Loading summary
Transcript15 lines
- [00:00]
Tim Miller
Hey guys. Tim Miller from the Bulwark here with my Next Level podcast co host, jvl. We saw this report from the Anderson School. It's a business school at ucla. My girl Katie went there. Shout out to Katie and they write this. UCLA Anderson forecast announces a recession. Watch Trump policies have fully enacted Promise a recession. And then they go through a bunch of details. Jbl, what struck you about this most?
- [00:28]
JVL
It's pretty bad. So the, what struck me the most about this, this piece by the, the Economist there. And again, these are not like never Trump cucks, these are serious economists is that they say the economy is, is good right now. The economy is, is strong right now. Joe Biden's economy is strong right now. Their concern is all about the choices being made by the Trump administration. And the key takeaway is that recessions happen when there's a confluence of events. Having one sector tip over having one problem in the economy isn't enough to cause a recession.
- [01:06]
Tim Miller
Right.
- [01:06]
JVL
Typically you need like two or three things going wrong at once. And I mean, I can walk you through this.
- [01:12]
Tim Miller
If you like it, let's walk through it. Let's do it.
- [01:15]
JVL
Yeah. So the, the, they start with the things that they, they believe the Trump administration is going to do. And the first is tariffs. So tariffs will cause a slowdown. Just a fact. It will cause rising prices. Just a fact. The second thing is the Doge cuts.
- [01:33]
Tim Miller
Just before the Doge cuts, I just want to highlight just a few things they point out auto sector downstream and upstream for auto sector, retail, agriculture will also likely contract. This is one of those things again where if they do the tariffs and Trump bails out one of these sectors or another, two of these sectors or another, there's still all these like ancillary, you know, sectors that get impacted by it. Even if the farmers get bailed out.
- [01:58]
JVL
Right. And also, even if it was just the tariffs, like again, right. You know, we're talking about, you know, monocausal. Right. You can, you can, you can weather that. So Doge. So they say Musk has said he wants to cut 10 to 15% of the federal workforce. So they say the size of the federal government is roughly 10 million people. That means we'd have a layoff. It would be the largest layoff in American history to be a million people getting pushed into the job market basically at the same time. And what's worse about this is that normally in the economy, government jobs are stabilizing because they're consistent, because they're safe. When you have a recession the existence of government jobs are, you know, they're like baffles. They keep everything a little bit. A little bit calmer. So losing those types of jobs is going to cause a lot of turbulence.
- [02:56]
Tim Miller
Yeah. I want to add two anecdotes to this on the public sector job loss, because again, that is a problem in itself. It's a problem in its own right. But I've got Scott Galloway on yesterday from the business school perspective. He's like, well, a lot of private sector people maybe won't have sympathy for this. This happens in other sectors where people lose their jobs. Maybe you just need a contraction of the federal government. I. Even if you accept that argument, the impact on private sector stuff also, you know, kind of runs downstream for that. You know, like, I just got this text from a friend right before we popped on. 40% of D.C. restaurants are saying that they're likely to close by the end of the year just because, like, they're not going to have the who's. Who's who is their clientele government employees. Right. And so that's a huge job loss. It's only in one market. Right. So it's not causing recession. But then you start to see this. Are federal government workers everywhere. I think I mentioned on last week's tnl, I talked to a farmer in Louisiana whose, whose clients were the school district and the food bank. And you know, as part of these cuts, they're no longer, you know, they no longer have the funds to support the local farms. That was part of an initiative that they'd been working on during the Biden administration. So that farmer like, that he could lose his farm, which is a couple of jobs. Right. So like, all this stuff, not to steal from Ronnie Reagan, but trickles down, you know, and like, has other as impacts, like, across the economy.
- [04:22]
JVL
So then we get to Immigration and the Anderson School people say, you know, the construction sector is an incredibly important business in America. It sort of drives a whole bunch of other things. And if, if we really get mass deportations, the construction industry heavily dependent on undocumented immigrants. Right. Yeah. And this is, again, so you have all three of these things. These are signature policy initiatives of Trump. All three of them will cause massive economic harm.
- [04:58]
Tim Miller
Yeah. And so again, I just want to give one other anecdote. You're here to. We have the business school example. You know, I'm just a man of the people. I'm just telling you what's happening out there in the real world. Here's just another example of how the construction industry Costs going up because of that's related to both tariffs and immigration really. It has impacts on people even who aren't purchasing a home or who aren't building something. We got a letter from our insurance carrier about how insurance prices on our house are going up next year and my husband emailed it and I was like, why? We didn't have any issues last year. There was no hurricanes didn't hit New Orleans like this last year. It's one of those things where there had been a big disruption in Louisiana. You'd understand that we already pay very high insurance rates. Why is it the reply came back? Well, the insurance company now has to price in that the cost of rebuilding. Things are going to go up higher, right? They're going to be higher, right, because of the tariffs, immigration, whatever the cost of, you know, of lumber and steel is going up. If the cost of, of, of the, the employees you have to pay to do it, the labor force goes up. Okay, well what are they going to do? They're passing that down to us. So we, you know, we bought our house two, three years ago now, like we're not in the market. Like this might not affect us but you know, we're going to be paying X more per year in insurance. Like, you know, like the stuff like that's how it gets its tentacles into, you know, all of the parts of.
- [06:25]
JVL
The economy, you know. So it's funny you talked about buying a house. Here's, I'm just going to read from the report. House prices are near record levels while the number of new unsold homes on the market is at levels last seen in 2009 and still climbing. So the, the next phase of their report, which, which is again a, like hey, we ought to be on a watch, is that there is some underlying instability in the market. And this, this stuff is happening in housing where again we have something that doesn't look balanced. It's in the securities market where the stock market has been very, very high. And I guess you could say Donald Trump is trying to fix that by bringing it down. People aren't going to feel real good about that. And again, I'm going to read from the report. There has been a surge in investment in somewhat speculative assets like artificial intelligence as well as purely speculative assets like crypto, cryptocurrencies. Corporate bond spreads are near all time lows suggesting investors still aren't fully pricing in risk. You add all this stuff up to the, the Doge cuts and the immigration stuff and the tariffs, this can be.
- [07:37]
Tim Miller
Real bad man, it's ugly. Here's how they end it. The Anderson School Report. Some administrations inherit the conditions of a looming recession. What's unique about this recession watch is that to a large degree, it depends on incoming policy. Recession is thus entirely avoidable. The policies outlined above are pared back. They're unlikely to trigger one. And who knows, maybe. And this was the bet that all of the Trump humpers made, right? Was that like, he wasn't actually going to do the stuff that he said he was going to do. So far, he's doing all the stuff that he said he's going to do on superspeed. So we'll see what happens. But the problem is, it's like with these sorts of recessions or anything that gets out of your control, there's no magic, no recession button, right? So if these actions trigger what these analysts say very well might happen, which is a recession, and then Trump decides, okay, fuck, let's pare it back. We're going to talk about Gulf of America again. Or we're going to. Whatever Occupy wins are to distract people from the fact that I'm pulling back from the tariffs and pulling back from the Doge cuts, then it's too late, right? You have to pare it back before the impacts start being too.
- [08:49]
JVL
Yeah, I mean, once the business cycle is falling. Getting that soft, people don't appreciate the amazing achievement that Biden engineered. Getting a soft landing coming out of COVID We ain't getting another one.
- [09:03]
Tim Miller
All right, guys, so there you go. When we see Recession Watch 2025 from somebody without TDS, something that we want to make sure to share with you. That's Clement Bohr, economist at the UCLA Anderson. We'll keep our eye out on all of this for you guys. Thanks to jbl. Subscribe to the feed Tell your friends we'll be here soon. Your messengers of death. JVL and Tim, see you soon. Peace.