Bulwark Takes - Recession Looms As Trump Crashes The Economy, Per Report

Episode Date: March 19, 2025

Tim Miller and Jonathan V. Last discuss UCLA Anderson Forecast announcing a recession watch as Donald Trump's policies, tariffs, government layoffs, mass deportations, and more are destabilizing the economy.

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We saw this report from the Anderson School. It's a business school at UCLA. My girl Katie went there. Shout out to Katie. And they write this, UCLA Anderson forecast announces a recession watch. Trump policies have fully enacted promise a recession. And they go through a bunch of details details. JBL, what struck you about this most? It's pretty bad. So what struck me the most about this piece by the economists there, and again, these are not like never Trump cucks. These are serious economists, is that they say the economy is good right now. The economy is strong right now.

Joe Biden's economy is strong right now. The economy is strong right now. Joe Biden's economy is strong right now. Their concern is all about the choices being made by the Trump administration. And the key takeaway is that recessions happen when there's a confluence of events. Having one sector tip over, having one problem in the economy isn't enough to cause a recession. Typically, you need like two or three things going wrong at once. And I mean, I can walk you through this if you'd like me to. Let's walk through it. Let's do it. Yeah. So they start with the things that they believe the Trump administration is going to do.

And the first is tariffs. So tariffs will cause a slowdown. It's just a fact. It will cause rising prices. Just a fact. The second thing is the doge cuts. Just before the doge cuts, I just want to highlight just a few things they point out. Auto sector.

Downstream and upstream for auto sector. Retail. Agriculture will also likely contract. It's one of those things, again, where if they do the tariffs and Trump bails out one of these sectors or another, two of these sectors or another, there's still all of these like ancillary sectors that get impacted by it, even if the farmers get bailed out. Right. And also, even if it was just the tariffs, like again, we're talking about monocausal, right? You can weather that. So Doge, so they say, Musk has said he wants to cut 10 to 15% of the federal workforce.

So they say the size of the federal government is roughly 10 million people. That means we'd have a layoff. It would be the largest layoff in American history. It'd be a million people getting pushed into the job market basically at the same time. And what's worse about this is that normally in the economy, government jobs are stabilizing because they are consistent, because they're safe. When you have a recession, the existence of government jobs are, you know,

they're like baffles. They keep everything a little bit calmer. So losing those types of jobs, it's going to cause a lot of turbulence. Yeah. And just, I want to add two anecdotes to this on the public sector job loss. Because again, that is a problem in itself. It's a problem in its own right. You know, but I've got Scott Galloway on yesterday from the business school perspective. He's like, well, a lot of private sector people maybe won't have sympathy for this. This happens in other sectors where people lose their jobs. Maybe we just need a contraction of the federal government. Even if you accept that argument, the impact on private sector stuff also kind of runs downstream for that. You know, like I just got this text from a friend

right before we popped on. 40% of DC restaurants are saying that they're likely to close by the end of the year just because like they're not going to have the, who is their clientele? Government employees, right? And so that's a huge job loss. It's only in one market, right?

So it's not causing a recession, but then you start to see this. There are federal government workers everywhere. I think I mentioned on last week's TNL, I talked to a farmer in Louisiana whose clients were the school district and the food bank. And as part of these cuts, they no longer have the funds to support the local farms.

That was part of an initiative that they had been working on during the Biden administration. So that farmer, like he could lose his farm, which is a couple of jobs, right? So like all of this stuff, not to steal from Ronnie Reagan,

but trickles down, you know, and like has other, has impacts like across the economy. So then we get to immigration and the Anderson school people say, you know, the construction sector is an incredibly important business in America. It sort of drives a whole bunch of other things. And if we really get mass deportations, the construction industry, heavily dependent on undocumented immigrants. Right.

Yeah. And this is, again, so you have all three of these things. These are signature policy initiatives of Trump. All three of them will cause massive economic harm. Yeah. So again, I just want to give one other anecdote. You're here to, you know, we have the business school example. You know, I'm just a man of the people.

I'm just telling you what's happening out there in the real world. Here's just another example of how the construction industry costs going up because of, hey, that's really both tariffs and immigration, really. It has impacts on people even who aren't purchasing a home or aren't building something. We got a letter from our insurance carrier about how insurance prices on our house are going up next year. And my husband emailed them. I was like, why? We didn't have any issues last year. There was no hurricanes didn't hit New Orleans like this last year. It's one of those things where it's like there's been a big disruption in Louisiana. You don't understand that we already pay very high insurance rates. Why is it? The reply came back, well, the insurance company now has to price

in that the cost of rebuilding things are going to go up. They're going to be higher, right? Because of either the tariffs, immigration, whatever, if the cost of lumber and steel is going up, if the cost of the employees you have to pay to do it, the labor force goes up. Okay. Well, what are they going to do? They're passing that down to us. So we, you know, we bought our house two, three years ago now, like we're not in the market. Like this might not affect us, but you know, we're going to be paying X more per year in insurance. Like, you know, like this, like that's how it gets its tentacles into, you know, all of the parts of the economy. You know, so it's funny you talked about buying a house. I'm just going to read from the report.

House prices are near record levels while the number of new unsold homes on the market is at levels last seen in 2009 and still climbing. So the next phase of their report, which is again a like, hey, we ought to be on the watch, is that there is some underlying instability in the market. And this stuff is happening in housing where, again, we have something that doesn't look balanced. It's in the securities market where the stock market has been very, very high. And I guess you could say Donald Trump is trying to fix that by bringing it down. People aren't going to feel real good about that. And again, I'm going to read from the report. There's been a surge in investment in somewhat speculative assets like artificial intelligence, as well as purely speculative assets like cryptocurrencies. Corporate bond spreads are

near all time lows, suggesting investors still aren't fully pricing in risk. You add all this stuff up to the doge cuts and the immigration stuff and the tariffs. This could be real bad, man. It's ugly. Here's how they end it. The Anderson School Report. Some administrations inherit the conditions of a looming recession. What's unique about this recession watch is that to a large degree, it depends on incoming policy.

Recession is thus entirely avoidable. The policies outlined above are pared back. They're unlikely to trigger one. And who knows, maybe, and this was the bet that all of the Trump humpers made, right, was that he wasn't actually going to do the stuff that he said he was going to do. So far, he's doing all the stuff that he said he was going to do on super speed. So we'll see what happens. But the problem is,

with these sorts of recessions, anything that gets out of your control, there's no magic no recession button, right? So if these actions trigger what these analysts say very well might happen, which is a recession, and then Trump decides, okay, fuck, let's pare it back. We're going to talk about Gulf of America again, or we're going to, whatever, occupy Windsor to distract people from the fact that I'm pulling back from the tariffs and pulling back from the doge cuts. Then it's too late, right? You have to pare it back before the impacts start being tangible.

Once the business cycle is falling, getting that soft landing, people don't appreciate the amazing achievement that Biden engineered getting a soft landing coming out of COVID. We ain't getting another one. All right, guys. There you go. When we see

Recession Watch 2025 from somebody without TDS, something that we want to make sure to share with you. That's Clement Bohr, economist at the UCLA Anderson. We'll keep our eye out on all of this. For you guys, thanks to JVL. Subscribe to the feed. Tell your friends. We'll be here soon. You're messengers of death. JVL see you soon peace america's energy future begins now more american oil and natural gas means more jobs more security and more innovation america's moment is now learn more at lights on energy.org paid for by the american petroleum institute