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Welcome to Inside Economics. I'm Mark Zandi, the chief economist of Moody's Analytics, and I'm joined by a few of my trusty colleagues, Chris Dridi, Marissa DiNatale, my two co-hosts. Hi, guys. Hi, Mark. Hi, Mark.

And we've got Dante, Dr. D'Antonio. It's Jobs Friday. How are you, Dr. D'Antonio? Doing well. How are you? Good, good. I'm just warning you up front. We're not going to get to you for a while. Okay. First time in my memory where the jobs numbers aren't front and center, you know? Yeah.

I can live with it. You can live with it? Yeah. Okay. Good, good. They were pretty good numbers. I mean- Yeah. Yeah. We'll come back to that. It feels like that's way in the rear view mirror, at least at the moment it feels that way. So what are we going to talk about, guys? What do you think we should talk about? I don't know. There's not much going on. Not much going on. Yeah. You've been watching the stock market recently?

I feel like I'm going to cry. Yeah, I just, I need to stop looking at it. Yeah, stop looking. Well, I think all of America is looking at it. Maybe the entire world is looking at it, right? I'm sure. Don't you think? Absolutely. Yes. Yeah. Has anyone done the calculation? How, what's from the peak in stock prices, US stock prices, which I think was early February,

Was it early February or mid-February? Somewhere in there. What is the percentage decline now at current market trading? Does anyone know the answer to that question? I know it's over 10%, which would be a market correction, but I don't know.

Is it 12? On the S&P 500? Say on the S&P 500. I thought it was like 11, but I don't know what it is right this moment. Okay. But we can find out. Yeah, let's find out. Dante, can you work on that? I can work on it, yeah. Okay. Can chat GPT it. I don't think you need a research assistant for it. But the NASDAQ is- That's more. Is bear territory, right? Yeah. Yeah.

Okay, so what's the proximate cost for this decline in stock prices? Pretty obvious. Yeah, it's the tariffs. The trade war. The tariffs. The trade war. President Trump's announcement on Liberation Day, which was, what day was that? April 2nd. Was it Wednesday, this past Wednesday, April 2nd? Yeah. Yeah.

what would given events what would you have called that day liberation day not liberation day demolition day uh what day from wealth maybe i don't know demolition day demolition day demolition day i like that uh dark day dark day hey chris you want to kind of run us through

What the president announced on April 2nd, the tariffs that he announced, just to give just a level set here so that we're all on the same page. Yeah. So he declared a national economic emergency. And based on that, he announced tariffs of at least 10% and more reciprocal tariffs on 60 worst offender countries. And we can go into the calculation of those tariffs. It's not

the tariff rate. It's the trade deficit of each of those countries that is used as the reciprocal tariff rate going forward divided by two. Okay. So, yeah, well, okay. A lot to unpack. So by our calculation, I think if all these tariffs are implemented, and obviously that's always a big if, but let's just say they are,

The overall, across all trading partners, across all products, effective tariff rate, I think comes in at 22.5%. There's been a lot of confusion about this, and I think I wrote a piece yesterday saying 25, but after more careful consideration and taking a look at the numbers more deeply, we're at 22.5%. Is that right, Chris? There's a lot of confusion around whether these tariffs actually stack with other tariffs. We have 25% steel and aluminum tariff, and it's not clear how...

All of these tariffs stack, but yeah, I think 22.5 is kind of the general interpretation at the moment. Okay. Until we get, maybe we'll get more clarity going forward. And I like 22.5 because it makes the arithmetic easy because before the tariffs started to kick in in President Trump's current term, we were at 2.5%. So 22.5 minus 2.5 is 20 percentage points. So it feels like the, you know, we're,

Roughly speaking, the effective tariff rate across all products and countries is up 20 percentage points if fully implemented. Right? Yeah. It's also consistent with the Smoot-Hawley tariffs. Right. Which is also a nice kind of- Reference point. Reference point. I think at the peak of the effective tariff rate under Smoot-Hawley, it got to-

I think it got to 20%, I think. I didn't think it... Yeah. So we're now over Spood-Hawley. The historical record is a little... Oh, is that right? ...gray there, you know? Yeah.

Because we didn't have computers, so it's a little... Yeah, that's a good point. But yeah, that's the general consensus. And so that means you have to go all the way back to the early 1900s to find a time when the tariff rate is higher than the currently announced one. That's how big a deal this is. Okay. And we've got some good rules of thumb that comes out of our modeling and I've seen in other research.

Every percentage point increase in the effective tariff rate, so it's up 20 percentage points, but every percentage point increase increases the consumer expenditure deflator. That's the measure of inflation the Fed is focused on in the subsequent year after the tariff increase by a 10th of a percentage point. So-

0.1 times 20, that's the increase in the effective tariff rate, is 2% percentage point. So if that rule of thumb holds, the inflation rate, which is currently on the PCE deflator, again, the measure the Fed uses when setting policy, will go from say 2.5%-ish, 2.5% to 3%-ish to 4.5% to 5%-ish, right? Am I right about that?

Yes, if the tariffs went in and- Yeah, as fully articulated. Yep. Okay. Over what time period? I'd say over the subsequent year, probably faster than that. And that accounts for some of the dynamic effects, but not all. If we go into recession, then it may be a different deal. These relationships are kind of on average in a reasonably well-functioning economy. Right.

The other rule of thumb is that for every percentage point increase, it reduces real GDP by six, seven basis points. So inflation goes up by 10 basis points, 0.1. The GDP goes down by 0.006, 0.007, six or seven basis points. So if you do the arithmetic on that,

say, we'll be conservative, six basis points times 20, that reduces real GDP in the coming year by 1.2 percentage points, 1.2 percentage points.

And again, I'm making this, this is probably a very nonlinear kind of relationship. You know, and we're in a very nonlinear part of the reality now. I mean, that one percentage point is kind of going from a 2% effective rate to a 3% effective rate, not from a 2% effective rate to a 22% point. But anyway, so it's going to be more than,

More than that, but that kind of gives you a sense of magnitude in terms of the impact. So pretty significant. Yeah. Okay. We're going to come back to recession probabilities because obviously when you get that kind of a hit to the economy, you got to start talking about recession. But before we do, let's kind of spend a little bit more time on the president's announcement on the tariffs. Again, explain to me

I thought that these tariffs were reciprocal, meaning we would raise our tariffs to be consistent with the tariffs charged by our trading partner partners after accounting for their tariffs and all the so-called non-tariff trade barriers that those countries impose on us.

By the way, we also have plenty of non-tariff trade barriers that we impose on them, but I don't know that that entered into anyone's thinking or calculation.

But that was the idea. But you're saying that's not what happened here in terms of the way these were calculated, these country to country tariff rates the president announced. Chris? Well, it's a very hand wavy type of calculation, right? They calculate the tariff rates by country as exports minus imports divided by imports. That's it? That's it. So there's no calculation here of, there's no hard work being done here about

what the tariff they charge, what the tariff equivalent is of easy financing or a tax subsidy or a quota or whatever. None of that. Yeah. The presumption is that that's all embedded in that trade deficit somehow. Oh, I got it. Right. And also, even if that calculation shows that we're running a trade surplus, the country's still got a 10% tariff. So 10%-

was sort of the minimum default for everybody, right? So there's countries like Brazil where we run a trade surplus, but they have a 10% tariff. So yeah, it had nothing to do with it. It had nothing to do with reciprocal tariffs in the end. And their assumption, I think he said, was that that calculation represents what he thinks is the culmination of all unfair trade practices and cheating, right?

that's what a trade deficit is in his definition right right well um i found it really amusing when because they have the they have a i think the u.s trade representative of the administration published a kind of a note saying here's how we calculated the tariffs and they have this kind of a fancy equation with lots of greek letters

Price elasticity, you know, pass through, so forth and so on. It's, oh, we use this formula to calculate this thing. But actually, when you boil it all down, all those Greek letters were equal to one. So they're not making any estimate whatsoever. They're just numbers.

They're just coming up with a number that they... Oh, and divide by two. I forgot. And divide by two. Got to divide by two. To be nice. To discount. We're being lenient. We're being lenient. Yeah. Okay. Dante... Makes no sense. Okay. Makes no sense. Makes no sense. Makes no sense. We can't make sense out of this. There's no way to make sense out of this. They just wanted a big number. They wanted a big number. They could have just selected the number and been done with it. Right. Right.

probably should have done that um okay all right so then let's then okay that's the state of affairs we've done this in previous podcasts but let's do it again let's just do it again why are we doing this what's going on you know what are the motivations you know for this and will uh those motivations uh those goals be achieved so

I can think of a few. Maybe I'll, let's go down each one of them and then I'm sure I'll miss something and you can put that forward and we can discuss it. But maybe we start with, this raises a lot of revenue, tariff revenue, right? Because it's a big number, 22.5% effective tariff rate. You multiply that by what, 3 trillion in imports every year that will be tariffed. I'm making that number up because I'm not sure we know exactly what's being tariffed and not, but okay.

And it's likely to decline, right? Yeah. Well, I want you to talk about that. Yeah. But that's the idea. So if you do the straight up arithmetic, meaning you give no thought to it whatsoever except multiplying two numbers together, what's the number you get? $750 billion per annum, something like that.

So, you know, in the budget world, you always think about the 10-year budget horizon. So you take the $750 billion, you multiply by 10, you get $7.5 trillion. You go, oh, wow. That's a lot of moolah. That's a lot of money. You know that word moolah? Yeah. Is that an Italian word, Chris, moolah? I don't believe so. You would know. You would know, wouldn't you? Oh, it's not in... No, it's... Unless it's from some...

Origin. Scripture or something? Toldi is money. What is it? Toldi. Toldi? Soldi. Yes. Toldi. Soldi. Oh, I like that. It's got a lot of soldi. It's got a lot of soldi. A lot of soldi. It's US slang. It's not a different language. It's just a slang term in the US.

Did you know that or did you chat GPT? I just looked it up. I just Googled it. I didn't even go chat GPT, but I got there. And by the way, since we have you, how far is the S&P 500 down?

So as of a few minutes ago when I calculated it, it was down just over 15% from its peak. Its peak was in February 19th at $61.44, and it was down a little over 15%. So we're past correction territory, headed to a bear market, which is down 20% by convention. Okay, so I'm going to raise all this revenue. Motivation number one. And by the way, these aren't rank ordered because I have no idea how to rank order these motivations. But let's just go with that one first.

What do you think about that? Marissa, what do you think of that? How realistic is achieving that goal of raising a lot of revenue? It raises a lot of revenue, but it doesn't, you know, I keep hearing people say, could we do away with like the income tax by raising revenue through tariff? I mean, it doesn't.

It doesn't come close to what income tax revenue is. And unlike an income tax, which an income tax will fall and rise, right, with economic conditions, of course, but people are going to be, this is essentially a sales tax. That's what these tariffs are. So you have to think that when the prices of,

goods rise, that people will buy less of them or they will substitute away from more expensive goods to less expensive goods. So that's just a straight up your seven and a half trillion is just a straight up calculation of the tariff rate times everything that we're importing. Right. But obviously, we're going to be importing less if the prices of these things go up. And there's downstream effects on the prices of other things, too. So

Yeah, it raises revenue, but it doesn't raise enough revenue to significantly. And a corollary of what you said has been raise revenue so that we can do things like extend the TCGA tax cuts and add on to them, right? But those are extremely expensive. And that still doesn't get us near plugging the hole of what those tax and spend programs will total even in a year, right?

Although the TC, I mean, if it's seven and a half trillion over 10, the CCGA is what? Four and a half? Four. Four and a half. But we're not getting seven and a half trillion. No. Okay. All right. Well, just one comment on what you said. I got a gazillion comments on what you said, but I'll just make one and then I'll turn to Chris and get his comments before I give you my comments again. But you're right about the tax. It's a tax, like a sales tax. It's a very regressive tax, right? It crushes.

lower middle-income households. Presumably, the folks were trying to help out by bringing manufacturing back, which is another motivation which we'll come back to. But this is much, this is more, the incidence of this tax is really borne most heavily by the people, by low and middle-income households, not the high-income households. And that just goes to the fact that the share of the budget that low-income households devote to goods that are imported is just much higher. So-

to keep that in mind. And you're right. What you're saying is I'm not going to get seven, seven and a half is what a budgeter might call us on a static basis, not accounting for anything else except the arithmetic multiplying 22.5% times 3 trillion, that kind of thing. But you're saying, look, the tax base is going to erode. You raise the price, people are going to buy less stuff and,

By definition, and therefore the tax base comes down again, which is right. Chris, how would you respond to this? Are they going to achieve this goal of raising a lot of revenue? No. They're going to raise some revenue, but not $7.5 trillion, right? Because you're going to have those fairly sizable responses.

What about the recession? What about a recession? Absolutely. Okay. I was going to say the other side of the tariff equation is that there's going to be retaliation by other countries. So it's also not static in that the stuff that we export to other countries is going to become more expensive there. Our producers are going to be able to sell less in other countries, which has a negative economic effect, right? A dampening on growth. So-

All around, the $7.5 trillion is like best case scenario. Best case? It's not even a case. What a con. It's not even a case. There's no case. Right. I mean, it's in a vacuum if-

Well, look, if you go into a recession, your tax revenues on everything else goes down. Right. And your spending goes up. Unemployment insurance, food stamps, you know, net snap. People lose jobs, unemployment. Yeah. So, you know, the dynamic effects are very substantial. Behavioral effects, meaning I buy less of something that has a higher price. And the dynamic effects, meaning the economy is a lot weaker, right?

you know, undermine the revenues and increases the expenditures and makes it even less likely you're going to raise, you know, anywhere close to what you expect. Here's anything else, Chris, before I go into my. You want to go to the next one or you want to. No, no, I'm not done with this one. Oh, you're not done with this. OK, no, no. You guys missed the most important point. Dante, you know what the most important point is?

I was going to make a different point, but I don't make a point. Go ahead. Make a point. In the very next breath, whenever you hear them talk about it's a revenue razor, the very next breath is like, how should people react? Should be that you should buy American and the company should invest in the U S it's like, well, if that's the goal is to get people to buy American and companies to invest in manufacturing here, by definition, that's going to lower this big revenue generation stream that you're claiming is the whole point here. Yeah. Like,

If your goal is to change behavior of businesses and consumers, then you're not going to get the revenue that you're talking about getting anyway. Yeah, good point. Here's the, I think, what I would put at the top of the list of reasons why this is a silly kind of argument. Would any prudent budgeter or planner count on those tariffs being in place any more than a

you know, a quarter, a week, a quarter, a year. You think they're going to be here next year? You think they're going to be here? Well, suppose President Trump does what he says he's going to do and sticks with them all the way through his term. But you think the next president is going to do that? This is all under executive order, right? It can be changed with the stroke of a pen. And by the way, national emergency is

Yeah. What national emergency? I mean, we've had these tariffs in place since the beginning of time. We've always been in a national emergency. So is this legal? Are these legal? Well, I don't know. I'm not a lawyer, but I go, whoa, this feels like a legal case to me. So, you know, you're sitting there as a I don't think there's any way the Congressional Budget Office, the folks that do this for things about the budget process.

And nonpartisan budget, they do the bean counting, you know, for the budget. Would ever count any of this for, you know, against, you know, tax cuts, the lost tax. Really, you want to use this so-called tariff revenue to pay for tax cuts that are going to be in place now?

Maybe five years, 10 years, forever? I mean, come on. That makes no sense whatsoever. So because these are not legislated by Congress, then CBO doesn't take this into the accounting, right? Nor should they, right? I mean, how can you? So I don't know. I think it's a very specious argument to say I'm going to raise a lot of revenue here. I just don't see it.

In fact, it just makes me more nervous about our fiscal situation, if that's what's going to happen here. Are you going to take that and give us permanent tax cuts? Whatever it may be, I don't know what it is, but whatever it may be, I mean, really? All that means to me is our budget deficits are going to continue to, are going to balloon even more, balloon even more. It's just a license to wreck the fiscal situation. Okay, that's one. All right, that's the first one. The second one,

This is going to bring back manufacturing in the US, the industrial base, increase the industrial base of the United States. There's some intuition behind it. I'm raising tariffs on imported goods, so put pressure on foreign companies to come here, invest here, set up shop here to avoid those tariffs. Dante, what do you think of that argument?

I don't buy it. I think maybe there's a very small slice of it, some high-tech manufacturing that could make sense where firms may actually invest in having a supply chain avenue in the US. But you think about a lot of the manufacturing in places like Cambodia and Malaysia and Thailand and all these places that got hit with huge

tariff rates. That's not the kind of manufacturing that there's no desire to bring it back here. It doesn't make any sense from a cost basis to bring it back here. The labor market in the US is already tight. Where are we finding hundreds of thousands of workers to work for probably relatively low pay and factories to make apparel and footwear and all these things that are produced in countries where now they're going to cost way more to import? It just...

It doesn't make sense for the bulk of manufacturing that I think people think about. Maybe there's some piece of it where sure, that you can make an argument, but not broadly speaking. Oh man. Really? That's all you have to say on the topic? Really? Okay. I'm gearing up for my answer. Go ahead, Chris. What do you have to say on this topic? I'm going to say, and whatever does come back is going to be highly automated. You're not going to get the type of manufacturing employment that we had in the 50s or the 60s coming back to this country. The horse has left the barn.

Right. And manufacturing only accounts for what, 10% of the job base anyway? I mean, even if it was Rip Warren, how many jobs would we create, Dante? 10,000s of jobs, maybe tens of thousands, not hundreds of thousands.

No, certainly not hundreds of thousands. The thing I don't understand is like the idealistic manufacturing job that they talk about bringing back is a, that was a union job 50 years ago, right? Is that, but that's obviously not what they're, that's not what they want to bring back. So it's like what they're talking about and what they actually want are two completely different things anyway. So I don't understand how you square that circle or whatever.

metaphor you want to use, but it doesn't make any sense. Here's what I don't get. It's just very simple. Okay, I'm a CEO of a global manufacturing company, let's say a vehicle manufacturer, and these tariffs are just imposed. And I'm trying to make a decision, should I move

production into the United States? Should I build a factory, a new vehicle factory in the United States? Which by the way, it takes a long time to build. I don't know, two, three, four years, something like that. And then these are long lived investments. You do this because these factories are going to be around in your planning for a decade, two decades, three decades, whatever it is. And then you go, okay, so right now if I do it, it makes some economic sense because the tariff is

whatever it is, 25% on all auto imports. But then I think, well, how long is that 25% going to be in place? Is that going to be there next week, next month? It goes back to the same argument I was making with the tariff revenue. Certainly three years from now when that factory opens, what's that tariff going to be? Is it going to be anywhere close to 25%?

And what about 10 years from now or 20 years from now? I can guarantee you it's not going to be 25%. So why would any CEO of a global manufacturing firm, based on the uncertainty around what these tariffs will be, and again, they could be illegal and be struck down in the courts a year from now, why would I make that investment? How in the world could I justify that investment? Am I missing something?

Marissa, am I missing anything? No, I agree. I mean, I think there might be some manufacturers that already have some capacity or operation in the United States that may be able to shift more production to the U.S. from somewhere else. But

For somebody that already has an entrenched presence in a foreign country that has spent years and millions or billions of dollars finding supply chains, a labor force that's skilled to do that kind of manufacturing, you know, shipping, distribution, plants, equipment, for them to pack that in and move that to the United States seems...

I totally agree. I don't know why you would do that in this. I just don't think the math would make sense for you to do that, given the seeming...

transitory nature of these tariffs that seem to change every few days, let alone, as you said, what's going to happen in two years, three years, four years. Well, what do you make of this? Oh, Hyundai just announced, I don't know what was the number, $10 billion investment in the United States. $20 billion, yeah. Apple made some kind of announcement.

What do you make of that? Is that run counter to what we're saying, Chris? I don't think so. I mean, well, I think both of those companies already have some capacity and manufacturing going on in the United States. So again, that could be an easy way to ramp up for them, right? I'm thinking of the manufacturers that are almost completely outside the US. Like take Nike, for example, right? They make all their shoes in Southeast Asia, right?

What do they do? Yeah. Well, Chris, what do you say? I think you already had manufacturers looking to bring some production back to the States or near shore, certainly after the COVID experience, right? So there's rationale to move some of this manufacturing around. That was already in play. And I think what we're seeing in terms of the announcements are just connected to those plans that they already had made. I think Hyundai already was planning to...

to move more production to the US. I mean, there are good reasons to do so, energy costs or other costs being close to your market, but I don't think they based any of that decision on the tariff. Right. I just point out,

I heard the same thing back in President Trump's first term when we had a natural war. Remember Foxconn? Is Foxconn a Taiwanese company? I believe so. Yeah, they're kind of a manufacturer of consumer electronics and other types of computer equipment.

They were going to, I think, 10 billion. Wasn't it a 10 billion? In Wisconsin? Very similar number, 10 billion. I don't know what to make of that. But that was in Wisconsin. And what did we get for that? There's something there, but I'm not sure what. Not much, no. Not much, yeah. Not a factory. All right, so you're on board with that motivation of bringing manufacturing back, that motivation

That ain't happening. Doesn't hold water. At least in terms of a lot of manufacturing jobs, not happening. Okay. All right. The third motivation that comes to mind is, this is a little more amorphous, but I've just heard comments coming out of the administration about, I want to reduce the trade deficit. The US runs a trade deficit. I want to lower the value of the dollar. I want to bring down interest rates. Okay. Yeah.

Dante, what do you think? Any chance we're going to achieve those goals with the higher tariffs? It certainly doesn't seem like it to me, not at the outset. Plus, I mean, especially the trade deficit one, I just don't really understand the logic behind it. Again, if there truly is some unfair trade practice going on, then sure, maybe there should be a targeted approach to try to remedy that. But

In general, we all benefit from running this trade deficit, right? We're getting those cheaper goods from all over the world that we can't get made here anymore. And so like, it just, I don't understand the logic behind it. I guess that's part of it other than just somehow that means we're being treated unfairly. And so we should make everything fair again, which just seems like it'll make everything more expensive. That's the, you know, I don't understand what the rationale is. Right. Chris? Yeah. Deficits, dollar interest rates. I want them all lower.

Well, you got lower interest rates today. Yeah. Right. You got a lower dollar too. You got a lower dollar. Yeah. Okay. But out of growth concerns, not out of a position of strength. I can get you a lower dollar and a lower interest rate, and a lower trade balance pretty quick. You know how you do that?

Recession. Recession. Just give me a recession. Is that is that that's what you want? That's what we're saying. We want a recession. All three of those things will happen. Presumably, the deficit depends a little bit on whether the rest of the world goes down the tubes with us or not, which to or what degree? Go ahead, Marissa. Were you going to say something? They have said that they will tolerate a recession. I mean, recession seems to be OK, but not.

Okay, but I don't think they've connected the dots back and said, I want a recession because that's how I get lower interest rates. No, no, no, no, no. Yeah. I mean, I find that just amusing bordering on, disconcerting bordering on, I'm going to cry. Really? Are you kidding me? And on the trade balance, will tariffs improve the trade balance? Yeah.

Probably not. Not necessarily because of what you just said, right? There's going to be retaliation. You're going to have U.S. exports falling to other countries as the price of imported U.S. goods in other countries rise. So it's not clear that that's going to happen. And-

This is a question we get from podcast listeners. We got it before and we kind of answered it, but we got another one. You know, what's inherently bad about a trade deficit? Is there something inherently bad about running a trade deficit? The administration seems to think so because they seem to think that that represents unfairness in the global trading system. But I mean...

You can't get French cheese from the U.S. You can't get Italian wine in the U.S. There's plenty of reasons why we want to import things for quality reasons, because we don't want to produce that stuff anymore. We want to focus on higher value added goods and services, right? So it's just a, it's a strain. To me, it's a strange way of viewing a trade deficit. Well,

And the trade deficit is a symptom, not a cause. The reason why you have a trade deficit is because you consume more than you produce. And I'm not saying that's a bad thing. Actually, I'll take that all day long. Give me more consumption. The way that squares is that global investors are willing to finance that. They buy our treasury debt and invest in our country because they think we're money good and this is a great place to invest.

But I would say the reason for the trade deficit, we consume more than we produce. And that really goes to our budget deficit. It's not the households, per se. They're saving just fine. Corporates are saving just fine. Businesses are saving just fine with their profitability and retained earnings. They're doing what they're supposed to do. It's the federal government, the budget deficit. So if you want to

If you think that if you want to bring the trade deficit down, the way to address that is to go to the root cause. The root cause is our budget deficits. You know, we're running large budget deficits. You address that and you'll get your budget. You'll get your trade deficit down. So you're just focused on the wrong thing. And using tariffs is.

to try to get the trade deficit down will not succeed. All it will do is reduce the amount of trade that's actually occurring. You're getting less, less, fewer imports, fewer exports. Your skills still lend, depending on the cyclical effects, the relative cyclical effects across the globe, you're going to end up with the same trade deficit. So it just makes no sense. It just makes no sense. This goes to one more motivation, and we've kind of danced around it.

we're being treated unfairly. It's just unfair. It has nothing to do with anything else other than we wanted to be treated fairly. How do you respond to that, Chris? There are cases certainly where we are being treated. US businesses are being treated unfairly. Access to Chinese markets, for example. But for that, you need more of a scalpel, not a sledgehammer to address. We're

Why are we putting a tariff on Canada, Mexico, and our best trading partners in Europe when we're really trying to address a trade issue with China, right? So I'm sympathetic to the diagnosis that there is a problem here, but it's not so broad-based, right? If you look at Europe, you look at our total trade, including goods and services, we're

Yeah, looks pretty balanced to me, right? It's not that, you know, there are some certain cases certainly where, you know, it's worth pursuing some type of corrective action. Maybe a tariff is helpful to spur some negotiation, but it's a broad-based tariff doesn't address those issues. Dante, anything to contribute there on the fairness issue? I know how important fairness is to you.

I am a big stickler of fairness. You get really annoyed when you play bocce ball with Chris and he's not playing fair. It's just not right. It's just not right. You guys play bocce ball? They play bocce ball. I wish. Now I wish we did. And you weren't invited, Marissa? I haven't been invited either. It's on the honor system. No, I mean, I agree with Chris. I think there are...

Yeah, there are certainly situations where that is true, but I don't see how this, you know, sledgehammer approach, like Chris said, I don't see how this even remotely addresses that, right? I don't, it just doesn't seem remotely feasible that this helps correct that specific issue in any way. Here's what I find amusing bordering on disconcerting to the point where I'm ready to cry is if you actually do some really hard work and try to tote up

the tariffs and non-tariff trade barriers of every country and compare them. And people have actually done some work here. The OECD has done some really good work. The US is kind of in the middle of the pack. Yeah, there are some countries that have higher tariffs and non-trade barriers. China is a great case in point. And I agree, scalpel, strategic tariffs maybe make some sense. By the way, I said this in the past, I'll just say it again.

i think the better way of handling china would have been the trans-pacific partnership the free trade deal that exclude with pacific rim nations that excluded china because they didn't play fair and they couldn't get back in until they did that would have been the way to handle it but that got blown apart

in the president's first term. So, yeah, I get that. But half the countries have lower tariffs and non-tariff trade barriers than we do. So why didn't we lower? If it's about fairness, OK, come on. Why didn't we lower our tariffs on those countries? Why didn't we give them, I don't know, what you should, negative tariff? I don't know. What should you do, right? I mean, come on. That's fairness, really? Yeah.

I don't know. Yeah. I think that should be the negotiation point though, right? Australia, which doesn't- Yeah, they shouldn't negotiate. A tariff should say, look, this- What were yours? I don't know where you came up with this number.

We don't charge you any tariffs. Let's zero. Let's go zero, zero. All right. So those are the issues I can think of, and I can't think of any of them being achieved, goals being achieved. Am I missing anything? Was there any others that have been brought up in the conversation? Do you think they want to lose the reserve currency status of the US dollar? Say that again? Do you think that an objective is actually to lose the reserve currency status?

status of the US dollar. That's another reason why you'd have some deficits. Gosh, I hadn't thought of that. Why would you do that? I don't know. It just makes sense. Because that gives you such benefit. I mean, that's why we have such a low interest rate cost of capital compared to the rest of the world, because money comes here when times are tough, right? Exactly. Especially when you need the capital, it comes here, or at least it did in times past. But we are eroding the reserve currency status, right? Because

Is the US money good now? Are we AAA? And I'm not commenting on ratings. I'm just using that as a description of how people used to think of it. Dante, I saw something you were going to say. You were going to say something. Yeah, I want to ask you. I mean, you still see the headline that this is just the start of a negotiation. But I don't understand. If the reciprocal tariffs were actually based on tariffs and trade barriers that countries were imposing...

I could maybe see that argument, but given that these were made up, right. They're just based on trade. Like how is that a starting point for a negotiation, right? How's the country supposed to negotiate against a made up number, right? Like if it was actually based on something real and you could say, okay, we can, you know, we can make some changes on our side and we can bring this down on both sides. But when you're just imposing 10% on people where there might not be any trade barriers at all, it just, I don't even understand how you negotiate against a,

a fictitious number. I don't know how that makes sense. I'm sure. And by the way, just a logistical question. There's a lot of countries that have tariffs on them. Are you going to, are you going to, do we have the manpower? Do we have enough people in the United States to negotiate with all those countries? Because those are complex issues, you know, very, very complex issues.

Well, the Treasury Secretary said when they released this the other day, we don't have the appetite or the patience to negotiate individual tariffs with each country. So what does that mean? Yeah, what does that mean? That this is not open for negotiation? Yeah. I think we're getting very mixed signals on all of that, including...

This is the president stuck to this or is he going to negotiate on this? Yeah, it's very unclear. And like Dante just said, if you're a country that for which we're running a trade surplus with and now you're looking at a 10 percent tariff, what do you what is that? What do you even offer? Yeah, yeah.

All right. So isn't that the case being offered though by some Republicans that this is just a negotiation and their objective is to get to zero? For what though? That's the question. What are we negotiating over? To get to zero, right? That they truly want free trade and that this is just a lot of noise to ultimately get people to table and-

you know sign deals got it got it that may and that certainly is what some countries are starting to do right but then there's other countries that are retaliating like china this morning europe yeah good luck with that

And to what end? You know, really? We're going to move the dial on what exactly? And I think there's another big risk here, which seems counter to the administration's goals, which is if you basically, you know, piss off the entire world, aren't you just driving a lot of these countries into the arms of China? Yeah.

right, the second largest economy in the world. And aren't you going to drive, especially all these Southeast Asian countries that are developing and got hit with enormous tariffs and have been close trading partners with China and have been alternatives to China. Aren't you just driving them closer to creating trade blocks of their own that exclude the U.S.? And that's sort of a scary prospect, right, for a number of different reasons.

Well, I think that's going to happen regardless of how this plays out. You know, even if the administration can find a exit ramp here pretty quickly and pull things off and

We're going to come back to probabilities of a recession and we avoid a recession. The damage is already done, I think. We're no longer a source of global stability. We are the source of instability. And if that's the case, I think other countries and companies are going to be looking for other relationships. And this enhances our competitors. It enhances China, enhances other countries around the world.

supply chains are going to shift as a result, but they're not coming here. They're going elsewhere. Hey, I want to do the game, stats game, and then talk about the employment report, and then we'll do probability recession. But I do want to just quickly bring up, I'm guessing we might, for folks listening to the podcast, we might get a few comments saying, we're partisan. We're not telling the other side. What's the other side of the story?

How do you respond to that, Marissa? Chris or Dante, I mean... Yeah, I mean, we get that a lot. I wouldn't say a lot. No, no. Would you say a lot? Maybe I'm not... It's more frequent since the election. More frequent since the election. No, I mean, it's not... I'm not saying we get...

I feel like we get that after webinars, right? We get one or two. One or two, right. After each time we talk. Yeah. So it's not like I don't think the majority of our listeners think we're being partisan. I don't know. I mean, I think that we are, as we're having this conversation, we're exploring all these angles as we're going through the motivation. I mean, clearly we have strong opinions about what we think about those, but...

As economists, I believe that we're considering both sides. We're doing this from a quantitative perspective when we're actually, we're talking on the podcast, but we have econometric models and calculations we use to try to come to an answer as to how all of this affects the economy. And I think that those models are widely accepted and they're within the consensus of how other organizations try to

forecast the economy. And I don't think there's anything partisan about that. I think it's very quantitative. What do you think, Chris? I'd agree with that. I think we do consider all the angles and we have a variety of scenarios, upside and downside. And you had mentioned now a potential positive reason, if you will, if indeed this is all a tactic to get to a freer trade system. So we're not ignoring that possibility. It's just, it seems very low probability.

And given history, it doesn't seem like a likely outcome. So I think, you know, come at us with the criticism, but I think our job is to evaluate all the angles and provide our best estimate or our best assessment of what the most likely outcome would be or what the downside risks are.

for these other possibilities. The administration hasn't been very, let's be frank, hasn't been very direct in terms of laying out very clearly what the motivations are for this policy. And so we are left to fill in the gaps here, right? So we're trying to understand, well, could it be this? Could it be that? They've said this, you know, what does that mean? Does this make sense? So I view it as having a healthy debate, but, you know, certainly people are going to read in

into this what they want, right? If you have a strong opinion, if one of these rationales really resonates with you, you know, certainly entitled to have that as a scenario. It just may not be the one we agree with as the most likely scenario. Yeah, you know, most economic issues, there's reasonable debate. I mean, you know, there's lots of sides, lots of ways of looking at it. You get, you know, three economists in a room on a subject, you'll get 10 opinions, you know, so I get that.

On tariffs, that's not the case. That's why I feel so empowered and strong about speaking of this. There's no argument here. This is a bad idea, really bad. Yeah. There's no debate, and you can come up with all the kinds of motivations you want and goals. We took them one by one. It's just not happening. It's just not happening.

So I feel very strongly that, you know, that there's no two sides here. There's no two sides. There's one side when we're talking about these kinds of tariffs, these kinds of tariffs. It's a bad idea. And we're seeing that. And I am confident we're going to continue to see that going forward. Let's play the game. What's that? I'm sorry. I was going to say, we also have a historical record here. That's the point. Yeah. This is not, you know, a lot of the policies we debate are,

Yeah. We're trying to understand, well, maybe this, maybe that. This case, we can look back at history and say, well, we did this and X happened. All right.

Okay. The game, the stats game. We each put forward a stat. The other folks try to figure that out through clues, questions, deductive reasoning. The best stats, one that's not so easy, we get it immediately. One that's not so hard, we never get it. I think this is good timing for the game because we haven't talked about the employment report, so we didn't steal anybody's stat. And we always begin with Marissa. Marissa, what's your stat? My stat is 275,000. That's the challenger report announced layoffs.

You keep going to that. Well, that's the problem. That's a good one, though. It's a really good one, though. Go ahead. Go ahead and explain. I do keep going to that. Well, yeah, that's what it is. It is the Challenger Gray and Christmas announced layoffs for the month of March.

It's the third highest number of announced layoffs in the history of this series. And the vast majority of these, over 200,000, are coming directly from the federal government. So these are the Doge-related cuts and buyouts.

The Doge accounting of how many jobs have been lost is very difficult because there's a lot of announcements and then there'll be a lawsuit and there'll be recalls. So it's a fungible number here, but we're looking at least here over 200,000 that have been announced. By our tally, it's, what is it now, Dante? I think it's like 175,000 or something like that.

Yeah. So 200,000-ish, we think, related to- That's on top of a big number last month too, which I don't understand. If you take, I think, February and March, you're over 300,000 announced cuts in the Challenger report for the federal government, which I just don't understand how you get to that number because it doesn't seem like, if you add up all of the news and all the stories about cuts, it just doesn't seem like

There's been anywhere close to that amount. We're closer to 100K, aren't we? Or 125K, something like that? When we towed up the doge cuts? Yeah, in terms of layoffs. And then if you add the 75,000 buyout, you're 200K maybe total. But yeah, the challenge report just seems to be suggesting something much bigger than that, which I don't know how to square at this point.

Yeah, I mean, they had a note in the release that said they're having a hard time toting it up, too, because of all this back and forth and the, you know, recalls and then having to call people back. So maybe it's possible that they're double counting some stuff. But I thought it was also interesting that in the report they also...

said that they're also trying to count the downstream impact of this. So they said that some of these cuts, some of the cuts also affected 23 government contractors, mostly from healthcare industry and nonprofits. So

You know, we have to remember that when we're talking about these federal cuts, that there's going to be all these sort of secondary impacts of this, right, that it's not just people employed directly by the federal government, but it's going to be private sector contractors. If you're looking at the D.C. metro area, it's going to be stuff that depends on federal employees being there, like restaurants and shops and that kind of thing.

Yeah, I discussed to the jobs numbers, which we'll get to. I think federal government employment fell a modest 4K, which highlights another measurement issue. I think the BLS doesn't count in their numbers. If federal government workers are on paid leave or if they're getting severance, then they will not be considered a lost job.

But in the challenger numbers, I'm sure, and in the Doge cuts that they are announcing, they're definitely- They are. Yeah. This is just announcement. So it's not dependent on severance or payrolls. Right. Okay. Okay. Dante, you want to go next? Sure. Let's go with 0.01%. 0.01%. 10 basis points? No. 0.01%. One basis point. 0.001%.

0.01%. Isn't that one basis point? Oh, one basis point. Right. One basis point. Okay. Sorry. Sorry. I thought I was losing. Yeah. Yeah. Yeah. Yeah. Yeah. One basis point. Jeez. Is it an interest rate change?

It's not an interest rate change. Because nothing changes by one basis point. It's changing by 20 basis points. I think the 10-year yield is down below 15 basis points today. Is it related to jobs? It is, yeah. It's something you ask me about all the time. I do. Yeah.

i ask you about everything all the time it's not that it's not helpful that's not helpful uh hours worked per week uh hourly not hourly earnings uh so this is basically zero this is uh is this something basically zero yes this is a rate of some kind it's how much a rate changed right participation prime age labor force participation or epop

No. We give up. What is it? It's the unemployment rate, the unrounded unemployment rate, which you always ask me about. It moved from 4.14 to 4.15%. So it moved up from 4.1 to 4.2. It only actually moved by one basis point. Really, the point was just this report

didn't really tell us anything, right? The labor market sort of is still the same as it was in February. I think there's still, you know, changes to come, but March was sort of, uh, nothing when it comes to new information about the labor market, right? Job growth was good. The unemployment rate basically didn't change. The labor force grew by a modest amount. Everything sort of sort of behaved well. Um, whether or not that's indicative of what comes in the next few months, I think remains to be seen, but yeah.

Okay, that's a good one. So you're saying the unemployment rate, the official BLS report said it went from 4.1 to 4.2, but there's no information there because it just went up one basis point and it got rounded up as opposed to rounded down is what you're saying. Yep. Yeah. Okay. That was a good one. Okay, let's do one more. Chris? Five. No units on that five? Just five? I'm not going to give you the units because then you'll know. Okay.

Is it related to jobs? Nope. No. It's not related to jobs. Oh, five percentage points? Nope. It is a number of actions. A number of actions. A number of actions.

Is that the number of Fed rate cuts that the markets expect? Ding, ding, ding. Okay. That's pretty good, but I needed that hint though. I would never have gotten it otherwise. Yeah. That's a cow bubble worthy. Yeah. Yeah. Oh, so explain. It's a lot. It's gone up a lot, right? Previously, the market was expecting maybe two, three, and now we're up to five this morning. So clearly-

Worried about growth, thinking that the Fed will have to come in to support the economy through some pretty aggressive cuts here. Yeah, well, we're going to get to our forecast in just a second, but we're putting in another rate cut in. We were at two rate cuts this year, September and December, and we're going to put it, I think, July, September, and December.

given events, given that now growth is more of an issue, I think, than inflation. And even that, I'm not going to argue with anyone who says four or five. I'm not going to argue. But if it's five, that feels recession-like, doesn't it? Yeah. Yeah. Yeah. Feels like they're starting to discount a recession, which is reasonable.

Okay, let's quickly go back to the jobs report. Dante, you want to? You don't have a number, Mark? I've been really busy. I like how he does that. He just ends the game early when he doesn't have a number. All right. I got it. I really know. I got a good one, but let's move forward. Let's move forward. All right. Yeah. It's probably going to be even a better one next week, given the way the market's going. That's a big hint, by the way. Big hint. Yeah.

The wealth effects here are pretty massive, you know, the amount of wealth being wiped out and what that means for the economy. But we'll come back to that next week. So, Dante, what should we take from the better than expected payroll employment gain of what, 226,000 or was it 228? Yeah. And you were expecting something less, much less than that.

Yeah, it was 120, 125, I thought. There were some downward revisions in previous months that had up to about 50K, so that takes away some of the miss. But it still was stronger than I think. But do you read anything at all into the number? Not really. I mean, because I think if you look at the last three months, right, the average is 150, which I think we've talked about over the last few months is sort of what we expected underlying growth to be. So you got those downward revisions in January, February. Those were...

111 and 117. So you got a slightly higher number in March, but I don't think it changes the story of sort of underlying job growth. I do think, yeah, we got less of a hit of federal government than I thought we would get in March, but that doesn't mean it's not coming. I think it just means it's delayed by the fact that you've got some of this uncertainty around a lot of these layoffs. You've got a lot of these workers that are on a paid leave status or that are getting severance. And so I think those

Those layoffs are still to come and we'll see the public sector, you know, it added 19,000 jobs overall. I think you'll see that turn to, you know, flat or maybe even down over the next couple of months. I still think that weakness is coming on the household survey side of things. There's just not a lot of change, right? The unemployment rate was basically unchanged. The labor force grew modestly household survey. Employment was up a little bit, but there were no sort of big swings in the positive or negative direction that I saw and,

hours stabilized, which I think was maybe one of the positive signs in their average hourly earnings sort of ho-hum where it's been year over year wage growth is still just shy of 4%, which has basically been the case for more than a year now. So I just think, yeah, it sort of falls in line with the first couple months of the year and doesn't provide a whole lot of new information.

So, so if next month we reconvene in what, can it give us a sense of things? If it came in at 200 K plus that, what would that mean? If came in less than a hundred K, what would it mean? I mean, what are you looking for? Like for next month? I know that's way off into the future, but I mean, just to give us a sense of our, how we should be thinking about this in the context of recession or not.

Yeah, I mean, I think, you know, in my mind, 150 sort of the benchmark here. So, you know, something above 150 is is positive. But I think I would, you know, if you get above 150, and you get a big decline in federal government, then I would see that as a strong positive, right. So even as those federal government layoffs are starting to show up, the labor market still generating sort of an outsized number of jobs.

If you get 200 or slightly better again, but you're still not seeing any of that movement on the federal government, then I think I'd feel like I do now where that's not really a positive to me. It's just a sign that that effect hasn't come through yet. Yeah, certainly I think if you're anywhere between 100 and 200, it signals that things are holding up okay. If you start to go below 100, then obviously we've got, I think, more warning signs that are starting to flash. So 100K is kind of your threshold, right?

Yeah, and that's even this month. I expected we'd stay above that threshold, but I thought we would weaken a little bit. What do you think, Chris, Marissa? Chris, would that sound right to you, the $100K, just as a kind of stake in the ground? Yeah, I think so. Marissa? Yeah, and especially if private sector employment is holding up. Did we get UI claims? I didn't look. Did they go up at all? They fell. Yeah, they fell. They fell.

It's 219, I think. Yeah, there's still nothing due in there. Interesting. And there's really no, I mean, federal UI claims had gone up a little bit, but now they're back down again. So it's just not showing up anywhere. Yeah, Jones, you saw a little bit of an uptick in layoffs of federal workers for February, but it was still pretty small. I mean, 15,000 increase or something, I think. I wonder if there's a measurement issue going on. I mean, usually when things don't make sense to me,

for a reason. The data is wrong. It's wrong. There's a problem. You know, we figure that out, you know, when the data is revised or whatever. But anyway, okay. Let's go, let's end the conversation with, and this will be a little shorter, I guess, just because it is kind of crazy busy. You know, our forecast, what's going to happen with our forecast? And,

I guess the way to couch it is again, because this is the way we've been doing it and it's easy to get your mind around, what's the probability of a recession beginning anytime, I'm going to say through the end of this year, not over the next year, but say through the end of 2025. Because it feels like if we're going to go into recession, it's going to happen sooner rather than later. It's not going to happen later. Yeah.

Given events. So Chris, maybe I'll begin with you. What was your probability of recession last time you gave it to us? And what is it now? I think it was 40 last time or maybe 80%. I can't remember what last time we did this. It was either like 35 or 40 and I'm at 50% now. You're at 50? Okay.

And just to remind listeners, we change our baseline forecast, the forecast in the middle of the distribution, kind of the top headline forecast. We'll make changes to the underlying, big changes to the underlying assumptions, like a recession call, if we're very confident, which subjectively is consistent with a two-thirds probability. So you're at 50, you're still a long way from saying, hey, our baseline forecast should have a recession in it. That's right, but certainly downgrading the baseline. Yeah.

Yeah, that would be consistent with lowering expected growth, higher unemployment. Yeah, but not an outright recession just yet. And more Fed rate cuts. I said we're thinking about going from two rate cuts, quarter point each time to three, July, September, December at those meetings of the FOMC. What do you think about that? I'm kind of on the fence between two and three, right? Because the- Two and three, okay. I think the inflation is still in the center. Right.

Good point. Because going back to the rule of thumb, if these tariffs are actually imposed, inflation goes up to 4.5% to 5%. That's pretty tough to cut rates when that's happening. Right. Yeah. I hear you. That's the problem with tariffs for the Fed. What do they do? Do they hike rates because of the inflation or they cut rates because of the growth? It's a really difficult problem. Yeah. Okay. So you're at 50%. Five, zero. Five, zero. All right. Marissa, where are you? I think I'm at 40%.

40. Okay. Where were you before? 35. 35. Okay. Why 40? I don't feel strongly enough to say it's a 50-50 shot that we're going into a recession. I mean, I think there's a... I also don't feel strongly between 40 and 50. I think we very easily could be in a recession by the end of the year, but...

I do feel like the economy still is coming into the year on such solid ground that it may be able to withstand this. And I'm really just and this is more hope than anything else. I'm just really hoping that these tariffs are not where we're going to end up anywhere near where we're going to end up. I'm hoping this is still a negotiation starting point and we're going to come way down from here quickly.

And if that's the case, then I think there's a chance we avoid a recession. But it has to happen quickly. That's the thing, right? What has to happen quickly? What has to happen quickly? Negotiation around the tariffs and see them significantly come down from where they are. Because if it drags out over the course of the next six months, then I think real economic damage will be done and there's kind of no turning the ship around at that point. So I think if we see in the next month something

negotiations get underway and really significantly bring these tariffs down, then we can avoid a recession. So you're assuming in your 40% that the administration is going to find some kind of off-ramp here? Yes. Yes. Yeah. Okay. Dante?

What's your probability? I don't see the same off-ramp. I just feel like with all the pomp and circumstance around Liberation Day and the big charts, it just doesn't feel like you're going to next week immediately 180 and reverse all of that. So I'm at 50. I think I almost went higher, but I'm going to stay at 50. I think I was one-third last time we talked about it. So it's a pretty big increase. Yeah. Okay. Okay.

But if there's no off-ramp, why only 50? I almost want above 50. I feel like I don't want to jump too high too fast. I want to give it a little bit of time. I don't think there's an off-ramp, but also... And what's a little bit of time? Is it like next week? Yeah, I think something has to happen before implementation, which is supposed to be pretty quick here. So I think if they get implemented... Tomorrow? I think it's tomorrow, isn't it?

I think there's some that are tomorrow and some that are the 9th. Oh, I see. Over the next week. So yeah, I think next week. Okay. To me, if you go through with them, there's not a quick enough off ramp to turn things around. But I still think there's obviously this weak window where things could potentially change. Right. I'm at 60%.

Whoa. Oh, yeah. I'm very close. Yeah. This is not good. This is not good. So you're almost at the point of implementing a recessionary baseline. I am. I mean, I hear Dante. It just feels like the administration's dug in here. It's almost now become becoming a matter of pride. Now, the president's really good at pivoting. He's so good at it. Yeah. Got to give him credit.

And he, you know, things aren't going the way he thinks they're going. He says, fine. You know, he won't, he won't say that it's not going fine. He says, it's going great. I won. Therefore. Yeah. You know, he's really good at that. Yep. But I'm just, it just feels like that's getting harder and harder to do here. You're getting pretty dug in. And when other countries are coming back and saying, Hey, I'm not playing ball. You know, I'm going to raise tariffs. So if you see, and I, to me, the key here is the EU. If the EU, the,

decides to kind of hang back and not retaliate in any meaningful way, we don't go, we don't put a, I don't think we go into a place where we get recession. But if they come back and say, you know, this isn't working for us, we're going to raise, we're going 20% or something in that direction. I think, I don't think there's any going back here. There's no off ramp. You know, we're in a war. And I think that's a recession. And I do think to Chris's point, it's almost getting to be

this is we're back to the parlor game who cares the economy is going to really have a problem here yeah uh and it's going to cost us it's cost us is already in our wealth you know we're looking at moody stock price and everything else going down i mean that's you know everyone's looking at that and uh and as soon as jobs go we're done we're done we're going in so i'm

I don't know. I feel very, very increasingly confident. As you see, I'm right on the edge. Our baseline forecast that's going to come out now, next week, won't have a recession in it. We're going to have much weaker growth. I think we come basically to a standstill on a Q4 to Q4 quarter to fourth quarter basis by the end of 25. That means unemployment is going to rise. We're going to get closer to 5% on unemployment. We're at 4.2. We're going to get closer to 5%. So, you know, we're right on the edge of, you know, going in. So...

If we do go in, you imagine mild, moderate, severe recession? What's your take? I think it'll be a statement just to say recession, and I think it'll be a modest recession. I think, again, the president is good at pivoting, and I think he'll pivot. But we're certainly going to run those downside scenarios because they're very likely. I mean, I am just so disconcerted by all this.

The United States of America is the source of global stability. It serves everyone, including the United States of America. Everyone comes to us when there's a problem. And by so doing, we benefit enormously from that. Now we're the source of instability in the world. And money won't come flowing here. It'll go elsewhere. We're going to be marginalized.

And for what? To what end? We want to go back to the motivations and the reasons for doing this. Really, to what end? To what end? I don't know. I'm closer to crying now. I'm closer to crying. I was perplexed. At some point, some used, now disconcerted. Come on. Really? Really?

All right. I know it's a bummer of a podcast, but it's a bummer of a time. It's a bummer of a time. And we're going to call this a podcast, dear listener. Hope you join us next week. Take care now. Bye-bye.