The US Economy and Trump Administration Policy with Apollo's Torsten Slok
Jan 30, 2025
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In this conversation, Torsten Slok, Partner and Chief Economist at Apollo Global Management, shares his insights on the U.S. economy and its resilience post-pandemic. Slok discusses the implications of high hotel costs in New York as economic indicators and dives into the unique traits of the U.S. economy amid global challenges. He analyzes how Trump administration policies might affect inflation and business spending, while advocating for diversified investments in today's market. His expert background enriches the discussion on navigating economic uncertainty.
Torsten Slok maintains a bullish outlook on the U.S. economy, attributing its resilience to low interest rate sensitivity and strong investments in AI.
The podcast highlights the importance of understanding private markets, noting that 80% of U.S. employment exists outside of the S&P 500 companies.
Slok contrasts U.S. inflation rates with those in Europe, explaining that different market structures significantly impact consumer experience amid global economic challenges.
Deep dives
The Importance of AI in Business
A significant 89% of business leaders have identified artificial intelligence (AI) as a top priority for their organizations, highlighting the growing reliance on AI technologies across various sectors. Companies like Grammarly are being utilized by Fortune 500 teams to enhance productivity while ensuring data security amidst the proliferation of AI tools. This emphasis on responsible AI aligns with the need for businesses to avoid harmful biases in their operations. The importance of discerning useful AI solutions from mere hype becomes crucial as organizations navigate this rapidly evolving landscape.
Economic Predictions and Performance
Torsten Slock, chief economist at Apollo, has notably diverged from the pessimistic forecasts of many economists over the past few years, maintaining a bullish perspective on the U.S. economy. He attributes the economy's resilience to factors such as low interest rate sensitivity, a boom in data center and AI investments, and favorable fiscal policies. Slock's assertions challenge the consensus view of impending recession and underscore the importance of understanding unique economic tailwinds. His analysis portrays the U.S. economy as comparatively stronger than those of Europe and China, driven by domestic growth factors.
Academia and Career Development
Slock shares insights into the differences in economic education between Denmark and the U.S., explaining that students in Denmark experience a more prolonged and specialized academic environment. He emphasizes the benefit of being exposed to diverse educational practices, which foster critical thinking and analytical skills crucial for understanding complex economic systems. His journey through prestigious institutions, along with mentorship from influential figures, has significantly shaped his professional trajectory. Slock attributes his success to the relationships formed during his educational and early career years, highlighting the value of networking and mentorship.
The Role of Private Markets
The conversation emphasizes the often-overlooked significance of private markets in the broader economic landscape, pointing out that 80% of U.S. employment exists outside the S&P 500 companies. Slock stresses the necessity to understand how these private entities receive financing and contribute to economic growth, as the majority of employment and business activity occurs within these smaller firms. By focusing predominantly on public markets like the S&P 500, a myopic view of the economy can result, neglecting the vast majority of businesses that drive employment. This insight serves as a call to action for economists and investors alike to broaden their perspectives on market dynamics.
Inflation and Global Economic Health
Slock discusses the varying inflation rates observed globally, particularly noting the challenges faced by the European economy compared to the U.S. He attributes Europe's struggles to external factors such as declining demand from China and ongoing demographic issues. In contrast, the U.S. has shown a lower inflation rate due to unique market structures, like the predominance of fixed-rate mortgages, which insulate consumers from immediate interest rate spikes. This nuanced understanding of inflation's causes and its disparate effects across different economies offers a comprehensive view of current global economic conditions.
Barry speaks with Torsten Slok, Partner and Chief Economist at Apollo Global Management. Prior to his time at Apollo, Torsten spent roughly 15 years on the sell-side with Deutsche Bank. His team there was top-ranked by Institutional Investor in fixed income and equities for ten of those years. Additionally, he spent time in Paris at the OECD as well as at the IMF's division responsible for writing the World Economic Outlook. He has developed several content platforms including Apollo Academy and the Daily Spark on which he publishes frequently. On this episode, Barry and Torsten break down their thoughts on the US economy, inflation abroad, and what sectors are most exposed to the second Trump administration's policy agenda.