The triangle of confusion

Robert Armstrong (0:06)

Pushkin. We are lost in the woods, and our compass needle is spinning. Economic indicators say one thing, markets say another, and sentiment surveys, still a third thing. Today on the show, welcome to the Triangle of Confusion. This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I'm Rob Armstrong. I'm coming to you from Unhedged World Headquarters in a still icy New York City. I'm very happy to be joined today by my co-author on the Unhedged newsletter and my indispensable aide de camp, Hakyung Kim.

Hakyung Kim (0:51)

Very happy to be here.

Robert Armstrong (0:52)

And I'm also joined by head of the Financial Times, Lex Column, and a man who sometimes wears shorts and an earring in the office at the same time, John Foley.

John Foley (1:05)

Hi, Rob, thanks for exposing my midlife crisis to the audiosphere.

Robert Armstrong (1:10)

All right. The triangle of confusion, which is a bit of geometry I came up with literally 30 seconds ago, is a beast with three points. One point is sentiment, which says things are terrible. One point is hard economic data, which says that things are good. And the third point is markets, which say a lot of different things all at once. Today, we're going to try to see if we can change this shape a little bit, maybe into the circle of knowledge. Let's talk about sentiment. Hakyung, you've written about what consumers say when economists ask them how they are feeling. What do they say?

Hakyung Kim (1:56)

So, if you go by just the sentiment numbers right now, the economy is worse than it was during the pandemic. We're seeing this big disconnect basically between the headline numbers, consumption, broader growth, even the unemployment rate, which isn't too bad right now, but consumers are just becoming more and more pessimistic as time goes on. And there are a lot of theories that kind of go to that. One point that's been brought up is, we're just in a really negative news cycle, and you have these algorithm-driven news feeds, and people are just being bombarded with negative information about the economy.

Robert Armstrong (2:34)

So it's social media, what done it, essentially.

Hakyung Kim (2:37)

Yeah, you can blame a lot of things on social media, this being one of them too, right? Like, the fact that sentiment right now is worse than it was during the 1970s and 80s, when inflation was far, far worse, that does suggest to a degree that it is this information overload that's overwhelming people, too.

Robert Armstrong (2:54)

Yeah. There's also this view that it's hopelessly partisan, that all the Democrats say things are terrible and all the Republicans say things are fine. Is that fair?

Hakyung Kim (3:03)

Well, definitely when Trump took office, there was a big divide, and there still is a divide between Democrats and Republicans on how the economy is going, but there has been a worsening of sentiment amongst Republicans as well. That does suggest that, especially with the tariffs that really sent a worry across consumers, that this fear is becoming a little more widespread. And I think by far the biggest, most common response we got to the sentiment piece is that people are really, really scared that AI is going to take their jobs away.

Robert Armstrong (3:37)

I thought this was absolutely fascinating. You know, we sort of, we always in the newsletter, we kind of put it to readers. Like, we don't really understand what's going on is kind of a theme of the newsletter, and please help us readers. And it was like, by far the biggest answer was AI scares the crap out of everyone.

Hakyung Kim (3:54)

Yeah, and it was, it was crazy. It was just people from all different ages, people, new college grads saying that AI was worsening their chances of getting a job, starting their careers. But also, people fairly well into their careers were saying, they've been at it for decades, and now they don't have a sense of confidence anymore because you have AI that can say code, within minutes.

Robert Armstrong (4:19)

How's Lex GPT going, John? I know that your columns are all written by an algorithm.

John Foley (4:28)

Do you know, the other day I had an article to write, and I was just like, I wonder what would happen if I asked Gemini to just do it for me. It was terrible.

Robert Armstrong (4:35)

Oh, God, I'm happy to hear that.

John Foley (4:37)

Oh God, it was awful.

Robert Armstrong (4:40)

But it won't be for long. The point is, what everyone says, it's like six months ago, people who wrote code were like, this code is so-so. And now you talk to experienced coders, and they're like, oh yeah, the machine's way better than me now.