Rob Kaplan

Yes.

And that's all true. And he was. And he warned that in order to get inflation down to two, we may have to accept a recession. So why didn't we have a recession? I'll tell you why I think why we didn't. Fiscal spending has been historically high. American Rescue Act, Inflation Reduction Act, Infrastructure Act, CHIPS Act.

And that's all true. And he was. And he warned that in order to get inflation down to two, we may have to accept a recession. So why didn't we have a recession? I'll tell you why I think why we didn't. Fiscal spending has been historically high. American Rescue Act, Inflation Reduction Act, Infrastructure Act, CHIPS Act.

We were running six and a half percent plus of GDP deficits, historically high. And so I think that helped cushion some of the Fed rate hikes. Now we're switching where we'll see how successful it is. Maybe unclear right now. Government spending, they're going to try to reduce it as a percentage GDP. Unclear whether they're going to have success. And it's clear the economy is now slowing.

We were running six and a half percent plus of GDP deficits, historically high. And so I think that helped cushion some of the Fed rate hikes. Now we're switching where we'll see how successful it is. Maybe unclear right now. Government spending, they're going to try to reduce it as a percentage GDP. Unclear whether they're going to have success. And it's clear the economy is now slowing.

And so...

And so...

I think the Fed's going to be more balanced on the one hand looking at unemployment and inflation, but this is why Jay Powell in a speech a couple of weeks ago in Chicago, I believe, made clear we haven't given up on fighting inflation because he's worried if he suggests that, inflation expectations might inch up more and become unanchored and doesn't want that to happen because if that happens, it's going to be harder to cut rates, not easier.

I think the Fed's going to be more balanced on the one hand looking at unemployment and inflation, but this is why Jay Powell in a speech a couple of weeks ago in Chicago, I believe, made clear we haven't given up on fighting inflation because he's worried if he suggests that, inflation expectations might inch up more and become unanchored and doesn't want that to happen because if that happens, it's going to be harder to cut rates, not easier.

They're not wrong to think it.

They're not wrong to think it.

think here's what we know and here's what we don't know i think the fed is going to be in my opinion more reactive than preemptive in 2019 i was at the fed when we had a tariff issue i advocated for preemption but we could do that because we didn't have an inflation issue the fed here will be more reactive if you see a severe slowing that i think on balance offsets some of this cost push i think the fed may well see its way clear to reducing rates

think here's what we know and here's what we don't know i think the fed is going to be in my opinion more reactive than preemptive in 2019 i was at the fed when we had a tariff issue i advocated for preemption but we could do that because we didn't have an inflation issue the fed here will be more reactive if you see a severe slowing that i think on balance offsets some of this cost push i think the fed may well see its way clear to reducing rates

multiple times. But the Fed shouldn't be in the business of predicting that because it needs to see it before it acts because it's unclear. And so the market has to make predictions because we've got to invest. The Fed should be more of a risk manager. And I would advise investors, realize there's a whole bunch of scenarios because we don't know what the tariffs are going to be.

multiple times. But the Fed shouldn't be in the business of predicting that because it needs to see it before it acts because it's unclear. And so the market has to make predictions because we've got to invest. The Fed should be more of a risk manager. And I would advise investors, realize there's a whole bunch of scenarios because we don't know what the tariffs are going to be.

We don't know what ultimately how far we're going to go on deporting undocumented immigrants, reducing workforce growth even further. And you don't know how this government spending effort is going to work out. That's a lot of uncertainty. And so just be prepared. This is unpredictable. I think investors think that.

We don't know what ultimately how far we're going to go on deporting undocumented immigrants, reducing workforce growth even further. And you don't know how this government spending effort is going to work out. That's a lot of uncertainty. And so just be prepared. This is unpredictable. I think investors think that.

I think you will see if you saw the unemployment rate. Remember, the Fed's mandate is full employment and price stability. It's not GDP. It's unemployment.

I think you will see if you saw the unemployment rate. Remember, the Fed's mandate is full employment and price stability. It's not GDP. It's unemployment.

If you saw unemployment begin to spike higher where it's clear it's on its way to 5%, I think that would – if I were at the Fed, that would get me on my front foot that maybe I might be willing to take some liberties in thinking that demand destruction – will offset some of this cost push. The other thing that would cause the Fed to act if you saw disorder