YouSaid · the spoken record

Stephen Moore

lines on the record: 17
first: 2025-04-23
most recent: 2025-04-23
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Suppress second round effects on inflation and therefore you can treat the tariff driven price increase as more of a price level shift rather than the start of a serious inflation. So ultimately I think the Fed's probably going to be a little bit late because of the difficulty of deciding between the inflationary impact and the real economic impact. If things weren't really seriously deteriorated, they would do a lot and I think they would have quite a large impact.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“Or whether you should mainly focus on the inflation or mainly focus on the weakness and growth. I think if the hit were large enough, even if you then have an even bigger short-term increase in inflation, but if you saw a serious deterioration in the labor market, I have no doubt that the Fed would cut and probably actually cut quite aggressively because I think they would take the B1, of course, maximum employment as part of their mandate. And two, if the labor market is really, really weakening.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“There's a reckoning in the financial markets and in the banking system. I mean, in the housing market and the ability of policymakers to push against it is complicated because monetary policy is the main game in town. The constraints are already at zero. It's just a limited amount of policymakers really can do. The good news is that the funds rate is four and a quarter to four and a half percent. So we're not close to a liquidity trap or an effective law advance situation. So the Fed should cut a lot in order to support the economy and stabilize financial markets as well. The bad news is that these types of alcohol stagnationary shock that push inflation up and growth down are just harder to deal with for policymakers because it's just hard.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“Don't disagree that there's going to be potentially ongoing damage from this. But if there is a pullback, I do think it's still going to have a near-term positive effect. I think maybe just some degree that effect diminishes the more times you go through one of these cycles, the smaller the effect. But my guess would be that let's say over the next few months, we get some really bad news on how the economy is performing. There will be a pullback. I think that pullback will stabilize conditions to some degree. Maybe you don't get a big bounce back, but I do think that because it's a policy-induced recession, if that's what it is, there is the ability to also at least stabilize things and keep you from continuing to contract at a rapid rate. I think that is different from say an 08 type of situation where”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“That's hard to null because obviously it's policy-induced, which means that what policy does and what trade policy does in particular is going to be really paramount. And the kid argued it shouldn't be that severe because once you do go into a recession, that's going to bring about a reaction. I tend to think that because, I mean, after all, we did see it move to a pause. So if you want to extrapolate from that, you would say if you do go into recession, if you actually see the recessionary data, they're going to pull back from that. But there's a lot of, obviously, unpredictability just in terms of how these decisions are made. And so that also makes it harder to assess how policy is going to respond to bad news on the economy. So what does all that tell me? I would say more likely it's going to be a less deep recession.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“Again, the uncertainty effect in particular is difficult to gauge. So over the next couple of months, we'll gain a lot of clarity in terms of what the damage to the economy really is. It's going to be a little bit difficult in the short term because there are a lot of data lags and distortions that are going to make it difficult to assess. So we might be flying blinds for a while, but two months down the road, we'll have a much better picture.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“We were at 45% then the full reciprocal tariffs with the country specific add-ons actually went into effect recently. We moved to a baseline recession call. And then when the pause was announced, we immediately moved back to 45%. So there are a number of paths. One is simply actually all of this does take effect. There is now a period of negotiations if they fail and then for many or most or all of these countries, you do actually get back to these numbers that showed up on the big placard on April 2nd. I think that would be a reason to go back to a recession call depending on what else we see. We're in a bit more of a data watching mode here. We have an estimate of what all of this is going to do to the real economy. But of course, we're far from sure.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“Financial conditions impact is greater uncertainty among businesses who are less willing to invest in capital equipment basically because of the uncertainty because it makes sense to wait before you spend on long-lived capital equipment.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“It stands today, and as reflected in our forecast, or where. Stepping back, if you take roughly two percentage point hits that were estimating from the tariff increase to GDP growth, which takes you from what we thought was a little bit more than 2% growth for the year as a whole as we entered the year down to this 0.5% number, there are three components to the hit. One is the tax-like effect of increases in tariffs on real income and therefore consumer spending. Number two is financial conditions tightening. We saw a very rapid tightening in financial conditions following April 2nd. That's pulled back to some degree, but financial conditions still tighter than they were prior to the announcement. And then the third component, which overlaps a little bit with the”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“But not nearly as big as consumer spending. So you would think that this is a shock that produces, if it happens, a moderate recession, although I think some of the wildcards here are what about consumer spending? For consumers, there are fewer long-term decisions that are going to be whip sawed by all of this, but the effect on consumer perceptions, morale, we have seen the biggest decline in consumer confidence kind of ever, which is really quite remarkable because so far the economy isn't suffering all that much. So we don't have soaring unemployment yet. We don't have soaring inflation yet, although the inflation is coming. But obviously, if you take the surveys at all seriously, people are extremely rattled. So if consumer spending falls off a cliff, yeah, then it can become a severe recession. So it is possible to tell stories where it's really very severe.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“It doesn't look all that severe given what we now know, again, this is completely untarted territory. This is one of those situations where even historical comparisons, those are often your best route, but there is no comparison. So there's nothing like this has ever happened. That said, the sort of focal point that the recession threat is probably business investment. And I guess I'd say it's mostly business investment in tradable goods in sectors that are either competing with imports or exports where things are more strongly affected by the tariff regime. It's not clear to me why investments in healthcare should be particularly affected by this. And your economy is probably about 75% non-tradable. So it's a limited set of stuff. But within that sector, it could be quite severe. Now, business investment is a significant share of GDP.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“It's hard because the thing about trade policy in particular is that the way it's set up in the United States, the law gives the president enormous discretion. No legislation has to be passed. No commitments need to be made, which means that he can change his mind overnight. And we set up that system to create some flexibility basically pressure release valves around tariffs that were negotiated with other countries. We needed something that would the United States respond if the political pressures became too great, but it was never intended to be used to make massive changes in trade policy. But that's what's happening now. And so even if they said, no, this is going to be our tariff policy and it will remain unchanged for the next three years. A week later, they can say actually we've decided to change it. And who can guard against that?”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“No, in some ways, I almost think that the policy reversals to the extent they happen may, in some ways, they make it worse because the reversal may be reversed a day or a week or a month later. So it doesn't make investing any easier because you still have no idea what the world will look like by the time your investment matures.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“Would you want to invest under those conditions? Suppose that you're considering you have a component plant in Mexico, an assembly plant in the United States or whatever, should you invest in Mexico? Well, not if there's going to be high tariffs. Should you invest in the United States? Well, what if the tariffs go away? Then that'll be uncompetitive. So anything you do runs the risk of having a lot of money stranded. And there's a tremendous option value to just sitting on your hands and sitting on your cash. So this is unique. A stable tariff rate would not cause a recession, but an unpredictable tariff rate that can change next day is really a depressing effect on demand. And that's clear for business investment, but it also affects consumers. It affects home builders. So the uncertainty is the reason why a recession seems likely.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“Well, okay, my track record at predicting recessions is terrible, but no worse than anybody else's. I mean, there have been studies. The success rate of economists at predicting recessions is approximately zero. And, you know, that said, this does look like a recession. But what's funny about it is that if you asked me, do tariffs normally cause recessions? The answer would be no. A tariff means that people buy less imported goods, but they might buy more of domestic goods, and it's not clear why that should lead to a recession. It has unpleasant consequences. It raises the cost of living. It reduces efficiency. But a recession is normally a collapse in demand, collapse in spending. So you wouldn't expect tariffs in general to do that. This secret sauce of the Trump tariffs is that they are extremely uncertain. Nobody knows what they will be. Nobody knows what comes next. Now, if you're a business trying to make plans.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“So obviously this tremendous trade shock has raised concern about recession in the US, maybe even beyond, but certainly in the US. Where do you stand on that? Is recession most likely ahead? Is it even inevitable at this point given the uncertainty?”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT
“There has been nothing like this. The story keeps changing, but it looks like we're looking at an average tariff rate. That is a little bit higher than the Smooth Holly tariff of 1930. But Smooth Holly was starting off a base of quite high tariff rates. So the actual increase in Smoothawy was a few percentage points on the average tariff rate. Here we're leaping from something like 3% average tariff to something like 20 or more average tariff, which is vastly bigger than Smooth Holy and trade is about three times as big a share of the U.S. economy as it was in 1930. So this is quite literally, people have asked me when I say this, whether it's a figure of speech, but this is an order of magnitude, bigger shock than anything that has ever happened in U.S. history. As far as I can tell anybody's history, even when you look at developing countries that had very high tariffs for about 30 years after World War II.”
2025-04-23 · Goldman Sachs Exchanges · Will tariffs lead to a recession? · IDENTIFIED FROM THE TRANSCRIPT