Bloomberg Talks PIMCO's Richard Clarida Talks 'Stagflation' in US Economy
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Apr 1, 2025 Richard Clarida, a global economic advisor at PIMCO and former Federal Reserve Vice Chairman, discusses the current landscape of the U.S. economy, suggesting there's a hint of stagflation looming. He predicts the Fed will wait to respond until negative tariff impacts are felt in economic data. Clarida analyzes the disconnect between survey data and actual consumer metrics, the wealth disparities affecting consumer spending, and the complexities of inflation, all while navigating a landscape of uncertain economic signals.
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Tariff Impact Timeline
- Tariffs, intended to onshore production and reduce trade deficits, take years to show results.
- Supply chains and uncertainty from tariff policies initially slow the economy.
Time Consistency and Uncertainty
- Time consistency in economics suggests that promises made now might not be kept in the future.
- Uncertainty around trade policy creates additional economic uncertainty.
Recession Probability
- Wall Street is reducing GDP forecasts and increasing inflation expectations due to tariff impacts.
- The probability of a recession is increasing, although it's not the base case scenario.