Oil Chiefs Lukewarm as Trump Pushes $100 Billion Venezuela Plan

Summary

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Podcast Summary: Bloomberg Businessweek

Episode: Oil Chiefs Lukewarm as Trump Pushes $100 Billion Venezuela Plan
Date: January 9, 2026
Hosts: Carol Massar & Tim Stenovec
Notable Guests: Ellen Wald (President, Transversal Consulting), Rockford Weitz (Maritime Studies, Tufts), Gregory Daco (Chief Economist, EY), Katie Hubbard (EVP, Walton Global)

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Episode Overview

This timely episode dives into President Trump’s ambitious plan to spur $100 billion in oil sector investment in Venezuela, the world’s geopolitical reaction, and broader implications for energy markets and U.S. economic policy. With experts from energy, foreign policy, economics, and real estate, Bloomberg Businessweek probes whether U.S. oil chiefs are convinced, what’s really at stake between global powers, and how these political strategies will impact markets and consumers in the long term.

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Key Discussion Points & Insights

1. Venezuela Oil Investment Skepticism

Guest: Ellen Wald
Timestamp: 02:28–04:05

• Oil executives are cautious about investing large sums in Venezuela due to concerns over political instability, lack of rule of law, and past breaches of contract.
• Venezuelan crude is technically difficult and costly to extract and process, requiring “billions of dollars in upgraders just to transport it, to get it to the ships, to get it out of Venezuela.”
• Even with a political breakthrough, it will be years before meaningful new oil hits global markets.

Quote:

"They need rule of law, they need political stability, they need assurances that contracts will be honored because a lot of these companies have been burned twice by Venezuela." — Ellen Wald (02:28)

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2. Comparing U.S. and Venezuelan Oil Contexts

Guest: Ellen Wald
Timestamp: 04:05–05:45

• The U.S. benefits from advanced extraction technology and stable legal frameworks, making it a much safer and more productive environment for oil investment.
• There’s skepticism over whether similar conditions—which enable American oil success—can be recreated in Venezuela.
• The U.S. may introduce new technology to potentially lower production costs for Venezuela in the long term.

Quote:

"The question is, can they bring that to Venezuela? Can the U.S. actually provide assurances and will they be able to do this?" — Ellen Wald (04:30)

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3. Strategic Rationale: Do We Need Venezuelan Oil?

Guest: Ellen Wald
Timestamp: 05:45–07:49

• Current U.S. supply is strong, so immediate need for Venezuelan oil is limited.
• The main driver is geopolitical: “Venezuelan oil could be very advantageous for the Trump administration in terms of replacing Russian oil.”
• Moves could alter global energy trade, notably shifting Indian refiners from Russian to Venezuelan sources.

Quote:

"If they want to put more pressure on Russia and kind of squeeze Russia’s customer base, they can do that by replacing some of Russian oil with Venezuelan oil." — Ellen Wald (06:31)

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4. Foreign Policy Implications: China & Russia

Host/Guest: Tim Stenovec / Ellen Wald
Timestamp: 07:24–08:38

• Trump has told China and Russia he doesn’t want them involved in Venezuela but offered that China can buy oil from the U.S. or Venezuela.
• The strategy aims to economically squeeze Russia while using oil as leverage in global negotiations.

Quote:

"Any way that they can squeeze Russian oil out of the market is helpful leverage for Trump over Putin." — Ellen Wald (07:49)

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5. Long-Term Energy Strategy for Oil Executives

Guests: Tim Stenovec, Carol Massar, Ellen Wald
Timestamp: 08:38–10:26

• Oil majors make long-term bets (beyond presidential cycles) and want guarantees that rules will outlast Trump’s term.
• If the administration can provide credible long-term assurances, investments may occur despite volatility and political risk.

Quote:

"In their minds, President Trump’s term is basically over in the terms that they think about in these long-term projects." — Ellen Wald (09:23)

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6. Geopolitical Moves in Venezuela: U.S. versus Russia & China

Guest: Rockford Weitz
Timestamp: 14:17–18:41

• Both Russia and China made significant inroads into Venezuela under Maduro, seeking economic and military footholds (navy and air bases, resource extraction).
• The rapid U.S. influence shift in Venezuela is seen as a demonstration of American power in the Western Hemisphere.
• Weitz outlines three main takeaways: U.S. reasserting hemispheric dominance, military strength over Russia, and a signal to the world about U.S. resolve.

Notable Quote:

"What President Putin has been trying to do to Zelensky and Ukraine...President Trump did that effort with Maduro in less than four hours." — Rockford Weitz (19:18)

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7. Greenland & Arctic Geopolitics

Guest: Rockford Weitz
Timestamp: 21:17–24:16

• Trump’s comments on “getting Greenland the easy way or the hard way” signal growing U.S. interest in Arctic resources and security.
• Weitz predicts Greenland may move toward independence and closer U.S. security cooperation, perhaps even NATO membership.

Memorable Moment:

Rockford Weitz: “Trump will help make Greenland great again.” — (23:28)
Carol Massar: “I feel like I just want to go, whoa. Because it does feel like the world is being divvied up a little bit.” — (24:16)

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8. Labor Market & Economic Outlook

Guest: Gregory Daco
Timestamp: 26:06–33:34

• 2025 saw a sharp slowdown in U.S. job growth, but resilience is supported by rising productivity rather than AI (yet).
• Productivity gains are coming from efficiency and automation in response to higher costs, not wholesale AI adoption.
• Immigration curbs and demographics are shrinking the labor force, making job gains harder to achieve and long-term growth riskier.
• Trade and tariff policy—especially impending changes—could significantly impact the U.S. economy and inflation outlook.

Quote:

"AI is actually the largest positive global supply shock that we've seen in decades." — Gregory Daco (30:12)

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9. U.S. Housing Market Challenges

Guest: Katie Hubbard
Timestamp: 37:30–43:41

• New policy steps may slightly improve mortgage rates and sentiment, but affordability remains a deep issue due to high prices and constrained supply.
• Amount of single family homes held by institutional investors is overstated; real issue is limited supply.
• High regulation in certain markets delays building and increases costs. Local zoning reform is crucial to boost supply.

Quote:

"Institutional investors own less than 3% of single family rental market. Blocking institutional investors is not going to move the needle. In fact, it actually could hinder the issue, which is supply." — Katie Hubbard (37:30)

• Long-term housing demand remains strong; market will stay robust once supply bottlenecks improve.

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Notable Quotes & Memorable Moments

• Ellen Wald (02:28): "They need rule of law, they need political stability, they need assurances that contracts will be honored because a lot of these companies have been burned twice by Venezuela."
• Rockford Weitz (19:18): "President Trump did that effort with Maduro in less than four hours."
• Rockford Weitz (23:28): "Trump will help make Greenland great again."
• Gregory Daco (30:12): "AI is actually the largest positive global supply shock that we've seen in decades."
• Katie Hubbard (37:30): "Institutional investors own less than 3% of single family rental market. Blocking institutional investors is not going to move the needle."

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Timestamps of Key Segments

• [02:28] Venezuela oil investment risk, Ellen Wald’s assessment
• [04:05] U.S. vs. Venezuela oil sector realities
• [07:49] Using Venezuelan oil to pressure Russia
• [09:23] Long-term outlook for international oil companies’ engagement
• [14:17] Geopolitics of the U.S. move into Venezuela, Rockford Weitz
• [21:17] Greenland, the Arctic, and U.S. foreign policy
• [26:06] U.S. jobs and productivity outlook, Gregory Daco
• [37:30] Housing affordability and supply insights, Katie Hubbard

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Conclusion

This episode offers a nuanced look at the intersection of energy, geopolitics, and economics, revealing both skepticism and strategic calculation behind the Trump administration’s Venezuela oil push. The panel underscores the complexity of turning political headlines into market reality—from the technical challenges of Venezuela’s oilfield revival, to the broader chess game among world powers, and persistent challenges in U.S. housing and labor markets. Listeners new and old will find in-depth, timely analysis on the real issues shaping today’s global business landscape.

Transcript

[Carol Massar]

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[Ellen Wald]

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[Tim Stenovec]

Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily Podcast with Carol Massar and Tim Stanweck on Bloomberg Radio. I want to bring in Ellen Wald, president of Transversal Consulting, senior fellow at the Atlantic Council. She's also the author of Saudi Ink, it's the History of Saudi Arabia and Aramco. She joins us from Florida. Ellen, as Carol mentioned, lots of headlines coming from the White House right now. I won't rehash them, but what I want to hear from you is, is if that's enough to get these oil executives to make commitments to the tune of tens of billions of dollars in Venezuela.

[Ellen Wald]

I think we have to take these announcements with a bit of a grain of salt. I do think that oil executives are always excited to invest in areas where there's oil. But I do think that that what they're saying, and I'm not sure if this is being communicated quite so strongly by the Trump administration, is that they need rule of law they need political stability. They need assurances that contracts will be honored because a lot of these companies have been burned twice by Venezuela. And this is not the easiest oil to drill for. I mean, we're talking about very sludgy tar sand like oil that requires billions of dollars in upgraders just to transport it, to get it to the ships, to get it out of Venezuela. So this is a big investment. It's not like a shale oil well out in the Permian. And so I do think if the White House is going to assure this, they're going to have to provide some kind of proof that their investments are being made in good faith that these contracts will be, will be honored. And I think that if they can do this and if they show that they can do this, then companies will be willing to invest whether or not that that oil is not going to hit the market in the next year or so. These are, these are still projects that take a lot of time and money and effort. And so it's going to be quite a while until new oil, or at least oil from, from these investments and until we can increase Venezuela's output and actually get that to the market, you know, regardless of, of whether they start tomorrow or next year, it's still going to take quite some time.

[Tim Stenovec]

Weigh in on what we just heard from the Secretary of energy. As the President said, he's an oil man with a, certainly an oil background, a former oil executive. He talked about record production in the US and what he also talked about, Ellen, was the fact that even though the US has less oil, its production is so much higher as a result of the technology that we have here and the investments that we've made. Talk a little bit about what we just heard from the energy Secretary.

[Ellen Wald]

Yeah, I think, I think he's exactly right. And he also highlighted our rule of law and the systems that we have in place that make it possible for businesses to have security, to make these kinds of investments, which are quite risky, and to develop the technology that we need to successfully and also environmentally consciously exploit these very important resources which can and have raised our standard of living to very incredible heights, particularly when you are comparing the situation to what's going on in Venezuela. And so I think he's exactly right. The question is, can they bring that to Venezuela? Can the US Actually provide assurances and will they be able to do this? Because Venezuela's oil is still, as I mentioned, quite difficult to access, requires a lot of investment and is quite expensive to produce. Now, it may be that US Companies and Other companies can bring new technology that will lower those costs of production, which would be an incredible thing for Venezuela, for the people of Venezuela, and also for these oil companies. But whether they can be assured that they will have this security, I really think the administration has to deliver on this. And that's. That's clearly the biggest point here.

[Carol Massar]

Ellen. One of the things that I found interesting, when the energy secretary was speaking, he was talking about record production of energy oil here in the United States, the U.S. it's quite a success story, many would say, in terms of what they have done, in terms of oil exploration and discovery and output. So do we need Venezuela? I'm trying to understand the relationship, and especially as we hear from President Trump basically saying that he will closely integrate the Venezuelan and US Economies, I just kind of don't understand how this all works and why it's even needed. Not for the people of Venezuela who need a better way forward. Absolutely. But I'm just trying to understand.

[Ellen Wald]

Yeah, I think that there are two key points here. One is, yes, us, the incredible heights that we've been able to achieve with our production are incredibly admirable. But then one has to ask the question, do we really need more oil? Do we really need more oil from Venezuela? I think the answer is twofold. Technically, I think we're quite well supplied at the moment. However, Venezuelan oil could be very advantageous for the Trump administration in terms of replacing Russian oil. So if they want to put more pressure on Russia and kind of squeeze Russia's customer base, they can do that by replacing some of Russian oil with Venezuelan oil. So, for example, I know that a major Indian refiner that's been known for importing a lot of Russian oil in contravention of. Of sanctions, is inquiring about importing Venezuelan oil instead. So that could be a useful, I would say, foreign policy tool.

[Tim Stenovec]

So I'm so glad you brought this.

[Ellen Wald]

It's like this juncture.

[Tim Stenovec]

It's like you're kind of reading what you're in two places at once.

[Carol Massar]

You've been talking to China.

[Tim Stenovec]

Maybe we're getting some headlines from the president right now. He says that he told China and Russia we don't want them in Venezuela. But the president also saying China can buy all the oil they want from us, from the US and from Venezuela is back to your comment that this could be a foreign policy tool. How do you read that?

[Ellen Wald]

Yeah, I mean, I think that it's the same thing, because any way that they can squeeze Russian oil out of the market is helpful leverage for Trump over Putin, because the best way to squeeze Putin and to get him, you know, to come to that negotiating table and maybe to make some more compromises is if he feels that his revenue is being, is being squeezed. So, so I do see it in that respect. In terms of the larger oil market, though, Venezuela's oil, I think has the potential to play a very important and crucial role in, in later decades. We may not need it now, but overall investment in long term projects is way down. And so all the indications that, you know, 20, 40 and beyond, we are going to need more oil and Venezuela does have the potential to provide it.

[Tim Stenovec]

So we were talking to Kevin Crowley about, of our Bloomberg News team based in Houston just a little earlier, because the question that we've had, Carol, that we've been talking about is, yeah, well, we're awash in oil right now. Oil's what, 60 to $64 a barrel? Is that a price that supports all this investment?

[Carol Massar]

Yeah. So, Ellen, is that what this is about and is that kind of a smart strategy going forward in terms of thinking much longer term? And I do think about, we often criticize the United States for being short term, four years to four years in terms of who's in the White House potentially. So is this kind of a smart long term strategy that's been put out by President Trump, whether or not you agree with the methods or the strategy or the specifics, does it make sense longer term?

[Ellen Wald]

I would say that it definitely makes sense in the longer term. And I believe a lot of the big oil companies are thinking that way because they think in much longer term blocks than a typical four year term. So in their minds, President Trump's term is basically over in the terms that they think about in terms of these long term projects. And so if they can get assurances that these things are going, that these safeguards are going to continue past President Trump's term, then potential investments could make much more sense. But this idea that suddenly I think that they remain cautious because President Trump talks about we're going to put so much more oil in the, and prices are going to go down to $50 a barrel, that's not helpful for them. And that doesn't give them confidence to invest either. So I do think that if he does have a grander policy strategy and an oil strategy, hopefully he's explained this to, to the, to the oil executives and maybe managed to satisfy them or perhaps he hasn't. And, you know, they still remain somewhat wary.

[Carol Massar]

All right, Ellen, thank you so much. Dr. Ellen Wald. Always appreciate your perspective in walking us through some of the headlines that we are getting out of this event. She is President of Trans Universal Consulting, Senior Fellow at the Atlantic Council, author of Saudi Inc. Stay with us.

[Tim Stenovec]

More from Bloomberg Businessweek Daily Coming up after this.

[Carol Massar]

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[Rockford Weitz]

So the short answer is yes and no problem waiting. That was fascinating press conference. So happy to talk about a bunch of different things. The short answer is correct that both Russia and China were making inroads into Venezuela under the Maduro regime, that that era ended on January 3rd.

[Tim Stenovec]

Wow.

[Rockford Weitz]

Okay.

[Tim Stenovec]

Who was more likely to get control and what did they want to do in Venezuela? Like what would have they used not just Venezuelan assets perhaps for, but maybe Venezuela territory for?

[Rockford Weitz]

Well, so I should clarify a little bit. So not really controlled, just be the sort of primary great power ally of Venezuela, which is a relatively small country, especially when you're comparing to China and Russia and the United States. So what they were looking for so different things. Russia was looking for basing rights in the Americas for their navy and their air force. Also potentially some of the critical minerals that Venezuela is a very resource rich country not just with crude oil but also with critical minerals and many, many other things. China was looking has an interest in the oil and also the critical minerals and also perhaps long term, perhaps basing rights for their navy or air force. But they were really focused on economics as part of their Belt and Road initiative. It sounds, listening to President Trump, that the commercial piece of it will continue with China at least. I don't think there's that much commerce naturally happening between Russia and China and Venezuela, though Russia, of course is under sanctions from the United States.

[Carol Massar]

What do you make of, you know, when the president says and I'm looking for the headline here that the United States will closely integrate the Venezuelan and US Economies, what exactly does that mean?

[Rockford Weitz]

Well, so the honest answer is we'll see what it means. What I think it means is essentially a return to the past in the sense that Venezuela and the United States were highly integrated economies for much of the 20th century, if not all of the 20th century. Essentially, when once Chavez took power in 1999, things started to change. But the United States and the Venezuelan economies were very much integrated economically, particularly with their oil industry. Their oil, which President Trump actually correctly said is really very good for making asphalt. It's not the best oil. It's very expensive to refine. And we have refineries designed almost specifically to refine the very heavy crude oil that Venezuela produces. And those, those trade, those trade flows continued actually even under Chavez and Maduro because of the economic interest. So I'm happy to elaborate on any of those.

[Carol Massar]

I guess what I'm just trying to understand is what's the key takeaway in some of the conversations we've had today? Professor Weitz there's an understanding that we know we need more power and more energy in all its forms, whether it's carbon based, whether it's renewable, whether it's nuclear. And maybe even though the world and the US Is awash in oil today, longer term we need to develop this. So maybe this is a smart longer term strategy for the United States. So I'm wondering, is that what this, this is about that mineral raw material grab that needs to be done, that the whole world kind of seems to be a part of. But I also do wonder about what this means geopolitically about President Trump when it comes to Russia and President Xi, Russia's president to Putin, who he says he gets along with. But again, he seems to be sending them a very strong message. He also has talked about, he was questioned about Greenland and saying we can do it the easy way or the hard way, but basically we want Greenland. So I'm trying to understand what the big takeaway is. What's the most important aspect of all of this? We see all these oil executives, but I wonder if it's really something else.

[Rockford Weitz]

Oh, okay. That's a, that's a very interesting question. Let me see if I can. So I think it's hard to come up with one key takeaway given the wide ranging conversation that was that press conference. So why don't I try for three. So I think the three key takeaways from that press conference, number one, the Trump administration is implementing its new national Security Strategy, which was issued in December, that essentially says the United States is going to become, or not become, but strengthen its position as the primary great power operating in the Americas. Box checked. Because with Venezuela, a regime that was not friendly, the United States is now being transitioned to a more US Friendly regime, though that'll take some that's going to be a hard challenge. That's number one. Number two, the other great powers are uncomfortable today. Russia is very uncomfortable. We can talk about the seizures of Russian tankers, dark fleet tankers. This to me is the second key takeaway, which is the what has happened. It's related to Venezuela. So what President Putin has been trying to do to Zelensky and Ukraine, which is depose Zelensky and essentially become the great power where Ukraine is in its sphere of influence, they've been trying to do that for almost four years. It'll be four years the birth, the anniversary four years will be on February 24, 2022. President Trump did that effort with Maduro in less than four hours. What that showed is and this is the second key takeaway is that the United States military is significantly stronger than the Russian military. And how that ripple effect came to the tankers is that the tanker that was seized just south of Iceland, the marinara, it had been it had tried to reflag as a Russian flag and we can go into why that wouldn't work. But basically it had a navy escort, a Russian submarine escort, and it was still seized by the Coast Guard. So we could talk about that.

[Carol Massar]

But the so your point is by doing what they did in Venezuela has shown the military might of the United States.

[Rockford Weitz]

And so that's the second key takeaway. And 1/3 one when you're ready.

[Carol Massar]

So President Putin, take heed. President Xi, take heed. World take heed. And just quickly what your third point is.

[Rockford Weitz]

The third point is that we're still in so Trump still almost can't help himself continues talking about Denmark and Greenland as I mean it is so Denmark is part of North America and I'm happy. I'm the Arctic lead at the Fletcher School and I've spent a lot I know the Greenlandic prime minister and foreign minister.

[Carol Massar]

We love this go.

[Rockford Weitz]

I have lots of opinions on that. But essentially the third key takeaway is that there's going to be some kind of arrangement or at least discussion that's is all public negotiation between the Danes and the Greenlanders in the United States unclear where that lands. But I have a lot of opinions on it if you're interested.

[Tim Stenovec]

Well, we don't have much time, but the president did say on Greenland we'll make a deal the easy way or the hard way, how is it going to go down in your view? And what is. What is the easy way and what's the hard way? Just very briefly.

[Rockford Weitz]

Yeah, okay, you got. I'll be fast. So I said. So there's essentially three options for the United States, Greenland and Denmark. So the preferred one, in my opinion, is a diplomatic solution where Greenland. So Greenland has been seeking some kind of independence from Denmark for a while. How that actually, so the way to think about it is what is the position of Greenland in the 21st century? And the easy way is to solve that through kind of friendly diplomacy, because we actually are all friends. There's another option, which would be that the United States actually purchases Greenland, like it purchased the US Virgin Islands from Denmark about 100 years ago. And then the third option, which I think is completely unrealistic, would be a military acquisition of it. And I almost think it's almost not worth talking about to quote Senator Kennedy as weapons grade stupid.

[Carol Massar]

But what's likely. And you're saying something's gonna happen and the US Is going to increase its presence there and control over this. That's the bottom line.

[Rockford Weitz]

And.

[Carol Massar]

And what do you think is likely the path there?

[Rockford Weitz]

All right, I'll quote a Greenlandic friend of mine. Here's what's going to happen. Trump will help make Greenland great again.

[Carol Massar]

What does that.

[Rockford Weitz]

And I can tell you what I think the scenario is.

[Carol Massar]

Which is what?

[Rockford Weitz]

That Greenland may actually become independent from Denmark, may join NATO, may join the Arctic Council as the ninth member. Doesn't mean Denmark is not part of the Arctic Council, still has the Faroe Islands. So it's still an Arctic nation. And essentially Greenland positions itself as a new independent country for the 21st century with a security alliance with the United States, but still part of NATO becomes part of the. Formerly part of the Arctic Council. And I think that's probably what would happen in the next year or two.

[Carol Massar]

I feel like I just want to go, whoa. Because it does feel like the world is being. Being divvied up a little bit.

[Tim Stenovec]

Yeah. And I think we're probably gonna be calling on Rocky again in the near future.

[Carol Massar]

So, Rocky, thank you so much.

[Tim Stenovec]

Appreciate your time.

[Carol Massar]

Rocky, is there any other parts of the world. 30 seconds. That we should be watching that? There's something Carol can't say.

[Tim Stenovec]

Carol can't say goodbye.

[Carol Massar]

I know. I can't say goodbye. Just 30 seconds. Is there anything else, like, in the world that we should be watching?

[Rockford Weitz]

Keep an eye on Iran. Keep an eye on Iran. I think that might I think we might see a change of government in Iran in the next 30 days.

[Tim Stenovec]

All right. Rocky Weitz, professor of practice and director of the Maritime Studies program at Tufts University's Fletcher School of Law and Diplomacy. He's got his J.D. from Harvard Law as well. He joins us from Medford, Massachusetts. This is the Bloomberg Business Week daily podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130.

[Carol Massar]

Now let's get to that monthly jobs report and actually all of it with our next guest who's been sitting by quietly listening.

[Tim Stenovec]

It kind of speaks to what's going on, Carol, when it's a jobs Friday and this is the first time I mentioned the jobs report, it's exactly right. Minutes in. Our next guest is an economy that underscores a labor market stuck in low gear. And yet, as we've seen on the Bloomberg, traders see almost no chance of a rate cut following this morning's monthly jobs report. I want to dig into the data and the outlook. Gregory Daco is back with us, chief economist at Parthenon. He joins us here in the studio. It's the data that we've been counting down to all week. It turns out a report that you could have gotten an early peek at if you would have just been following the president on true social. This is one way to increase engagement there. I guess the weakness does it doesn't warrant warrant another Fed cut.

[Gregory Daco]

I think it could warrant another rate cut. I think that what we are seeing is ongoing weakening in the labor market. Labor market. And what's very interesting is that we're seeing conflicting cross currents when it comes to the labor market. On the one hand, we have labor supply that's come down dramatically for two reasons. One, demographics, that's a natural aging of the population. But two, and very importantly, significant immigration curbs. So you've got labor supply hit negatively quite significantly. But at the same time, labor demand is also softening. And I would argue labor demand has been softening faster than labor supply, leading to this gradual creep up in the unemployment rate. Nothing alarming yet, but there are warning signals here when we're seeing the unemployment rate gradually creep up over time.

[Carol Massar]

You Note that in 2025 in the notes you shared with us, the economy added just 584,000 jobs, a stark slowdown compared to the 2 million gained in 2024. So 2025, just about half a million jobs There, this is the weakest annual increase outside of recession since 2003. So are we headed toward a recession? Does anything there, like when does it become more problematic? What we seem to hear when we have conversations around this, that once the labor market starts to slow down, it starts to slow down pretty quickly.

[Gregory Daco]

That's the risk. Right. And the negative story is indeed that we are seeing broad evidence of a labor market slowdown. Whether you look at job growth over the past three months, down 22,000 per month, whether you look at job growth concentration, only half of the sectors in the private sector added jobs over the course of December, or you look at the hiring rate at a 12 year low, all of these are indicators of very selective labor market demand. Does that mean a recession is on the horizon? Not necessarily. Because the big element that we're seeing here that's very positive is productivity growth. Productivity growth has been increasing, has been accelerating.

[Carol Massar]

Wait, wait, is Alan Greenspan in the room?

[Gregory Daco]

Well, he might be, because what we are hearing from a lot of business leaders is that they're trying to do more with less. It's not AI yet, and that's actually a positive spin on the story.

[Tim Stenovec]

Well then what is it?

[Gregory Daco]

It's businesses that are coming out of an environment of high cost and high interest rates where they're trying to do more with less without incurring additional cost. And that means you have to be more efficient, you have to automate process. You have to think about creative ways to put your money to work and focus on higher return on investment assets.

[Tim Stenovec]

So is this a positive that it's not AI yet? Because that productivity boom is still to come in your view?

[Gregory Daco]

That's my positive spin on this story. It's that we are not yet seeing the benefits of AI in terms of productivity growth. We're only seeing it very selectively in the sectors that are high on the curve of adoption.

[Tim Stenovec]

How do you know we'll see.

[Gregory Daco]

Yeah, how do we know we'll see it?

[Tim Stenovec]

How do you know we're going to see the productivity boom?

[Gregory Daco]

Well, that's the hope, essentially. I can't guarantee that.

[Tim Stenovec]

But is there any data that you're seeing right now or the way that at least early adopters are using this technology that show to you, okay, once adopted on a wide scale, we are going to see an increase in productivity.

[Gregory Daco]

Let's take a little bit of a step back in terms of the historical environment when it comes to technological revolutions. The key fundamental aspects of any technological revolution is having the proper investment, the proper infrastructure that takes Time. So building data centers, building semiconductors, ensuring that we have a proper cybersecurity environment, ensuring that corporates are adopting the technology and building the talent to manage that technology will ensure a solid foundation that should develop and drive stronger productivity growth. It's not a guarantee, but those fundamentals are essential in driving this technological revolution.

[Carol Massar]

You know, we've talked to you about economic resiliency, the increasing dependence. This is something that you put out on those three narrow, interconnected a pillars, affluent consumers, artificial intelligence, field investment, which we're talking about in asset price gains. It feels like that is coming together this year. How do you see that mix doing in your view and what it means to us? Economic resiliency? Do you feel like they're coming together to kind of shore up the economy?

[Gregory Daco]

In my opinion, AI is actually the largest positive global supply shock that we've seen in decades. We're hearing a lot of these negative supply shocks from trade and tariff policy and immigration and demographics that are weighing on potential growth and lifting inflation. AI is actually the key support to economic activity because it lifts your potential output. It allows you to do more with less, but it also eases inflationary pressures, which is a key issue around affordability right now.

[Carol Massar]

All right, do more with less. Does that at some point mean do more with less workers too?

[Gregory Daco]

Potentially. But let's not forget that we are in an environment where demographics are working against us. Populations around the world are rapidly aging. Two thirds of the population in the world live in countries where the fertility rate is below 2.1 child per woman. That means that populations are shrinking and that we have to think about how the talent is will adapt to serve an environment where demographics are weighing against us.

[Tim Stenovec]

One way the United States has challenged this demographic narrative over the last few decades has been immigration. That spigot has been turned off.

[Gregory Daco]

It's a huge, huge constraint.

[Tim Stenovec]

Is it a drag?

[Gregory Daco]

The cbo, the Congressional Budget Office has population estimates and it estimates that births will be lower than deaths by 2031. So we'll have a natural shrinkage of the US population by 2030, 2031. That's because immigration has been reduced quite significantly. The key driver of working age population growth in the US has been immigration. Without immigration, we're at risk of seeing weaker working age population. And that means that the so called break even rate for payrolls, which is the rate at which the unemployment rate stays constant, is falling lower and lower and lower. And we may soon be in an environment where we actually have a negative break even rate. And that if we're seeing slower job growth. It's actually okay because we're in this environment where the break even rate, the natural rate of working age population growth is much, much lower.

[Carol Massar]

Yeah, I do feel like there's other countries we've done stories about, well, okay, immigrants, come on into our country. We'll welcome you because they see the importance of having those workers in terms of growth. One last question. We've got about a minute left here, Greg. We are spending, spending so much time focusing on what's coming out of the White House and different policies, whether it's on housing, whether it's on defense, stocks, you know, you name it. Continuation. In terms of tariff policies, how is any of it or any of these specific policies are you taking note of and factoring into your economic forecast for the United States?

[Gregory Daco]

You have to take everything into account. That's the difficult part, Carol. We have to take all of the policy shifts that are occurring into consideration. Think about the potential ruling on emergency tariffs, for instance.

[Carol Massar]

This is a big deal, right?

[Gregory Daco]

It's a huge deal. It could actually lower the effective tariff rate on US imports from 16.8% to 9%, a significant easing. Now what happens after that? Are there new tariffs put in place and how do these affect imports from different companies in the US So you really have to factor everything, trade, industrial policy, immigration shifts, demographic shifts, shifts.

[Carol Massar]

And is energy policy and getting more oil for Venezuela something going to change your thoughts here in terms of inflation and just got about 15 seconds.

[Gregory Daco]

It could very well. But we have to see how much investment is needed to actually get the oil out of the ground. Under the ground. The story is very positive. Over the ground, much less so.

[Carol Massar]

Really well said. Have a great weekend. Happy New Year.

[Gregory Daco]

You as well. Happy.

[Carol Massar]

Great to have you back. Gregory Dacko, he is chief economist at EY joining us here.

[Tim Stenovec]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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[Tim Stenovec]

You're listening to the Bloomberg Businessweek Daily Podcast. Catch us live weekday afternoon afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube. Our next guest is a front seat to the housing market. Katie Hubbard is back with us. She's Executive Vice President of Capital Markets at the privately owned asset and real estate investment company Walton Global got close to four and a half billion dollars of land under management, more than 90,000 acres under management in the US. They operate in retail, industrial, industrial and commercial sector. She joins us from Scottsdale, Arizona. Katie, we've been eager to talk to you this week as we've heard from the President about his moves to make housing more affordable. The what he said earlier this week about single family homes being purchased by institutional investors. The latest moves today, as Carol mentioned from US Commerce Secretary Howard Lutnick, and then of course the moves with mortgage backed securities to try to get mortgage rates lower. Just taken together, does this move the needle in the US on housing.

[Katie Hubbard]

Affordability? It's definitely a step in the right direction and it's going to improve sentiment, which is going to help, but it's not going to drastically fix things. And the idea that institutional investors are blocking homeownership is a myth. Institutional investors own less than 3% of single family rental market. That's 6/10 of 1% of the entire housing market in a 50 trillion dollar market. You know, blocking institutional investors is not going to move the need and in fact it actually could hinder the issue, which is a supply.

[Tim Stenovec]

Issue. So that's it, that's everything. She.

[Carol Massar]

Just. Katie, great to see you. Have a great.

[Tim Stenovec]

Weekend. She just, she just gave us all the.

[Carol Massar]

Answers. All right, we're done. No, but. And even the idea of buying more mortgage bonds, does that do anything or is that just a little.

[Katie Hubbard]

Thing? So again, it is, it's a step in the right direction. But $200 billion in MBS and a $9 trillion MBS market could move it 10 to 30 basis points on the 30 year fixed in the near term, which is probably already being priced in right now. And then long term over the next year or so, it could bring rates down 50 to 100 basis points. But we're talking going from, you know, if you're at 6.08 today on the 30 year fixed, even if you were at 6.5, dropping a full 100 basis points points isn't going to move the mortgage payment enough. And that's what the issue is, is affordability. So if you take a $415,000 home, that's the median home price for new homes right now the mortgage payment only drops $200 a month. The issue is that in 2019, that same house was $283,000. So home prices have gone up 80%. And so they're just not affordable anymore. And mortgage rates at that time were 4.1%. So now the mortgage rate on that same house just in 2019 is $2,500 versus 12 $50. So dropping rates 10 to 30 basis points in the near term is, like I said, going in the right direction. But it's not going to be a major needle.

[Carol Massar]

Mover. Listen, we love talking to you. You understand land acquisition, what the home builders are up to. I mean, what are you hearing from home builders? Why they aren't buying more homes in the United States. And I know when we talk to you, you know, building home, it's real estate's regional, right. There's rules, there's regulations, there's zoning, there's lots of things that come into it. So is there a clear takeaway of why aren't homebuilders building more homes in the United States right.

[Katie Hubbard]

Now? Yes, and I'm glad you mentioned that because what the Fed can do if they want to improve America's ability to purchase more homes is we need to increase supply. So what they can do specifically is help with reform and make it easier for permitting, entitlements, impact fees, or. All of this regulation adds up to 20% of the home price in markets that aren't as regulated. And in heavily regulated markets, it can make up 40% of the home price just because of these extra regulations which the government comes and steps in. It adds time, soft costs, carrying costs, years of delays and over $1 million just to get projects off the ground. And so that's feeding into the ultimate home price for homeowners. The government needs to help with densities in zoning reform in order to make it faster and easier for developers. That will increase the supply and that's what we.

[Tim Stenovec]

Need. Can the federal government help with density reform? This is a local issue. This is an issue that is sometimes put up to voters in some.

[Katie Hubbard]

Cases. Exactly. And it is a local issue. And so the places that are more pro development, that's where houses are more affordable. And because it is a more local issue, we need reform at the local level which the government, you know, the Fed, the federal government has the ability to pull some levers to pressure the local governments. And so that is one thing that they could.

[Carol Massar]

Do. Yeah, you know. Yeah, yeah. I mean, the other thing is, you know, Katie, we often hear from, or not often, but we've had guests on who say, you know, it's really simple, we need to also pay people more money. I mean, if you've gotten things that are costing more, that if you want to make things more affordable, pay people more money. I don't know. Is that, does that make sense? Does that factor in, in your.

[Katie Hubbard]

View? Well, I mean at Walton we believe in, at free markets and looking at the data driven housing policy and so we just really need to increase supply and then it will work itself self out because the money is coming from.

[Tim Stenovec]

Somewhere. So on the supply side of things, if we look at this as the local and regional issue that it is, Katie, where, where in the country are homes needed the most and the.

[Katie Hubbard]

Quickest? Well, definitely where jobs are. I mean, there are some places that have the highest regulation. You're looking like Massachusetts and New York work. And it makes it difficult for developers to build homes in those markets where people do want to be but they just simply can't afford the home. So places like, you know, Houston, that has very low regulated zoning laws, developers are able to go in there and build houses for much more affordable because you can be off the ground in six months where it can take literally more than five years to get land zoned and approved in places that are highly regulated like the coastal.

[Carol Massar]

Cities. Yeah, it's interesting. You know, the other thing is like we've been watching the sector and it's been whipsaw based on what's coming out of the White House in terms of the homebuilders in particular, we've got quite a rally. But we did see, you know, some selling earlier in the week based on the social media post out of the president. When it comes to housing, does it make sense at all for investors to be thinking about buying? I know you know, that's not necessarily your world, but there's nothing that's really changed that maybe has fundamentally or financially changed the outlook for these names. And just.

[Katie Hubbard]

Quickly. Yeah. And I think it's the good news that the government wants more affordability and more housing for the American people. The fundamentals are there. Demand is off the charts. So the, the long term fundamentals from the investment side are there. And that I would say is positive. There's really nothing that's going to keep demand from, from being there long term. If we can fix the supply side, then I think long term you're in a good.

[Carol Massar]

Spot. All right, thank you so much, Katie. Glad we could get some time with you. Katie Hubbard. She's Executive VP of Capital markets of the privately owned asset and real estate investment company. It is Walton.

[Tim Stenovec]

Global. This is the Bloomberg Businessweek daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg, bloomberg.com, the iHeartRadio app TuneIn and the Bloomberg Business.

[Rockford Weitz]

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[Tim Stenovec]

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