Trumponomics

The US economy has proven resilient after more than a year’s worth of interest-rate hikes, with a steady drumbeat of recession predictions having been proven wrong. New data released this week continued to point away from a downturn. Still, some forecasters warn a recession might still be coming, and that it could coincide with the 2024 presidential election. On this week’s episode, we look at how the current leading candidates for the White House are framing the economy. Bloomberg Senior Reporter Nancy Cook describes the challenge facing President Joe Biden: the economy has thrived on his watch, especially in terms of record low unemployment, but the overhang of persistent inflation weighs heavy on voters’ minds. Meantime, Florida Governor Ron DeSantis and former President Donald Trump haven’t put forward any economic plans and have largely focused on divisive social issues and the threats posed by China. Then Stephanie sits down with Michael Strain, director of economic policy studies at the American Enterprise Institute, a right-leaning think tank, and Bloomberg economist Anna Wong. They discuss how the US economy will evolve leading up to the 2024 vote, and how important it might be in deciding the election. Wong says that, while Biden’s signature economic legislation—the Inflation Reduction Act, the CHIPS and Science Act, and the Bipartisan Infrastructure Law—are investments that will play out in the long term, short-term costs of higher inflation and recession risks may offset the benefits, and even outweigh them.See omnystudio.com/listener for privacy information.

Climate change is fast transforming the planet. Global warming is fueling drought, massive wildfires, rising sea levels and stronger hurricanes. Now scientists and economists are worried about another knock-on effect: faster inflation. On this episode of Stephanomics, we hear from reporter Laura Curtis, who explains how drought has lowered the water level of a lake feeding the Panama Canal, which could in turn boost shipping costs. A similar phenomenon is already playing out in Europe, where low water levels in the Rhine River are making it more expensive to transport key commodities across the continent. Then host Stephanie Flanders chats with Deutsche Bank macro strategist Henry Allen and Bloomberg economist Bhargavi Sakthivel about the economic impacts of El Nino, a period of unusually warm water in the Pacific Ocean. The system, which scientists say is becoming more frequent and intense thanks to global warming, is already placing upward pressure on prices of agricultural goods like coffee and sugar. That could lead to higher inflation and lower growth in several countries in the tropics and southern hemisphere.See omnystudio.com/listener for privacy information.

Globalization was once the watchword of Washington. Bill Clinton made it a centerpiece of his economic policy, from the North American Free Trade Agreement to ushering China into the World Trade Organization. But two decades later, America has become increasingly protectionist, pushing strategic industrial policies and trade barriers. Just the other day, National Security Adviser Jake Sullivan turned heads when he said "the postulate that deep trade liberalization would help America export goods, not jobs and capacity, was a promise made and not kept." Indeed, the Biden Administration has been touting a new kind of trade policy, one known as "friend-shoring." It encourages friendly nations and their companies to shift manufacturing away from geopolitical rivals like China and toward allies.  On this episode, Stephanie speaks with Mike Froman, who served as the US Trade Representative under President Barack Obama, about how trade policy has evolved since his administration and where it's heading. We also sit down with Senior Editor Brendan Murray, who takes us to Morocco, a country where globalization still holds sway. There, companies from China and Russia are manufacturing auto parts and sending them around the world.See omnystudio.com/listener for privacy information.

Joe Biden, like so many other presidents before him, put America’s re-industrialization at the center of his campaign for the White House. And like his predecessors, he’s found that the “Made in America” label remains hard to find. Indeed, more countries are trying to cut their reliance on imports from China, the global giant of manufacturing, citing everything from geopolitical tensions to human rights abuses and supply-chain snarls. But the reality is they still can’t seem to break away from the “world’s factory floor.” And when they try, it doesn’t work out well. On this episode we take you around the world to see what’s standing in their way. Bloomberg reporter Jeannette Neumann tours clothing factories in Los Angeles, the heart of America’s apparel industry, and struggles to find tags that don’t say “Made in China.” In India, Bloomberg editor Ruchi Bhatia and reporter Vrishti Beniwal explore toy stores in New Delhi, and find the selection lacking thanks to Prime Minister Narendra Modi’s effort to cut out goods from his neighbor to the north. Finally, we have more from Milken Institute Chief Economist William Lee and his chat with host Stephanie Flanders. They discuss how realistic it really is for companies to even try to diversify their supply chains beyond China.See omnystudio.com/listener for privacy information.

The idea that artificial intelligence would someday replace humans in certain jobs is nothing new. Now, as some companies make plans for this new reality, it's still an open question as to whether AI should be feared--or embraced as a technology that will make the world a better place. On this episode, Daron Acemoglu, an economics professor at the Massachusetts Institute of Technology, tells Stephanie that while it may be right to be concerned, people shouldn't be scared. They discuss a new book co-authored by Acemoglu, Power and Progress, and whether AI will yield benefits similar to those conferred by other technological and scientific advancements throughout history. The key to making AI work in the long run, Acemoglu says, is that workers maintain a role and a voice through protections like unions and government regulation. Without those guardrails, he warned, AI may indeed sideline more humans from the workforce.  See omnystudio.com/listener for privacy information.

The US debt ceiling is all anyone in Washington (and increasingly elsewhere) can talk about these days. For months, politicians have been in a stalemate triggered by Republican demands for spending cuts as the price for paying America's debts. With next week seen as the point at which the Treasury may have to start issuing IOUs, any deal to avert a catastrophic default is going to come down to the wire.  Recent sticking points are tied to potential spending caps, the GOP's insistence on slashing domestic spending for several years and the Biden administration's desire for more limited cuts. On this episode of Stephanomics, Senior Editor Chris Anstey and reporter Josh Wingrove give us the state of play, from explaining what exactly the debt ceiling is to laying out some scenarios of how things progress from here.  Stephanie then sits down with economist Stephen King to talk about government debt levels more broadly, and if we should be worried given how high interest rates have climbed.See omnystudio.com/listener for privacy information.

Some of the world's largest economies are struggling with a response to the rising influence of China and Russia. Specifically, how the ambitions of those two authoritarian nations tend not to conform with Western ideals. And nowhere is this more relevant than in Japan, for whom China, Russia and indeed North Korea are neighbors. Those tense relations and their economic implications are top of mind at this week's Group of Seven summit in Hiroshima, Japan, where we take you for this episode. From a city that suffered the unspeakable destruction of nuclear weapons, Bloomberg's Yoshiaki Nohara explains how the nation is now trying to balance its longtime aversion to war with the growing threats in its backyard. Stephanie then sits down with Richard McGregor, a senior fellow at the Lowy Institute in Sydney, and Rory Medcalf, who leads the National Security College at the Australian National University. They discuss not only Japan's strategic role in the Indo-Pacific region, but also China's significance in the global economy. See omnystudio.com/listener for privacy information.

Inflation rates may be slowing broadly across Europe, but you wouldn’t know it after a trip to the grocery store or dining out. And there’s only so much governments can do to help their people cope. In this week’s Stephanomics podcast, Bloomberg reporter Alessandra Migliaccio takes you across the continent to see how much more it costs to make some of the world’s most famous dishes, from France’s coq au vin to pizza margherita in Italy. Politicians have tried to limit the pain of high prices, but their efforts have barely made a dent. Bloomberg has been tracking custom food indexes around the world for close to a year, including the traditional English breakfast. Reporter Irina Anghel tells us about the latest reading, which showed the average basket of ingredients—including eggs, bread and milk—spiked almost 23% in the past year. Host Stephanie Flanders then chats with Joe Glauber, a senior research fellow at the International Food Policy Research Institute, about the outlook for global food prices.See omnystudio.com/listener for privacy information.

The banking crisis that began in March continues to rapidly evolve. What started with the collapse of Silvergate Capital and Silicon Valley Bank went on to claim Signature Bank and push a vulnerable Credit Suisse into the arms of UBS. This week, another midsize California lender that couldn’t find its footing also dropped, as First Republic was acquired by JPMorgan. In the first episode of this season, we catch you up on the turmoil in the financial sector and how it’s straining US small businesses that rely on these banks for capital. Bloomberg reporter Mike Sasso takes us to Florida, where a couple that’s trying to create a space for people to eat and drink while playing the fast-growing sport of pickleball is struggling to get an affordable loan. The topic dominated discussions at this week’s Milken Institute conference in Los Angeles. Host Stephanie Flanders sat down with Milken Institute Chief Economist William Lee, who warns that cutting off small businesses from borrowing would hit the labor market almost directly. However, he says that’s exactly what the Federal Reserve wants, as illustrated by a cycle of rate hikes that, after Wednesday's latest increase, may finally be at an end.  And finally, Flanders speaks with Kristalina Georgieva, managing director of the International Monetary Fund, who said the banking crisis highlights the complacency of regulators when it comes to financial risk. See omnystudio.com/listener for privacy information.

We all might one day be replaced by robots or ChatGPT. But for now, businesses still need humans to make computer chips or staff daycare centers. Problem is, too few workers in the US are actually working and too few people are having babies. That’s a major concern for American industry, policymakers, and most immediately, tech giant Intel Corp. The company is trying to find 7,000 people in central Ohio to build its new semiconductor facilities and 3,000 more to staff them.On this, the season’s final episode of Stephanomics, we dig into the super-tight US labor market, which is expected to get even tighter as more of the nation’s skilled workers retire. First, senior reporter Shawn Donnan visits Licking County, Ohio, future home to a $20 billion chip plant that will pay workers an average annual salary of $135,000. The Biden administration hopes Intel’s project sparks a wave of manufacturing projects in strategic industries like semiconductors and electric vehicles. Then reporter Ben Steverman offers some insight into the roughly 2.6 million US workers who’ve gone missing since the pandemic began. A recent study by Harvard University economist Raj Chetty suggests many of them waited tables, cut hair and staffed gyms in relatively affluent neighborhoods. When these wealthy residents slashed their spending and stayed home as Covid-19 bore down, it created a wave of business closures and job losses. Many of those workers, Steverman explains, never returned. Meanwhile the nation’s working-age population is growing at its slowest pace since 1960, and total population actually dropped in at least 24 states, including Ohio. Host Stephanie Flanders follows up on America’s demographic challenges with University of Maryland economist Melissa Kearney, also director of the Aspen Economic Strategy Group. The US birth rate, at just under 1.7 children per woman, is well below the so-called replacement rate of 2.1, and the share of working-age adults who are actually working is falling, says Kearney.   Long term, fewer workers means fewer ideas and less specialization, she warns, all of which could mean lower income and living standards in the US and globally. See omnystudio.com/listener for privacy information.