Robert Kaplan, Vice Chairman at Goldman Sachs and former President at the Dallas Fed, shares insights on inflation trends, the importance of Federal Reserve independence, and their impact on the US economy. Mark Gurman, Bloomberg News' Chief Correspondent for Apple and Tech, dives into Apple's strategic shift in chip development and the challenges of adapting to global markets and geopolitical tensions. The conversation also touches on the growing significance of Apple’s services revenue, showcasing the company's evolving position in the tech landscape.
The podcast addresses how inflation and government spending policies are creating complexities that may hinder GDP growth in the American economy.
It discusses the contrasting consumer behaviors of two distinct income groups, affecting business strategies and spending patterns amidst economic uncertainty.
Deep dives
Impact of AI on Business Competitiveness
AI is fundamentally transforming business operations across industries by enhancing productivity and accelerating decision-making processes. Companies that overlook AI advancements risk falling behind their competitors who are already integrating these technologies into their workflows. The significant compute power required for AI applications often translates to high costs when utilizing traditional cloud platforms. However, transitioning to a specialized infrastructure, like Oracle Cloud Infrastructure (OCI), can significantly reduce these expenses, with OCI reportedly offering 50% lower costs for compute and even more for storage and networking.
Current Economic Landscape and Growth Projections
The discussion highlights ongoing structural changes within the American economy that may lead to slower growth projections. Key areas of change include a shift in fiscal spending, initiatives aimed at increasing productivity, and policy-level efforts to manage workforce growth and immigration. Consequently, a reduction in government spending combined with tariffs introduces complexities that could further limit GDP growth. Overall, these factors suggest that while there is potential for more organic, private-sector-driven growth, the current trajectory points towards a deceleration in economic expansion.
Consumer Behavior in a Diverging Economy
The podcast elucidates a dichotomy in consumer behavior, highlighting two distinct groups facing contrasting economic realities. One group, earning below $55,000 annually, has experienced a significant decrease in purchasing power and is cautious in spending, often opting for budget-friendly options. Meanwhile, another group with higher financial stability and asset ownership tends to spend more freely despite inflation concerns. This divergence complicates the business landscape, as companies must navigate which consumer segment they are servicing to align their strategies effectively.
Corporate Risk Appetite and Regulatory Environment
CEOs express a mixed outlook on their willingness to engage in risk-oriented growth strategies like mergers and acquisitions, informed by the current regulatory landscape. A favorable regulatory environment that promotes sensible regulation is positively received, enhancing corporate confidence. Conversely, uncertainties around trade policies and tariffs have instilled caution, causing some companies to delay expansion plans. Additionally, the pressing need to invest in AI and technology means that growth strategies will increasingly rely on larger corporate structures that can support such investments.
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF. Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyFebruary 21st, 2025 Featuring:
Robert Kaplan, Vice Chairman at Goldman Sachs and former President at Dallas Fed, joins for an extended discussion on inflation, the Fed, and the US economy
Ellen Wald, Senior Fellow at the Atlantic Council, on energy volatility and prices amid uncertainty in Ukraine and other global conflicts
Mark Gurman, Chief Correspondent: Apple & Tech with Bloomberg News, joins in studio for a discussion on Apple's new products and a broader look a the tech space, including Nvidia's key earnings next week