Bloomberg Talks: Dr. Adam Posen Talks CPI, Global Economic Outlook

Date: February 13, 2026
Host(s): Carol Massar, Tim Phillips
Guest: Dr. Adam Posen, President, Peterson Institute for International Economics

Episode Overview

This episode of Bloomberg Talks dives into the state and outlook of the U.S. and global economy following a recent CPI print. Dr. Adam Posen joins to share his outlook on inflation, U.S. fiscal policy, Federal Reserve actions, demographic challenges, and the limits of economic indicators in gauging broad sentiment. The hosts and guest explore the risks ahead: from sustained high inflation to the labor market implications of anti-immigration policies and technological disruption.

Key Discussion Points & Insights

1. Recent Inflation Print & Near-Term U.S. Economic Outlook

[01:18-03:09]

• Dr. Posen stresses not to overreact to minor CPI variations, emphasizing bigger economic trends:

  "If you're plus or minus 0.1, 0.2 from expectation on any given month's print, it's not worth real information ... you have to look at the bigger stories." (Dr. Adam Posen, 01:38)

• The labor market remains healthy with solid employment retention, though growth is modest.
• Possible stimulative fiscal policy ahead, especially with potential pre-election spending increases and restoration of Obamacare subsidies.
• Structural shifts—tariffs and migration curbs—are still working through the economy and will take time to show full effects.
• Posen doubts the accuracy of markets pricing in three Fed rate cuts for the year:

  "I think the pricing of three Fed cuts this year is much too many."
  (Dr. Adam Posen, 03:09)

2. Inflation Risks and Policy Stimulus

[03:09-05:20]

• Dr. Posen references a co-authored January column with Peter Orszag, highlighting risks that inflation could surpass 4% by the end of 2026.
• Rising inflation risk is driven by fiscal stimulus, lagged tariff effects, anti-migration policies, and a robust labor market.
• There is further concern about potential delays in the Federal Reserve's response to rising inflation, especially under heightened political scrutiny:

  "You have to be a little more worried that the Fed will not react quickly if there is inflation and that to some degree becomes self-fulfilling." (Dr. Adam Posen, 04:43)

• While he acknowledges possible recessionary or policy failures that could keep inflation low, he highlights that the cumulative likelihood points to inflation remaining elevated.

3. Federal Reserve Leadership & Monetary Policy Direction

[05:20-07:38]

• Discussion shifts to the possible nomination of Kevin Warsh as Fed chair and broader White House influence on monetary policy:

  "I think it's a result of the desires expressed so strongly by President Trump and by Secretary Bessant ... all the shortlisted people ... in favor of loosening policy quite a bit and doing so in the face of data ... should give people pause." (Dr. Adam Posen, 05:41)

• Posen notes the Fed's internal debates:
  • Some on the Fed argue tariff effects are one-time shocks, but he is skeptical.
  • Productivity growth driven by AI could potentially ease inflation, but the timing and degree are highly uncertain.
• He frames the introduction of new technology as initially boosting incomes but only delivering disinflation with a lag:

  "When you get a new technology, most of the disinflation stuff comes with a lag ... whereas some of the income growth, the productivity growth, you get up front just because we've all got a new toy." (Dr. Adam Posen, 07:12)

• His baseline remains: substantial risk of underlying high inflation, with the Fed possibly lagging in response.

4. Top Realistic Risks for the U.S. & Global Economy

[07:38-09:50]

• Carol Massar asks Dr. Posen to rank the most realistic near-term and medium-term economic risks.
• Next 3-12 months:
  • Inflation is the top realistic risk.
  • Little concern about surging unemployment or escalation in US-China tensions into armed conflict.
• Medium-term (1-2 years):
  • Demographic shifts due to lower immigration and policy changes present growing risks.
  • Reduced migrant labor can limit labor force growth and slow economic momentum.
  • Challenges for female labor force participation linked to affordable healthcare/childcare and ongoing policy cuts.
• Longer-term:
  • The trajectory and economic impact of AI is deeply uncertain; job displacement and unemployment could be amplified, with no clear consensus among economists.

  "Not only I, but the economics profession has no clear idea ... there's no consensus and we're still working on that." (Dr. Adam Posen, 09:50)

5. AI, Productivity, and Workforce Displacement

[09:50-10:31]

• Posen's "best bet" is that productivity continues to rise, unemployment rises in coming years (especially among youth), but "doesn't shoot up enormously."
• He anticipates labor force participation may fall as people exit traditional employment paths for alternative ways of living—so official unemployment could understate real displacement.
• Posen underscores the complexity of these changes and the limits of clear economic forecasting.

6. Wealth Gaps, Sentiment, and the Disconnect from Economic Data

[10:31-12:17]

• Carol highlights the attention-grabbing stock market highs contrasted with widespread feelings of economic insecurity—even among the relatively affluent.
• Posen reflects on the limited power of economic data to capture shifts in public sentiment:

  "Sometimes when people don't feel so good, it's not about the economic numbers ... it's about their relative position in life. It's about uncertainty ... The connection between surveys of how good people feel or how confident people feel has become much more tenuous ... than it used to be." (Dr. Adam Posen, 11:10)

• He draws parallels between the U.S., Europe, and China, all facing high youth unemployment.

Notable Quotes & Memorable Moments

• On the pace of Fed cuts:
  "I think the pricing of three Fed cuts this year is much too many."
  (Dr. Adam Posen, 03:09)

• Inflation risks from policy and politics:
  "You have to be a little more worried that the Fed will not react quickly if there is inflation and that to some degree becomes self-fulfilling."
  (Dr. Adam Posen, 04:43)

• On the limitations of economics for public mood:
  "The connection between surveys of how good people feel or how confident people feel has become much more tenuous ... than it used to be."
  (Dr. Adam Posen, 11:10)

• On the global situation:
  "There's a lot of youth unemployment in China and in Europe. And that we got to think about."
  (Dr. Adam Posen, 12:05)

Timestamps for Key Segments

• 01:18: Dr. Posen joins, initial inflation and labor market take
• 03:09: Discussion shifts to inflation targets and fiscal stimulus
• 05:20: Fed policy outlook and leadership discussion
• 07:38: Breakdown of realistic economic risks: inflation, demographics
• 09:50: Projecting the future: productivity, AI, and job market trends
• 10:31: Wealth gaps, sentiment, and disconnect from hard data
• 12:05: Mention of global youth unemployment

Conclusion

Dr. Adam Posen provides a measured, cautionary outlook—warning that U.S. inflation is likely to run hotter than anticipated, due to cumulative effects of fiscal policy, tariffs, and demographic shifts. He sees significant risk of the Fed falling behind the inflation curve and flags major uncertainty in how new technologies will impact jobs and productivity. Ultimately, Posen urges not to rely solely on month-to-month data or economic indicators to capture lived realities—a perspective especially pertinent amid widespread public anxiety and uneven globalization.