The 2026 Economy: Make it Make Sense

Consumer sentiment is in the basement. Jobs aren't being added. Prices keep climbing. GDP barely grew at the end of 2025, and a ‘meh’ 2% last quarter. Shouldn’t this be a recession? Not so far. Economist Kathryn Anne Edwards walks through the clear cause of each bad number: Tariffs explain the prices and foul mood. Mass deportations explain the jobs. The government shutdown explained last quarter. Still, knowing the passing reasons for economic pain doesn't make it hurt less. And none of it changes the long-term economic reforms we still need. Chapters: 00:01:06 Announcements 00:01:57 Retcon: Wealth at retirement 00:03:52 Terms & Conditions: Recession, Slack, Tight, Loose, Goodflation/Badflation 00:09:10 Centerpiece: What is going on with the U. S. Economy right now? The vibe is don’t panic. But don’t not panic. 00:53:38 Executive Orders: Free work parking. Legislators do their own taxes. 00:55:00 Spiritual Sponsors: Genre-specific bookstores and great newstands Donate to Optimist Economy: https://optimisteconomy.com Hey, we are on Facebook https://www.facebook.com/people/Optimist-Economy/61572035831413/! Follow us! Or, on Instagram at ⁠⁠@optimist_economy https://www.instagram.com/optimist_economy or TikTok at ⁠⁠@optimist_economy https://www.tiktok.com/@optimist_economy. Or on the Optimist Economy YouTube channel⁠⁠ https://www.youtube.com/@optimist_economy. Chat with other Optimists on Substack. https://substack.com/chat/4604257?utm_source=pub-nav-bar You need this hat: https://merch.ambientinks.com/collections/optimisteconomy Send us your economic questions and concerns at [email protected] mailto:[email protected]

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

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• 0:28Speaker 01

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• 0:36Speaker 02

  Hello, and welcome to Optimist Economy. I'm economist Catherine Ann Edwards.

• 0:39Robin Rauzi?

  I'm editor Robyn Rousey.

• 0:41Speaker 02

  On this show, we believe the US economy can be better, and we talk about how to get there, one problem and solution at a time.

• 0:53Speaker 02

  Big old problem today is the economy. This is our inception episode, where the problem we solve in the economy is the whole, the whole economy.

• 1:04Robin Rauzi?

  I'd be happy if we just, we don't have to solve it, if we can just explain it, if we can just unravel the plot here, I would be happy with that. Couple of announcements before we get started. First, we're gonna, um, oh shoot.

• 1:17Speaker 02

  Wait, was it clear? Today, we're doing a checkup on the state of the US economy. This episode is just, we're not going into a big policy, we're not doing history, it's just what on earth is going on right now. The title for this episode, working title, is Make It Make Sense. So that's what we're gonna do. But first, announcements. Our next Q and A episode is coming up. We'll record it in about a month. In the meantime, send us your questions, so we can work on answers. We can take them at [email protected]. You can also, that's the most effective way to get questions, but you can also slide into our DMs, and we'll try to get them there.

• 1:57Robin Rauzi?

  I also want to thank our first formal, eternal optimist donor. This is AJ from the Bay Area of California. There's somebody did suggest that we call this Optimist Prime, which is pretty good. It's pretty good if you're into transformers. I just want to say donations from optimists like you are by far the largest revenue stream for our little podcast enterprise. So if you can afford to de-save a little bit on our behalf, please click on Donate at optimist economy dot com. Next chapter is retcon.

• 2:29Speaker 02

  Retcon, what do you got?

• 2:30Robin Rauzi?

  I have two things. One is, we got a note from Monica in Massachusetts, who was just commenting on something that you said about the day that you retire being the richest you'll ever be. And that, in this day and age, that that doesn't necessarily still hold. Especially when capital returns to capital more than it returns to wages. If you've saved for your entire life, in fact, you might continue to make more money than you're spending anyway, after you retire.

• 2:57Speaker 02

  Self-serving sidebar, should this befall you? Optimist economy is a qualified charitable distribution. Sidebar over. Yeah, I mean, you know, we think about wealth as the assets you hold. And then there's the value of those assets. So the lifecycle model-

• 3:20Robin Rauzi?

  The assets are different than the value of them?

• 3:22Speaker 02

  Well, you're, you're holding something and is the value increasing or decreasing?

• 3:26Robin Rauzi?

  Okay.

• 3:27Speaker 02

  So in the lifecycle model, the idea is that you are accumulating assets and building up wealth until you retire. And then you dis-save, meaning you spend down your dis-savings until you die. Sorry. So what she's pointing out is that the assets that people have now, they're not necessarily adding to those assets in retirement, but you can be holding assets that do increase in value. So you're not necessarily still saving for retirement once you retire, but you've built up so many appreciating assets that your wealth is actually getting higher, even though you're not, no longer contributing to it. And that's a really good point. I think that the notion of a lifecycle model is really about the action that you are taking, right? You're earning and saving, and then you're stopping earning

• 4:11Speaker 02

  and you're living off of those proceeds. And this really, her point is just that in the real world, where economists don't always live, it can be even more complicated than that.

• 4:21Robin Rauzi?

  Yeah, yeah, yeah, yeah. Okay. Next chapter, terms and conditions.

• 4:25Speaker 02

  Oh.

• 4:26Robin Rauzi?

  You have a lot.

• 4:27Speaker 02

  I have a lot. I just wanted to go over, we're talking about make it make sense, the economy in 2026.

• 4:34Robin Rauzi?

  Little glossary up in here at the top.

• 4:35Speaker 02

  So I had a little bit of a lightning round. A recession is an economic downturn. It is determined by the National Bureau of Economic Research Business Cycle Dating Committee. There is no government official declaration of a recession. It's a group of economists that do it. And it is not two quarters of negative growth. It is a overall decline in economic activity. And they gauge it in real time and they determine it after the fact. So if we are in a recession in May of 2026, they will tell us in like Christmas.

• 5:11Robin Rauzi?

  Oh, Christmas.

• 5:12Speaker 02

  Oh, yeah, it's gonna be like a really long. So they didn't declare the recession that started in December 2007 until December of 2008.

• 5:21Robin Rauzi?

  Wow.

• 5:22Speaker 02

  Okay. And it's mostly to hope that it breaks the right way.

• 5:26Robin Rauzi?

  Mm hmm, mm hmm. Yeah, you don't wanna, you don't wanna give a bad diagnosis and have people freak out.

• 5:31Speaker 02

  Exactly.

• 5:32Robin Rauzi?

  Animal spirits go awry.

• 5:33Speaker 02

  Animal spirits go awry. So the, the other term I wanted to bring up, which is how economists refer to the decline in economic activity. We often refer to that as slack, like there's slack in the labor market.

• 5:44Robin Rauzi?

  And so slack is bad. I always think of getting slack as good, but.

• 5:47Speaker 02

  Slack is bad. And we think of the labor market as being tight versus loose. So tight is good, loose is bad, loose has slack, tight has no slack.

• 5:58Robin Rauzi?

  And a tight labor market is from the point of view of the employer, right? That there's not a lot of employees to choose from.

• 6:06Speaker 02

  Yes, the hiring pool is quite tight, so they don't have, um, the pickings are slim for them. So for a worker, you want it to be tight.

• 6:15Robin Rauzi?

  You want it to be tight. You don't want there to be a lot of slack. Okay.

• 6:18Speaker 02

  Yeah, you want it to be tight, no slack. If it's loose and there's lots of slack.

• 6:22Robin Rauzi?

  Lot of competition.

• 6:23Speaker 02

  You are the slack. Labor, there's slack in labor. Yeah. Um, so as we see the labor market become more loose, uh, we are worried that we are dipping into a recession. But it's a very fuzzy line. We don't always see it happening in real time that well, which is why it's, it tends to be determined after the fact. The last thing I'll say is that we have something called the target. The inflation target.

• 6:47Robin Rauzi?

  Right.

• 6:48Speaker 02

  After the stagflation debacle of the late 1970s, early 1980s, the Federal Reserve made a lot of improvements to their policymaking, culminating in adding a target that they needed to be able to say, this is where we want inflation to be and we will raise interest rates to pursue contractionary policy until inflation gets to this target. And it's, they adopted it in 2012, it's 2%.

• 7:13Robin Rauzi?

  2%, yeah.

• 7:14Speaker 02

  Yeah, so zero to infinity inflation is just inflation. And below zero is deflation.

• 7:22Robin Rauzi?

  Okay.

• 7:23Speaker 02

  If it's under target, I call it goodflation. Because you don't want prices to fall, that would mean the economy's spiraling in freefall. So I think of under 2% as goodflation and over 2% as badflation. Because they're both technically inflation.

• 7:38Robin Rauzi?

  So that's just some Catherine terminology.

• 7:41Speaker 02

  Goodflation, badflation, you're only going to hear on Optimist Economy.

• 7:47Robin Rauzi?

  I looked up the origins of 86.

• 7:50Speaker 02

  What are they? I love this phrase.

• 7:53Robin Rauzi?

  So it's apparently in some dispute, but it mostly, it comes from hospitality, bars and restaurants. And of course, it means in general, two things in a bar and restaurant. One is to 86 something from the menu, meaning you're out of it. Or to 86 a customer, which means to throw somebody out or cut them off if they're, let's say, drinking too much. But the question is like, how did that become the term for that? And there is some speculation that it's 86 rhymes with nicks and that's essentially what it means.

• 8:25Speaker 02

  Oh, like a Cockney thing where like they like to use rhymes for words?

• 8:29Robin Rauzi?

  Yeah, I guess, but there was also a whole soda fountain soda jerk lingo, especially in New York in the 20s, 30s into the 40s, where soda jerks were, you know, they worked in pharmacies, serving ice cream and ice cream sodas and various soda drinks. And they had their own patter and like, there's books written about it. It's so complicated, like you would say.

• 8:54Robin Rauzi?

  Pull a long one and spit on it, you know, and that meant something. And so 86 is is also supposed to be one of those terms.

• 9:05Speaker 02

  I would have like assumed if it was a number, I had no idea the origin. I would assume if it was a number, it was like a police code or like a security code.

• 9:12Robin Rauzi?

  Yeah.

• 9:13Speaker 02

  Can you use 86 in a sentence like a human would today and not a soda jerk in the 1930s?

• 9:18Robin Rauzi?

  Yeah, 86, the guy in the booth. He's cut off, right?

• 9:23Speaker 02

  All right, so let's see if I can work 86 into the transition. I think our economy right now would be a lot better if we 86ed all of the policy that the president was pursuing.

• 9:33Robin Rauzi?

  Excellent. We're going to take a break. We'll be right back.

• 9:40Robin Rauzi?

  We're recording this on April 30th, which is the day that the first quarter GDP figures came out. And those said that the US economy grew 2% in the first quarter.

• 9:53Speaker 02

  Grew at an annualized pace of 2%. When you measure growth from one quarter to the next, that's quarterly growth. What economists want to know is if we grew at this rate for a year, what would the growth be? Because the actual quarterly growth is so small. And so we get a quarterly number and we put it into an annualized rate. So the economy grew at a 2% annualized rate, meaning if it grew at this pace, it would have grown 2% for the year. That was below expectations. It was supposed to come in a little higher. The forecast was that it was going to be 2.2. It came in at 2.0. So like many things over the past two years, not panic, not great.

• 10:34Robin Rauzi?

  Yeah, it was like it was, it was, I mean, don't get me wrong. I don't want us to be in a recession, but I was sort of like, oh, that's just kind of meh.

• 10:41Speaker 02

  Yeah.

• 10:42Robin Rauzi?

  Like it didn't have any drama, 2% didn't have any drama to it.

• 10:44Speaker 02

  I feel like the tagline for the economy right now is like, don't panic, don't not panic.

• 10:52Robin Rauzi?

  Worry, but not too much.

• 10:54Speaker 02

  Don't panic panic, but don't not panic. Do you know what I mean? That's the economy.

• 10:59Robin Rauzi?

  I feel like I'm living it every day.

• 11:02Speaker 02

  Now, this was a relatively high stakes GDP report because the last quarter's growth was nearly zero. It was just 0.5% at an annualized rate.

• 11:13Robin Rauzi?

  So that was the fourth quarter of 2025. This is the government shutdown, right?

• 11:18Speaker 02

  Longest shutdown in US history.

• 11:20Robin Rauzi?

  Yeah, which is basically what got the blame for the really, the lack of growth.

• 11:25Speaker 02

  Yes. So we were coming off of a quarter in which the economy, I mean, this is the thing about going into a recession and what makes growth stronger, weak is what is driving the data that we're seeing. In the fourth quarter, if everything was normal and the economy grew at a near 0% annualized rate, we would think that we were in a recession. But we had a causal, we had something to point to as the culprit. It was a really long government shutdown. Government spending is a part of GDP. So it wasn't that we needed to panic because the economy didn't grow because we know where it came from and it wasn't a slowdown in economic activity.

• 12:08Speaker 02

  You know, we did an episode on GDP last season and this was Kuznets's goal was to break down the economy in a way that we could point to what was causing overall changes. So that's good, but we don't want that slowdown to have a contagion effect so that the lack of spending from the government then creates a broader slowdown in economic activity, which is what might have shown up in this quarter. Now, so it's the end of April. The data point we just got for GDP covers January through the end of March. So it takes a month to produce the estimate and it will be revised twice at the end of May and at the end of June. And the last two quarters.

• 12:53Speaker 02

  Almost all the revisions have been downward. So now, some of the "don't panic, but don't not panic" comes from, if it's 2% now,

• 13:02Robin Rauzi?

  Is it gonna get revised downward?

• 13:04Speaker 02

  Is it gonna get revised down to like 1.9 or 1.8?

• 13:07Robin Rauzi?

  Hmm. So you can still be growing, just slowly, but you could be in a recession because other things are happening in the economy that are slowing down enough?

• 13:16Speaker 02

  Mm-hmm.

• 13:16Robin Rauzi?

  Okay. Interesting. Interesting.

• 13:19Speaker 02

  It's not one thing, but it's not, not one thing.

• 13:22Robin Rauzi?

  Yeah. Yeah.

• 13:24Speaker 02

  I have a PhD. Yeah.

• 13:27Robin Rauzi?

  I feel like I need like a, you know, one of those TED Talk balloon charts where it's like, "It's, it's, it's trade, no, it's government spending," and they, and they grow and shrink, you know, like that would help me understand what's going on in real time. What's really interesting to me is that even though the economy is, like you say, still above water by these measures, as far as we know, that consumer confidence is like, just tanking. So Gallup does this poll, it's actually called the Economic Confidence Poll. They basically ask people, like, "Do you think the economy's getting better or worse?" And 73% think it's getting worse, and 23% getting, think it's getting better.

• 14:09Speaker 02

  Yeah, it's, it's, um, we actually have multiple measures of confidence. So Gallup does one, and the Conference Board does another one. They do consumer confidence.

• 14:20Robin Rauzi?

  Confidence, right.

• 14:21Speaker 02

  Yeah, and that becomes the Consumer Confidence Index. And then the University of Michigan has what's called the Survey of Consumers.

• 14:29Robin Rauzi?

  Oh, right.

• 14:30Speaker 02

  And that one is the Consumer Sentiment Index, and that is the one that, I think that's the one that economists follow the most.

• 14:38Robin Rauzi?

  Oh, mhm. And what's it saying?

• 14:41Speaker 02

  Uh, "Bad."

• 14:43Speaker 02

  More bad. It's like, what am I, what's, what's the term, real bad? Yeah, it's, it's just showing a cratering of consumer confidence that basically started at the start of last year and has been considering to fall. So it's in one of the lowest rates we've ever seen outside of a recession. So here's going to be a theme for this episode. The economy keeps hitting marks that it never hits outside of recessions. And that is the problem, is that it's not, and it doesn't hit them all at the same time. Because if they hit them all at the same time, we'd be in a recession. But we're hitting marks that you typically see in a recession in like random places at inconsistent times.

• 15:24Robin Rauzi?

  Huh. Like buckshot.

• 15:27Speaker 02

  Yeah, like the economy is, is weak. We know that. But is it actually contracting? It's not contracting, but 0.5% growth annualized over a quarter is pretty low growth to hit outside of a recession. Right? Like, is the economy adding jobs? Yes, technically it is. But the total number of jobs that we added in 2025 was the lowest we've ever added outside of a recession. And in fact, for all of calendar year 2025, we only added 180,000 jobs. For reference, over the past three years, or say the three years before that, we were adding 150 to 350,000 in a month. And then for a year, we added 180.

• 16:11Robin Rauzi?

  Wow. So it's like, less than 10% of what we would normally be adding in a year.

• 16:15Speaker 02

  Yes. But again, the problem is, is that all of these tend to have...

• 16:20Robin Rauzi?

  There's reasons, right?

• 16:21Speaker 02

  There's reasons. Yeah. There's reasons. So we just did GDP. The economy isn't, it's slowing, growing. If I wanted to be confident that the economy was not going to tip into a recession, that number wasn't going to do it. And it didn't do it. I'm still not confident. But we could still, so here's a, here's a thought that's like, really hard to get your brain around. We could actually be in a recession. It just hasn't been declared yet.

• 16:45Robin Rauzi?

  Sure.

• 16:46Speaker 02

  Sure. And if that were the case, I would peg it of starting of Q4 of last year.

• 16:53Robin Rauzi?

  Fun.

• 16:55Speaker 02

  All right.

• 16:56Robin Rauzi?

  But you're not calling, but you're not calling it.

• 16:58Speaker 02

  I mean...

• 17:01Robin Rauzi?

  It's not your job. There's a, there's a board of academic economists on the East Coast.

• 17:06Speaker 02

  Dr. McSparty Pants from Boston.

• 17:11Speaker 02

  Um, senior panel, they meet and they look at all this and they, they...

• 17:17Robin Rauzi?

  How often do they meet? Like, is it just like...

• 17:19Speaker 02

  Monthly, I'm pretty sure.

• 17:20Robin Rauzi?

  They put up the bat signal and they all get together and like...

• 17:22Speaker 02

  Yeah, yeah, but it's just actually just a, it's a, it's a graph with a line going down. And then they gather on a pier, um, right outside the docks of Boston. And the workers are like throwing things into panels and they're just like, alright, it's time. Oh, please, it's Cambridge. Andy?

• 17:41Speaker 02

  Yeah, they, they, uh, they publicize their methods, like how they look at things and then the, you know, who's on the board. And they're not an official government. I mean, the reason why the NBER, the National Bureau of Economic Research, does this is to make it easier to do economic research into downturns. And it's just, it's notionally a way for the economics profession to like harmonize their research about recessions. Like, we can't study a recession if we don't agree when one started or stopped. So we all follow this definition. And it just so happens that that becomes like the de facto official indicator of a recession. How about this? I'm gonna put my money on it. If they declare a recession while Trump is president, he's gonna say they're not real

• 18:24Speaker 02

  and come up with a government agency to say that it's not a recession. And the US government has never officially declared a downturn. And there's no arm, which is of the government that is tasked with doing it. But when this group of nerd geeks in Boston decide that we're in a recession, he will say that they are not legitimate and that they're not official. And he'll come up with something else. Because they're not, they're not legitimate or official. It's a private research group coming up with their own method.

• 18:48Robin Rauzi?

  Yeah, but so is the consumer sentiment and, and frankly, also consumer confidence. The Conference Board isn't a government agency.

• 18:55Speaker 02

  Yeah, so consumer, consumer sentiment and consumer confidence is, um...

• 19:00Robin Rauzi?

  Just survey, survey data.

• 19:02Speaker 02

  Yeah, they survey people and they ask them a whole host of things. And then they put it together into an index to, to portray confidence.

• 19:10Robin Rauzi?

  Sure, but it's not like, it's not like the BLS does it. It's not like the Census Bureau does it. These are, these are also private...

• 19:16Speaker 02

  These are private surveys. The sentiment index...

• 19:20Speaker 02

  Okay, why do we care about it? Is it a real thing? If people feel bad, does it actually mean the economy is worse? Or that people are in a mood? And certainly, consumer sentiment varies with political party. So if you're a Republican and Obama is president, everything is awful. Same with Biden. We tend to have a big sentiment switch based on our party affiliation. But the other, the reason why we care about it is that most economic decisions we make tend to be pretty long term. Like if I decide I'm gonna buy a car, it is not like going to buy Chapstick. Like, I will go buy Chapstick and I will be fine. But if I need to go purchase a massive vehicle, I'm not gonna do it overnight. I'm gonna look at the market for a while. I'm gonna gauge how much things cost.

• 20:05Speaker 02

  I'm gonna look at the price of borrowing. I'm gonna test out my options because it's a major purchase. Well, the US economy runs a lot on major purchases. When people buy cars, when people buy homes. The reason why people look at consumer sentiment is that it has, to some degree, a prediction of how people will be spending in a few months.

• 20:24Robin Rauzi?

  Oh.

• 20:25Speaker 02

  Right? Like, if I don't feel good about-

• 20:26Robin Rauzi?

  How I feel now is gonna, yeah.

• 20:28Speaker 02

  Yeah.

• 20:28Robin Rauzi?

  Shade my, my, sorry.

• 20:30Speaker 02

  You get it. No, you get it.

• 20:31Robin Rauzi?

  I get it, yeah.

• 20:32Speaker 02

  If I bought a car today, I decided to buy a car probably six months ago, and I started really the process in earnest three months ago. So if I don't feel good about the economy today, that means that car's not being purchased in six months. It's a, it's a real, like, you gotta bend your mind around the time of what confidence means. Well, here's another thing that the economy is doing right now that it not, doesn't normally do. We are seeing dips in consumer sentiment that are not predicting consumption. So people feel bad-

• 21:00Robin Rauzi?

  Consumption is still pretty high.

• 21:02Speaker 02

  Consumption is still pretty high. And people feel bad about the economy.

• 21:05Robin Rauzi?

  Yeah.

• 21:06Speaker 02

  But they're not, they're not pulling back on spending necessarily, broadly.

• 21:11Robin Rauzi?

  Is this the K-shaped economy situation?

• 21:14Speaker 02

  Yeah, so definitely one narrative here is, rich people are spending, poor people are not.

• 21:19Robin Rauzi?

  Or poor people just aren't spending anymore. They're, they're already spending.

• 21:23Speaker 02

  Or that they-

• 21:23Robin Rauzi?

  Probably already everything they had to spend.

• 21:25Speaker 02

  Yeah. Well, that the, or that consumption is being fueled by spending at the top and they, they buy 50% of everything anyway. That is incredibly hard to measure. How much of spending goes to what percentage and how you define the percentage in terms of the K shape. Like, we live in a K economy. So to say that K-shapeness is causing one thing or the other. Like, we've been in an increasingly unequal economy for decades. So for me, the attention on it right now is like, I'm like, okay. I'm glad that the Wall Street Journal is picking up on the idea that inequality might be bad. Been at this party all night, you just got here.

• 22:03Speaker 02

  The things that we're seeing that are probably more tangible is, one, big increase in consumer debt.

• 22:13Robin Rauzi?

  Yeah. Credit card debt mostly, but also?

• 22:16Speaker 02

  Yes, lots of credit card debt. And we're starting to see steady increases in 90-day delinquencies.

• 22:23Robin Rauzi?

  I was gonna say, and missed payments, yeah. And you're seeing that on cars, too? And you're seeing it on health insurance policies?

• 22:30Speaker 02

  Seeing it on credit cards, student loans, cars. Really, everything but mortgages and home equity lines of credit. So what's interesting about the economy in like the run-up to the Great Recession is that we had lots of credit, but the real explosion in credit, miscredit payments, was all on mortgages and HELOCs, home equity line of credits. Those are now tightly regulated, and that market has pulled back. So if you look at credit today, mortgages and home equity lines of credit, like, they're in a different world. They don't really look like everything else. They haven't seen an explosion in credit. Like, they're quite tame. And it's everything else that has just seen massive run-up in numbers about the total amount of credit, as well as the 90-day delinquencies. It's coming from not the housing sector.

• 23:16Speaker 02

  It's coming from everything else.

• 23:18Robin Rauzi?

  Interesting.

• 23:20Speaker 02

  So we are, our economy is still trucking along, but I mean, there's massive cracks beneath the surface.

• 23:27Robin Rauzi?

  Yeah.

• 23:27Speaker 02

  Coming from consumer debt.

• 23:30Robin Rauzi?

  While we're on consumers, can we talk for a second about what's happening with prices? So, the Consumer Price Index was up 3.3%. Is that also an annualized figure? No?

• 23:42Speaker 02

  Yes, that's annual. They do, they do monthly and annual. And for that one, I'm so glad we're talking about the method of statistical indices. The Consumer Price Index... It's a month over month and a year over year.

• 23:57Robin Rauzi?

  Right.

• 23:58Speaker 02

  So, so it's the monthly change from February to March. And then it's gonna be the change from March of last year to March of this year.

• 24:07Robin Rauzi?

  Right.

• 24:07Speaker 02

  Which is not the way GDP calculates it. GDP is the annualized rate of the quarter's growth. Oh, is this, is this confusing? Is everyone like, we don't, don't want you to understand the economy we're living in? You know, don't panic. Don't not panic.

• 24:22Robin Rauzi?

  I can, no, I can understand why these things are useful. So CPI was up 3.3% in March of this year compared to March of the year before, but also up 0.9% from February to March. And a lot of that was oil prices. Because of the war.

• 24:40Speaker 02

  Because of the war.

• 24:42Robin Rauzi?

  And the feeling is that that's, I mean, obviously the war is not over, but that it's continuing to drive up oil prices, but by extension then all sorts of other prices for goods.

• 24:51Speaker 02

  Yeah.

• 24:53Speaker 02

  So inflation started to pick up in 2021.

• 24:57Robin Rauzi?

  2021.

• 24:58Speaker 02

  And then in the spring of 2022, it was getting higher and higher. I mean, these rates were coming in, it's at four, five. You know, if target is two, these were getting really high. The Fed starts raising rates in March of 2022. In the summer of 2022, we were seeing inflation at 8% annual growth from the summer before. That inflation had a very clear cause, which was supply chain issues, meaning a run-up of consumer demand and consumer savings coming out of the pandemic. So you had people who were trapped inside their house for a year.

• 25:33Robin Rauzi?

  Got some stimulus money, yeah.

• 25:35Speaker 02

  Got some stimulus money.

• 25:36Robin Rauzi?

  Saved some money.

• 25:37Speaker 02

  Saved a ton of money because they weren't doing anything or going anywhere or spending on anything. So you had this like massive pent-up demand hit supply chains in a real way.

• 25:48Speaker 02

  And that is, I mean, the supply chain story is really the story of that inflation. And it, because it was demand driven, right? It was just whatever they're charging, I will pay for it because I have not seen a human at a concert in two years. People were willing to shell out and because they had the money to spend and they were willing to spend it, demand drove inflation until it peaked and interest rates did their job. It made that inflation painful and your demand decreased. You started to cut back on things and the price spikes started to decline. That gets us to the end of 2024, when inflation is in the mid 2s and falling. And we hold on everything because then we have a new president.

• 26:31Speaker 02

  And when it comes to the economy, this guy categorically sucks. I don't know how else to say it. He has like two terrible economies under his belt, one from each term, and he got the golden gift. He is one of the, like, I think I, I looked this up, it's like one of like four presidents who came to office when the economy wasn't bad.

• 26:52Robin Rauzi?

  Really?

• 26:53Speaker 02

  Like, he was actually gifted a strong economy. Like, 2017, it is a strong economy. Now, some people say the economy at the end of 2024 wasn't actually that strong, but it was moving in the right direction. I mean, inflation was falling precipitously towards the back half of the year. The Federal Reserve was lowering interest rates to ease the labor market and that all came to a screeching halt. So when I say this guy is categorically a bad economic president, I mean it because of he both squandered what he had in a, in a unique way.

• 27:22Robin Rauzi?

  I always felt like the story was that presidents, like, take credit or get a lot of blame for the economy, but that, but that usually presidents don't actually have that much control over the economy.

• 27:35Robin Rauzi?

  I kind of wonder if this is the, not the case now, because this has been such dramatic. Let's just say choices.

• 27:42Speaker 02

  Okay, so I'll put it this way. There's lots of presidential turnovers that are simultaneous with really hard economic times. And it's rare that you would be given an economy that's just strong.

• 27:56Speaker 02

  I don't attribute that much economic policy to the sitting president. Because the policy takes a long time to accumulate and have consequences and may have long antecedents. I don't know if I can really fault him through the COVID pandemic.

• 28:11Robin Rauzi?

  Yeah, as I say, the pandemic was not.

• 28:12Speaker 02

  He took so much credit for a strong economy that was in existence when he was elected. Anyway, so what is happening with tariffs and prices? To go back to our CPI.

• 28:24Robin Rauzi?

  And oil prices and.

• 28:25Speaker 02

  And oil prices is that there's this real question as to why consumer spending is being maintained even though prices are increasing.

• 28:37Robin Rauzi?

  Yeah. And sentiment is so bad.

• 28:40Speaker 02

  And sentiment is so bad. There's kind of like emerging data that what's happening is that people are shifting their consumption around non-tariff affected goods. So the goods that have the highest tariff effect, they have the highest price increase. And people are just spending less on that and shifting their spending to other things.

• 29:02Robin Rauzi?

  Like what?

• 29:03Speaker 02

  They're like responding to the tariffs without being penalized too harshly from the price increase because they're going to consume less of whatever is more expensive, but they're still consuming more of other goods.

• 29:14Robin Rauzi?

  And it's goods. There's just not like they're moving to services or something else like that.

• 29:17Speaker 02

  I should say goods and services. So like there's a set of goods that are more expensive because of tariffs. And the bigger the price increase due to tariffs, the less people are consuming of it, which is explained why you would be both like kind of okay, but really pissed off. Because it's not like you don't see the price increases. You're reacting to the price increases and you're shifting your consumption to other things. So it's like pain that you're trying to minimize, which you could still be really pissed off about.

• 29:44Robin Rauzi?

  Yeah. Did you read that story in the Wall Street Journal last week about, you know, basically people who had enough money, but who were just like, no, I am not going to pay that for.

• 29:53Speaker 02

  Yes.

• 29:54Robin Rauzi?

  There was a couple who bought the whole side of beef and they had it in their freezer.

• 29:58Speaker 02

  The whole side of beef.

• 29:59Robin Rauzi?

  Like, that's how they adapt. Yeah. So they were just like, we're eating tons of steak, but you know, it's because we bought a whole cow.

• 30:06Speaker 02

  Yeah, they bought a whole side of beef, but then they wouldn't be like, but I'm not going to buy that coffee out. Like, it was just really remarkable because it wasn't the price point relative to their income. It was price point relative to what they were spending of like, if I make $200,000 a year, that doesn't mean I think it's okay that coffee costs $10. Like, I will not buy that coffee. It's not that I can't afford $10 coffee. It's that I'm opposed to $10 coffee on principle, so I refuse to buy $10 coffee. And they were talking about how like fascinating this was, that it should be if money is no object, you would just keep your consumption bundle the same.

• 30:41Robin Rauzi?

  No, the people are mad.

• 30:42Speaker 02

  Yeah. I mean, I think I can say for all of us, I don't know anyone who likes living through special economic times and how much we're learning right now is it's like a painful lesson because this sucks. So, so the, I think following tariffs can be really hard. And actually shout out to my compatriots at Bloomberg who have a flow chart of every tariff announcement on every country. It's a tariff tracker. It like, I've got a 30 inch monitor, thing doesn't fit. It's a tariff tracker of every announced tariff, what happened, if it's in court filings, if it was revoked, if they had an agreement reached, if it was announced at 40, but actually never implemented at 40. Like, it was just,

• 31:27Speaker 02

  it's, it's absolute mess. The result, about a year after we embark on this tariff dance, is that we now have the highest tariffs in the world, lower than what is often announced, but still the highest in the world and the highest we've had since the 30s.

• 31:48Speaker 02

  And that hurts.

• 31:50Robin Rauzi?

  Yeah.

• 31:50Speaker 02

  It hurts. And it's pushing up prices.

• 31:54Robin Rauzi?

  It's gonna keep pushing up prices.

• 31:56Speaker 02

  Yes, and now we just added fuel to that fire, literally, because of Iran.

• 32:03Robin Rauzi?

  Yeah, yeah.

• 32:05Speaker 02

  So, the other thing that happened this week, and I guess for people listening last week, is that the la- we had the last meeting of-

• 32:13Robin Rauzi?

  Oh, of the Powell Fed.

• 32:15Speaker 02

  The Federal Reserve with Jerome Powell as chairman.

• 32:19Robin Rauzi?

  Yeah.

• 32:20Speaker 02

  Now, we talked about this in our Fed episode. He is still on the board, and he can go back and finish out the last two years of his 14-year board term.

• 32:32Robin Rauzi?

  And he announced that he was going to do so.

• 32:34Speaker 02

  Yes, he was going to do so. He felt like he wanted to make sure all of the-

• 32:41Robin Rauzi?

  Various prosecutorial threats against himself and the Fed in general were-

• 32:47Speaker 02

  Were wrapped up. And then he kind of make a vague suggestion to steadiness.

• 32:51Robin Rauzi?

  Mm-hmm.

• 32:52Speaker 02

  So, for the last few meetings, when the Fed has met, and there had yet to be announced a new nominee for Fed Chair, the Fed has voted to hold interest rates steady, meaning that they weren't going to increase them to fight inflation or decrease them to try and stimulate the economy. And most of the dissenting opinions were on the decrease rate side. And these were, a lot of people thought were almost like tryouts for being appointed Chair, that these Fed Board Governors were trying to signal to Trump that they were amenable to having rates being dropped because Trump has said that the rates need to be lower. And Trump's man on the Fed, and I say that because this man was appointed

• 33:36Speaker 02

  to the Board of Governors and kept his job in the White House for many months. Trump's man on the Fed has voted to decrease them every time.

• 33:44Robin Rauzi?

  Right.

• 33:44Speaker 02

  This last meeting, the Fed met, and once again, the Fed, the Trump man, voted to decrease interest rates to juice the economy.

• 33:55Speaker 02

  Three other people.

• 33:57Robin Rauzi?

  Dissented.

• 33:58Speaker 02

  This is so confusing. They dissented with the statement, not the action.

• 34:03Robin Rauzi?

  It's really, that was totally crazy. What I understand is that they thought that the statement should signal that the Fed was just as likely to raise rates as lower them in the future.

• 34:14Speaker 02

  The projection of the statement was, we're going to lower rates soon, once we feel like prices are under control. And what they, they thought that that was not correct, that the statement should have said, if prices keep going up, we will raise them again. Because remember, the reputation of the Fed in fighting inflation is paramount. The fastest way to increase inflation in the US economy is for people to not believe the Fed cares about it. But in fact, really good historical evidence, when a politician interferes with a central bank, it results in higher inflation for two reasons. One, they tolerate more inflation, and they lose credibility that they care about inflation.

• 34:50Robin Rauzi?

  Right.

• 34:51Speaker 02

  So Powell has said he's going to stay on the board. You've got three open market committee members who said, you need to make sure people know that we can raise rates again, and not just lower them when we feel like it's okay.

• 35:03Robin Rauzi?

  Yeah.

• 35:03Speaker 02

  The official kind of policy, when it comes to something like a price spike that comes from oil, that's really easy to see cause and effect, is that the Fed should, quote unquote, "look through it."

• 35:14Robin Rauzi?

  Yeah, wait it out.

• 35:15Speaker 02

  Wait it out.

• 35:16Robin Rauzi?

  Yeah.

• 35:16Speaker 02

  Right? And it's the same thing with like, the bad GDP report. Like, this is a price spike that we know came from oil. Like, we know what is causing these problems. It's just, again, it's too many.

• 35:25Robin Rauzi?

  And we don't think it's permanent. We think that it'll go away.

• 35:27Speaker 02

  Yeah. It's the same thing of like, we're taking these hits, but we think that because we can see the cause, it's not necessarily reflecting weakness in the economy. But for all of these things, it could mean that the economy will be weak soon, if the effect holds. I mean, this is, this is one of the most extended periods of economic uncertainty that I could possibly.

• 35:47Robin Rauzi?

  Yeah. It's just, it's been, what, a year and a half of this? Of just, like, what? What?

• 35:53Speaker 02

  Oh man, I need to shout out my brother. When he was learning how to drive, he would follow too closely the car in front of him. And at points, my dad would say like, "Just hit him. The suspense is killing me. Just hit him and then we can move on." So I feel like a lot of us are in this point of the economy of like, you either need to stop the car or hit him. Like, I know, like, we're just, we've been right at the edge. Just hit him. Or stop, pull over, something. And you know what? We haven't even gotten to-

• 36:21Robin Rauzi?

  It's true. It's like we're like in a car where somebody doesn't know how to drive yet and they're just like, "Eh eh eh eh."

• 36:26Speaker 02

  Yeah, and you're just grabbing, like-

• 36:27Robin Rauzi?

  You're just like getting carsick?

• 36:29Speaker 02

  Getting carsick and holding on to, I don't know what it's actually called, because in my family, we were just referred to it as the "oh, handle," where you grab the handle at the top of the door and go, "Oh, yeah, yeah. Yeah, we're just white knuckled grabbing on to that."

• 36:41Robin Rauzi?

  We are. We are. God.

• 36:45Speaker 02

  So we, we still haven't talked about immigration.

• 36:48Robin Rauzi?

  Yeah, we haven't even talked about immigration. I was reading that Dallas Fed report, did you read that, about the new kind of baseline for how many jobs we need to add? And they were estimating way more people have left that our net, our net immigration is even lower than the government has been estimating. So, you know, it turns out that if 500 to 600,000 people leave, either voluntarily or because they've been terrorized or because they've actually been deported, that you don't have to add as many jobs to stay sort of even with your workforce needs. And that also the labor force participation has been going down anyway.

• 37:28Speaker 02

  Mm-hmm. Yeah. So just to sum up where we've been so far, because we're gonna stay on the theme. GDP was low and we knew why. Same thing with consumer sentiment. We know why consumer sentiment is bad, because people are seeing price increases. They are upset about it, but we're still not seeing consumption actually fall. In part because people are shifting their bundle and in part because people are relying on credit and debt. In prices, we know why prices are going up. We instituted tariffs and we waited for them to take effect. And now we have an oil price crisis. So we, again, it's not good, but we know the cause and there is a non-economic reason. We are not adding jobs.

• 38:11Speaker 02

  Part of the reason why we're not adding jobs is because the working age population in the US this century has only grown because of immigration.

• 38:22Robin Rauzi?

  Right.

• 38:23Speaker 02

  So if like tomorrow, we were able to effectively stop another immigrant from coming to the US ever again, our population would immediately decline. And I not decline in a few years. I mean, it would decline the hour that we closed our borders. Our population would start to decline. And had we not had immigration this century, our population, in particular, our working age population, would be in decline. So if you target immigrants through deportation and through fear tactics that are meant to make people afraid to be here or not comfortable to be here, you are going to reduce the size of the labor force, which means you don't need to add as many jobs. So this really weak year of only adding 180,000 jobs, again, we have the cause in front of us.

• 39:08Speaker 02

  We're deporting and scaring off working age people. So the typical number, how many jobs does the US need to add a month? That is a function of the growth of the working age population. For a long time, it's been north of 200.

• 39:24Robin Rauzi?

  Right, 200,000 jobs.

• 39:26Speaker 02

  200,000, you're supposed to add 200,000 jobs a month in the US.

• 39:30Robin Rauzi?

  To keep up.

• 39:30Speaker 02

  To keep up.

• 39:31Robin Rauzi?

  Population growth, new people coming in, people coming out of school, looking for jobs.

• 39:36Speaker 02

  And if we don't add enough, we would see it in the unemployment rate.

• 39:39Robin Rauzi?

  Right.

• 39:40Speaker 02

  What's happened this year is that we are not adding jobs, but the unemployment rate is not going up. And what the report that Robin brought up from the Dallas Fed is we now think the number that we need to add each month might be as low as, I mean, I've seen low as like 20,000, maybe 50,000.

• 39:57Robin Rauzi?

  Yeah, I mean, it's practically zero. It's weird because it sounds on the surface like things are in balance. Oh, we are, we are not creating a lot of jobs, but we don't have a lot of workers. So unemployment is low and it all seems good, but it seems actually not to be good.

• 40:11Speaker 02

  No, it's like imbalance on the aggregate, but, but. So the example I gave, I was actually just on a podcast recently and I gave this example and had someone write in to say they found it to be particularly powerful of an explanation, was if you were worried about men and how men need jobs and men don't have a place to work and that men's economic status is falling in the US, and I told you, "Okay, easy solution, I'm going to fire a million nurses so now men can take those jobs," you would be like, "Come on. Men and women don't work the same jobs. Men don't want to be nurses. You can't just fire a million women who are nurses and expect men to take those jobs." That is essentially replace women with immigrants. If I were

• 40:56Speaker 02

  to fire a million immigrants and say, "Well, now native workers can take those jobs," it does not match. They don't work the same jobs. So you're seeing this like, Powell called it a quote-unquote "curious" kind of balance, that the labor market isn't growing, but it isn't receding. It's been steady in terms of the number of jobs and unemployment we have, and yet we have clear evidence of mismatch between who wants a job and the jobs that are available.

• 41:25Robin Rauzi?

  Right.

• 41:26Speaker 02

  So it's in balance on aggregate, but it's not matched. And we know why.

• 41:32Robin Rauzi?

  And that's hurting both job seekers and the industries that have lost all those workers.

• 41:37Speaker 02

  Yes. Now, worth it to remember that many industries begged for exceptions to any of the deportation practices because they rely on unauthorized workers, and a lot of them were very quietly successful at making sure that their workers weren't targeted. So, you know, instead you have these very visible hateful influxes of ICE into cities, and it's not all for show, but it's a facade. The real people who win off of our current broken immigration system and tacit acceptance of unauthorized immigrants as workers that hold up our economy are the employers. They are the winners here.

• 42:21Speaker 02

  It's a facade because it makes it seem like we're taking enforcement to another level when really we're just taking it like it's just a roadshow. I suppose at some point I start to sound crazy, unhelpful.

• 42:36Robin Rauzi?

  Well, it is weird.

• 42:37Speaker 02

  All these things are bad things and we know, just because we know.

• 42:40Robin Rauzi?

  We know why.

• 42:41Speaker 02

  Just because we know why it's okay.

• 42:44Speaker 02

  A little bit, but.

• 42:47Robin Rauzi?

  We know why, but that doesn't mean we're going to change course. It doesn't mean we're going to fix it. And I think this is the reason that I, I think people who pay attention to the economy are so anxious about it. Is that whether or not you just see prices go up at your gas station or you actually read the Wall Street Journal every day, the signals are all there and they're all, like you said, like they're flashing yellow if not red, right?

• 43:14Speaker 02

  I think there's a certain desperation to not enter another recession that is carrying the momentum to not be in one.

• 43:23Speaker 02

  And the fear of what a recession could look like if we actually declare it. You know, they have a, they have a real kind of own momentum and there's a general fear that we, we had so much suffering in the economy from the pandemic that to enter a recession so quickly would just leave households so battered. But now the question is, do we even need a recession if there's this much pain outside of it?

• 43:48Robin Rauzi?

  Right. Does it feel unprecedented? I mean, I think sometimes I think we use, we throw that word around. But this kind of combination of things, it just really does seem like nothing that I have experienced in this combination before.

• 44:03Speaker 02

  So the way that I think about it is that recessions tend to hit certain beats. Whenever the economy enters a downturn, they hit the marks. They don't hit them in the same way. They're not always wearing the same outfit. The tempo changes, but like they hit marks, you know, as they move across the stage.

• 44:21Speaker 02

  I think what makes the current period so difficult is that they're hitting a mark we don't hit. It doesn't ever slow down like this.

• 44:28Robin Rauzi?

  Mm-hmm.

• 44:29Speaker 02

  You know, it doesn't, it doesn't, we don't stop.

• 44:32Robin Rauzi?

  Yeah.

• 44:33Speaker 02

  We fall, we get back up, we don't actually hold in place. But I mean, I think one of the most visible aspects of this is the total number of jobs in the US. You can look at it over a 90-year period, and I mean, it is just an upward line, and you can see the last year and a half is just flat. And we've never been flat. The US economy, job growth, has never been flat. We are not an economy that holds steady.

• 44:58Robin Rauzi?

  I know. And just why it's so steady, you just feel so uncomfortable.

• 45:01Speaker 02

  It's so uncomfortable to be holding steady.

• 45:03Robin Rauzi?

  But it's also like, I don't know that it is steady. Like, it's averaging out.

• 45:06Speaker 02

  It's averaging out. It's not.

• 45:09Robin Rauzi?

  It's not steady.

• 45:10Speaker 02

  It's, what's that joke about statistics? You've got one foot in fire and one foot in ice, and you say, "On average, I'm fine."

• 45:17Robin Rauzi?

  Yeah.

• 45:18Speaker 02

  It's like, "Oh, on average, we're fine." Not a good average. Not a good, you don't want to look at the averages here. Averages here are not good. I guess one way to think about it is, like, this is the economy now. What would actually happen for it to break good or bad?

• 45:32Robin Rauzi?

  Sure.

• 45:33Speaker 02

  Like, what needs to happen next? One path forward is prices stop rising.

• 45:40Robin Rauzi?

  Yeah. The Supreme Court could again rule on tariffs. The Congress could change, and they could overrule tariffs. The war could end, oil prices could stabilize and drop again.

• 45:50Speaker 02

  Yeah. It all hinges on prices, because once prices are, again, steadily and predictably declining, the Fed feels free to lower interest rates to ease up lending and spending in the economy. That signals to businesses that things have returned to normal, and they start making decisions differently. Once they see leadership from the Fed, that we're actually on a sustainable path, you know, they use those lower interest rates to expand, to borrow, whatever, and they start hiring and expanding in earnest, and that kicks us off on, like, breaking good.

• 46:23Robin Rauzi?

  Yeah.

• 46:24Speaker 02

  Next path out of here is that those prices don't fall. And the kind of contagion effect of higher gas prices into goods and services, where gas isn't just something you consume, it's an input into the production of other goods and the delivery of services. Prices go up enough that the Fed has to raise interest rates. And this time, people, they're not going to wait, like, this is the writing on the wall, and they pull back. You see mass layoffs and we're in recession. That could take-

• 46:53Robin Rauzi?

  When you say people, you mean business leaders or you mean individuals, consumers?

• 46:57Speaker 02

  Businesses and individual consumers. Like, the Fed raises rates again, and there's like a, there's a that's it aspect to the economy of like, I've been holding on and that's it.

• 47:07Robin Rauzi?

  Yeah.

• 47:07Speaker 02

  Another path out of here is that the prices go up enough and consumers get spooked enough-

• 47:16Robin Rauzi?

  Mm-hmm.

• 47:17Speaker 02

  -that they pull back consumption. We have a bad GDP report, and that's enough to convince people that there's no going back on the economy, we're going to be in a recession. And then you have, like, mass layoffs, businesses get spooked, and they start to prepare for a recession.

• 47:32Speaker 02

  I think those are probably the three most likely paths, all of them kind of contagion through prices.

• 47:38Robin Rauzi?

  Interesting.

• 47:40Speaker 02

  Now, other thing that could happen is that you have some type of AI bubble reckoning, where the incredible valuation of AI gets reconsidered by the stock market, and the stock market goes into what we call correction, where it declines by a certain percentage. Once it goes into correction, there's pressure on publicly owned companies to downsize.

• 48:09Speaker 02

  Those are the paths out of here. Our most hopeful path is that we are able to turn off tariffs and get to lower interest rates. Trump's preferred path out is to pack the Federal Reserve Board of Governors to lower interest rates anyway.

• 48:23Robin Rauzi?

  Get to lower interest rates, yeah.

• 48:24Speaker 02

  What's kind of funny about that is that he, like, well, first off, he's not his best messenger, because he always talks about how amazing the economy is, which, if the economy was amazing, you wouldn't need to lower interest rates. But also- It won't work.

• 48:38Robin Rauzi?

  Lower interest rates, it won't lower prices.

• 48:40Speaker 02

  No, if you lower interest rates to juice the economy because borrowing is cheaper, this is animal spirits. Part of it comes from borrowing being cheaper, but part of it comes from people believing that we are in a place to lower interest rates soundly because the Fed is making good decisions. You lose faith in the Federal Reserve and think they're going to lower interest rates now, it's just going to lead to higher prices in the future, right? Like, the, the lack of credibility from the Fed is as important as the actual move in interest rates when it counts. So, I don't think he realizes that that's not a path forward. Like, he convinces the board to lower, or like, gets enough people fired, interferes with the Fed, gets interest rates lowered without kind of the conditions to have interest rates lowered.

• 49:24Speaker 02

  He might get something from it, but the actual, like, good stuff will only come when, like, there's still faith in the Federal Reserve. And I, I say this, so like, you might be listening, being like, hey, man, I don't really give a [bleep] about the Federal Reserve. I don't know anything about them. Their confidence or their credibility doesn't matter to me at all.

• 49:43Robin Rauzi?

  Yeah.

• 49:44Speaker 02

  I just want to have cheaper things and lower interest rates would help me. Yeah, you're great, and I want you to keep doing you and to make decisions that are right for you and your family and the economy and not listen to me at all. Like, shoot your shot, do your best, make it work. That is you. People who are highly influenced by interest rates and the perspective of interest rates going forward, the Fed's credibility with them matters a lot.

• 50:12Robin Rauzi?

  Yeah.

• 50:13Speaker 02

  You see interest rates as it filters down through consumer prices for certain long-term purchases, but there are businesses and entities that will live and die by interest rates, and that credibility matters a ton. I don't know, I mean, there's probably like 20% of Americans who think the Fed should be ended anyway. Like, that's, that's, it's not like broader consumer credibility, it's the credibility with the financial institutions and financial sector.

• 50:35Robin Rauzi?

  Right, right.

• 50:39Robin Rauzi?

  Do you have an optimistic note here at the end at all?

• 50:42Speaker 02

  Yeah, I mean, this isn't the most uplifting episode, knowing that the reason why we are not in recession so far is because we've been able to reason and explain away the really bad things we've seen. I think, I didn't dwell on this enough. It is also not as bad. Like, I understand-

• 51:01Robin Rauzi?

  It's not 2007, 2008.

• 51:02Speaker 02

  It's not 2000. Yeah, we are not in the Great Recession. Like, we are not in a financial crisis. There is weakness in the economy that is accumulating and hardening. But like, you might think that right now feels bad, but if the unemployment rate were 10%, I promise you it would feel worse. Like, we shouldn't lose sight of the strength that we have. Like, yes, weakness is coming from a lot of directions, but we still have an incredible strength. And I am of the mind that no individual can be expected to see the forest for the trees of the broader economy's strength when they are suffering. And so I would never ask you to do that. We didn't talk about how, like, strong the US is. And in fact, I've talked to a lot of economists who have said, like,

• 51:46Speaker 02

  "I cannot believe we have not stepped into a recession already. It is testimony to how [bleep] strong this economy is that we haven't." And if it doesn't feel strong for you, I'm not saying you're wrong.

• 51:59Robin Rauzi?

  Yeah, but it is, I feel like, like those toys that you punch and it just kind of keeps popping back up. And I've felt that way pretty much since the pandemic. I mean, I know we did a lot to try to bounce back from the recession in the spring of 2020, but the tariffs especially, and the uncertainty, and just kind of the ongoing uncertainty, and yet we're bobbing and weaving and we're like, as an economy, just still, you know, all these players adjusting how they can. It's a big, big, big, dynamic economy.

• 52:33Speaker 02

  It is, and it is not on you to have to diagnose the source of your economic frustrations. It's like, the economy is weak. There's lots of uncertainty. There's lots of things we don't know. Don't lose sight of what we do know, which is, it is not the fault of prices in April of 2026 that health insurance is so (bleep) expensive, or that the economy is so unequal, or that the labor market is so stacked against workers, or that workers have lost power. That is not an April 2026 problem. That is a 21st century problem. And I think that like, these moments, these acute moments in the macroeconomy,

• 53:15Speaker 02

  they make us feel all these pain points that are not of the moment.

• 53:22Speaker 02

  Yo, we're gonna be okay. We're gonna be okay. Even if the economy enters a recession, we can get to the other side of it.

• 53:30Robin Rauzi?

  Yeah.

• 53:30Speaker 02

  I mean, we don't have a lot of experience with economic declines not being cataclysmic. But that's how they normally are. And if we go into one, it will be bad, especially for the people in it. But we can help people. We know how to identify people who are hurt, and we can get to the other side of it. And the long solution does not change. The long solution is, we need better economic policy, we need better economic structures, and no recession will change what we need in our economy long term.

• 53:58Robin Rauzi?

  We're gonna take a little break, and we'll be back with executive orders and spiritual sponsors.

• 54:08Speaker 02

  I'm going through our outline. I'm like, "Economy bad, economy bad, another bad thing, bad, bad, bad, bad, bad, bad, bad." Executive orders!

• 54:19Robin Rauzi?

  I'm sharing an executive order this week from Brian Field in Redding, California. Brian suggested everyone in elected office should be forced to do their own taxes every year until the tax code is properly simplified.

• 54:31Speaker 02

  Brian.

• 54:33Robin Rauzi?

  Hero.

• 54:37Robin Rauzi?

  Do you have an executive order?

• 54:39Speaker 02

  My executive order for the week is that places of employment should not be allowed to charge you for parking.

• 54:46Robin Rauzi?

  Not sure if I endorse that or not. Okay. I mean, as a place that's just overrun with traffic, I'm sort of like, eh, meh, I don't know.

• 54:53Speaker 02

  I mean, but like, doctors work at hospitals and they have to pay to park there.

• 54:56Robin Rauzi?

  Yeah, I worked in downtown LA, I had to pay to park there.

• 54:59Speaker 02

  It seems like it's a wage cut to make people pay for parking, but to have parking be the only way to access their job. So I feel like it should fall under wage an hour. Like, if in order to get to your place of employment, they have to park a car there, you cannot charge them for parking the car. And otherwise, you just have to, we'll tax you and spend it on public transit. And you have to run a very complex shuttle system, so don't charge for parking. It just feels like a wage cut.

• 55:28Robin Rauzi?

  Okay, okay.

• 55:31Robin Rauzi?

  Spiritual sponsors?

• 55:32Speaker 02

  My spiritual sponsor for the week is genre-specific, independent bookstores. So you probably have, or maybe you have, a murder bookstore, or like a mystery bookstore, crime bookstore, romance bookstores. I recently went on West 42nd Street in New York City to a drama bookstore, and almost everything on offer was plays. It was lovely. It was, it was such a lovely setup. It was, they had like, books about kind of the film industry and theater and history and things like that. But they had just more plays than you've ever seen in one location. But the real showstopper was they had a sculpture called "The Bookworm",

• 56:15Speaker 02

  and it was hundreds of books elevated above the store that was like, you know, curling around like a worm that eventually hit into the wall. Turns out, people who do set design can do all kinds of fun [BLEEP].

• 56:29Robin Rauzi?

  Yeah, they can. Yeah, they can.

• 56:31Speaker 02

  So crazy, specific, independent bookstores that are taking advantage of capitalism to do something real niche and real awesome. I love you.

• 56:39Robin Rauzi?

  Excellent, yeah.

• 56:42Robin Rauzi?

  Just yesterday, we went to Barnes and Noble, where we almost never go. But Barnes and Noble has a fantastic newsstand. And they have, I mean, it must be 150 linear feet of magazine shelves. And magazines you didn't know existed. For instance, I saw The Guardian, the newspaper, does a magazine called The Guardian Longform. And the cover is neon orange. And Nordic Home Magazine, you know, Country Cottage and Southern Coastal Living. And it's just great newsstand. And they're just hard to find anymore, but they're so much fun.

• 57:20Speaker 02

  For environmental reasons, I try to only subscribe online to magazines. But like, there's really nothing like getting Southern Living in your hand.

• 57:28Robin Rauzi?

  Yeah, yeah.

• 57:35Robin Rauzi?

  All right. That's another episode of Optimist Economy.

• 57:39Speaker 02

  We hope this made sense. I hope this made sense.

• 57:43Robin Rauzi?

  Didn't make you more... We hope we're leaving you at least informed. If not, optimistic.

• 57:48Speaker 02

  Sometimes there's comfort in clarity, right?

• 57:51Robin Rauzi?

  Comfort in knowing, sure.

• 57:53Speaker 02

  Okay, well, in that case, the Optimist Economy podcast is edited by Sophie Lawnd, and our video production for social media is by Andy Robinson.

• 58:01Robin Rauzi?

  Who is live in Houston.

• 58:02Speaker 02

  Who is live in Houston. He's actually here. Video clips from the show for you to share are available on TikTok, Instagram, YouTube, and now Facebook. And we have a chatroom on Substack for anyone who subscribes, paid or unpaid, to Optimist Economy.

• 58:17Robin Rauzi?

  T-shirts, hats, tote bags, those are all available on our website. But if you don't need any of that, that's okay. We'll still take your donor-advised fund money, your cash money, your old-fashioned check, or your bag of gold coins. Or you can just click Donate at OptimistEconomy.com.