The Federal Reserve has been focused on cooling inflation and achieving a so-called soft landing. President Trump’s trade policies have sent markets reeling and fears of a recession are on the rise. WSJ’s Nick Timiraos joins Ryan Knutson and Molly Ball to discuss Trump’s economic vision. Plus, the Trump administration is moving to deport a permanent legal resident of the United States and the possibility of a government shutdown has Democrats in a pickle. Further Listening: - What’s Going On With the Economy - Tesla Has a Problem: Elon Musk - The Fight to Kick Soda Out of Food Stamps Further Reading: - How Trump 2.0 Is Shifting Its Tone on Markets - A Presidency of Upheaval Emboldens Trump Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: How has Trump performed in his first 50 days?
All right, Molly, we have made it past the halfway point.
That's right. We hit a big milestone this week. In the first 100 days, we have passed day 50.
How much has Trump accomplished in his first 50 days compared to how much most presidents accomplished in the first 100? Has he set a new land speed record?
Look, there's no question that this has been an action-packed and eventful first 50 days of the Trump presidency. He has signed a record number of executive orders. At the same time, he has not passed a lot of legislation. And especially considering that he does have, you know, majorities in the House and Senate, the legislative agenda is strikingly modest.
But one of the things he's very good at is creating the impression of action, creating the impression of So that people feel like he's doing stuff. And that's a big, I think, part of the Trump political profile is just this idea that he's a strong leader. He's a man of action.
Well, all of this action is starting to create a reaction in the stock market and the broader economy, which is the main thing that I wanted to talk about today. But first of all, can you just remind us how important was the economy to Trump's presidential campaign and ultimate re-election?
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Chapter 2: Why is the economy reacting to Trump's policies?
In exit polls, voters said that the number one issue for the plurality of voters was the economy, specifically prices. And they rated Trump much better on that issue than his opponent, Kamala Harris. And I think in a bigger sense, the economy has always been central to Trump's political brand. He's seen as a businessman. He's seen as someone who has a command of the economy.
And when voters look back on his first term, the principal thing that they remember is that the economy was good.
And so far, is this the economy that voters were expecting?
Doesn't seem like it. It seems like, you know, the stock market's going down, various economic indicators are wobbly, and people are nervous.
From the journal This Is Trump 2.0, I'm Ryan Knudsen.
And I'm Molly Ball.
It's Friday, March 14th. Coming up, Trump was supposed to be great for the economy. So why is the economy looking so scared? Plus, a Columbia student gets arrested and the Democrats dilemma over a government shutdown. Stay with us.
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Chapter 3: What are the current economic concerns?
Well, if you look at the stock market and listen to what businesses are signaling right now, it would seem that a lot of people are afraid that it is not going to go well because the S&P 500 closed in correction territory yesterday, meaning it's down more than 10% from its recent high. Companies are projecting weaker sales, and you're hearing lots more talk about a recession.
And even President Trump, in an interview on Sunday, wouldn't rule out that a recession was possible.
Are you expecting a recession this year?
Um... I hate to predict things like that. There is a period of transition because what we're doing is very big.
Can you lay out as best as you can what Trump is trying to achieve with all these policy experiments and what is he trying to transition America toward?
It's hard to say because the administration doesn't even seem to be clear on that point. I think what you kind of gather is we're going to make more stuff here. Over the last 30 or 40 years, we've allowed other countries to make the things that we consume. And we are an economy that produces more services, tradable services.
This is high value, but we lost a lot of manufacturing jobs over the last 30 or 40 years. So part of this is we're going to bring more of those jobs back. The reason I hesitate is... The president and his advisors also talk about raising more revenue from tariffs, which would imply that we continue to import things from overseas and we charge people more for it and we raise revenue that way.
So I think there's a little bit of a work in progress on what exactly Trump 2.0 is driving at.
Aside from the uncertainty, is there something about the policies themselves that business leaders and economists are concerned about?
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Chapter 4: How are businesses responding to Trump's economic strategies?
They always thought that that was a really important metric to him. And if something he did started to make the stock market slip, he would change course. And the fact that he's looking at the stock market slipping and saying, we're going to brazen through it, that has really set a lot of people on edge. But Nick, what do you think?
Businesses hate this, right? They just hate it. And it's not so much the tariffs. I mean a lot of businesses don't like tariffs unless it's going to protect their industry. What they don't like is that what's announced at 9 a.m. may be different from what policy is at 1 p.m. versus what policy is at 5 p.m. How do you plan for the future in that environment? I mean if you are going to –
bring your factories back to the U.S., you want to know what the tariff rates are going to be, what the cost structure is going to be. So what I've heard from businesses, it's not so much we don't like tariffs and we don't want to see tariffs, even if that's true. It's they want certainty. They want to know what the outlook is going to be, even if the tariffs are going to be really high.
Just tell me what they're going to be, and then let's get on with this, and we can plan for that. I think that's the issue that is most frustrating right now to business leaders. And you're exactly right. They're not saying these things publicly because nobody wants to get into the president's line of fire. All right.
I want to bring in a question from one of our listeners, Charles Park. who, when we got this question, my first thought was, I know exactly who I want to ask this of, and it is Nick Timros, and you are here, so here we go.
In your podcast, you state that many economists fear the president's actions will further increase the United States' inflation. However, it has been stated several times from the president and his administration that cutting government spending will lead to decreasing inflation. If you look at Elon Musk's first interview in the Oval Office, that was said.
Are they right? So what do you think of this, Nick? Can cutting government spending help ease inflation?
I mean, the answer is yes, but it's complicated. So cutting spending reduces demand. That can help in an overheated economy. Absolutely, that can help you get inflation and price pressures to cool off. The tariffs are more complicated because if you just raise tariffs once, you know, a set it and forget it. We're doing this. It's going to be 10%.
It's going to infect on April 1st, and everybody knows now that's what's coming. It'll raise prices, but it'll be a one-time effect. If it's only going to happen one time, you shouldn't react to it by raising interest rates or tightening monetary policy. to constrain demand for something that's just going to resolve itself on its own.
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Chapter 5: Why are tariffs causing uncertainty in the economy?
All right. Before we let you go, Nick, one last question. Let's just cut to the chase. Is there going to be a recession? Yes or no?
I will never answer that question.
Just like I will never tell you who's going to win an election.
All right. Well, Nick, thank you so much for your time.
Thanks, Nick.
Thank you, Brian. Thanks, Molly.
Okay, we're going to take a short break. Don't go anywhere. Something else that's making headlines this week, Molly, is the arrest of a Columbia student, Mahmoud Khalil. Khalil was one of the students that was leading the pro-Palestine protests on Columbia's campus last year, and he often spoke with the media about ending the war in Gaza. The students are here.
They are holding their grounds until they get what they want, which is divestment from the Israeli occupation. So Khalil is a legal resident. He has a green card. So first, I'm just curious to know, what is the legal argument that the Trump administration is making for why he can be deported?
They have said that they are revoking his green card. Interestingly, it appears that they may not have originally understood that that was what they were doing. His lawyer said that when they first went to detain him, they said they were revoking his student visa. And he said, no, I have a green card. And they said, well, we're revoking that too.
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