Chapter 1: What is the main topic discussed in this episode?
Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made.
And I'm Caroline Hepke in London. We're the hosts of the Bloomberg Daybreak Europe podcast.
We're up early every weekday, keeping an eye on what's happening across Europe and around the world.
We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going.
From Brussels, I'm following the politics, policy and the people shaping the European Union right now.
And from London, I'm looking at what all that means for markets, money and the wider economy.
We've got reporters across Europe and around the globe feeding in as stories break.
So whether it's geopolitics, energy, tech or markets, you're hearing it while it happens.
It's smart, calm and to the point.
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Chapter 2: What insights does Dr. Adam Posen provide about the U.S. economy?
It's indeterminate ahead of time, to use a fancy word, how much of that shows up as income and how much of that shows up as price disinflation. And my reading of the historical evidence is when you get a new technology, most of the disinflation stuff comes with a lag because that only comes when companies start restructuring, changing their workforces to figure out how to use the stuff.
whereas some of the income growth, the productivity growth, you get up front just because we've all got a new toy. So I think there's room for me to be plenty wrong, but I think we're going to end up pretty high inflation and a Fed that's behind the curve.
So is that the biggest realistic risk to the U.S. economy? I wanted to insert that word realistic because I think we talk about risks all the time, and there's a list, you know, as long as my arm and then some. But I'm just curious, is itā higher inflation? Is it higher interest rates? Is it demographics and older population, folks not having babies? Is it less immigration? Is it rising debt?
Is it China-U.S. tech? What do you think is the biggest realistic risk to the U.S. economy, maybe to the global economy?
yeah well thank you for putting it that way carol i would sort the risks by two categories the realistic and unrealistic as you said but then at what time frame they hit i think the realistic risk for the u.s in the next three to 12 months is probably inflation is the biggest risk I'm not that worried about a downside unemployment.
I'm not that worried about trade wars turning into hot wars with China. I mean, I'm worried about it. It'd be terrible, but I'm not that worried it's likely. But if we start looking out one, two years, then to me, the realistic risk starts to get into some of those demographic issues you and Tim just mentioned.
because we are cutting off a lot of people from the workforce by excluding or deporting migrants. And there's a lot of things that happen, for example, the female labor force participation and prime age women. If you don't have cheap available health care and cheap available
a child care and the budget doesn't support that in out of the federal government and health care is cut back if they don't pass the subsidies for obamacare and even if they do it's still cut back so those are the things in the next couple years but then when we think beyond that then you've got a tug of war between the positive impact of ai
and the potential for large-scale unemployment as people adjust to AI. And there, I got to say, not only I, but the economics profession has no clear idea. There are a few people out there with very strong opinions, but there's no consensus, and we're still working on that. What's your best bet there?
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