24,360
Speaker 1: Handsome Kevin. People in bond markets still care what the

557
00:29:24,360 --> 00:29:27,000
Speaker 1: FED does because the FED sets the overnight interest rates

558
00:29:27,280 --> 00:29:29,960
Speaker 1: and that's really important for the pricing of longer term bonds.

559
00:29:30,840 --> 00:29:33,040
Speaker 1: But it used to be that they would care about

560
00:29:33,040 --> 00:29:34,480
Speaker 1: the FED, and the FED would tell them what the

561
00:29:34,520 --> 00:29:38,720
Speaker 1: FED thought. Now folks in bond markets care about the FED,

562
00:29:38,720 --> 00:29:41,800
Speaker 1: but the FED won't tell and that's created a lot

563
00:29:41,800 --> 00:29:45,440
Speaker 1: of volatility. But it hasn't solved this problem that now

564
00:29:45,480 --> 00:29:49,440
Speaker 1: the market can speak to the Fed more clearly, not

565
00:29:49,480 --> 00:29:52,200
Speaker 1: in any way that I can at all understand. And

566
00:29:52,200 --> 00:29:54,280
Speaker 1: then there were my favorite parts of the press conference

567
00:29:54,280 --> 00:29:57,280
Speaker 1: when he would be asked a direct question, You know,

568
00:29:57,800 --> 00:30:02,520
Speaker 1: inflation is high, will raise it interest rates help solve

569
00:30:02,560 --> 00:30:05,760
Speaker 1: the problem? I can tell you. You can just pick

570
00:30:05,880 --> 00:30:08,560
Speaker 1: up your favorite economics textbook, and I bet I know

571
00:30:08,880 --> 00:30:13,320
Speaker 1: that it's Stevenson Wolfers and the answer, by the way,

572
00:30:13,320 --> 00:30:15,720
Speaker 1: it's on the final you better know the answer. The

573
00:30:15,760 --> 00:30:19,080
Speaker 1: answer is higher interest rates help reduce inflation, and he

574
00:30:19,120 --> 00:30:21,520
Speaker 1: sort of says, now I've got a committee looking into it.

575
00:30:22,720 --> 00:30:26,040
Speaker 1: This didn't feel like a confident leader. This felt like

576
00:30:26,040 --> 00:30:29,240
Speaker 1: someone who campaigned for the job with a bunch of

577
00:30:29,280 --> 00:30:34,280
Speaker 1: talking points that could please both country club Republicans and

578
00:30:34,320 --> 00:30:39,360
Speaker 1: mega Republicans. But he's just repeating them now and it

579
00:30:39,400 --> 00:30:40,360
Speaker 1: all felt very empty.

580
00:30:42,240 --> 00:30:45,719
Speaker 2: Is that what got everyone's so upset that his speech

581
00:30:45,800 --> 00:30:49,480
Speaker 2: didn't clarify anything? Is that more so than the three

582
00:30:49,840 --> 00:30:50,760
Speaker 2: dissenting boots?

583
00:30:51,200 --> 00:30:54,120
Speaker 1: Yes? And the way I know that is because market's

584
00:30:54,120 --> 00:30:57,320
Speaker 1: got upset at two thirty when they've heard the vacuus,

585
00:30:57,520 --> 00:31:00,280
Speaker 1: not at two when they heard that a sense. So

586
00:31:00,320 --> 00:31:03,440
Speaker 1: you have to be watching minute by minute bond yields

587
00:31:03,520 --> 00:31:08,160
Speaker 1: as people love to do during their summer vacations. It's

588
00:31:08,200 --> 00:31:12,120
Speaker 1: not so One view is that sound evacuous? Another view

589
00:31:12,240 --> 00:31:15,840
Speaker 1: is handsome. Kevin has said I'm against inflation. And if

590
00:31:15,880 --> 00:31:18,400
Speaker 1: you remember, the concern before the fact was was this

591
00:31:18,520 --> 00:31:21,080
Speaker 1: sock puppet Kevin, the guy who's going to do what

592
00:31:21,120 --> 00:31:24,000
Speaker 1: the president wants? Or was this hawkish Kevin the guy

593
00:31:24,040 --> 00:31:27,920
Speaker 1: who hates inflation? So what's happened? He gave a really

594
00:31:27,920 --> 00:31:30,400
Speaker 1: good press conference after the first meeting. After the second one,

595
00:31:30,400 --> 00:31:32,840
Speaker 1: he said, I am hawkish Kevin. The way he said

596
00:31:32,880 --> 00:31:34,280
Speaker 1: that was we will defeat inflation.

597
00:31:34,960 --> 00:31:37,800
Speaker 2: Yes, I remember, and everyone was very reassured.

598
00:31:38,200 --> 00:31:41,080
Speaker 1: Right, he didn't say how. He didn't take a single action.

599
00:31:41,560 --> 00:31:45,040
Speaker 1: He's appointed committees. This supplow could be great at a university.

600
00:31:45,080 --> 00:31:46,880
Speaker 1: That's what we do when there are hard problems we

601
00:31:46,880 --> 00:31:50,120
Speaker 1: don't want to solve a former committee, absolutely committee of

602
00:31:50,120 --> 00:31:55,600
Speaker 1: profoundly learned people. And so what this raised, though was okay,

603
00:31:55,600 --> 00:31:59,000
Speaker 1: so we didn't actually do anything. He didn't raise rates

604
00:31:59,040 --> 00:32:02,560
Speaker 1: where the situation might call for it, and he sounded

605
00:32:02,640 --> 00:32:07,160
Speaker 1: lightly incoherent in defending that. And there's a little faint echo.

606
00:32:07,160 --> 00:32:08,600
Speaker 1: I don't want to ever stated that. There's a faint

607
00:32:08,640 --> 00:32:12,440
Speaker 1: echo of wait, is this sock puppet Kevin? And if

608
00:32:12,440 --> 00:32:14,760
Speaker 1: it is, then we've lost fed independence and that's what

609
00:32:14,880 --> 00:32:20,400
Speaker 1: really matters. So saying I'm against inflation, look mate, everyone

610
00:32:20,400 --> 00:32:24,320
Speaker 1: can say that. Doing something to show that you're against inflation,

611
00:32:24,520 --> 00:32:26,120
Speaker 1: that's what the markets were looking to hear, and they

612
00:32:26,160 --> 00:32:27,560
Speaker 1: didn't hear anything like that at all.

613
00:32:28,720 --> 00:32:34,480
Speaker 2: So was the fact that he didn't say something that

614
00:32:34,600 --> 00:32:37,440
Speaker 2: made sense that the markets got worried that maybe he

615
00:32:37,480 --> 00:32:39,560
Speaker 2: doesn't have a plan. Is it that he doesn't have

616
00:32:39,600 --> 00:32:41,840
Speaker 2: a plan or he doesn't know what he's wit. We

617
00:32:41,960 --> 00:32:43,960
Speaker 2: just don't know which Kevin, we're going to get okay.

618
00:32:44,000 --> 00:32:46,760
Speaker 1: So one problem is that markets, when I say markets,

619
00:32:46,800 --> 00:32:48,760
Speaker 1: believe markets said the only thing I actually see is

620
00:32:48,760 --> 00:32:52,440
Speaker 1: a graph of prices. So where personifying something that's not

621
00:32:52,560 --> 00:32:56,160
Speaker 1: quite that way. But I do think part of its incoherence.

622
00:32:56,200 --> 00:32:57,680
Speaker 1: But I also think part of it's like if you

623
00:32:57,720 --> 00:32:59,360
Speaker 1: say one thing, I won't do anything, then I'm not

624
00:32:59,400 --> 00:33:03,040
Speaker 1: sure I believe at all. He didn't reassure them that

625
00:33:03,040 --> 00:33:07,880
Speaker 1: he was committed to reducing inflation. Now there was an

626
00:33:07,920 --> 00:33:09,360
Speaker 1: easy way out if what he wanted to do is

627
00:33:09,440 --> 00:33:12,880
Speaker 1: keep interest rates low and make it clear that he

628
00:33:12,960 --> 00:33:15,280
Speaker 1: was going to keep inflation low. What he would have says,

629
00:33:15,520 --> 00:33:17,480
Speaker 1: I don't think I'm ready to raise rates now, but

630
00:33:17,560 --> 00:33:20,959
Speaker 1: if the following happens, I will raise rates a lot.

631
00:33:22,280 --> 00:33:25,840
Speaker 1: I guess what that's called forward guidance, And that's something

632
00:33:25,960 --> 00:33:28,760
Speaker 1: that Handsome Kevin has said he's deeply against. So he's

633
00:33:28,800 --> 00:33:31,800
Speaker 1: boxed into a corner now and there's not much and

634
00:33:32,160 --> 00:33:34,440
Speaker 1: he hasn't found his way out. There's going to be

635
00:33:34,480 --> 00:33:36,800
Speaker 1: a lot of meetings at the FARED over the next

636
00:33:36,840 --> 00:33:39,240
Speaker 1: few weeks, as they try to figure out how to

637
00:33:39,640 --> 00:33:41,959
Speaker 1: come across somewhat more coherently.

638
00:33:43,480 --> 00:33:46,800
Speaker 2: Interesting though. Yeah, I was wondering why the markets were

639
00:33:46,800 --> 00:33:48,760
Speaker 2: so upset. I mean, some people did say that it

640
00:33:48,800 --> 00:33:51,920
Speaker 2: was because the signal is that rates are going to

641
00:33:51,960 --> 00:33:56,480
Speaker 2: go up soon, because there were three dissenters and things

642
00:33:56,520 --> 00:33:58,400
Speaker 2: seemed to be kind of moving in that direction. But

643
00:33:58,560 --> 00:34:00,280
Speaker 2: when I watched the speech, I didn't get much of

644
00:34:00,320 --> 00:34:02,520
Speaker 2: an impression from it, and I guess that the real

645
00:34:02,600 --> 00:34:04,240
Speaker 2: problem was the lack of impression.

646
00:34:04,640 --> 00:34:07,480
Speaker 1: Yeah, and so the fact that long term bond yields rose,

647
00:34:07,760 --> 00:34:11,440
Speaker 1: so the interest rate over long periods, that's reflecting expectations

648
00:34:11,440 --> 00:34:14,160
Speaker 1: of higher inflation in the future, which is markets are

649
00:34:14,200 --> 00:34:18,920
Speaker 1: less convinced that it's hawkish Kevin, Okay, I know your

650
00:34:18,920 --> 00:34:22,080
Speaker 1: favorite thing in the world is data or data, depending

651
00:34:22,120 --> 00:34:23,320
Speaker 1: which country you're from.

652
00:34:23,400 --> 00:34:27,160
Speaker 2: Data, data, your data.

653
00:34:28,280 --> 00:34:31,480
Speaker 1: I have had to move from data to data and okay,

654
00:34:31,840 --> 00:34:32,920
Speaker 1: very hard for me.

655
00:34:33,040 --> 00:34:34,640
Speaker 2: But in your heart of hearts, it's data.

656
00:34:36,680 --> 00:34:38,320
Speaker 1: Now you're going to make me think about my data,

657
00:34:39,480 --> 00:34:42,480
Speaker 1: and that's a sad and difficult topic as well. How

658
00:34:42,480 --> 00:34:44,200
Speaker 1: about we just talk about gross domestic product.

659
00:34:44,920 --> 00:34:48,440
Speaker 2: Okay, that's true. Your therapist was invoked many times in

660
00:34:48,480 --> 00:34:51,200
Speaker 2: the last in the last show. So I think we can.

661
00:34:51,440 --> 00:34:53,480
Speaker 2: We can stay away from parents.

662
00:34:54,320 --> 00:34:56,319
Speaker 1: I had to pay them a licensing fee at the end.

663
00:34:58,520 --> 00:34:59,480
Speaker 2: We should bring them on.

664
00:35:00,840 --> 00:35:05,720
Speaker 1: We should. He's really good and you know, actually, Stacey,

665
00:35:05,920 --> 00:35:07,879
Speaker 1: I can. I can do an impression for you. Say,

666
00:35:08,160 --> 00:35:11,080
Speaker 1: Stacy's the latest growth domestic product numbers for the second

667
00:35:11,160 --> 00:35:13,560
Speaker 1: quarter just came out. And Stacy, how did that make

668
00:35:13,600 --> 00:35:14,080
Speaker 1: you feel?

669
00:35:16,440 --> 00:35:20,800
Speaker 2: It made me feel worried, really really worried.

670
00:35:23,120 --> 00:35:25,680
Speaker 1: Tell me more, say more.

671
00:35:27,160 --> 00:35:29,879
Speaker 2: It made me feel worried for a few reasons. One

672
00:35:30,600 --> 00:35:34,120
Speaker 2: GDP is like a very it's a very ham fisted number.

673
00:35:34,160 --> 00:35:37,319
Speaker 2: It's very imperfect. A lot of people criticize it, but

674
00:35:37,440 --> 00:35:38,200
Speaker 2: it's kind of.

675
00:35:38,120 --> 00:35:41,440
Speaker 1: A sort of like my parents flash.

676
00:35:41,920 --> 00:35:45,560
Speaker 2: Yeah. Yeah, it's like a flash judgment, you know what

677
00:35:45,600 --> 00:35:47,840
Speaker 2: I mean. It's like this quick snapshot of the economy.

678
00:35:47,840 --> 00:35:52,239
Speaker 2: How's it doing? Growth at one point five percent is

679
00:35:52,680 --> 00:35:57,480
Speaker 2: quite low. And what especially worried me, and I'm especially

680
00:35:57,520 --> 00:35:59,200
Speaker 2: excited to ask you about.

681
00:35:59,239 --> 00:35:59,479
Speaker 1: Is.

682
00:36:02,040 --> 00:36:04,279
Speaker 2: You know, there's been all this promise about AI that

683
00:36:04,280 --> 00:36:06,440
Speaker 2: that is going to start growing the economy, and there

684
00:36:06,520 --> 00:36:09,480
Speaker 2: was some talk that that's already happening. It's already improving productivity,

685
00:36:09,480 --> 00:36:11,279
Speaker 2: and things like that, well, that should be showing up

686
00:36:11,320 --> 00:36:14,279
Speaker 2: in GDP numbers if that's true, And the fact it

687
00:36:14,360 --> 00:36:17,720
Speaker 2: wasn't really worried me. It really seemed like a signal

688
00:36:17,760 --> 00:36:20,120
Speaker 2: that things are slowing down. So many mixed signals in

689
00:36:20,160 --> 00:36:24,520
Speaker 2: the economy right now that it just seemed like the

690
00:36:24,800 --> 00:36:27,600
Speaker 2: overall snapshot was just like not good. That's why I

691
00:36:27,680 --> 00:36:28,040
Speaker 2: worried me.

692
00:36:28,920 --> 00:36:32,320
Speaker 1: What about you, I'm going to agree, I'm going to

693
00:36:32,360 --> 00:36:36,560
Speaker 1: blame my mother and tell you about a bad dream

694
00:36:36,600 --> 00:36:40,880
Speaker 1: that I had. Uh okay, so one point five per

695
00:36:40,880 --> 00:36:44,440
Speaker 1: cents of bad number not bad, it's it's not great,

696
00:36:44,800 --> 00:36:48,040
Speaker 1: genuinely mediaca. And if I'd brought that home on a

697
00:36:48,040 --> 00:36:52,000
Speaker 1: school report I got enough with the therapist took, it

698
00:36:52,040 --> 00:36:55,279
Speaker 1: wouldn't have been good now, but I would have said

699
00:36:55,320 --> 00:36:57,879
Speaker 1: to my mom, the underlying fundamentals are a lot better

700
00:36:57,920 --> 00:36:59,520
Speaker 1: than that. And actually that always worked in my house

701
00:36:59,520 --> 00:37:02,560
Speaker 1: holiday I did well in English and math and poorly

702
00:37:02,600 --> 00:37:05,000
Speaker 1: in music and pe. Mom was always like, that's all right,

703
00:37:05,120 --> 00:37:08,520
Speaker 1: justin where we knew what we cared about. And actually

704
00:37:08,600 --> 00:37:12,480
Speaker 1: GDP is much the same way, which is there are

705
00:37:12,480 --> 00:37:14,520
Speaker 1: some parts where if they're doing well today, that tells

706
00:37:14,520 --> 00:37:16,240
Speaker 1: you a lot about how well we're doing in the future.

707
00:37:17,040 --> 00:37:20,040
Speaker 1: That really particularly true for consumption and investment, So spending

708
00:37:20,080 --> 00:37:23,040
Speaker 1: by businesses and spending by you and me, those actually

709
00:37:23,040 --> 00:37:27,280
Speaker 1: looked pretty good. What we had was rundown was disinvestment

710
00:37:27,320 --> 00:37:32,719
Speaker 1: in inventories. What does that mean? When a company can't

711
00:37:32,760 --> 00:37:35,080
Speaker 1: sell stuff and it leaves it in the warehouse, that's

712
00:37:35,080 --> 00:37:37,560
Speaker 1: actually called a form of investment, which for odd reasons

713
00:37:37,600 --> 00:37:39,799
Speaker 1: counts as positive economic growth. And when we get less

714
00:37:39,800 --> 00:37:44,680
Speaker 1: stuff in the warehouse, that's less investment than that, So

715
00:37:44,880 --> 00:37:46,839
Speaker 1: that tends to move up and down like crazy. That's

716
00:37:46,880 --> 00:37:49,360
Speaker 1: a big part of what's going on here. So the

717
00:37:49,440 --> 00:37:51,680
Speaker 1: headline was one point five percent, but it's a little

718
00:37:51,680 --> 00:37:53,799
Speaker 1: bit like the GPA was a little bit stronger than that.

719
00:37:54,760 --> 00:37:57,799
Speaker 1: So look, there are two ways we have to tell

720
00:37:57,840 --> 00:38:00,040
Speaker 1: stories in the modern world. One is how is this

721
00:38:00,560 --> 00:38:02,160
Speaker 1: as a serious matter, and I think this is the

722
00:38:02,200 --> 00:38:06,600
Speaker 1: economy bumped along genuinely moderate, fair enough. Then the other

723
00:38:06,800 --> 00:38:09,600
Speaker 1: is how do we And that's the truth and that's

724
00:38:09,600 --> 00:38:12,960
Speaker 1: what we should care about, But then there's our political narratives.

725
00:38:14,920 --> 00:38:19,160
Speaker 1: Commerce Secretary howdnik Wod promised US five percent growth this year.

726
00:38:19,960 --> 00:38:24,560
Speaker 1: One point five is profoundly less than five Now you

727
00:38:24,680 --> 00:38:28,440
Speaker 1: might think maybe Howard Latinik's just not very good at numbers,

728
00:38:28,840 --> 00:38:31,840
Speaker 1: and that's probably true, but relative to the sorts of

729
00:38:31,880 --> 00:38:33,359
Speaker 1: numbers we've did in promise now, other thing we saw

730
00:38:33,480 --> 00:38:35,600
Speaker 1: was through twenty twenty five, the numbers weren't great, and

731
00:38:35,600 --> 00:38:38,279
Speaker 1: we kept being told don't worry, the good stuff's coming

732
00:38:38,360 --> 00:38:41,239
Speaker 1: soon or now you know, a year and a half in,

733
00:38:42,440 --> 00:38:45,120
Speaker 1: I'm less patient than I might once have been, and

734
00:38:45,280 --> 00:38:48,480
Speaker 1: so things aren't that great. What do you think is

735
00:38:48,560 --> 00:38:51,440
Speaker 1: driving us law down there? Mate?

736
00:38:51,719 --> 00:38:55,000
Speaker 2: Well, I'm more excited to hear what you think about

737
00:38:55,040 --> 00:38:57,440
Speaker 2: that than me speculating. But I'll tell you some of.

738
00:38:57,360 --> 00:38:59,520
Speaker 1: The things, which, by the way, is what my therapist says.

739
00:39:02,120 --> 00:39:06,239
Speaker 2: Your therapist is a smart man. Yeah, I mean, I

740
00:39:06,280 --> 00:39:09,880
Speaker 2: think one of the things driving the slow down is

741
00:39:09,960 --> 00:39:12,920
Speaker 2: the uncertainty that we talked about around tariffs. I think

742
00:39:13,239 --> 00:39:16,040
Speaker 2: because it's not just tariffs, there's a lot of uncertainty

743
00:39:16,120 --> 00:39:20,319
Speaker 2: around policy right now. The Trump administration likes kind of

744
00:39:20,400 --> 00:39:25,040
Speaker 2: surprises much. I guess, like Kevin Walsh, kind of there's

745
00:39:25,120 --> 00:39:28,040
Speaker 2: lots of unexpected things happening, and I know that the

746
00:39:28,080 --> 00:39:32,239
Speaker 2: markets hate uncertainty, but also businesses do not like it.

747
00:39:32,760 --> 00:39:34,919
Speaker 2: They don't feel comfortable. I mean, if and you think

748
00:39:34,920 --> 00:39:37,279
Speaker 2: about it as a person too, if you don't know

749
00:39:37,280 --> 00:39:40,560
Speaker 2: what's gonna happen, there might be bad things on the horizon.

750
00:39:40,840 --> 00:39:42,799
Speaker 2: You save a little money, you kind of you're like, Okay,

751
00:39:42,800 --> 00:39:45,319
Speaker 2: I'm gonna keep a little powder dry. You know, I'm

752
00:39:45,360 --> 00:39:47,399
Speaker 2: going to keep a little savings just in case you're

753
00:39:47,400 --> 00:39:49,040
Speaker 2: not gonna say, I think we need to open this

754
00:39:49,080 --> 00:39:50,719
Speaker 2: new factory. I think we need to hire all these

755
00:39:50,719 --> 00:39:54,400
Speaker 2: new people. Let's tick a chance, let's expand. And I

756
00:39:54,440 --> 00:39:58,160
Speaker 2: feel like in order for that sort of expansive growth

757
00:39:58,239 --> 00:40:01,040
Speaker 2: to come into an economy, and I think it could

758
00:40:01,080 --> 00:40:03,480
Speaker 2: be in the economy because of AI and all the

759
00:40:03,520 --> 00:40:06,680
Speaker 2: promise of it, I think all the sort of fear

760
00:40:06,760 --> 00:40:12,840
Speaker 2: and uncertainty around policy things like tariffs and gas prices

761
00:40:12,880 --> 00:40:15,320
Speaker 2: and all that stuff, I think that is kind of

762
00:40:15,400 --> 00:40:17,759
Speaker 2: draining that some of the energy that would otherwise be

763
00:40:17,840 --> 00:40:20,520
Speaker 2: going into growing the economy. That's what I saw when

764
00:40:20,560 --> 00:40:22,200
Speaker 2: I saw those numbers that were in me.

765
00:40:23,239 --> 00:40:25,839
Speaker 1: Yeah, well, so then let me give the optimist version

766
00:40:25,840 --> 00:40:27,759
Speaker 1: of the story. And I do think both sides are true.

767
00:40:28,480 --> 00:40:30,040
Speaker 1: I suspect you're going to agree with me on this,

768
00:40:30,120 --> 00:40:33,360
Speaker 1: which is there's lots of policy related reasons to worry.

769
00:40:33,440 --> 00:40:37,840
Speaker 1: There's war, there's a trade war, there's a new scandal

770
00:40:37,840 --> 00:40:42,560
Speaker 1: every other day, Boom boom. Despite all that, the economy

771
00:40:42,680 --> 00:40:45,680
Speaker 1: sort of bumping around with economic growth round about two percent.

772
00:40:46,480 --> 00:40:49,560
Speaker 1: The unemployment rate is remarkably stable. So I think we're

773
00:40:49,600 --> 00:40:53,360
Speaker 1: seeing actually a remarkably resilient American economy in the face

774
00:40:53,400 --> 00:40:57,160
Speaker 1: of those shocks. That's the optimist view. The pessimist view

775
00:40:57,320 --> 00:41:01,600
Speaker 1: is is building data centers really broad based economic growth

776
00:41:02,600 --> 00:41:05,520
Speaker 1: and how much of what's going on is about that?

777
00:41:06,280 --> 00:41:09,200
Speaker 1: And that, Stacy, is how we're going to segue to.

778
00:41:10,200 --> 00:41:12,040
Speaker 1: You wanted to do art of the chart. You wanted

779
00:41:12,040 --> 00:41:15,279
Speaker 1: some sort of a competition charts chart.

780
00:41:15,520 --> 00:41:18,719
Speaker 2: What are we competing for? I think those pillows behind you,

781
00:41:19,080 --> 00:41:22,200
Speaker 2: I am for really coveting your platypus pillows.

782
00:41:23,160 --> 00:41:28,600
Speaker 1: March bet you well, no, it just you know, I

783
00:41:28,760 --> 00:41:32,040
Speaker 1: just I just love the platypus. I just love seeing

784
00:41:32,040 --> 00:41:35,120
Speaker 1: Gussie makes me happy. So, Stacy, that one, right, which

785
00:41:35,120 --> 00:41:37,040
Speaker 1: one do you want? The white one or the green one?

786
00:41:38,000 --> 00:41:42,120
Speaker 2: Like the partier one. Yeah, yeah, it's because it's like

787
00:41:42,160 --> 00:41:44,239
Speaker 2: a logo. It's like the Apple logo or something, you

788
00:41:44,280 --> 00:41:45,839
Speaker 2: know what, It's like if you know, you know.

789
00:41:46,360 --> 00:41:48,360
Speaker 1: Just like that. In fact, that was produced by the

790
00:41:48,400 --> 00:41:51,120
Speaker 1: exact same designer who did the Apple logo.

791
00:41:51,520 --> 00:41:53,759
Speaker 2: Maybe I thought so I was looking at it.

792
00:41:53,880 --> 00:41:57,160
Speaker 1: Yes, I'm willing to bet you that pillow on chart

793
00:41:57,239 --> 00:42:00,960
Speaker 1: versus chart, we're going to see your couch totally totally different.

794
00:42:01,040 --> 00:42:03,680
Speaker 2: So has these people going to like vote on this?

795
00:42:03,800 --> 00:42:05,560
Speaker 2: How are we going to know who wins the pillow?

796
00:42:06,120 --> 00:42:09,759
Speaker 1: I mean I could just judge it myself. I could say,

797
00:42:09,840 --> 00:42:12,600
Speaker 1: whose child risky?

798
00:42:12,760 --> 00:42:14,719
Speaker 2: And wait, what do you get if you win? You

799
00:42:14,840 --> 00:42:16,920
Speaker 2: just get to keep your pillow. That doesn't feel quite right.

800
00:42:17,239 --> 00:42:19,120
Speaker 2: I can send you peanut butter cups, but I think

801
00:42:19,120 --> 00:42:20,160
Speaker 2: you might be set up there.

802
00:42:20,719 --> 00:42:23,600
Speaker 1: No, actually I really like them. They're really good.

803
00:42:24,000 --> 00:42:25,279
Speaker 3: I know.

804
00:42:27,120 --> 00:42:30,080
Speaker 1: If you can find me some king size races, that's

805
00:42:30,120 --> 00:42:33,040
Speaker 1: your side of it done. But six of them, not

806
00:42:33,160 --> 00:42:34,120
Speaker 1: just like two or three.

807
00:42:35,400 --> 00:42:37,239
Speaker 2: I'll set you up for this for the rest of

808
00:42:37,239 --> 00:42:37,720
Speaker 2: the summer.

809
00:42:38,320 --> 00:42:40,640
Speaker 1: Oh that might need more than six months. That's going

810
00:42:40,680 --> 00:42:43,480
Speaker 1: to get me through two days. But those things are spectacular.

811
00:42:43,719 --> 00:42:46,000
Speaker 1: We had people in the comments so like, justin, You've

812
00:42:46,000 --> 00:42:48,040
Speaker 1: got to stop going on about this. It's so obvious

813
00:42:48,040 --> 00:42:52,319
Speaker 1: your advertising and I'm not it's just Stacey changing my life.

814
00:42:52,600 --> 00:42:54,680
Speaker 2: That's one peanut butter cup at a time. That's what

815
00:42:54,719 --> 00:42:59,879
Speaker 2: I do. I bring. I bring joy and a lot

816
00:42:59,880 --> 00:43:00,959
Speaker 2: of calories into people.

817
00:43:00,960 --> 00:43:03,200
Speaker 1: Okay, here's what we're going to do. My producer Megan

818
00:43:03,280 --> 00:43:06,360
Speaker 1: is going to post a poll on YouTube and substack

819
00:43:06,440 --> 00:43:09,520
Speaker 1: who's got the best chart? And if you don't have

820
00:43:09,560 --> 00:43:13,319
Speaker 1: access to YouTube or substack, that's at Platypus Economics, then

821
00:43:13,480 --> 00:43:16,080
Speaker 1: just leave a comment and Megan will make sure that

822
00:43:16,120 --> 00:43:20,040
Speaker 1: she adds your vote to the most important delection of

823
00:43:20,200 --> 00:43:22,680
Speaker 1: our lifetimes. So who's going first?

824
00:43:22,680 --> 00:43:26,279
Speaker 2: I see, I want to go first because I do

825
00:43:26,320 --> 00:43:28,920
Speaker 2: think it's quite an elegant segue out of our last conversation.

826
00:43:29,480 --> 00:43:35,480
Speaker 2: Here's my chart. Oh it's GDP, what we were just

827
00:43:35,560 --> 00:43:38,640
Speaker 2: talking about. So I thought it was like very helpful

828
00:43:38,760 --> 00:43:42,680
Speaker 2: to take a look at the GDP journey that our

829
00:43:42,800 --> 00:43:46,680
Speaker 2: economy has been on. So if you see there was

830
00:43:47,280 --> 00:43:49,799
Speaker 2: Q one of twenty twenty five and look at the

831
00:43:49,840 --> 00:43:52,200
Speaker 2: growth in Q two and Q three, it seems like

832
00:43:52,280 --> 00:43:56,160
Speaker 2: we were like really on an exciting trajectory and then

833
00:43:56,239 --> 00:43:59,120
Speaker 2: Q four and of course these numbers get adjusted, that

834
00:43:59,239 --> 00:44:04,919
Speaker 2: must be said, but it just seems like if you

835
00:44:05,000 --> 00:44:08,320
Speaker 2: back up from the chart, it just seems like things

836
00:44:08,360 --> 00:44:12,560
Speaker 2: are slowing down, and that feels very counter to where

837
00:44:12,600 --> 00:44:14,960
Speaker 2: it feels like we should be with all of this

838
00:44:15,000 --> 00:44:21,160
Speaker 2: new technology coming online and making people more productive and

839
00:44:21,600 --> 00:44:23,760
Speaker 2: causing all kinds of disruption in our lives. It seems

840
00:44:23,760 --> 00:44:26,040
Speaker 2: like the good part of that should be economic growth,

841
00:44:26,280 --> 00:44:28,600
Speaker 2: but we're not seeing that. This is why I'm worried.

842
00:44:28,640 --> 00:44:30,480
Speaker 2: This is why this chart feels like such a big

843
00:44:30,600 --> 00:44:31,680
Speaker 2: seismic deal to.

844
00:44:31,680 --> 00:44:35,040
Speaker 1: Me, Stacy, you have made the strongest possible case that

845
00:44:35,160 --> 00:44:37,440
Speaker 1: I have chart of the week, and I am so

846
00:44:37,560 --> 00:44:41,680
Speaker 1: grateful that was the intro I was hoping for. Suck it,

847
00:44:41,840 --> 00:44:44,360
Speaker 1: here comes mine.

848
00:44:44,560 --> 00:44:44,920
Speaker 2: Okay.

849
00:44:45,120 --> 00:44:48,200
Speaker 1: My chart takes all of our economic growth over the

850
00:44:48,239 --> 00:44:51,080
Speaker 1: period you were talking about, so basically what's driven the

851
00:44:51,120 --> 00:44:54,520
Speaker 1: economy since the Trump administration. So I took all of

852
00:44:54,560 --> 00:44:57,640
Speaker 1: your bars and I schmushed them together. Okay, And so

853
00:44:57,680 --> 00:45:00,920
Speaker 1: everage economic growth has been about one point eight percent

854
00:45:01,480 --> 00:45:05,560
Speaker 1: since President Trump came to office. That's merely moderate, but

855
00:45:05,600 --> 00:45:07,879
Speaker 1: at least it's merely moderate. But the thing I did,

856
00:45:07,920 --> 00:45:10,320
Speaker 1: and you were making such a pasture. Isn't it important

857
00:45:10,400 --> 00:45:14,279
Speaker 1: we get into AI and the AI revolution and what

858
00:45:14,360 --> 00:45:19,000
Speaker 1: it's doing to GDP, and that's what I did. Sorry

859
00:45:19,040 --> 00:45:22,440
Speaker 1: for sounding glueful. I just realized I'm showing my personality

860
00:45:22,480 --> 00:45:27,239
Speaker 1: and I've been told that's a bad idea to hard disagree.

861
00:45:27,520 --> 00:45:31,120
Speaker 2: I'm just amused at the theatrics. I feel like, if

862
00:45:31,160 --> 00:45:34,520
Speaker 2: you really had confidence in your chart is superior chart,

863
00:45:34,560 --> 00:45:39,239
Speaker 2: you wouldn't be you know, but that's just me anyway. Continue,

864
00:45:39,920 --> 00:45:42,640
Speaker 2: So this is since Trump took office.

865
00:45:43,760 --> 00:45:46,560
Speaker 1: The totals of the growth growth has been one point

866
00:45:46,600 --> 00:45:48,879
Speaker 1: eight percent. Now, what we can do is we can

867
00:45:48,880 --> 00:45:51,600
Speaker 1: say of the economy, there's a little tiny section, five

868
00:45:51,640 --> 00:45:55,440
Speaker 1: percent of it that is investment in IT related stuff.

869
00:45:55,480 --> 00:45:59,200
Speaker 1: So there's no line that says this is AI. The

870
00:45:59,400 --> 00:46:05,160
Speaker 1: closest proxy is this small sector that's just five percent

871
00:46:05,200 --> 00:46:10,720
Speaker 1: of the economy. That tiny sector has contributed one point

872
00:46:10,760 --> 00:46:13,720
Speaker 1: twenty four percent to our one point eight percent economic growth.

873
00:46:15,280 --> 00:46:17,799
Speaker 1: The rest of the economy imagine that sector hadn't grown.

874
00:46:17,840 --> 00:46:19,400
Speaker 1: I want to put an asterix next to this, and

875
00:46:19,520 --> 00:46:21,359
Speaker 1: it says our economic growth would have been less than

876
00:46:21,400 --> 00:46:25,560
Speaker 1: one percent if we hadn't had the AI boom. And

877
00:46:25,600 --> 00:46:27,800
Speaker 1: so the other way of saying this is, roughly speaking,

878
00:46:27,840 --> 00:46:31,320
Speaker 1: two thirds of our economic growth has come from AI.

879
00:46:31,480 --> 00:46:33,560
Speaker 1: Now I want to put two asterisks next to that, the.

880
00:46:33,680 --> 00:46:37,919
Speaker 2: Data center construction, right, So this testament, Okay, yeah, there's

881
00:46:37,960 --> 00:46:39,440
Speaker 2: two AI stories.

882
00:46:39,840 --> 00:46:43,160
Speaker 1: One AI story is in the future, we're going to

883
00:46:43,160 --> 00:46:46,800
Speaker 1: become much more productive at everything blah blah blah. So

884
00:46:46,880 --> 00:46:50,400
Speaker 1: that's his productivity will grow the other stories, yes, but

885
00:46:50,480 --> 00:46:51,719
Speaker 1: to get there we need to build a lot of

886
00:46:51,800 --> 00:46:54,880
Speaker 1: data centers, and data centers are spending, and GDP counts spending.

887
00:46:55,600 --> 00:46:58,319
Speaker 1: This is basically that version of the story, and it's

888
00:46:58,320 --> 00:47:01,120
Speaker 1: saying the spending side, which is driving so much about

889
00:47:01,120 --> 00:47:04,360
Speaker 1: economic strength roat now, is what's keeping the economy afloat.

890
00:47:05,320 --> 00:47:08,200
Speaker 1: I have to put a second asterix. A lot of

891
00:47:08,239 --> 00:47:12,400
Speaker 1: the stuff we're buying for the AI rollout is actually

892
00:47:12,520 --> 00:47:16,480
Speaker 1: imported stuff, and so my red bar here is all

893
00:47:16,520 --> 00:47:20,520
Speaker 1: spending on AI related stuff, not spending on American made

894
00:47:21,160 --> 00:47:24,120
Speaker 1: AI stuff, and so were I able to make an

895
00:47:24,160 --> 00:47:26,960
Speaker 1: adjustment for that, the red bar would look smaller. So

896
00:47:27,040 --> 00:47:29,400
Speaker 1: this one's got a little bit too much dramatic effect,

897
00:47:30,000 --> 00:47:32,920
Speaker 1: But the underlying message is still fundamentally true, which is

898
00:47:32,960 --> 00:47:36,160
Speaker 1: the AI rollout and the building of data centers has

899
00:47:36,200 --> 00:47:38,399
Speaker 1: been a huge part of the story about what's keeping

900
00:47:38,400 --> 00:47:43,480
Speaker 1: the American economy afloat station. Now I think you and

901
00:47:43,520 --> 00:47:45,759
Speaker 1: I can both agree it's over to the voters.

902
00:47:46,520 --> 00:47:49,640
Speaker 2: Well, I did want to ask one quick question, So,

903
00:47:49,719 --> 00:47:54,040
Speaker 2: like you me, all the work that we do, it's

904
00:47:54,080 --> 00:47:55,640
Speaker 2: all just in the little purple bar.

905
00:47:56,360 --> 00:47:59,080
Speaker 1: Yeah, you and I just a little purple bar.

906
00:48:00,200 --> 00:48:02,560
Speaker 2: I do have like one final thing I would like

907
00:48:02,600 --> 00:48:06,239
Speaker 2: to say for the voters consideration, m M, and that

908
00:48:06,360 --> 00:48:10,359
Speaker 2: is paper covers rock. This is so interesting and so

909
00:48:10,520 --> 00:48:14,960
Speaker 2: fascinating and also completely encompassed in my chart. So I

910
00:48:15,000 --> 00:48:17,400
Speaker 2: feel like my chart is really a vote for both

911
00:48:17,400 --> 00:48:18,480
Speaker 2: of our charts.

912
00:48:19,160 --> 00:48:23,000
Speaker 1: I want to say to people. My chart loves freedom,

913
00:48:23,560 --> 00:48:27,799
Speaker 1: my chart loves America, my chart loves dogs, my chart

914
00:48:27,920 --> 00:48:33,280
Speaker 1: rock family, and my chart puts a Racey's Peanut butty

915
00:48:33,280 --> 00:48:34,600
Speaker 1: Cup in every part.

916
00:48:35,680 --> 00:48:38,920
Speaker 2: I feel like it's it's dirty pool bringing in the

917
00:48:39,000 --> 00:48:40,720
Speaker 2: cute dog for the votes.

918
00:48:41,040 --> 00:48:43,839
Speaker 1: Oh den, Max, But I respect that. You know Max

919
00:48:43,920 --> 00:48:47,080
Speaker 1: was actually named for economics. What do economists let to do?

920
00:48:47,160 --> 00:48:51,040
Speaker 1: We like to maximize, We maximize utility, we maximize the

921
00:48:51,120 --> 00:48:51,919
Speaker 1: quality of our ground.

922
00:48:51,960 --> 00:48:53,080
Speaker 2: That's how you named your dog.

923
00:48:54,000 --> 00:48:57,560
Speaker 1: I believe that's true. My critics would say it's just

924
00:48:57,719 --> 00:48:59,480
Speaker 1: I meant to name him Max, But I don't know

925
00:48:59,520 --> 00:49:05,680
Speaker 1: how to spell, and Betsy would say the dog from

926
00:49:05,680 --> 00:49:07,320
Speaker 1: the Greenches style Christmas.

927
00:49:07,920 --> 00:49:11,200
Speaker 2: Oh okay, and he works on a number of levels.

928
00:49:11,480 --> 00:49:14,240
Speaker 1: Over to the vaders, folks, there's going to be a poll.

929
00:49:14,600 --> 00:49:20,000
Speaker 1: Leave your comment Stacy's chart, Justin's much more colorful chart.

930
00:49:21,960 --> 00:49:24,480
Speaker 1: It's up to you. So this has been Off the

931
00:49:24,480 --> 00:49:28,080
Speaker 1: Clock the Economics podcast in which we slow down, review

932
00:49:28,160 --> 00:49:30,319
Speaker 1: the week that was, and try to sort out what

933
00:49:30,440 --> 00:49:32,719
Speaker 1: really mattered. Stacey and I were going to be back

934
00:49:32,719 --> 00:49:34,759
Speaker 1: in a couple of weeks with our next installment. In

935
00:49:34,800 --> 00:49:39,320
Speaker 1: the meantime, be sure to subscribe, and just as important,

936
00:49:39,800 --> 00:49:43,799
Speaker 1: tell a mate. So I found this podcast where they

937
00:49:43,840 --> 00:49:50,160
Speaker 1: talk about peanut butter cups, dogs and freedom. So today

938
00:49:50,400 --> 00:49:52,640
Speaker 1: you've come away feeling a little bit smarter, a little

939
00:49:52,640 --> 00:49:56,280
Speaker 1: more entertained, a bit more prepared. Please tell a friend,

940
00:49:56,600 --> 00:49:59,560
Speaker 1: just say mate. Let's get it done. Platypus Economics. You

941
00:49:59,600 --> 00:50:02,479
Speaker 1: can find us on substack, YouTube or your favorite podcast app.

942
00:50:02,960 --> 00:50:04,799
Speaker 1: In the meantime, we're going to keep on top of

943
00:50:04,880 --> 00:50:07,319
Speaker 1: all of the economic news that you don't have time for.

944
00:50:07,840 --> 00:50:10,840
Speaker 1: Don't forget to vote for your favorite chart, and as always,

945
00:50:11,280 --> 00:50:12,040
Speaker 1: stay cries