Is The Economy Becoming A "Slow Moving Train Wreck"? | Anna Wong, Bloomberg Economics

**Anna Wong** (0:00)
Something bad like this does not always need to translate into a financial stability credit event, like one shock-limit thing. But however, it could be a slow-moving train wreck in the sense that it could be, it just means that the resilience of the economy and consumption would be much lower because people won't be able to borrow, I think 30% adjustment in S&P 500 is not out of the realm of possibility.

**Adam Taggart** (0:39)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Today's guest had one of the best track records last year in forecasting key economic indicators, like the rates of inflation and unemployment. Well, now that we've got a new administration in place, one aggressively deploying disruptive economic policy changes, where does she see the key indicators headed from here? To find out, we've got the good fortune to speak today with Dr. Anna Wong, Chief US. Economist for Bloomberg Economics. Prior to her current role, Anna also worked at the Federal Reserve Board, the White House Council of Economics Advisers, and the US. Treasury. Anna, thanks so much for joining us today.

**Anna Wong** (1:18)
Happy to be here again, Adam.

**Adam Taggart** (1:20)
Thank you. I'm so looking forward to this conversation.
You could not be a better guest for a more topical topic, which is tariffs. And the day this is recorded, being recorded is the day before Liberation Day. So we're recording this on April Fool's Day. The day it's going to launch is going to be the day after Liberation Day, where people are going to have an awful lot of questions about all this. So again, like I said, you're the perfect person for this moment in time. So we're going to get to tariffs in just a quick second, but very quickly, if we can, Anna, let's just spend a little while since you've been on the channel, let's just do a quick refresh on how you see the world right now. What's your current assessment of the global economy and financial markets?

**Anna Wong** (2:03)
I think that the sentiment data, so consumer sentiment, the small business sentiment, they are all coming off from a honeymoon period, which is actually perfectly forecastable. If you look at past presidential elections, the improvement in consumer sentiment typically lasts five to six months. And so we are basically right on time for the souring of the sentiment. But I think what makes the current moment more tricky or nebulous than other transition moments from one administration to another, is that we are also coming off of four years of extreme fiscal stimulus.
And this new administration not only are announcing new ways to downsize the government, which has exacerbated a lot of these souring of the sentiment that was going to happen anyway, but on top of that, there were these stealth fiscal stimulus that's been boosting the economy in the past two years that are just expiring and fading away. And in fact, even if Trump were to do nothing, many of these expiring fiscal stimulus were going to be dampening economic growth. So basically, the economy, US economy, is experiencing the double whammy of new administration policies that's accelerating underlying vulnerabilities of the economy. And of course, the third whammy is that the world economy will be affected by all this, and the uncertainty of it all is going to, I think, bring down, slow down economic growth. So altogether, it seems clear that at least in the next three or six months, the outlook is not bright.

**Adam Taggart** (4:05)
Okay. Outlook not bright. So this issue of a downshifting of the fiscal stimulus, as well as a removal or ending of the stealth part of that fiscal stimulus, it's a big deal. It's something that a couple of folks who have preceded you on this channel have warned about, most notably, I'd probably put Michael Howell and Darius Dale at the top of the list. I'm sure you're familiar with their work. At our recent conference for Thoughtful Money, Michael walked in detail through what he called the not QEQE and not Yodkirk Control that he calculates that the Fed and the Treasury were engaged in over the past couple of years, and as you said, showed that that is really ending now here.
Michael's lens is all about capital flows, and when capital flows start diminishing and then perhaps even shrinking, that's when he starts to get real worried about markets. Economies, economic growth and markets. Sounds like you are seeing through a similar lens. All right, so we'll start with this not bright outlook, given all the reasons that you mentioned. That is the big trend that's going on here. Let's talk for a moment about specifically tariffs, because that's creating a lot of the immediate uncertainty that's going on right now. We have this whole Liberation Day this week as I talked about in the intro. I guess, first off, Anna, leading up to the end of last year, you and your team there at Bloomberg Economics had your forecasts and whatnot. How do these Trump tariffs, the scope and the scale of them, how have they impacted your economic outlook, if at all, now that we're in 2025?