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Monetary Matters with Jack Farley
Tariffs Could Blow Up the Bond Market | Mark Zandi on the Biggest Risk to the Economy
Jan 28, 2025
Mark Zandi, Chief Economist for Moody’s Analytics, shares keen insights on the US economy. He highlights how broad-based tariffs could drive up bond yields, posing a significant risk to economic stability. Zandi discusses the elevated recession risk, driven by policy uncertainty, and delves into the roles of Fannie Mae and Freddie Mac, cautioning that exiting conservatorship could hurt the mortgage market. He also provides a nuanced view of inflation dynamics, emphasizing the complex interplay of labor supply and consumer debt.
01:06:37
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Quick takeaways
- Mark Zandi highlights that broad-based tariffs could significantly elevate inflation, posing a major risk to the bond market and the economy.
- Despite a strong economy with low unemployment and stable inflation, Zandi foresees recession risks primarily due to policy uncertainty and potential tariff implementations.
Deep dives
U.S. Economic Strength and Growth Expectations
The U.S. economy is currently experiencing exceptional strength, with GDP growth anticipated to be around 3% for the fourth quarter and for 2024 as well. Job creation remains robust, averaging about 150,000 jobs per month, keeping unemployment low across various demographics. Inflation has also stabilized close to the Federal Reserve's target, interrupted by past issues but now appearing contained. Stock markets and housing values have reached record highs, suggesting a healthy economic environment and acknowledging the Federal Reserve's success in achieving a soft landing.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode