Leading Indicator

How Political Tribalism Is Enabling Bad Economic Policy | Jessica Riedl

Apr 16, 2025
Economist Jessica Riedl, a Senior Fellow at the Manhattan Institute, dives into the misconceptions around tariffs and trade deficits, arguing they reflect a strong economy rather than a failing one. She critiques the political landscape, highlighting how tribalism skews economic policy, and discusses the disturbing trend of Congress prioritizing spectacle over governance. Riedl also touches upon the influence of the bond market on presidential strategies and the implications of partisan divides on critical budget discussions.
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INSIGHT

Trade Deficits Are Capital Surpluses

  • Trade deficits are capital surpluses since the money sent to other countries returns as investment in the U.S.
  • Trump's view of deficits as subsidies is economically incorrect and misunderstands trade mechanics.
INSIGHT

Trump's Economic Impact Declines

  • Trump inherited a growing economy and amplified growth with tax cuts but now faces a more challenging economy.
  • His second-term policies, especially tariffs, risk pushing the economy into recession.
INSIGHT

Markets Influence Trump Most

  • The stock and bond markets are the main influences that impact Trump's policy decisions.
  • Market downturns challenge Trump's promise to make people rich and can force policy shifts.
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