Bloomberg Talks

Episode: Robert Kaplan Talks Fed Decision, Policy in 2026
Date: December 11, 2025
Host: Bloomberg
Guest: Robert Kaplan (Goldman Sachs, former Dallas Fed President)

Episode Overview

In this episode, Bloomberg hosts a candid discussion with Robert Kaplan, former president of the Dallas Fed and now with Goldman Sachs, diving into the recent Federal Reserve decision, the evolving impact of artificial intelligence (AI) on productivity, the dual mandate tension within the Fed, economic outlook for 2026, M&A activity, and private credit markets. Kaplan offers perspective on why policy debates are intensifying and what’s driving strategic corporate actions as the economy evolves.

Key Discussion Points & Insights

The Early Days of AI and Its Economic Impact

• AI Infrastructure Versus Adoption:
  Kaplan emphasizes the current focus is largely on AI infrastructure, not yet on widespread business adoption.

  “We’re in the early stages of AI adoption. Most of the talk about AI right now is about the infrastructure build, but that's different than the downstream adoption. We're in the first or second inning.”
  (Robert Kaplan, 01:06)

• Productivity Potential:
  He forecasts meaningful gains in U.S. productivity over the next five years:

  “When we talk five years from now, we'll see a half a percentage point gain in productivity growth for GDP and it will help business... and which use cases work and which don't, we’re going to spend the next three years trying to figure that out.”
  (Robert Kaplan, 01:06)

• Crucial for Growth:
  With sluggish workforce and low immigration, AI-driven productivity becomes vital.

  “We don’t have much immigration at the moment. Bulk of our GDP growth's got to come from productivity growth. So AI is very important to the world and to the US and yeah, half a percentage point would be a big deal.”
  (Robert Kaplan, 02:00)

Fed Decision and the Dual Mandate Debate

• Disagreement Inside the Fed Room:
  Kaplan notes more internal debate than the public might perceive about where rates should be.

  “I think in the room there was a lot more disagreement than it may have looked like. Only a couple of dissents, but we're at or near neutral.”
  (Robert Kaplan, 02:17)

• Fed's Balancing Act:
  He critiques the challenge of pursuing both employment and inflation targets, especially post-pandemic:

  “For a lot of the last 10 or 15 years... The Fed had the luxury exactly pre Covid of not having an inflation problem. So it could focus heavily on what was going on employment... post Covid... they got to deal with both and it's harder.”
  (Robert Kaplan, 03:31 & 03:37)

• Headwinds and 2026 Outlook:
  Cites tariffs, immigration policy, and the government shutdown as recent drag factors, but expects firming in 2026 with tax incentives and AI momentum.

  “Going into 26 we're in have tax incentives, we've got this AI boom continuing. And I think the... economy is likely to firm. And you saw that in the dot plot...”
  (Robert Kaplan, 04:17)

Corporate Sentiment and M&A Activity

• Confidence for 2026:
  Corporate clients at Goldman Sachs are generally positive:

  “Most companies believe as we do that 26, you'll see firming GDP growth because of tax incentives and other reasons.”
  (Robert Kaplan, 05:16)

• M&A Drivers – The Scale Imperative:
  Kaplan identifies technological investment needs as the driver behind recent surge in M&A:

  “I've never seen a period in my business career where there wasn't a bigger concern about the need for size and scale to afford the technology investment and that's driving lot of merger activity.”
  (Robert Kaplan, 05:27)

• Transformation of Market Structure:
  While large-scale companies get bigger, AI is also empowering smaller players—but the competitive "middle" grows:

  “You'll have lots of very big huge scale companies that are dominant and you're going to have a lot in between. And I guess we had said in between has gotten a lot bigger in the last... companies that used to think they were big and dominant and still are less dominant.”
  (Robert Kaplan, 05:50)

Strategies for "Old Industry" and Margin Pressure

• Necessity of Investment:
  Established firms must invest in tech and efficiency, but this squeezes short-term margins—hence belt-tightening.

  “Build size and scale and make more investment in efficiency, productivity, technology and so all that costs money and in the short run reduces margins. And that's why you also see a lot of belt tightening right now to offset some of the margin impact.”
  (Robert Kaplan, 06:27)

Private Credit Markets

• Role and Risks:
  Kaplan sees private credit as a constructive addition to capital markets but highlights risk in sub-investment-grade lending:

  “Private credit... has been a good addition to bank lending… I'd be careful about that [less-than investment grade private credit].”
  (Robert Kaplan, 06:54 & 07:12)

• Caution About Credit Cycles:
  Warns that the lack of recent credit cycles could be lulling investors:

  “We haven’t had a credit cycle in many years. We’re not going to have one, I don’t think in 26... eventually... I’d be careful about that.”
  (Robert Kaplan, 07:12)

Notable Quotes & Memorable Moments

• On AI’s Potential
  “If you got a half a percentage point jump in productivity growth, that’s a huge deal.”
  (Robert Kaplan, 01:49)

• On the Fed’s Dilemma
  “They have to make trade off decisions and that's hard to do.”
  (Robert Kaplan, 03:37)

• On Scale in Modern Business “Need for size and scale to afford the technology investment and that's driving lot of merger activity.”
  (Robert Kaplan, 05:27)

Timestamps for Important Segments

• AI’s Stage and Productivity Forecast – 01:06
• Why AI Matters for U.S. Growth Now – 02:00
• Fed Decision: Internal Debate and Neutral Rate – 02:17
• Dual Mandate Tension, Post-Covid Dynamics – 03:31 – 04:17
• 2026 Economic Outlook & M&A Drivers – 05:16 – 05:27
• Transformation of Competition: Big, Small, Middle – 05:50
• Old Industry and Margin Pressures – 06:27
• Private Credit: Opportunities and Warnings – 06:54 – 07:12

Summary

Robert Kaplan delivers a nuanced, forward-looking assessment of where both policy and corporate America are heading. He underscores the emerging, not-yet-certain impact of AI on productivity, the intensifying difficulty of achieving the Fed's dual mandate, and the growing imperatives for scale among major firms. While signaling optimism for 2026—supported by favorable policy and tech innovation—he also counsels caution regarding credit markets and the concentration of market power. This episode offers listeners a clear, high-level roadmap as the economy enters a new, more complex phase.