Odd Lots – A Trip to Alaska With San Fran Fed President Mary Daly

Hosts: Joe Weisenthal, Tracy Alloway (Bloomberg)
Guest: Mary Daly, President of the Federal Reserve Bank of San Francisco
Date: October 17, 2025

Overview

This special episode follows Bloomberg reporters Joe Weisenthal and Tracy Alloway as they accompany San Francisco Fed President Mary Daly on her August fact-finding trip across Alaska. The journey puts a spotlight on how Alaska's unique logistics, geography, and exposure to tariffs create an amplified version of the economic themes facing the wider US: inflation, supply chain fragility, labor market shifts, and the challenges of interpreting data versus on-the-ground realities. Daly’s observations and conversations with local business and civic leaders feed into the Federal Reserve’s monetary policy deliberations, and the episode details how regional understanding shapes national economic decisions, notably a recent Fed rate cut.

Key Discussion Points and Insights

1. Fed Rate Cut Context and Rationale

• Recent Decision: The Fed cut rates by 0.25% at its September meeting, after a year of no cuts and extensive debate.
  • “The question is not if they'll cut interest rates. The question is by how much? The answer to your question, John, is a quarter percentage point cut, as expected.”
    – Mary Daly (01:38)
• Mixed Economic Signals:
  • Labor market showing signs of slowing but remains strong.
  • Inflation running above the Fed’s 2% target, with tariffs threatening further increases.
  • “You could make a convincing case for deeper cuts, but you could also make a case for even raising benchmark rates at this point.”
    – Tracy Alloway (02:35)
• Data vs. Ground Observations:
  • Fed’s “data-dependence” is augmented by local experiences and insights.
  • “You could look at 100 series and you would never have the complete picture.”
    – Mary Daly (08:18)

2. Why Alaska? The State as an Economic Microcosm

• Alaska’s Size and Isolation:
  • Two and a half times the size of Texas; cities and supply lines highly isolated.
  • Anchorage is a major logistics hub, but distances and lack of infrastructure amplify national issues.
  • “Alaska is the size of two and a half Texas...The only way to get from Anchorage...to Juneau, which is the capital, is a two hour plane ride.”
    – Tracy Alloway (05:43)
• Challenges Mirror Broader US Trends:
  • Facing inflation, unemployment, tariffs, housing shortages, and logistical snarls—just more acutely.
  • Alaska serves as a canary in the coal mine for national trends: “It really is sort of this canary in the coal mine almost that when you see it here, you know it's coming elsewhere.”
    – Joe Weisenthal (32:59)

3. The Fact-Finding Expedition: Learning from Locals

• Anchorage Economic Development Corp. Gathering:
  • Over 1,500 local leaders hear Mary Daly’s economic assessments, provide feedback.
  • “Uncertainty is the word of the day... which makes it harder for us as policymakers.”
    – Mary Daly (07:44)
• On-the-Ground Insight vs. Published Data:
  • Revised jobs report matched what Daly heard in Alaska before official numbers were updated.
  • “A disciplining device for data that you don’t know if they're really accurate is what you hear from people...”
    – Mary Daly (09:38)

4. Tariffs and Supply Chain Constraints

a. Oilfield Manufacturing (Northern Solutions Visit)

• Steel Tariffs:
  • Lead time and specialization are bigger bottlenecks than price alone.
  • Switching to US suppliers isn’t simple due to technical requirements and “Buy America” provisions.
  • “Not everybody is here to your industry. You have to have a specific heat strategy in order to even use the materials.”
    – Mary Daly (13:06)
  • “All steel isn't equal.”
    – Tracy Alloway (12:18)
  • Global supply constraints mean tariffs raise the cost, even when using US inputs.

b. Port of Alaska

• Logistics Vulnerabilities:

  • 94-96% of Alaska’s food is imported; only four container ships per week.
  • Tiny supply slack: “We have six to ten days’ worth of food in the state.”
    – Mary Daly (18:54)
  • Any shipping delay can empty shelves for days or weeks.
  • Lack of warehousing due to small population, vast area.

• Tariff “Death Spiral”:

  • Increased tariffs or port fees risk driving shippers elsewhere (e.g., to Whittier), further reducing port revenue and requiring higher fees for remaining customers.
  • “We raise our tariffs per ton enough... we now have to increase our tariffs more. So we're getting into this spiral. Food prices just went up even more.”
    – Mary Daly (22:23)
  • “The normal way that all this, any kind of extra tax ships out is you either wait longer or you pay more.”
    – Joe Weisenthal (23:26)
  • Cost pass-through to end users can be limited by consumer resistance.

• Construction & Infrastructure:

  • Modernization project ballooned from $400 million to $2.5 billion in cost, partly due to tariffs inflating material prices.
  • “We started off 10 years ago with something that was $400 million, and we're at 2.5 billion now.”
    – Port of Alaska Representative (26:47)

c. Airport as Key Logistics Node

• Anchorage Airport – Cargo Hub:
  • 3.7 million tons of cargo in 2025; fourth busiest in the world, supporting 1 in 7 local jobs.
  • Essential for intra-state and international goods movement.
  • “It's also the fourth busiest cargo airport in the world and the second busiest in the United States.”
    – Susan Alt (29:40)
  • Essential for oil field shift work and remote community supply.

5. Alaska as Economic Early Warning

• Multiple guests and hosts note that economic shocks—tariffs, supply chain breakdowns, inflation—tend to hit Alaska first, providing a preview of potential downstream effects for the rest of the US.
• “Any shock we get in the United States just in that, I'm sorry, you get it amplified.”
  – Joe Weisenthal (32:28)
• The particularity and fragility of Alaska’s economy stress-test ideas about policy impacts.

Notable Quotes & Memorable Moments

• On the uniqueness of Alaska’s supply chain:
  • “If we lose a ship... that's 25% of the food for the next week.”
    – Port of Alaska Representative (18:54)
• On lack of data clarity:
  • “The data alone... you would never have the complete picture.”
    – Mary Daly (08:18)
• On inflation and pass-through:
  • “How much of the extra cost coming from the tariffs is going to be absorbed by the companies themselves... and how much... is going to be passed on to consumers?”
    – Tracy Alloway (24:56)
• On Alaska as a leading indicator:
  • “It really is sort of this canary in the coal mine almost that when you see it here, you know it's coming elsewhere.”
    – Joe Weisenthal (32:59)
• On living in constant logistical stress:
  • “I've never just felt distant like I did in Alaska... it’s a state permanently in a state of sort of supply chain stress.”
    – Jill Weisenthal (35:24)
  • “All that stuff has to be transported thousands and thousands of miles to get there.”
    – Tracy Alloway (35:39)

Key Timestamps

• Fed rate cut context – 01:38–02:35
• Why Alaska? Regional vulnerabilities – 03:53–05:43
• Insight from local business (Northern Solutions, Steel) – 10:46–13:47
• Port of Alaska fragility and logistics – 17:03–24:04
• Construction/tariffs and cost jump – 26:07–26:54
• Airport as global/local hub – 29:26–32:41
• Alaska as canary in the coal mine for US economy – 32:59–33:35
• Host reflections and wrap-up – 35:02–36:36

Conclusion

The episode paints Alaska as an “amplifier” for US economic challenges: supply chain fragility, cost inflation, logistical bottlenecks, and the effects of national policy choices like tariffs. Mary Daly’s visit highlights how gathering local intelligence can fill gaps left by macroeconomic data, guiding more nuanced central bank decision-making. The conversations reveal the complex, cascading impacts of economic policy at the edge of the US, making Alaska a vital, if extreme, lens through which the Fed can gauge the downstream effects likely to surface elsewhere.