You Have Questions About the Economy. We Have Answers.

Summary

Summary of "You Have Questions About the Economy. We Have Answers." – The Daily by The New York Times

Release Date: May 5, 2025

In this insightful episode of The Daily, host Michael Barbaro engages with Chief Economics Correspondent Ben Castleman to address pressing economic concerns raised by listeners. The episode delves deep into the ramifications of President Trump's tariff policies, exploring their impact on consumer goods, the housing market, the job sector, the stock market, and the overarching fear of a potential recession.

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1. Tariffs and Consumer Goods: Navigating Increased Costs and Scarcity

Key Discussion Points:

• Impact on Baby Products: Listener Sarah from Saginaw, Michigan, voices anxiety about the availability and cost of baby supplies due to high tariffs on Chinese imports. She fears empty shelves and soaring prices for essentials like strollers and cribs.

  Notable Quote:

  "President Trump has imposed 145% tariffs on products from China... a lot of our strollers and cribs and other baby equipment comes from China. And a lot of that is not gonna come." (05:04)

• Supply Chain Disruptions: Ben explains that exorbitant tariffs render it financially unfeasible for manufacturers to import certain goods, leading to reduced availability. He advises cautious purchasing, suggesting that while panic buying can exacerbate shortages, securing essential items sooner rather than later might be prudent.

  Notable Quote:

  "It's a situation where really the idea of trying to get something now before the tariffs make it impossible to get at any price is something I think we're gonna see a lot of people starting to think about." (06:08)

2. Housing Market: Rising Costs and Challenges in Home Buying

Key Discussion Points:

• Increased Building Costs: Questions about how tariffs affect housing lead to a discussion on rising costs for materials like lumber and appliances imported from countries like Canada and China. These increased costs, coupled with higher interest rates, make constructing and buying homes more expensive.

  Notable Quote:

  "Tariffs are gonna directly hit the cost of building a home... the supply of homes is gonna be lower. And so it could be a really tough time to buy a home." (09:09)

• Mortgage Rate Concerns: Despite hopes for stabilization, mortgage rates remain around 7%, deterring potential homebuyers. Ben emphasizes that if tariffs contribute to sustained inflation, the Federal Reserve is likely to maintain high interest rates, further complicating home purchasing decisions.

  Notable Quote:

  "Mortgage rates have not come down. They're still hanging out around 7%. That's pretty high." (09:53)

3. Job Market Uncertainty: A Stagnant Landscape Amid Economic Policies

Key Discussion Points:

• Hiring Hesitancy: A listener with an MBA expresses frustration over the tough job market, highlighting the paradox of low unemployment rates coexisting with high-profile layoffs and hiring freezes. Ben attributes this to economic uncertainty driven by fluctuating tariffs and broader policy shifts.

  Notable Quote:

  "Companies are trying to figure out what's happening in the economy and where things are going. They're very reluctant to hire." (12:18)

• Potential for Job Cuts: The uncertainty surrounding tariff policies may lead companies to either pause hiring or initiate layoffs if economic conditions deteriorate further, exacerbating unemployment concerns.

  Notable Quote:

  "There are real questions about the long term stability of the financial system... We could be sowing the seeds of some much deeper long run problems." (26:07)

4. Stock Market and Retirement: Navigating Volatility and Savings Strategies

Key Discussion Points:

• Market Volatility Impacting Savings: Listeners inquire about the best strategies for managing retirement and education savings amidst a volatile stock market influenced by tariff-induced economic shifts. Questions arise about whether to increase 401(k) contributions or focus on debt repayment.

  Notable Quote:

  "If you're sitting here saying like should I start my 401k? Start your 401k." (18:30)

• Advice on Investment Timing: Ben advises against attempting to time the market, emphasizing the importance of long-term investment strategies. He recommends that funds meant for near-term needs remain in safer investments rather than the fluctuating stock market.

  Notable Quote:

  "Don't put money into the stock market that you need in the next couple of years and put money in that you can afford to risk." (19:38)

5. Fear of Recession: Assessing the Likelihood and Potential Severity

Key Discussion Points:

• Recession Indicators: Multiple listeners express concern over recession fears exacerbated by tariffs, with questions about the probability and potential severity compared to past economic downturns.

  Notable Quote:

  "I keep seeing things online about recession indicators... Is a recession coming?" (24:43)

• Expert Analysis on Recession Probability: Ben suggests that while a recession isn't inevitable, the combination of higher prices and slower growth poses significant challenges. He notes that existing economic policies and international relations could either mitigate or exacerbate these concerns, making the future economically uncertain.

  Notable Quote:

  "Most of the economists that I talk to say that if there is a recession, it has the potential to be a comparatively mild one... But there are real questions about the long term stability." (26:07)

• Long-Term Economic Concerns: Beyond immediate recession fears, Ben highlights underlying issues such as diminished global confidence in the U.S. financial system and the potential for enduring economic instability due to aggressive tariff policies and strained international alliances.

  Notable Quote:

  "We have certainly seen some cracks in the confidence in that [US economy]." (28:22)

6. Potential Economic Outcomes: Balancing Optimism and Skepticism

Key Discussion Points:

• Reversal of Tariff Policies: There is a possibility that tariffs could be rolled back, potentially stabilizing the stock market and restoring some economic confidence. However, the uncertainty surrounding policy continuity remains a significant barrier.

  Notable Quote:

  "If the President comes out next week and says nevermind about the tariffs, I'm not sure that CEOs are all going to say, well, I guess we're fine then." (30:11)

• Long-Term Economic Impacts: Even if tariffs are reversed, the episode underscores that pre-existing economic damages and shifts in business confidence may have lasting effects that won't be easily undone, potentially leading to sustained economic challenges.

  Notable Quote:

  "There are real questions about the long run damage that may have already been done, especially when it comes to just business confidence." (30:11)

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Conclusion

The episode closes by reiterating the complex and intertwined nature of current economic challenges, emphasizing that while some negative trends might be mitigated, the overarching uncertainty fueled by tariff policies and international relations continues to cast a long shadow over the U.S. economy. Michael Barbaro wraps up with a brief update on stock market movements, noting the S&P 500's recovery despite ongoing recession fears, leaving listeners with much to ponder about the future economic landscape.

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For a comprehensive understanding and further insights, listeners are encouraged to tune into the full episode of "You Have Questions About the Economy. We Have Answers." on The Daily by The New York Times.

Transcript

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[Listener 1]

Hi Michael and everyone at the Daily. Good morning.

[Listener 2]

Hey.

[Listener 1]

Hi.

[Michael Barbaro]

Daily hello from the New York Times. I'm Michael Balbaro. This is the Daily. I had a quick question about Trump's tariff policies.

[Listener 1]

I have so many questions, I'm struggling to choose priority.

[Michael Barbaro]

At a time of enormous economic upheaval and uncertainty triggered by President Trump's trade war, we asked you, our listeners, what you want to understand about this financial moment.

[Listener 1]

How many American businesses will even survive this?

[Michael Barbaro]

What can actually be done to bring down the cost of goods? No matter how big is whether or.

[Listener 2]

Not the American dream is feasible in the next coming years?

[Listener 1]

What can I do to prepare for.

[Michael Barbaro]

Uncertain catastrophe or small?

[Listener 1]

How will this affect Parmesan cheese? I love parmesan cheese.

[Michael Barbaro]

Today, my colleague, Chief Economics Corp. Correspondent Ben Castleman, tries to answer those questions.

[Listener 1]

Please help me understand. Are we gonna be okay? The people need ANSWERS.

[Michael Barbaro]

It's Monday, May 5th. Ben, always a pleasure.

[Listener 2]

Michael, thanks for having me.

[Michael Barbaro]

You know, we're gonna do something a little bit different here.

[Listener 2]

I hear it's not just us that we'll be hearing today.

[Michael Barbaro]

No, not just us. And I think a little backstory is in order. We came to you, as we do with some, I suspect, annoying frequency, to ask you how to think about the economy. And when we talked to you last week, you said, sure, there's a ton going on in the economy because of everything that President Trump has done to the economy. But that just looking at the raw data, nothing much has changed since we last spoke with you, maybe a couple weeks ago. But everyone we know is feeling something very acute in their financial lives. And it felt like we needed to listen to that. And we thought, what if we hand our microphone to our listeners and just acknowledge how many people have questions and anxieties, worries, concerns that they want to get answers to?

[Listener 2]

I love this. And I have to say I hear all the time recently from friends, from family, from long lost acquaintances who are asking me these kinds of questions. And we're all spending our time asking these questions because like you say, it's not that clear in the data yet, but clearly something is happening and we're all trying to figure it out.

[Michael Barbaro]

Exactly. So we put a call out to our listeners for their questions and they showed up in force.

[Listener 2]

Hello, my name is Elliot yeager. I am 22 and I'm living in Boston, Massachusetts.

[Listener 1]

I'm 29 years old and I live in Houston, Texas.

[Listener 2]

I'm 67 and live in White River Junction, Vermont. I am 55 and I live in California.

[Michael Barbaro]

Hundreds and hundreds of questions from Indianapolis, Indiana, from New Orleans, Louisiana, from Olympia, Washington, came our way in the form of voice memos. It's not gonna surprise you to hear that a lot of those questions revolve around tariffs.

[Listener 2]

I'm not surprised we're getting these questions and I will do my best, but frankly, the policies have been changing at such a speed that I don't know if by the time listeners hear this, we won't have had another round of changes. So I will do my darndest, but bear with me.

[Michael Barbaro]

Okay, caveat accepted. I want to start with a question that I think really encapsulates listeners curiosities around the tariffs.

[Listener 1]

Hi, New York Times. My name is Sarah. I'm 27 years old, living in Saginaw, Michigan. My husband and I are expecting our first baby in October. My question today pertains to tariffs. Is there anything that new expecting parents can do to prepare? I'm worried about not having supplies for my baby empty shelves and the cost of goods greatly increasing, especially those from China.

[Michael Barbaro]

What do you have to say besides mazel tov?

[Listener 2]

I was going to say, first of all, congratulations. You know, we normally think of tariffs as being mostly about higher prices, and they are for sure, but they can also be about the availability of goods. And when we talk about goods from China in particular, right now, President Trump has imposed 145% tariffs on products from China. And you talk to some businesses. I talked to a toy manufacturer recently who said at a certain point, 145, 150, he said a billion percent, it doesn't matter. I cannot pay that. And so there's certain things that just may not come in. Baby goods are a prime example of this. A ton of our strollers and cribs and other baby equipment comes from China. And a lot of that is not gonna come. Now, look, eventually, right, People will figure out workarounds. It's not like no crib will ever enter this country again. But you know, babies famously come on a timeline.

[Michael Barbaro]

Sarah can't sometimes ahead of time.

[Listener 2]

Sarah can't presumably just Say, you know, nevermind, we'll get the crib sometime next year. And so this is a situation where really the idea of trying to get something now before the tariffs make it impossible to get at any price is something I think we're gonna see a lot of people starting to think about.

[Michael Barbaro]

I think a reasonable question, and it's implied in Sarah's question, is, is it okay to kind of panic buy now, we all know what happens when lots and lots of people decide to do that collectively at the same time. That's what happened during the pandemic. It can actually be pretty counterproductive and yet entirely, in this case, understandable.

[Listener 2]

Yeah, I mean, look, we saw in the pandemic how complicated supply chains are, how small disruptions can filter through in unexpected ways. Look, I don't think you need to rush out and buy a year's worth of socks right now necessarily, but it's.

[Michael Barbaro]

Probably not a bad idea to buy a crib.

[Listener 2]

You know, look, I'm cautious about giving specific advice to a specific person, but, yeah, I don't think it's crazy to say I better place that order for the crib now, even though I'm not gonna need it for a little bit.

[Michael Barbaro]

How likely are empty shelves? I believe that both Walmart and Target have found a way to warn the White House that that could be a thing. Not totally empty shelves, but not really full shelves either, if the tariffs against China remain in place.

[Listener 2]

Well, we heard President Trump functionally acknowledge that recently when he talked about, you may go to the store at Christmas, at the holidays, and the toys you want to buy may not be there, they may cost a lot more. There may be fewer presents under the tree this year. That, that is not than normal political messaging for most goods. We're gonna be talking about higher prices rather than just lack of availability.

[Michael Barbaro]

Interesting.

[Listener 2]

But a huge percentage of our toys come from China. You could easily see a situation where some toys are simply not available or are not available in nearly the numbers that we would expect this fall.

[Michael Barbaro]

All right, let's turn to a set of questions we got about housing.

[Listener 1]

Hi, this is Anna.

[Emily Badger]

Hi, this is Lucy.

[Michael Barbaro]

My name is Mike. I'm 55 years old, live in San.

[Listener 2]

Antonio, Texas, and my question is how.

[Listener 3]

Or if tariffs will affect U.S. interest rates and building supply costs.

[Michael Barbaro]

My wife and I are considering constructing a new home on a piece of property that we own.

[Listener 1]

I saved enough money to pay for a down payment on a house.

[Michael Barbaro]

What could happen with interest rates if there's a chance they might go down or if they could even go up in the next couple of years.

[Listener 1]

But with the economy where it is, is that a crazy thing to do right now? Thank you.

[Michael Barbaro]

A lot of our listeners, and I frankly didn't expect this. Asked questions about what the trade war and all that economic disruption means for buying a home. And I think people are intuiting that tariffs could increase inflation. And they know from you, Ben, and your many appearances on this show that when inflation gets higher and higher, the tool that the government uses to bring it down is that they raise interest rates, which raises the cost of that 30 year mortgage. And therefore the question really becomes, do tariffs of the kind that are now in place almost ensure a costlier housing market down the line? Yeah.

[Listener 2]

So let's take a quick step back here about how we got here with housing. It was hard to buy a house before the pandemic, but then housing prices just soared during and immediately after the pandemic. Right. Everybody rushing out to get more space. Interest rates were super low. Then all of a sudden we get inflation, interest rates soar. So that makes it even harder to buy a home. And the hope coming into this year was this would finally be the year that things sort of started to settle down a little bit and the housing market could start to get back to some kind of normal. That is just not what we're seeing. So first of all, mortgage rates have not come down. They're still hanging out around 7%. That's pretty high.

[Michael Barbaro]

It's really high.

[Listener 2]

And there's no sign for exactly the reasons that you're talking about, that they're gonna come down significantly anytime soon. Right. If tariffs drive up inflation, the Fed is gonna have a hard time cutting interest rates. That's gonna keep mortgage rates higher. Also, tariffs are gonna directly hit the cost of building a home. We're talking about lumber that comes in from Canada. We're talking about appliances that come in from China. We're also talking about maybe less labor supply if we deport a lot of immigrant workers who work in construction. So there are a lot of reasons that the cost of building a home is gonna be higher and therefore the supply of homes is gonna be lower. And so it could be a really tough time to buy a home. That down payment that Anna saved up may not far as she had been counting on.

[Michael Barbaro]

We've been talking about big purchasing decisions for a lot of people. The tariffs have raised this bigger existential question about whether they're going to have a job and what all of this means for the job market. And I Want to play some of those questions?

[Listener 1]

I am 40 years old and I have an MBA and I can't find a job. And I'm not alone. I'm not really sure what's going on with the job market. I keep hearing the phrase the job market is just really tough right now. And I'm sure many people in my same position could relate. Why is it so hard for me to get a job, even though I have all the things I've been told my whole life, I need to get a job? With everything going on right now, what does the job market look like for those of us graduating college within the next year or so?

[Michael Barbaro]

What can you tell us about the job market? And I really want to make sure we acknowledge that final question about folks just coming into the market.

[Listener 2]

So I hear this a lot from people right now, and at first it might sound a little surprising when I say by some measures, the job market looks pretty good right now. The unemployment rate is low. We hear about some high profile layoffs, but layoffs in the aggregate are still pretty infrequent. And so if you have a job right now, at least at this moment, it looks like things are kind of okay. What we also know is that it's a hard time to be looking for a job. And I think that's what these listeners are getting at.

[Michael Barbaro]

Why?

[Listener 2]

So a lot of it has to do with this uncertainty that we're in right now. Companies are trying to figure out what's happening in the economy and where things are going. They're not in such bad shape that they're cutting jobs, but they're also very reluctant to hire. And so it's this sort of stagnant labor market where if you're trying to get that foot in the door or you're trying to get that next step up in your career, it could be really tough because all of these businesses are out there just saying, let's hold off and see where things are. We'll touch base again in a few months.

[Michael Barbaro]

If the tariffs were to settle into a more permanent seeming dynamic, would that uncertainty start to dissolve and could hiring start to go up? Or is the reality that a settled tariff situation is probably going to lead to higher costs for businesses and therefore that won't be the case?

[Listener 2]

So it depends a little bit on what we're talking about when we talk about tariffs. Right. If we talk about 145% tariffs on everybody, that's going to be a very bad situation for a lot of companies. But yeah, the uncertainty is a really big issue here. On some level, businesses can navigate a difficult environment if they know what it is that they're going to going to be facing and they can make appropriate decisions. But when, you don't know when one day the tariffs are on, the next they're off. One day they're on China, but not on Europe, the next day, maybe that flips. And it's not just tariffs. It's everything we're hearing around federal job cuts and doge. It's everything. The uncertainty around immigration policy, all of this makes it difficult for companies to make decisions. And so a lot of companies are on hold. One possibility, right, is we eventually get some certainty and companies start hiring again. But there's another very real possibility, which is that eventually they do start cutting jobs. If we see these tariffs hit, if we see consumers pull back, if we see a real slowdown in the economy, companies won't be on hold anymore. They'll be cutting jobs and we'll see unemployment rise.

[Michael Barbaro]

Okay, on that note, Ben, we're gonna take a break and when we come back, we're gonna answer a bunch of questions we got about what all of this means for the stock market, for people's retirement accounts, their college savings accounts, and their general sense of financial well being. We'll be right back.

[Listener 1]

Foreign.

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[Emily Badger]

I'm Emily Badger. I'm a reporter with the New York Times. Since the pandemic, empty office buildings have become much more common in many cities. Why can't we just turn them into housing? It's actually a really complicated question. To answer this question, you have to find a developer trying to turn an office building into apartments. Ride a rickety elevator to the 30th floor of a construction site to see the interior guts of a building. Find an expert in incandescent light bulbs who can explain to you how they fundamentally change office buildings. And that's just the beginning of what you have to do. When you subscribe to the New York Times, you are sending reporters like me out into the world to ask questions of dozens of different experts to go and visit places most people don't get to go to try to come back with answers and then turn all of that into something that anyone can understand. If you'd like to become a subscriber, head to nytimes.com subscribe. You need to see the animated floor plans in this piece.

[Listener 2]

Hi to the team at the Daily thanks for taking my question.

[Michael Barbaro]

My name is Hannah, I'm 38 years.

[Listener 3]

Old from San Diego, California.

[Listener 2]

My name is Hunter Rebel. I'm 31 years old and I live in a small town in Indiana.

[Listener 1]

My name is May, I am 29 and I live in Los Angeles, California. My name is Hannah, I'm 34 and I live in Salt Lake City.

[Listener 2]

As an American in my early 30s, I'm wondering what should I be doing to protect myself and build a secure future for my family?

[Listener 1]

Should I be increasing my 401k contribution and buying up as much much stock as I can? Is the priority to save money or pay off debt first? I just qualified to apply for a 401k with my company. I've never had a 401k before and I'm wondering, is this a good time to open my 401k account because prices are so low? My dad used to work in finance and I feel like he would disown me if he knew we weren't really investing right now. Because historically, over time, despite any bumps and bruises along the way, the stock market goes up. But I'm I'm just not so sure anymore. What if that trend is over?

[Michael Barbaro]

Ben first of all, those are great questions, and I think a lot of them are touching on the theme of volatility in the stock market in this moment. Now, whenever we talk about the stock market, I feel like I have to repeat what they say in all the ads. Trading stocks involves a significant risk of loss. It's not suitable for everyone. Past success is not an indicator of future performance. And we are not, of course, Ben, asking you to give financial advice about the stock market. But how, broadly speaking, do you think about the choice facing some of these listeners about whether to try to potentially profit from the market's swings right now or sitting tight and waiting out these swings in the market?

[Listener 2]

So, yeah, I'm definitely not a financial advisor and I'm definitely not in a position to tell anybody specifically what to do. But look, I think you're right that that is underlying a lot of these questions. And it's interesting to me, a lot of those questions sounded like they were coming from people in their 30s, even younger than that. If you're in your 20s, if you're in your 30s, you've mostly experienced a stock market that has been rising. You've had some dips along the way, but it bounces back relatively quickly. And we hear buy the dip, stocks fall great, they're on sale, let's buy them up and profit from it. That's worked out pretty well over the last few years. It doesn't always work that way. Stocks historically have gone up over time, but over time is a really important caveat there. The standard financial advice is don't put money into the stock market that you need in the next couple of years and put money in that you can afford to risk. And don't try to time the market. If you're sitting here saying like should I start my 401k? Start your 401k.

[Michael Barbaro]

We heard from folks who are in the unique position of having saved up a good amount of money for their children's higher education in something like a 529 educational savings account and discovered that this is the moment they need it and that because of the trade war, the stock market has gone down. And I want to play you a question from one of those listeners.

[Listener 3]

Hi Michael. My name is Tracy Church and I live in Louisville, Kentucky and I'm a single mother. I'm a healthcare worker. I had saved enough for my daughter to go to a four year institution. She graduates next week from high school. You know, I worked my tail off to get money set aside for her and I took a look at two of the 529s that I had for her and they had decreased dramatically because of Trump and the tariffs and everything. And it's just heartbreaking. And my question about the economy is how bad is this going to affect our kids college funds? Thanks for listening.

[Michael Barbaro]

What do you have to say to Tracy?

[Listener 2]

Well, first of all, it's a tough situation and I think it's a reminder. We sometimes say the stock market isn't the economy. It mostly affects rich people. Most of us have money in retirement savings, in college savings. There are real consequences to what happens in the stock market, not only for rich people. I will say I don't know when Tracy looked at her 529 account, but there was a moment when the market was way, way down.

[Michael Barbaro]

I think it was off 20%.

[Listener 2]

Yeah, it was brutal. It has come back up since that sum. I make no prediction about where it goes, but it may be worth Tracy's while to take a look and see where things are now because you don't necessarily have to keep all that money in the stock market. You can keep it within that 529 plan and put into something a little bit safer, which if she needs the money soon, could be a safer bet. But I think that the larger point here is this is painful. These are real consequences. And not everybody has the luxury of just saying, oh, if we wait a while, things will get better. We've heard a lot from the president about, oh, short term pain is going to yield some sort of long term gain. But if your kid's going to college today, if your baby is due in a few months, right. You can't necessarily plan your life for the long term. And that's a real pain point that a lot of people are gonna be experiencing.

[Michael Barbaro]

Right? Ben despite how worried so many of our listeners are about what tariffs are gonna mean for cost, product availability, car purchasing, home purchasing, job market. A fair number of folks asked us what it would be like for the tariffs to accomplish what the president has said that he thinks they could, which is to bring back domestic manufacturing. Now here I know you, you're about to tell me that mainstream economists of all political stripes have a lot of doubts that tariffs can bring back domestic manufacturing. But I think what listeners are trying to understand is what would be the impacts of a renewed US Manufacturing base.

[Listener 2]

So I would go further. I don't think it's just that mainstream economists have doubts. I would say virtually all economists are beyond skeptical to the point of sort of dismissing the possibility that tariffs, at least as they're being imposed here, could have that effect. It's not clear that even if you brought back manufacturing production, it would bring back A, that many jobs because a lot of automation or B, that the jobs would be all that good. I think the skepticism comes from the idea that these policies could actually achieve.

[Michael Barbaro]

Those ends because they've actually made the cost of bringing manufacturing back so high. You've said that to us in the past. Business folks are basically telling you the current tariff scheme introduced by Trump is an impediment to bringing manufacturing back because.

[Listener 2]

You can't turn this around on a dime. It takes time to build a factory. It takes time to reorient supply chains. Right now, even a factory here is probably using goods that are brought in from overseas that can't change overnight. Rather, they're just going to end up shutting down a lot of manufacturers.

[Michael Barbaro]

Ben, as we come to the end of the conversation, I want to acknowledge that a big thread running through a lot of the questions we got was an even deeper Worry about what might happen. And a lot of people named it the R word. Let me play you some of those questions.

[Listener 1]

Hi, my Name's Holly, I'm 19 and I'm from New Jersey. And I keep seeing things online about recession indicators. Some serious and some jokes, all relating to the tariffs. And I guess my question is whether all this widespread talk about a recession would affect demand and actually worsen our probability of a recession actually occurring. Good morning, my name is Cynthia Janzura. Now, seeing the way the stock market is see sawing, we are terrified. Is a recession coming? Therefore keep our money close to the pocket and not spend it whatsoever. We just don't know. Hi, New York Times, my name is Molly, I'm a 25 year old teacher from Chicago. And all I've been hearing about and reading about from various news agencies is that pretty much every economist thinks that we are headed for a recession. So one, are we going into recession? Two, what are the indicators of how bad it is going to be? And three, what can we do to keep it from being as disastrous as the one back in 2008?

[Michael Barbaro]

So how likely is a recession to be at this moment? And how likely is something potentially even worse than just a recession?

[Listener 2]

So I would say first of all, I don't think a recession is inevitable. For one thing, these policies could be reversed again, right? We've already seen a lot of back and forth. It's not a deal could be reached with China, a deal could be reached with China. It's not clear where things will end up. It's not clear that these tariffs would inevitably lead to a recession on their own. I think they're clearly going to lead to higher prices, they're clearly going to lead to slower growth. But that doesn't necessarily translate into a full blown recession. And most of the economists that I talk to say that if there is a recession, it has a potential to be a comparatively mild one. This isn't 2008 where we have this huge housing bubble that's then going to collapse. It's not global pandemic in the same way. So there's some optimism for you. Now let me undermine it. I would say a couple of things. I mean, one, even a mild recession is really painful for a lot of people. If you lose your job, there can be long term consequences from that. It also seems like there are some things about this potential recession or even potential slowdown that could be tougher than some in the past. This combination of higher prices and, and slower growth is a really tough combination to Navigate. And it's also not clear that there's going to be a lot of help there. If you think back to 2008 and 2009 or you think back to the pandemic, we had enhanced unemployment benefits and we had checks that went out to people. It's not clear that a lot of that help is going to be there this time around. And then there are the bigger risks that are hard to quantify and hard to be sure about. But we've seen some real turmoil in the financial markets over the past several weeks. Fears of what's happening in the bond market, fears of what's happening with the dollar. But I think there are real questions that are being asked about the long term stability of the financial system, of the US economy, the US's place in the global economy. And it's hard to predict where that goes. But at a minimum, you've got to be concerned that we could be sowing the seeds of some much deeper long run problems that could show up in unpredictable and potentially pretty disastrous ways down the road.

[Michael Barbaro]

Okay, you can't use the word disastrous without telling me what you mean.

[Listener 2]

You know, if you look at what the President has done in his first months in office, he's picked fights not just with adversaries, but with allies. He's called into question fundamental alliances, military and economic. He has at least floated questions about Fed independence, about the sanctity of the treasury market. There are a lot of hard to pin down, but worrying questions that we're seeing are leading investors, they're leading leaders of other countries to start to think twice about the role that the US is playing. And I know that this sort of sounds a little bit esoteric. I know that this sounds a little bit hard to pin down. And it is hard to pin down. I can't sit here and give you a super specific scenario about what this looks like. But the bedrock of the global financial system for decades now has been that the US is the world's strongest and most solid economy, that it pays its debts, that it meets its obligations. And I don't want to say that that is no longer true. But we have certainly seen some cracks in the confidence in that.

[Michael Barbaro]

On the other hand, one of the realities of an unpredictable moment and an unpredictable administration is that we could also be looking at a scenario in which the tariffs get peeled back, the stock market starts to inch up, gets back to where it was when Trump took office, and confidence in the US financial system remains relatively high and ultimately unblemished.

[Listener 2]

So I think it is definitely the case that a lot of the economic damage is still sort of fresh enough that a lot of it could be reversed. I mean, indeed, a lot of it hasn't even shown up in the economic data yet. I do think that there are questions about some of the longer run damage that may have already been done, especially when it comes to just business confidence. If the President comes out next week and says nevermind about the tariffs, I'm not sure that CEOs are all going to say, well, I guess we're fine then. I think that there are real questions about, well, but could the tariffs be back again a week later? Like if you can't trust that the rules are the rules, that makes things difficult. And so on the one hand, yes, I don't think a recession is baked in. I don't think that the die is cast. But I also am not sure we can say everything can just return absolutely to normal. I do think that we have already seen real changes that are not just going to disappear.

[Michael Barbaro]

Well, thank you Ben, on behalf of all of our listeners. We appreciate it.

[Listener 2]

These are great questions. Thanks for having me.

[Michael Barbaro]

On Friday afternoon, US stocks led by the S&P 500, erased the deep losses that they suffered in the days after President Trump ruled out his tariffs on April 2. But the increase in stock prices comes despite warnings that the tariffs could spark a recession, and it's unclear what the next few days and weeks of trading will ultimately bring. We'll be right back.

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[Listener 2]

We are living in interesting times, a turning point in history. Are we entering a dark authoritarian era or are we on the brink of a technological golden age or the apocalypse? No one really knows, but I'm trying to find out from New York Times Opinion. I'm Ross Douthen and on my show Interesting Times, I'm exploring this strange new world order with the thinkers and leaders giving it shape. Follow it wherever you get your podcasts.

[Michael Barbaro]

Here's what else you need to know today.

[Listener 3]

Your Secretary of State says everyone who's.

[Emily Badger]

Here, citizens and non citizens, deserve due process. Do you agree, Mr.

[HubSpot Ad]

I don't know.

[Michael Barbaro]

I'm not. I'm not a lawyer. I don't know.

[Listener 2]

Well, the Fifth Amendment, I don't know.

[HubSpot Ad]

It seems, it seems, it might say.

[Michael Barbaro]

That, but in an interview with NBC broadcast on Sunday, President Trump questioned whether every person on American soil was entitled to due process, something the Fifth Amendment guarantees, and said that he did not know whether it was his job as president to uphold the Constitution.

[Emily Badger]

Don't you need to uphold the Constitution of the United States as president?

[Michael Barbaro]

I don't know. I have to respond by saying, again, I have brilliant lawyers that work for me and they are going. The exchanges help explain the administration's aggressive approach to deportations and its decision to ignore a Supreme Court ruling to facilitate the return of a migrant living in Maryland who was mistakenly sent to a prison in El Salvador without due process. And a forthcoming book reports that before President Joe Biden was forced to quit his campaign for reelection, his aides debated having him undergo a cognitive test to prove his fitness for a second term. But those aides ultimately decided against the idea. The account highlights the degree to which Biden's own aides worried about his age and mental acuity, even as they publicly supported Biden's decision to seek a second term. Today's episode was produced by Diana Wynn, Olivia Natt, Sydney Harper and Will Reed. It was edited by Mark George, Chris Hacksell and Patricia Willins. Contains original music by Elisheba Itu, Dan Powell and Rowan Amisto, and was engineered by Alyssa Moxley. Our theme music is by Jim Brunberg and Ben Landsberg of Wonderly. That's it for the Daily I'm Michael Balboro. See you tomorrow.