Kevin Hassett

Inflation has been trending slightly down.

And so I think that it's working the way it would if it were a border-adjusted business class pro-tax.

I think that there's a race to produce in the U.S.

to avoid tariffs.

that is very beneficial for U.S.

workers.

And if you look at capital spending year over year, we're having one of the best years ever, and that's even before we go through the trillions of promises that we've made in the trade deals.

And so there's that, which is the sort of capital spending effect.

That was somewhat of a surprise to me, how big it was, because I again thought that what you might see is like price adjustments and so on by the inelastic suppliers, and then the consumers wouldn't really see much

price increase.

But I think one of the things we're seeing is a massive onshoring of activity unlike anything I've ever seen.

So I think that it's really been a very net positive policy, despite what sort of conventional economics has been teaching us since we went back to the textbooks when I was in grad school.

Well, I think it will depend on... It's a product-by-product kind of analysis, and I think that it's still work in progress to figure out what the final story is.

But again, we've got high growth and no pickup in inflation.

I think that the Wall Street folks, or a lot of Wall Street folks who I respect and read in the spring, were saying that we're going to have stagflation, that we're going to have 4% or 5% inflation because of the tariffs and no growth.

And so I think that...

allocating like the current state of the economy and the impact of tariffs on it from people who told us that we'd have a recession with high inflation with those models is probably not the best thing to do.

Well, I think it's actually quite a mistake to look at 100 years of history to learn about today's situation.

To do that, you're making an underlying assumption of what econometricians call ergodicity, the idea that the data generating process is the same over time so that you can identify it in this period and then use your knowledge to think about the next period.

I think that 100 years ago, if you wanted to move production from one place to another, it was almost impossible.