PIMCO Global Economic Advisor Richard Clarida Talks US Inflation, Economy

Summary

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Bloomberg Talks: PIMCO Global Economic Advisor Richard Clarida Talks US Inflation, Economy

Date: January 23, 2026
Host: Scarlett, Bloomberg
Guest: Richard Clarida, PIMCO Global Economic Advisor and former Federal Reserve Vice Chairman

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Episode Overview

In this episode, Scarlett interviews Richard Clarida to get his expert take on the US economy’s current state, the outlook for inflation, and the Federal Reserve's evolving leadership during a pivotal political moment. Clarida provides a nuanced overview of economic resilience, addresses concerns about consumer confidence, and offers an insider assessment of the Fed’s future direction amidst political scrutiny and legal battles.

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Key Discussion Points

1. The State of the US Economy

[00:36 – 01:50]

• Scarlett opens by highlighting that headline indicators show the US economy in strong shape, with solid growth and a resilient labor market amid easing inflation.
• Richard Clarida affirms the positive assessment:
  • Growth in 2025 is expected to exceed 2%, with a strong finish to the year.
  • Inflation has remained flat, unaffected by tariffs.
  • "We've had strong capital spending in the tech sector." (Clarida, 01:17)
  • Fiscal stimulus ("the big beautiful bill") and international investments are providing additional boosts for 2026.
  • The US economy is "in a pretty good place," but aggregates may mask underlying disparities.

2. Diverging Economic Narratives: Resilience vs. Caution

[01:50 – 02:52]

• Scarlett points to downbeat corporate commentary on consumer confidence and uncertainty.
• Clarida explains the coexistence of positive macro data and corporate caution:
  • Tech and asset-owning households are benefiting from wealth effects.
  • Outside these segments, economic performance is more uneven; uncertainty is higher.
  • "This may well be a year when the aggregates and averages are hiding a lot of interesting differences in the economy." (Clarida, 02:32)

3. The Next Federal Reserve Chair: Candidates and Implications

[02:52 – 05:42]

• Scarlett discusses President Trump’s selection process for the next Fed chair and references commentary on differing leadership styles.
• Clarida assesses the leading candidates:
  • Kevin Hassett (likely staying at NEC), Chris Waller, Kevin Warsh, Rick Reeder.
    • Chris Waller: "A world class macro economist... a good forecaster and good communicator." (Clarida, 04:07)
    • Kevin Warsh: "Had very thoughtful things to say about changing the Fed as an institution."
    • Rick Reeder: "A very respected legendary investor... would bring a lot of connectivity to the bond market."
  • "All three bring something a lot to the table. It's really going to be the call of President Trump..." (Clarida, 04:47)
• Unlikely surprises: Only if Kevin Hassett or Scott Besant are chosen, contrary to current signals.
  • "Among the other three, probably right now the odds of Waller are a bit lower simply because he doesn't seem to have that connectivity..." (Clarida, 05:26)

4. The Lisa Cook Supreme Court Hearing & Fed Board Stability

[05:42 – 07:13]

• Scarlett: Asks about the legal case regarding the removal of Fed Governor Lisa Cook.
• Clarida’s view:
  • Notes Supreme Court skepticism toward the White House's justification for removal.
  • Expects Lisa Cook to remain in her role throughout much, if not all, of the year.
  • "Legal scholars seem to think that one likely scenario is that the Supreme Court merely rules narrowly that she cannot be removed..." (Clarida, 06:38)

5. Confidence in Fed Independence

[07:13 – 07:57]

• Scarlett: Inquires if recent events have changed Clarida's confidence in Fed independence.
• Clarida: Expresses strong confidence, citing Congressional intent and market forces.
  • "An important factor that supports Fed independence is the financial markets and the bond market." (Clarida, 07:32)
  • Politicians seeking low rates wouldn't get them if the market doubted the Fed's commitment to fighting inflation.

6. DOJ Investigation: How Should the Fed Chair Respond?

[07:57 – 08:42]

• Scarlett: Considers the DOJ's investigation into Jay Powell’s remarks.
• Clarida: Expects a brief, careful response from Powell, sticking closely to pre-prepared statements, then moving the press conference along.
  • "I think he'll have a crisp answer and he'll try to move on would be my guess." (Clarida, 08:34)

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Notable Quotes

• On Economic Strength:
  "Growth for 2025 will probably come in north of 2%, finishing strong. Inflation's been basically flat. It did not really move up as a result of the tariffs."
  — Richard Clarida ([01:10])

• On Divergence Beneath the Surface:
  "This may well be a year when the aggregates and averages are hiding a lot of interesting differences in the economy."
  — Richard Clarida ([02:32])

• On Fed Chair Candidates:
  "All three bring something a lot to the table. It's really going to be the call of President Trump..."
  — Richard Clarida ([04:47])

• On Lisa Cook’s Job Security:
  "I think there's a very high likelihood that Lisa Cook will continue in this role, you know, throughout certainly much if not all of this year."
  — Richard Clarida ([06:22])

• On Fed Independence:
  "I'm confident in Federal Reserve independence. That's clearly what Congress intended in terms of the way the Fed is set up... an important factor that supports Fed independence is the financial markets..."
  — Richard Clarida ([07:20], [07:32])

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Timestamps for Major Segments

• US Economy Outlook & Resilience: 00:36 – 01:50
• Corporate Caution & Economic Disparity: 01:50 – 02:52
• Fed Chair Candidates & Political Dynamics: 02:52 – 05:42
• Lisa Cook Supreme Court Case: 05:42 – 07:13
• Fed Independence: 07:13 – 07:57
• Fed Chair & DOJ Investigation: 07:57 – 08:42

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Memorable Moments

• Clarida’s “K-shape economy” observation: The ongoing divergence between beneficiaries of tech/asset booms and those left uncertain.
• Insider view on the strengths of Fed chair front-runners.
• Legal and political commentary delivered with cool confidence and respect for both economic and judicial processes.
• Clarida’s steady assurance on the resilience—and independence—of the Federal Reserve.

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Transcript

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[Scarlett]

Bloomberg Audio Studios Podcasts, Radio news let's bring in Rich Clarida. He is global Economic Adviser at Pimco. He is also a former Federal Reserve Vice Chairman. Rich, always a pleasure to speak with you. Give us your read on the US Economy right now because the economic data seem to suggest that it's holding on pretty well. It's, it's, it's solid. And the labor market is also not deteriorating even as inflation seems like it's on the right path.

[Rich Clarida]

Well, hi Scarlett. Yes, as we used to say during my time at the Fed, the US Economy is in a good place. And, and it is. It's been remarkably resilient. Growth for 2025 will probably come in north of 2%, finishing strong. Inflation's been basically flat. It did not really move up as a result of the tariffs. We've had strong capital spending in the TEC sector. Now in 2026, you've got the big beautiful bill which is providing a fiscal impulse. You've got commitments from foreign countries and companies to invest in the US and obviously the cap capital spending boom in the tech sector continues. And so indeed, I think you summarized it well, the economy is in a pretty good place.

[Scarlett]

It's in a pretty good place, certainly by the based on the headline economic indicators. Yet when you look at the anecdotal and here I'm referring to commentary from airlines to PNG to 3M so far this earnings season, a lot of it's focused on uncertainty, on caution, on what they're calling low consumer confidence. Rich, how much do you read into this downbeat commentary from companies on the front line?

[Rich Clarida]

Well, you know, Scarlett, I think, I think both can be true at the same time in the sense that you have a very positive impulse from the tech sector, from tech capital investment. And obviously households that, that own a lot of stocks and own their own home have done quite well because of the wealth effect, you know, the K shape economy that you talked about. But as you move outside of those sectors, I think there Is it is a more of an uneven story and I think uncertainty is more relevant and this may well be a year when the aggregates and averages are hiding a lot of interesting differences in the economy.

[Scarlett]

All right, let's turn now to the Federal Reserve. Rich, President Trump saying of course that he has finished interviewing candidates to serve as the next Fed chair. And earlier London business school lecturer Rebecca Hamkes appeared on Bloomberg Surveillance where she gave her take on who Trump may choose. Take a listen. We've really had different styles of leadership over the past decade or so. You know, Chairman Greenspan ran a very centralized, he was a much different leader. Ben Bernanke went much for consensus. We didn't have Janet Yellen in for very long. We're learning a lot over what Chairman Powell is doing. You know, and we can handle that. You know, the Fed is an independent body. Different leadership styles are to be expected and we've seen success from different ones. You know, I'm not quite sure what President Trump is looking for in the new one, but we do know that he very much values loyalty, probably part of the decision. Rich, how do you size up the remaining front running candidates and how do you think President Trump is going to size them up?

[Rich Clarida]

Well, of course, only President Trump knows where he's going to land. What I would say is I know all of them well. It does appear as though Kevin Hassett and the President have decided that perhaps his best role is to stay as the National Economic Council director. So that leaves Governor Waller, Kevin Warsh and Rick Reeder. I know each of them well. I think each of them would an effective Fed chair. But they bring different strengths and backgrounds to the, to the role. Chris Waller is a world class macro economist. He's also a good forecaster and good communicator in the case of, of Kevin Warsh. Kevin Warsh was a Fed governor. He's had very thoughtful and, and interesting things to say about changing the Fed as an institution and in particular thoughts on the balance sheet. And then finally Rick Reeder is a very respected legendary investor in financial and obviously would bring a lot of connectivity to, to the bond market. So all three bring something a lot to the table. It's really going to be the call of President Trump and we'll see where he ends up.

[Scarlett]

At this point when any of those picks surprise the bond market.

[Rich Clarida]

I think right now it's pretty even in the betting odds, I guess right now what would be a surprise? Would there be two surprises? One would be if, if Kevin Hassett decides and the President decide they do want him at after a week ago saying no, then of course there is some probability that Scott Besant does it. He would obviously be an excellent and very effective choice. But again, they've indicated that they the president wants Secretary Bussen to stay at the Treasury. But I think among the other three, probably right now the odds of Waller are a bit lower simply because he doesn't seem to have that connectivity to either the President or the treasury secretary.

[Scarlett]

And of course, personnel is policy when it comes to the Federal Reserve, which is why the president is so intent on changing the folks there. The Supreme Court this week heard arguments in the Lisa Cook case for the governor. They gave no ruling, but the justices do appear to be wary of President Trump's effort to fire her. What would I mean, do you expect any kind of change in the board of the Fed based on the Lisa Cook hearing, or is it safe to, to say that should be in place through the first half of the year?

[Rich Clarida]

Oh, I, again, not a legal expert. I just do economics. But I talk to them. And, and my sense from all the reporting, including by Bloomberg, is that the justices, both, you know, the more liberal and more conservative justices seem skeptical of the White House argument that, that, that it had met the standard of a four cause removal. And so I think there's a very high likelihood that Lisa Cook will continue in this role, you know, throughout certainly much if not all of this year. I mean, legal scholars seem to think that one likely scenario is that the Supreme Court merely rules narrowly that she cannot be removed and bump it back down to the lower courts to finally and indeed many justices indicated that they thought that the process was a bit rushed, indicating they would have preferred it to work through the lower courts before reaching them for final judgment.

[Scarlett]

Do you feel more or less confident in Federal Reserve independence this week?

[Rich Clarida]

I'm confident in Federal Reserve independence. That's clearly what Congress intended in terms of the way the Fed, the Fed is set up. And I've also said, including when I've done shows on Bloomberg, that I think an important factor that supports Fed independence is the financial markets and the bond market. And in particular, politicians who want low interest rates would not be getting low interest rates if the markets lost confidence in the Fed's inflation credibility. So, so I am, I am confident that that Fed independence will continue and, and be robust.

[Scarlett]

And that is something that Jay Powell is extremely concerned about. Clearly, given the DOJ's subpoenas investigation into his remarks. How does the Fed chair address the subpoenas in the post decision Q and A on Wednesday because I feel like it threatens to take over the entire proceedings.

[Rich Clarida]

He will be asked that. I think he will have a crisp answer when he's asked it initially and I think he'll stick to that answer. Probably not really wander too far away from what he said in that two minute video that was released a couple of of weeks ago. I don't expect him to belabor it. I think he'll have a crisp answer and he'll he'll try to move on would be my guess.

[Scarlett]

All right, Good stuff, Rich. Always appreciate your joining us, Rich Claire as the economic adviser pimco, and of course a former vice chairman at the Federal Reserve as well.

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