Is the Economy Breaking? Wall Street Vet Robert Wolf on the Brutal Jobs Report

Summary

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Podcast Summary

The Tara Palmeri Show
Episode: Is the Economy Breaking? Wall Street Vet Robert Wolf on the Brutal Jobs Report
Host: Tara Palmeri
Guest: Robert Wolf (Former Chairman & CEO, UBS Americas; Obama Economic Advisor)
Date: March 6, 2026

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Overview

On this pivotal episode, Tara Palmeri is joined by Wall Street veteran and longtime Obama economic advisor Robert Wolf to break down an unexpectedly harsh jobs report against a backdrop of escalating global instability, particularly war in the Middle East and surging oil prices. The episode delves deeply into the real-world impacts of economic policy—from tariffs to rate cuts, AI, and geopolitical shocks—while grounding the conversation in practical terms for American workers and voters. Wolf’s behind-the-scenes insights offer a clear-eyed, unsparing look at decision-making and policy consequences at the highest level.

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Key Discussion Points & Insights

1. The Brutal Jobs Report & Labor Market Realities

• Expectation vs Reality: Economists were expecting 50–70k new jobs; the report came in at –90k.

  • “Brutal. I’m being nice by using that word.” (Robert Wolf, 02:35)

• Unemployment Ticks Up: Rate rose to 4.4%. Labor participation dropped to 62%—signaling widespread discouragement among job-seekers.

• Racial Disparities: Unemployment for minorities is nearly double that of white working Americans.

• White House Spin: Officials (e.g., Kevin Hassett) blamed weather and strikes, but Wolf called out this explanation as “total BS.”

  • “Since May of 2025, we've actually lost jobs. So this idea that we can only blame it on the weather or some sort of strike is just total BS.” (Robert Wolf, 05:04)

  Timestamp: Jobs report breakdown—[02:23 - 05:04]

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2. ‘Low Hire, Low Fire’ & Job Stagnation

• Definition: Companies are neither hiring nor firing—creating a stagnant “job session.”

• Executives’ New Playbook: Layoffs such as Jack Dorsey’s 40% cut at Block lauded by Wall Street; “every executive…is looking at what happened on that announcement.”

  • “I would call it a job session because I think we're going to actually start losing jobs like we've shown since May of 2025.” (Robert Wolf, 06:45)

• Sectors: Job growth only visible (and declining) in healthcare; manufacturing and construction particularly hit.

  Timestamp: Low hire/low fire economy—[05:22 - 08:31]

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3. Tariff Policy: Public Policy Mistakes & Economic Pain

• Tariffs as a Drag: Construction and manufacturing especially harmed; small businesses hit hardest.

• Misconceptions: Wolf refutes the claim that foreign countries pay tariffs—importers (mainly US-based) shoulder the burden, often passing costs to consumers.

  • “This idea that foreign companies and foreign countries paid for the tariff is just complete nonsense.” (Robert Wolf, 09:58)

• Call-Outs: Wolf describes last year’s across-the-board tariff as “one of the most unforced errors I’ve ever seen... more like the Game of Thrones Red Wedding.”

  Timestamp: Tariffs & sectoral impacts—[08:31 - 09:58]

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4. Global Instability: Oil Shock & War in the Middle East

• Why Oil Prices Spiked: Iranian action has choked the Strait of Hormuz, through which 20% of global oil supply is shipped.

  • “It’s not about how much oil output Iran does…It’s that the Strait of Hormuz does about 20% of all shipping.” (Robert Wolf, 10:15)

• Potential Recession Trigger: If oil spikes to $120–$150/barrel and remains high, the economic consequences for the US (and globally) could be severe.

• Stagflation Concerns: Wolf warns about the rare but serious risk of stagflation—simultaneous high inflation and low/no growth.

  • "[Stagflation is] the intersection of a recession and inflation...the worst of the two bookends imaginable." (Robert Wolf, 13:41)

  Timestamp: Oil, energy shock, and stagflation—[09:58 - 14:52]

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5. Energy Independence is Not Immunity

• US Status: The US is “incredibly energy independent” (record production), but energy is a global commodity; events abroad set prices here, too.

  • “Although we're the Goliath…we're just one of many large players…so what happens in Russia impacts us.” (Robert Wolf, 15:02)

• Russia’s Gain: Russia benefits from ongoing Middle Eastern disruptions (US Treasury allows some Russian oil exports despite sanctions).

  Timestamp: US energy, global commodities—[15:02 - 16:05]

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6. Rate Cuts, the Fed, and Political Pressure

• Wolf’s Perspective: He favors rate cuts (3–4 cuts in ‘26) to help employment, but expects the Fed to hold steady due to inflation concerns.

  • “I am more concerned about jobs than I am about inflation.” (Robert Wolf, 17:32)

• Kevin Warsh at the Fed: Wolf sees Warsh (recently nominated) as more of an inflation hawk, expects him to stay independent, but reminds listeners Fed policy is set by majority vote.

  Timestamp: Rates, Fed policy—[17:25 - 18:51; 26:39 - 27:45]

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7. Economic & Political Consequences for President Trump

• Public Discontent: Only ~35% approve of Trump’s handling of the economy (Reuters poll).

• Pocketbook Pain: Record 401k hardship withdrawals, first-time homebuyers at record lows, drastically higher income needed for home ownership.

  • “Americans feel like the American dream is, you know, slipping away.” (Robert Wolf, 19:53)

• Messaging Misfire: Wolf slams Trump’s comments that “affordability is a hoax.”

  • “His comments…that affordability is a hoax is just ridiculous.” (Robert Wolf, 19:43)

  Timestamp: Politics & economic perceptions—[18:51 - 21:18]

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8. Lessons from Past Oil Shocks—Obama Administration vs Now

• Libya (2011) vs Today: Libya crisis contained; Saudi and IEA helped stabilize markets. Today’s crisis is broader because of shipping lane disruptions.

  • “Very different today, where we're possibly thinking about…the inability of 20% of the shipping lanes…being paralyzed. So just a night and day difference.” (Robert Wolf, 24:30 & 25:06)

  Timestamp: Historical context and lessons—[21:18 - 26:06]

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9. K-Shaped Economy: Winners, Losers, and Stock Market Myths

• Not Teflon: The economy is K-shaped—top 10% are thriving, middle/lower classes struggling.

  • "The stock market is not an economic gauge…the bottom 50% of our country in income own around 1% of the stock market." (Robert Wolf, 29:41)

• GDP Reality: 2.2% growth isn't enough; Wolf expresses concern about stagnant jobs, reduced immigration, and slow growth.

  Timestamp: Inequality, stock market vs. main street—[28:05 - 31:43]

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10. Risks Ahead: Geopolitics and AI

• Biggest Risks: Geopolitical paralysis of companies (main risk), plus uncertainty from rapid AI changes—impacting job market and capital investment.

• Fed's Balancing Act: The Fed faces difficult tradeoffs: jobs stagnation vs. slightly elevated inflation.

• AI's True Impact: Too soon to tell—AI is boosting productivity, but ongoing CapEx demands, labor implications, and sectoral winners/losers will play out over several years.

  Timestamp: Risk outlook and AI's future—[31:50 - 35:09]

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11. Notable Quotes & Moments

• On Tariffs:
  “Liberation Day was more like the Game of Thrones Red Wedding.” (Wolf, 07:05)
• On the Stock Market:
  “The stock market is not an economic gauge…90% of the stock market is owned by the top 20% wealthiest people.” (Wolf, 29:41)
• On the American Dream:
  “Americans feel like the American dream is…slipping away.” (Wolf, 19:53)
• On Dunkin Donuts:
  “Screw RFK because Dunkin Donuts is the best coffee.” (Wolf, 36:04) (Lighthearted closing moment)

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Audience Q&A Highlights

• Interest rates? Wolf: Fed will likely hold, but should cut.
• Effect on midterms? Palmeri: Economic pain likely hurts Trump.
• Will Kevin Warsh placate Trump with cuts? Wolf: Expects independence.
• Are we in a Teflon economy? Wolf: No, it’s K-shaped.
• What should investors watch? Wolf: Focus on PCE/inflation data, but don’t expect imminent Fed move.

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Closing Thoughts

Wolf leaves listeners with a sober assessment: the near future looks challenging, especially if the Middle East war continues and companies shed jobs. However, he ends on a lighter note supporting his Celtics and Red Sox—and with a Dunkin Donuts shout-out.

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For listeners seeking a candid, high-level take on the volatile intersection of Wall Street, Washington, and the world, this episode delivers both clarity and frank warnings, grounded in deep experience.

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Transcript

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[Tara Palmeri]

Welcome to the Tara Palmeri Show. Thank you for everyone who is joining live on this pretty big news day. I mean, we are into a week of war in the Middle east and oil prices have surged 20% as Iran disrupts global shipping through the Strait of Hormuz. It is one of the most critical checkpoints in the world. At the same time, the US Economy has been supported, surprisingly resilient despite all this turmoil and the rising prices. Some economists are calling it a Teflon economy. But today we woke up to brutal jobs numbers and we're going to break it all down on the show. So for me, the question on my mind is how much can the US Economy really absorb when it's already on pretty shaky grounds? Stick with us because we're going to get questions from you, but I've got a very special guest on the show. So to help us break it all down, I've got Wall street titan Robert Wolff. He's the former chairman and CEO of UBS Americas and he served as one of President Obama's top economic advisors during the financial crisis and recovery. He is not the only politician that Robert has advised, but we'll get into all of that and more. Robert has been inside the room during historic moments, including that pivotal Lehman weekend in 2008. So he really gets how decisions are actually made. This, he's going to tell us what powerful people actually say behind closed doors and what they're thinking when they make decisions that impact all of our lives. Robert, thanks for coming on the show. Long overdue, I know.

[Robert Wolff]

Thanks for having me on. I, I love your show and I'm, I'm glad to be on today. Although today probably, probably isn't going to be the easiest day for those who are watching and listening.

[Tara Palmeri]

I know the text message from you this morning, brutal jobs report. I mean, what did you make of these numbers yesterday? I was thinking, well, economists were predicting as many as 70,000 new jobs. What happened?

[Robert Wolff]

Well, let's just say brutal. I'm being nice by using that that word. So we were expecting 50 to 70,000. It came in minus 90,000.

[Tara Palmeri]

Yeah.

[Robert Wolff]

And so much, much different than expected. Unemployment went up to 4.4%. One of the biggest things that really no one's talking about is the labor participation rate. That's the number of people actually that are looking for jobs, that are currently looking for jobs in the jobs market went to a low of 62%. And really, Tara, what that says is people are discouraged. They're actually stopping looking for jobs. And so just a brutal day for the, for job seekers. And we saw unemployment for minorities almost near double what unemployment are for white working Americans.

[Tara Palmeri]

Yeah, it. The unemployment rate went up from 4.3% to 4.4%. So it's just been really slow and sluggish. Is this a sign that companies are just like, they feel stalled? They can't. They're in a holding pattern. What are we supposed to make of this? Because economic. The White House's National Economic Council, Kevin Hassett, is blaming it on poor weather in parts of the country and worker strikes on the West Coast. There were those nurse strikes and just methodological, methodological changes at the federal agency that actually produces this data. Do you believe him?

[Robert Wolff]

So he expected this. There's always some cyclicality as we go into year end with weather. And we did have strikes in the healthcare space, but the facts matter. And so let's just look at reality. In January, we actually had all of 2025 jobs revised down by 580,000. That means in all of 2025, we gained about 180,000 jobs, which is roughly about 15,000 average workers per month. That's horrible. What's even more important is Since May of 2025, we've actually lost jobs. So this idea that we can only blame it on the weather or some sort of strike is just total bs.

[Tara Palmeri]

Wow. Yeah. President Trump is not really concerned about it either. We'll get to that, too. He was talking about the oil prices. We're going to talk about the Iran of it all. But, you know, we keep hearing this phrase, it's low hire, low fire economy. What does that actually mean in pro. Like, in practice?

[Robert Wolff]

Yeah, so that's kind of, I think if you listen to either Squawk Box this morning or Fox Business, they kept using that, that, that phrase. Mainly it's kind of, you know, I have used the term that. We're in a job session. Some people are using this low hire, low fire economy. What it means is companies are neither hiring nor laying off people. So we're in this just stagnant environment which the numbers show roughly, you know, 15,000amonth of jobs. And I think that what it's telling us is people are nervous about, you know, geopolitical risk. They're also now deciding, you know, how much does AI artificial intelligence impact their productivity, impact their efficiency. One thing I wanted to bring up is Tara, is last week Jack Dorsey, who is the founder and CEO of Block, made an announcement that he was going to reduce headcount by 40% from 10,000 to 6,000. The stock went on fire. I'm telling you, every executive in the country, big and small is looking at what happened on that announcement. And so, yeah, I think, like I said, I would call it a job session because I think we're going to actually start losing jobs like we've shown since May of 2025.

[Tara Palmeri]

Yeah, and the job growth that we have seen because like last, the last jobs report in January was actually really great for over 100,000 jobs, but they were mostly in the healthcare industry. And that seems to be where all the job growth is. Is that sustainable long term?

[Robert Wolff]

It's not sustainable at all actually. Healthcare jobs went down by 30,000 last month. But that's probably because of the strike. It's not, I would say one of the most important sectors we need to look at is manufacturing. The President keeps touting all this new capex that's coming, construction and factories. The truth is we had a manufacturing recession in 2025. We lost about 100,000 jobs and we have not seen that come back. We actually have lost manufacturing jobs back to back months in January, February. And so I would just say to myself that because of geopolitical risk, because of the tariff situation that we'll talk about, you know, I think the tariffs had one of the most major impact on the job market in 2025. You know, I called and you and I chatted about it offline, but I called. Liberation Day was more like the Game of Thrones Red Wedding. I thought it was one of the most unforced errors I've ever seen at the intersection of public policy and finance. There's no reason that we do across the board tariffs. You know, we call, use that example, why are we tariffing coffee or bananas when actually we just import those. So I think we've made some real mistakes in the past year and then I think we've done some, some smart things as well.

[Tara Palmeri]

Yeah, it's really ironic that the blue collar industries that Trump had promised to help seem to have had a really bad Month, I mean, unemployment fell by 12,000 in manufacturing last month alone, 11,000. In construction, mining and logging, which includes oil and gas sector, they cut 2,000 jobs. What do you, what do you make of all this? Is this because of the tariffs? I mean, what's going on here?

[Robert Wolff]

Well, I think there's a bunch of things that the tariffs have definitely changed. Construction. Right. You know, if you look at the supply chain, if you look at the lumber we get from Canada, that impacted it. If you look at the auto sector, we, we had a complete reversal of electric cars, which was supposed to be the boom and now it's become for the most part the bust. And so we've just had a lot of changes. Small businesses, they're impacted the most by tariffs because literally they're not sure if they can pass their products onto the consumer or not. And this idea that foreign companies and foreign countries paid for the tariff is just complete nonsense. I mean, you know, I'm on Fox and I've been arguing this since April. The tariff is paid by the importer. We just show that 92% of the importers are located in the US so they're either eating the tariff or passing it to the consumer. And so one way or the other, the US is being hurt by that.

[Tara Palmeri]

Yeah. The thing that I'm thinking about right now is that since it does seem that our economy is on shaky ground with this slower hiring rate, how are we going to be able to handle an external shock like a war driven oil spike?

[Robert Wolff]

Well, let's hope one. It's short lived. And I mean, listen, you can never predict geopolitical risk. You can, I would say when it comes to domestic risk, you can always kind of measure it. When it's geopolitical, you can't. This is, this war is much different because of the energy shock. And you mentioned the straight Armus. It's not about how much oil output Iran does. Actually they only output about 2% of oil production. So it's not that they're huge, maybe it's 3%, it's that the Strait of Hormuz actually does about 20% of all shipping. So the large tankers go through the straight of Hormuz. And so right now it's pretty much as you mentioned, it's paralyzed, it's choked off. And so you can only imagine that, you know, 80% of those ships go to, you know, Asia, which is, you know, a large amount to China and India. And so it's not the idea that we're as concerned about only the Shipping lanes. But what happens, Tara, is when you shut down shipping lanes, then all of a sudden the producers actually start losing their capability to keep storing oil where actually would be shipped. And so they stop drilling. The reason we're seeing this spike is because even you heard this morning, the Qataris are saying, hey, and I'm not predicting this, but they said we could see oil go to 130 to 150 because we actually have nowhere to store it. Now understand the Qataris and the Iranians have a little more of a relationship than most other Middle east countries. So I would, I'm not sure I would take that at face value. But with that being said, it's a scary moment. If this war is prolonged, you know, past the possible 60 days that this administration has been talking about, would oil,

[Tara Palmeri]

if it were to reach like those numbers, 120, 135, would that trigger a recession?

[Robert Wolff]

Well, I would hate to say that energy alone will trigger a recession. Certainly it will impact spending. You know, one of the thing that President Trump has been most proud about is gas prices. He has touted that it's under $2 a gallon. I mean right now we're seeing the average at 3:30. So that has spiked dramatically. And energy prices in the past month are up 35%. So there's no question if you look at gas and you look at oil and then if you add electricity costs because of AI and data centers, which is up about 10%, it's definitely going to hit the pocketbook of hardworking Americans. And considering we're a consumer driven country, about 70% of our GDP is consumer driven, then yeah, it's going to impact our spending. So if you take what's happened in jobs and then you take what's happened in consumer spending possibilities. Yeah, I think you'll start hearing people talk about recession. My bigger concern, and I'll only put this at a 10% probability. So it's low. Yeah, I mean we could have stagflation, which, you know, I've been in finance for 40 plus years, I've never seen. So that's, that's the, that's the, you know, the worst of all possibilities.

[Tara Palmeri]

Can you explain that for everyone who's never heard that term before?

[Robert Wolff]

Yeah. Stagflation is like the intersection of a recession and inflation. It's when inflation's going up in prices. So whether it's groceries or energy prices. And at the same time we have slow growth and low jobs. And so it is the worst of the two bookends imaginable it kind of

[Tara Palmeri]

feels like we're there already. Am I wrong? Does it think that I don't think

[Robert Wolff]

you can, you know, predict what's happened in a one week period. You know, this isn't a black swan event. Right. It's a geopolitical event that will end. So this is, so my view is, listen, if it ends, you know, in the, within the next 60 days, we can reverse a lot of, you know, these, these trends that we're seeing. I don't know about the jobs market, but certainly with respect to energy and I know we're going to talk about other cycles we've seen, but there's a lot of ways to positively impact energy, whether it's with, you know, strategic reserves or OPEC doing something differently. So there's other alternatives I know we'll be discussing.

[Tara Palmeri]

Yeah, I mean, but hasn't the US really depleted a lot of its own reserves at this point because of the war in Ukraine?

[Robert Wolff]

No, we, we are incredibly energy independent. We are, we have a record number of 13 million barrels a day of, of crude oil, 20 million barrels a day if you look at all types of energy that we're producing. So the US Are in a, is in a good situation. The other side of that is energy is a global commodity. So you know, although we're the Goliath, you know, Saudi Arabia is, you know, 10 million, Russia's 10 million barrels. So you know, we're the largest but we're just one of many large players. So what happens in Russia's impacts us Actually I saw today that the Treasury Secretary approved Russia oil going to India even though that there were sanctioned because of what's happening in the Persian Gulf. So yeah, you know, we're going to read and see things that we haven't seen. But you know, that's what we have to do. We're going to have to be dynamic as a country.

[Tara Palmeri]

So Russia is actually benefiting from all of this.

[Robert Wolff]

Russia absolutely benefiting.

[Tara Palmeri]

Go figure. By the way, President Trump was asked about the rising gas prices by CNN's Dana Bash this morning and he said, quote, that's all right, it'll be short term, it'll go down very quickly. And, and then when asked about the Strait of Hormuz, he said he's quote, already figured it out but did not give any more details.

[Robert Wolff]

So, so let me just make, make one comment. And, and I don't want this to be, you know, I'm not here to tell you where I agree or disagree with Trump, although, you know, happy to go There as well. But I am completely opposed of this idea that we're going to put Navy ships through the straight of hermuz to actually help, you know, Middle east ships get to Asia. I think the idea that we would put our military in harm's way to help transport ships that are mainly going to China makes no sense. I also don't think that we should be the ones doing political risk insurance as well. These are, you know, one to $2 billion types of ships. So I'm on the other side of those insights that the President has possibly put forward. I don't think they'll come to fruition, but I don't think that is the best way to solve this.

[Tara Palmeri]

Okay, so Jennifer, who is watching us live on Substack, wants to know what you see for interest rates.

[Robert Wolff]

Well, listen, I'm probably the other side of where the Fed has been. I am more concerned about jobs than I am about inflation. Until this week, I also have been of the view that in a post Covid world, I think the Fed being at 2 to 2 and a half percent is their inflation rate is off. I actually think it should have moved in a post Covid world where inflation skyrocketed because of literally a black swan event, something that's happened never before, where the entire globe shut down. So I think it should have moved to 3%. So I actually think the Fed should be looking to cut rates. I actually would tell you they should probably cut three to four times in 26. I'm at the high end. They cut 75 basis points, you know, throughout 25. So I think they felt they did enough. My gut tells me they're going to stay and do nothing for the foreseeable future. Mainly because, you know, although jobs feel somewhat stagnant, you know, we're still low unemployment at, you know, 4 3, 4 4. And I think that with the possibility of inflation, producer prices came in a little hotter than expected. My gut tells me they'll probably just stand still.

[Tara Palmeri]

Yeah. Tyler from Substack is asking how will this affect Trump in the midterms? I think I can help with that. This can't be great. I mean, gas prices, affordability, they are all tied together. Even the perception that, you know, obviously I think there's a Reuters poll that just came out that said that. Hold on, I'll get you the exact figure, how people feel about his handling of the economy right now. And I think it was in the 30% approved, which is underwater. Yeah, only 35% approve of the President's handling of the economy. So it really shows some unhappiness. And then when you couple it with a war, even temporary rising gas prices, uncertainty, geopolitical shock, I can't imagine the President's doing well. And obviously there's reporting that his team is scrambling to try to contain the gas.

[Robert Wolff]

If I can just add to that one, I think his comments when he's on the stump that affordability is a hoax is just ridiculous.

[Tara Palmeri]

It's insulting, frankly.

[Robert Wolff]

I think, you know, and, and, and I kind of know that all too well because, you know, when I was as a surrogate for President Biden and we tried to make it like Biden nomics was doing well, you know, that didn't work either. So the Americans are smart. Americans are smart. They understand, you know, what's really happening because it's pocketbook issues. And the one thing I'll say is that, you know, Americans feel like the American dream is, you know, slipping away. I mean, you know, in the last year we had people take out money from their 401k at a record rate. Over four and a half million people withdrew for hardship. Number two, we have the lowest amount on record of first time buyers for home ownership at 21% of new homes, of homes being bought. And then number three, the average income for new home buyers used to be about 85,000. It's now 125,000. So people feel like this idea that I'm going to be able to, you know, afford health care and you know, afford education and buy a house, it feels like it's slipping away. And it's been happening. It's not just this administration. It's been happening for a while and we need to change that.

[Tara Palmeri]

Yeah, I know it is. We're not in a great position right now. I do want to go back though to your time during the Obama administration and how you've dealt with oil shocks in the past tied to geopolitical crisis, even on Wall Street. And how does this moment feel similar?

[Robert Wolff]

I don't think it's similar.

[Tara Palmeri]

So.

[Robert Wolff]

So during the Obama administration from 2008 to 2016, we had a lot of oil peaks and oil valleys. Yeah, my role as an economic adviser to the President really started with the financial crisis. And you know, I was one of the executives when I was running UBS at the time at that Too Big to Fail weekend, Lehman weekend that led to the global recession. So 2008 through 10, we were just dealing with one crisis after another. Then all of a sudden demand surged and that also actually coincided with the Arab Spring in the Middle east. And that caused energy shocks in the system throughout 2011 and 12. And then all of a sudden we had some good fortune and good luck that fracking proliferated. And all of a sudden we had too much energy. And in 2015 and 16 it went the other way where we had so much energy, energy prices was getting, were getting smoked. You know, the one thing I could say is over that eight year period the under President Obama, we went from an energy importer and was only producing, you know, 4 to 5 million barrels a day to becoming the energy independent by 2016 where we were producing north of 10 million barrels a day. And so, you know, like I said, we had peaks and valleys, but we definitely had shocks. I mean, you know, if you want to discuss Libya, that's probably the closest example to today. I don't know if that's something you want to discuss.

[Tara Palmeri]

Yeah, no, I do want to know how they prevented that from becoming a sustained crisis. Because it was, the prices were at $125 a barrel and 2011.

[Robert Wolff]

So let me just start on Libya because I think it is somewhat similar and somewhat completely different. First I would say where it was similar and this is hard for me to say, but this is probably one of President Obama's biggest mistakes when he alongside with NATO in 2011 led to the ousting of Muammar Gaddafi. That caused incredible civil unrest after that and we're still living with that today. So one, the idea that we, you know, took out a leader but didn't really understand what regime change meant and how it would happen and didn't have a good plan for day two, you know, it feels like some similarities today.

[Tara Palmeri]

So you think it was ultimately a mistake?

[Robert Wolff]

Well, it was definitely a mistake with Obama then it's too, you know, I would say it's too early to tell whether it's a mistake today. I mean, certainly am I glad that the, that the Ayatollah is gone? The answer is yes. But let me tell you where it's very different with respect to energy. And we did see prices surge to 125A battle. So back then actually similar to Iran, Libya was doing like 2% of the output, but the other OPEC nations weren't really, weren't really impacted. And Saudi, who was the Goliath at the time, actually helped with excess capacity. Number two, there was no issues with the shipping lane. So it was really just contained to Libya, didn't impact any of the Persian Gulf. And then the other thing is we had what was called at the time, I think we still have it. But the International Energy agency, which is US and Canada and the UK and Japan and actually they floated 60 million barrels at the time to help with the capacity. So we were able to absorb that shock by the US working with their allies, OPEC actually working together. And so Libya really became this one off. Very different today, where we're possibly thinking about, you know, the, the inability of 20% of the shipping lanes, you know, literally being paralyzed. So just a night and day difference.

[Tara Palmeri]

Yeah, it did have a huge impact. So I guess in a way, even though we are the biggest producer of oil, we are vulnerable today despite the fact that, you know, that we can,

[Robert Wolff]

I mean, global commodities are bigger than any one nation. We have found that, you know, you know, wherever geopolitical risk hits a commodity, we found that with agriculture during, you know, the beginnings of Ukraine and Russia and, you know, we're seeing that obviously today with energy.

[Tara Palmeri]

Jennifer. Sorry, excuse me. Doug on subsack asks, are you in the camp that Kevin Warsh will cut rates to placate Trump irrespective of the data?

[Robert Wolff]

So I'm a fan of Kevin Warsh. I worked with him peripherally when I was running ubs and he was at the treasury during the Lehman crisis. I think Kevin is a really smart guy and I think he's an independent thinker. I would hope that he's going to stay independent, and I believe he will. I would say he's a little more of an inflation hawk than, than most people that was being considered for the Treasury Secretary Federal Reserve under President Trump. So it was a, I think, a great pick. I think it was the right pick and I hope he stays independent. But let's recall, it's still a vote of 12. So to really move rates, it's not just Kevin Warsh alone. I mean, you need a majority to vote.

[Tara Palmeri]

And what do you think of the board right now? I mean, is that something that you think they're going to be, Like I

[Robert Wolff]

said, I, I, I think they're gonna stay and look at the data. I think there'll be a few outliers. Either they're, you know, one way or the other, but I think for the most part they're going to look at the data and the data has been volatile and I think it probably forces them to hold off again. I'd be on the other side of that.

[Tara Palmeri]

So political columnist Victoria Guida, she wrote that Trump is lucky to have a Teflon economy, keeps absorbing shocks, shocks. And do you agree with that description of a Teflon economy under president.

[Robert Wolff]

Well, I would agree he's sometimes the Teflon man, but I would totally disagree with her statement that we're in this Teflon economy. I would say we're in the K shaped economy. I would view it completely different, differently. One, this started during COVID where you have the haves and have nots, the haves doing well, the top 10%, the have nots, the middle income and lower income doing worse. We're seeing that again proliferate, you know, not to the same extent during COVID but definitely we're feeling it. I use the 401k example. Right know I say this, you know, part jokingly, but you know, Birkin bags had their, you know, literally best retail sales ever. And work in bags, which is the Walmart $78 one had their best too. So we can see that the two bookends.

[Tara Palmeri]

It's a tale of two economies. No, it's true. There's.

[Robert Wolff]

So it's definitely K shaped. You look at housing, you look at groceries, we're seeing that impact. But here's what I would say and this is where hopefully for your viewers, they, they understand where I'm getting. The stock market is not an economic gauge. The stock market is not an economic gauge.

[Tara Palmeri]

What about the GDP though? It did one sec.

[Robert Wolff]

Just because I think this is important and this is why people say how well Trump's doing.

[Tara Palmeri]

Yeah.

[Robert Wolff]

90% of the stock market is owned by the top 20% wealthiest people, maybe even the top 10%, 50% owned by the top 1. The bottom 50% of our country in income own around 1% of the stock market. So the idea that everyone is benefiting from this stock market and it's a gauge of the economy is just not accurate. And when I was advising President Obama, I always used to say don't look at the stock market as a gauge. And by the way, you would never see his comms people show stock market signs even though they performed very well. They would really focus on unemployment and jobs and wages. You were going to mention gdp. I'm sorry.

[Tara Palmeri]

Yeah, I wanted to ask about that because it did grow 2.2% this year. Should we be looking at that?

[Robert Wolff]

Well, 2.2 isn't anything to really be cheery about. I mean, you know, President Trump had a interview with Larry Kudlow on Fox and he told us it was going to 15%, which is complete nonsense, obviously.

[Tara Palmeri]

Right.

[Robert Wolff]

Listen, I think, you know, we need to get it 3, 4% to have the type of Growth we need, and hopefully we do that through wages and then obviously higher wages than the consumers able to spend more. I'm a little nervous about growth. I mean, you know, if the jobs market stays stagnant and the labor participation stays stagnant and we've had a complete reversal on immigration, which is a big part of, of the jobs and growth economy. You know, I'm a little nervous and certainly we saw less than 2% in the fourth quarter, but we could, I, I don't know if I would blame that on the, on the shutdown, but it's definitely impacted it.

[Tara Palmeri]

Yeah. What's the single biggest economic risk Americans should be worried about or paying attention to over the next six months?

[Robert Wolff]

I mean, geopolitical is the biggest risk we have right now because geopolitical risk actually paralyzes companies. Most of the larger companies who hire are global companies. You know, very few companies are domestic only. And so I think geopolitical risk is front and center. I also think AI is, you know, certainly, you know, front and center on when it comes to jobs, when it comes to capital expenditure, when it comes to the stock market. You know, if not, because if, if the war wasn't started in the last week, I probably would have said AI.

[Tara Palmeri]

Yeah. Doug on Substack asks what should investors be watching for if there are any signs that the Fed is getting inflation worries wrong?

[Robert Wolff]

You know, they, they look at PCI more than they look at cpi, so they look at personal consumption more than they look at the Consumer Price Index. Personal consumption was a little hot in the last month. CPI wasn't. So my guess is that's why all of a sudden the futures market had them, you know, holding off versus a, an interest rate cut. Listen, inflation's still around 3%. Their targets, two, two and a half. So I, I think they're going to struggle, in my opinion, to find the balance between a stagnated jobs market and inflation that I actually think is low enough to cut rates. But my gut tells me by their data and by their goal to be at two, two and a half, they probably won't.

[Tara Palmeri]

I know you mentioned that Jack Dorsey cut a bunch of jobs because of AI, but when will we really see whether or not AI is going to have a lasting impact on employment?

[Robert Wolff]

Well, one, we, we are going to see it because we know that AI is enhancing productivity and efficiency. We just know that for a fact. I think the impact of AI we won't know for a few years, mainly because the capital expenditures for AI is so ginormous that it's hard to assess whether these companies who are Talking about spending 200, 300, 400, 500 billion a year actually is going to be able to continue that. We've already seen some of the companies decided they're going to actually have to shut shed employment, they're going to have to slow down capex. We see some of this, you know, circular procurement where Nvidia gives open AI and OpenAI gives this and it just keeps going in a circle. Someone's going to catch that hot potato and not want it. So I will tell you there'll be some winners, but there'll be some losers too. And so, you know, everyone's so excited about AI, but my gut tells me that if you see the shocks like this on energy prices and also they're being forced to start paying for their own electricity and you know, the CapEx I think will start impacting their, their earnings and, you know, you may see it slow down a little more than everyone thinks.

[Tara Palmeri]

Robert, thank you so much for joining the show. We went five minutes over, but we had so many questions from the audience. Everyone wants to know your insight and knowledge about what to expect in this crazy day. Hopefully the next report will be better. I mean, that's all we can hope for. But what do you think? Do you think the next report will improve? Are we going to see more of the same decline?

[Robert Wolff]

I think with a war that started and with some of the bigger companies shedding jobs like Morgan Stanley and Oracle, I think there's going to be a nervousness. You know, I'm a little less enthused right now about the economy, you know, so I'm probably on the other side of that, but I hope I'm wrong.

[Tara Palmeri]

On that sad note, anything to be excited, anything to look forward to. Any, any positive thoughts to leave our audience with?

[Robert Wolff]

Yeah, I'm excited for my Celtics and I think my Red Sox are going to have a good season. And I would tell everyone screw RFK because Dunkin Donuts is the best coffee.

[Tara Palmeri]

That's a, that's a. Dunkin Donuts is good coffee. Actually hard to come.

[Robert Wolff]

Yeah, the idea that he's going after Dunkin Donuts, oh my God.

[Tara Palmeri]

We were getting some really good feedback.

[Robert Wolff]

We love listening to you.

[Tara Palmeri]

Well, Jennifer Anderson said fantastic guests. Alex Alercon said great guests. Robert Wolf is so knowledgeable. Everyone is very great. Grateful to have you on the show. So thanks so much and we hope to have you back soon. Hopefully not only on these doom and gloom days, we don't want you to be? What do they used to call Ali Velshi? The bald headed. The bald headed messenger of doom. I mean, you've got better hair, but you know.

[Robert Wolff]

Thank you all great, but thanks.

[Tara Palmeri]

All right, talk to you soon. Thanks everybody for tuning in. Of course, you can support the show by hitting that subscribe button like share, comment, tell all your friends about it and subscribe to the red letter.

[Tamsen Fadal]

Hi, I'm Tamsen Fadal, journalist and author of how to Menopause and host of the Tamsen Show, a weekly podcast with your roadmap to midlife and beyond. We cover it all, from dating to divorce, aging to adhd, sleep to sexual brain health to body fat and even how perimenopause can affect your relationships. And trust me, it can. Each week I sit down with doctors, experts and leaders in longevity for unfiltered conversations packed with advice on everything from hormones to happiness and, of course, how to stay sane during what can be. Well, let's face it, a pretty chaotic chapter of life. Think of us as your midlife survival guide. New episodes released every every Wednesday. Listen now on Apple, Spotify or wherever you get your podcasts.