The Bulwark Podcast: Season 2, Episode 1031 - "Joe Weisenthal: Everything Screams Recession"
Release Date: April 29, 2025
Hosts: Tim Miller and Joe Weisenthal
Guest: Joe Weisenthal, Executive Editor of Digital News at Bloomberg and Co-Host of the Odd Lots Podcast
Introduction
In this episode, Tim Miller welcomes Joe Weisenthal to delve into the current economic landscape, focusing on the ominous signs pointing toward a potential recession. The discussion covers a range of topics, including market behavior, tariffs, supply chain disruptions, domestic economic impacts, and the role of cryptocurrency in uncertain times.
Economic Outlook and Market Resilience
Key Discussion: Goldman Sachs' projection of the U.S. experiencing the lowest economic growth and highest inflation among developed economies in 2025 sets a grim backdrop. Despite this, the S&P 500 remains surprisingly resilient.
Notable Insights: Joe expresses confusion over the market's lack of reaction to traditionally recession-indicative metrics. He states, "Everything screams recession right now by almost any traditional metric," reflecting his skepticism about the market’s current stability despite negative indicators (02:46).
Quote:
"A lot of people are scratching their heads about why isn't the market down more given what we can plainly see in much of the evidence." — Joe Weisenthal (04:37)
Treasury Secretary's Statements and Market Dynamics
Key Discussion: Tim references Treasury Secretary Scott Bessant's assertion that individual investors are holding steady while institutional investors are panicking. Joe elaborates on this dynamic, noting the significant involvement of retail investors who continue to invest aggressively despite broader economic concerns.
Notable Insights: Joe highlights the dichotomy between optimistic retail behaviors and the pessimistic outlook of institutional investors, questioning, "Is the market missing something?" (04:37).
Quote:
"There is still this belief of a blink or it can't really be as bad." — Joe Weisenthal (08:34)
Tariffs and Supply Chain Disruptions
Key Discussion: The conversation shifts to the impact of tariffs, particularly those imposed on Chinese goods. Joe discusses how tariffs are increasing costs for manufacturers who struggle to pass these costs onto consumers, leading to potential cutbacks in hiring and capital investments.
Notable Insights: Joe emphasizes the strain tariffs place on small businesses, making it difficult for them to survive under increased costs without the ability to adjust prices accordingly.
Quote:
"They're talking about how they're going to have higher costs but not going to be able to pass it on." — Joe Weisenthal (03:15)
Domestic Impacts: Small Businesses and Retailers
Key Discussion: The episode examines how tariffs and economic uncertainty are affecting domestic businesses, particularly during critical retail periods like the holiday season. Joe highlights the vulnerability of small businesses compared to large retailers like Walmart, which can absorb the financial shocks better.
Notable Insights: Joe warns of potential disruptions in supply chains leading to empty shelves and reduced product variety, which could disproportionately harm small businesses unable to sustain high tariffs.
Quote:
"Small businesses, which historically have been one of the most reliable Republican constituencies, really lose out to the giant retailers that can afford to take a gamble and can afford to take a hit." — Joe Weisenthal (23:23)
Reconciliation Bill and Budget Concerns
Key Discussion: Tim and Joe discuss the complexities surrounding the reconciliation bill, highlighting disagreements over budget cuts, Medicaid, SNAP, and tax deductions. Joe expresses skepticism about the administration's ability to effectively manage fiscal policy amidst these disagreements.
Notable Insights: Joe points out that Wall Street may not fully grasp the intricacies of D.C.'s budgetary conflicts, leading to an underestimation of the potential economic fallout.
Quote:
"I sort of think the only thing that Wall street has really thought about is, oh, yeah, they're going to like extend the tax cuts." — Joe Weisenthal (35:43)
Energy Sector and Domestic Production
Key Discussion: The discussion moves to the energy sector, focusing on coal jobs and the administration's inconsistent policies toward energy production. Joe notes the industry's dissatisfaction despite Republican rhetoric favoring domestic energy expansion.
Notable Insights: Joe criticizes the lack of substantial support for high-risk, high-capital investments necessary for revitalizing sectors like shipbuilding and energy, especially in a shrinking economy.
Quote:
"In a shrinking economy, if that's what we're going to get, if there's going to be this recession that a lot of people are anticipating, investors aren't going to do that." — Joe Weisenthal (29:29)
Worst-Case Economic Scenarios
Key Discussion: Joe outlines potential doomsday scenarios, including severe supply shortages and a sustained recession that traditional macroeconomic policies might fail to mitigate. He emphasizes the societal disruptions that could arise from prolonged economic downturns.
Notable Insights: The conversation underscores the limitations of monetary stimulus in addressing supply-side shocks, aligning with Megan McArdle's assertion that such measures can exacerbate inflation without resolving underlying issues.
Quote:
"If there aren't things to buy, if there aren't industries to serve them, then it becomes a lot harder to see how you get that countercyclical macro policy that stabilizes things." — Joe Weisenthal (46:50)
Cryptocurrency Discussions
Key Discussion: In the final segment, Tim and Joe explore the rise of Trump's crypto firm amid economic uncertainty. They discuss the potential for cryptocurrencies like Bitcoin to serve as safe-haven assets, as well as the speculative risks associated with digital currencies in a volatile market.
Notable Insights: Joe remains cautious about the speculative nature of many cryptocurrencies but acknowledges the growing interest in Bitcoin as a non-sovereign asset holding value similar to gold.
Quote:
"I think that we should at least be looking out for it. People actually treating bitcoin as a safe haven asset the way many of its proponents have been advertised for a long time." — Joe Weisenthal (49:13)
Conclusion
The episode concludes with a reflection on the intertwined challenges of tariffs, economic policy, and market behavior, leaving listeners with a comprehensive understanding of the precarious economic situation and the factors contributing to the looming recession.
Notable Quotes:
- "Everything screams recession right now by almost any traditional metric." — Joe Weisenthal (02:46)
- "There's this belief of a blink or it can't really be as bad." — Joe Weisenthal (08:34)
- "They're talking about how they're going to have higher costs but not going to be able to pass it on." — Joe Weisenthal (03:15)
- "Small businesses, which historically have been one of the most reliable Republican constituencies, really lose out to the giant retailers..." — Joe Weisenthal (23:23)
- "I sort of think the only thing that Wall street has really thought about is, oh, yeah, they're going to like extend the tax cuts." — Joe Weisenthal (35:43)
- "In a shrinking economy... investors aren't going to do that." — Joe Weisenthal (29:29)
- "If there aren't things to buy... it becomes a lot harder to see how you get that countercyclical macro policy that stabilizes things." — Joe Weisenthal (46:50)
- "People actually treating bitcoin as a safe haven asset the way many of its proponents have been advertised for a long time." — Joe Weisenthal (49:13)
Produced by Katie Cooper with audio engineering and editing by Jason Brown.
Timestamp Reference
- 02:46: Joe discusses traditional recession indicators.
- 03:15: Tariffs increasing costs for manufacturers.
- 04:37: Market resilience vs economic indicators.
- 08:34: Institutional disbelief in economic downturn severity.
- 23:23: Impact of tariffs on small businesses vs large retailers.
- 29:29: Challenges in domestic energy and shipbuilding investments.
- 35:43: Wall Street's perception of budgetary policies.
- 46:50: Limitations of monetary stimulus in addressing supply shocks.
- 49:13: Cryptocurrency as a safe-haven asset.
For more in-depth analysis and discussions, listen to the full episode of The Bulwark Podcast.