Prof G Markets - The Biggest Disruption Is Yet to Come — ft. Justin Wolfers

Episode Date: December 19, 2025

Ed Elson and Scott Galloway are joined by Justin Wolfers, Professor of Public Policy and Economics at the University of Michigan, to reflect on the key economic lessons of 2025 and what lies ahead. He also shares his views on how AI is reshaping employment, where inflation could head in 2026, and what themes he believes will define the economy in the year to come. Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram and X Follow Scott on Instagram Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Visit bitdefender.com slash trusted to see why experts and renowned brands trust Bit Defender to stay protected. Right now is the AI Gold Rush. And that means everybody who builds an app, a platform, a piece of software, a gizmo that somebody, anything,

everybody is trying to put AI everywhere. And for two weeks, in a series on the Vergecast, we are talking through what that looks like. We're talking to developers about what they're building and how they're building it. And whether AI actually does make sense everywhere or is just going to ruin everything in the process. That's the AI miniseries on the Vergecast wherever you get podcasts.

This series is presented by MongoDB. 2025 was a wild year for the tech industry. AI seemed like it took over everyone's brains. It was the only thing anyone wanted to talk about. Invidia became the most valuable company in the world. We had some huge new video games. The Switch 2 launched a lot of people got it. There was just a lot going on.

And on the Vergecast, we are talking about the best, the worst, the most important, the biggest heel turns, all the stuff that happened in 2025. And making maybe a few predictions about what's going to happen next year. All that and more on the Vergecast, wherever you get. podcasts. This series is presented by Jira by Ed Lassian. Today is number 469. That's how many times executive said storyteller or storytelling on earnings calls and investor days in 2025, a 31% increase from last year. At Merry Christmas, true story when I was five, I got a piece of coal from Santa and I was so pissed off that I

poisoned his cookies and that motherfucker killed my fuck. bother. Listen to me. Markets are bigger than I. What you have here is a structural change in the world distribution. Cash is trash. Stocks look pretty attractive. Something's going to break.

Forget about it. I was a five Hertford or Hartford, whatever it's called, one of these deucey members clubs here in London. Haltford. No. Smell you. Grand Prince of Wales. Anyway, so, and I started talking to a very lovely prostitute.

And I said, so what did you ask Santa for? young lady, and she said, $500 like everyone else. Well, it's hilarious because you also gave me $500 for Christmas, so clearly I'm the prostitute as well. Except I got it as a digital gift card. Is that what we gave? I literally have no idea what we gave.

I mean, I'm so, I picked it out myself. I'm so glad. A $500 digital, how do we pick that number? $500, thank you. Thank you, Scott. Spend it on the ones you love. Spend it on the ones you love. God, in New York, that won't even be a,

date. Thank God you have a girlfriend. That wouldn't even be a date these days in New York. You and your douche Shea Margot members club. Oh my God. That's the thing I don't like about Chey Margot as it has. I'm fine with women your age at those places. I'm not fine with men your age at those places. We're terrible. We're cramping your guys' style. Oh, Prop G, you're so interesting. Let's talk about interest rates. Fuck off. Fuck off. I'm not that nice and I'm not the last thing I want to talk about is business when I'm out. You really need to make sure you never do that because this happened to James Corden where he was a huge dick in public.

Actually, he was at Baltazar, which is your favorite restaurant. Huge dick in public, publicly shamed and canceled for it. People stopped listening to the show. People really care how you interact in person. So even if those feelings come into your mind, I would encourage you to just really suppress them. Just be nice to say. Except for Uber, I could not be nicer.

to service people because I used to be, I'm, I'm, um, this guy changed, there was a couple guys. I used to park cars and the same car, he used to give me 20 bucks, which was like $7,000 when I was your age. And I love, anyways, I'm, except for Uber drivers, I'm definitely like, going to have a vulture pick at my liver forever by the way I treat Uber drivers. I, but everyone else, I'm very, very good too, very kind of. What do you have it against the Uber drivers? I get in a car, I'm stressed out, and they're like, literally, I've put into the app, I'm going to LaGuardia and they're like, oh, and then they pull up their thing and then they type into Ways for 10 minutes. And I'm like, can we go? And then he's like, I have a different

route. And I'm like, what? You're smarter than the AI called Ways. Google Maps needs you. Have you thought about going to work for Amazon for Google Maps? Is that your next career? I can't handle myself in the back of a car. I'm stressed. It, my favorite, line in the devil wears Prada and it's coming out next is when she gets into the car in the back of her car and they're just sitting there and she goes go I'm like every time I sit in I'm like go I've already put in the fucking what's the point of me putting in the address 20 minutes ago if you don't already have the root figured out and all you got to do is follow the blue line I thought you were going to say my favorite line from that movie is

Anna Hathaway is doing something clumsily and she says, by all means move at a glacial pace. You know how much that thrills me. That's not even the best. The best is Emily Blunt who says I'm one stomach flew away from my target weight. That's the best line. God, we need more movies like that.

Do you know it's coming out? It's coming out with my friend Justin Thoreau isn't it? Devil wears Prada too. I can't wait to see that and meet the fuckers four. But there's clearly aren't money. I'm glad Meryl Streep's getting her second home or her second penthouse somewhere. The creative community was demanding a sequel to the Devil Wears Prada. We were. We actually were. Shall we get into our conversation here with Justin Wilfers? Why not? Why not?

Here is our conversation with Justin Wolfer's professor of public policy and economics at the University of Michigan. Justin, great to see you. Thank you for joining us on our final episode, final guest episode of 2025. Good to see you. Where are you packing up? Going home? Done. Going out? Done. That's it. Call in a day. I'm going to take over. I'm going to begin just by saying congratulations. I heard that Forbes was looking for people under 30. Wow. And they managed to find 30. Thank you. And, mate, I reckon, look, it's not only often you get a moment. Let me explain. The audience probably heard it. but Ed was named one of the 30 under 30.

And, you know, you're from the journalism side, and I'm from the econ side. So I want to say as an accredited economist, mate, I think you're there because you are an immensely talented economics communicator. And I tip my hat to you and you earned every part of it, mate. Wow, that is really, really kind, especially coming from you. Thank you. Scott. Yeah, Scott's gone quiet. God, I hate this podcast so far.

It's not like we've been talking about this nonstop for the last what feels like 30 years. You're the one who brings it up, Scott. We're very proud of Ed, Justin. We're very proud of him. I want to start with a reflection on the year as our final interview of 2025. It's been kind of a wild year. How would you grade Trump's first year back in office? With many of my students, I give me.

I look at the output they produce, and I give them a grade, and then they come to my office after and say, but Professor Wolfer's, this isn't fair. I put a lot into it. Their claim is that I should grade them on inputs rather than outputs. And I think if you were to do that, in Trump's case, you would actually get very different answers. So if we were talking about outputs, how's the economy doing in terms of hard numbers that we have at this point in time? And to be clear, it's December 2025. We still don't have a lot of the numbers from late 2025, so it's only a partial report. We are not in the recession, probably. We do have unemployment drifting up. We do have inflation uncomfortably high. We do have a budget deficit

that is at a point that simply doesn't make sense for where we are in the business cycle. All of those would push you toward a B. You might go, remember, this is a grade inflated America. You need to understand the extent of great inflation in this country right now. But you can go a step further. We have needlessly turned allies into foes. Our incoming tourism is terrible. Our exports of education are going to be in the tank. Our role in the world and the respect with which we're held around the world, I don't think it's been lower in my lifetime. whether that has an economic impact is something of an open question. So in terms of outputs, actually, I'm on the generous side.

Let's go back to inputs. The inputs are, do we have a coherent, the president's first job is to appoint a high-quality economic team. I think by any measure he failed, it's the worst economic team in a White House. At a minimum in my lifetime, and I'm just not very good at history. That's why I can't say ever. The president's chief trade advisor is a felon. His chief economic advisor is a yes man.

He is chair of the Council of Economic Advisers, claims to believe in the independence of the Fed. That's why he's currently on leave from the executive and sitting at the Fed. The people on his shortlist to become the next Fed chair, if you look at the history of our Fed chairs, people like Ben Ben Bananke, who went on to win the Nobel Prize in economics, people like Janet Yellen, extraordinary public servants, his shortlist doesn't look like that at all. And if you think about the, if you, again, judging by inputs, now this is a question of policy process and actual policies implemented. The policy processes have been a disaster. The man 10 years after declaring that his number one economic priority was tariffs, the man who had run two election campaigns and in fact one four-year term as president arrived and still didn't have,

a tariff agenda, even though he'd written one several times, announced one on the White House Lawn on so-called Liberation Day and was forced to back off within seven days, giving you a sense of how chaotic it was. Of course, that's not where you need to look. You could ask the penguins at the herd and McDonald-Ireland, whether this was a well-thought-through and highly targeted tariff regime. You have a regime which I think doesn't make any sense on its face, but at least 10 months later, they've finally figured out that tariffs on bananas are not going to bring banana factories back to the United States because we simply don't have the soil or the sunshine. And so the very fact that took 10 months to figure that out is extraordinary.

And that's, I'm not even getting started. So I do want to get to the important thing. The important things here are the man fired the head of the Bureau of Labor Statistics. I will tell you, Betsy and I are on vacation. Betsy, my partner, fellow economist, and she woke me up at 6 a.m. and said he fired the BLS commissioner. So for folks at home who don't understand how weird that is, my partner woke me at 6am in quite some distress. This is something you have not seen from a non-autocrat anywhere in the world ever. We've had continued attacks on the Fed, continued attacks on the rule of law, continued

attacks on immigration, then many Trump supporters say, no, no, no, it's all about illegal immigration, except it's not. And the institutional foundation of American prosperity is wrapped up in those deeper forces, and that's what he's undermined. And the reason you don't want to grade based on what's happened in the first year, as much of this is white-anting the foundation of prosperity and will show up not next week, not next year, but in a decade or two. And the effects from what we know in the economics literature is the effects are quite substantial. And so in 10 and 20 and 30 years time, our kids, the beautiful little baby Ed Ellsons,

I bet they're so cute. They're going to be lovely. And they'll be looking for their first job, but their first job won't be as good is what you're hoping for right now, Ed, because our economy won't be as big, it won't be as prosperous. There will be entrepreneurs who never entrepreneur, inventions that weren't invented, diseases that weren't solved because of what's going on right now. So on this measure, it's the worst single year in an administration as far back as I know American history, which really is only 50 years. Is that an F?

Mate, how far as the scale go? A to D and F. Well, when I don't know what to do, I just give an incomplete. And incomplete feels like where we're at right now. Yeah, incomplete. So how is it? I like that you're creating a distinction between the inputs and the outputs. The inputs, really bad.

Outputs, not so bad. It sounds like it's your description. Outputs being perhaps stock market performance up 17%. Let's pause there. You don't like that one. Okay. So this has been the number one talking point from the administration, which is, look at us, markets are up.

We must be doing incredible stuff. So one of the things we try and do is we think about what would have happened otherwise. It's called counterfactual thinking. So what would have happened to the U.S. stock market if it weren't for the president? Well, one thing you could think is maybe we just would have gone up at the same rate as everyone else. So let's compare the returns on the American stock market to everyone else. And so I did an exercise recently where I took, I believe it's 23 developed countries that are in the Morgan Stanley total return indices.

And I calculated the returns since Liberation Day in every one of those countries up to about a week and a half ago. I can update it again if you want. And what I discovered, of those 23 countries, we were third last, maybe fourth last. So Denmark is below us because the Danish stock market is Novo Nordesque. And if things aren't going well with their wonder drug, there goes Denmark. Mark. New Zealand is beneath us and Australia is pretty close. But every other major country, Germany, Italy, Japan, just name your favorite countries, Portugal, Spain. They're all doing better in terms of stock market returns in US dollars than the US. So if you, Canada, Canada's

doing better despite the fact with clobbered Canadian exports. So if you say, are we doing well, the question is compared to what, if the answer is compared to almost anyone else you think should be in your peer group unless you believe New Zealand and Denmark are your peer group or actually doing worse in terms of stock market returns. I'm having a tough time sussing out the impact of AI on unemployment or if there is one yet. Any thoughts? I think you've actually gotten something really, really painfully important, which is that unemployment has been rising and that is an untold story. Unemployment has been rising at exactly the pace

that will attract zero media attention while still disrupting people's lives. An unemployment has been as low as 3.5% just in the pre-pandemic period or up to 4.5%. That is an enormous difference. And the problem is it occurred month by month or every second month

and no one's talking about it. And so that's part of why I think the output of this economy is so weak. The second reason I think that's very important to think about is a lot of our economic measures right now are distorted by what's going on with immigration. So, for instance, employment growth in numbers is not that great, but that's partly because usually employment growth's got to be high to keep up with population growth. We got no population growth. So we're going

to see pretty crummy employment numbers. There's also a lot of questions about benchmarking, a whole lot of nerdy stuff about how you measure stuff. One of the nice things about unemployment is it tends to maintain its interpretability during these complicated moments. All of which is, say, so far, Scott, all I've done is granted the premise of your question. You might now ask me to answer it. So there's a little swirl of conversation that says recent college grad's unemployment rate is a bit high and you might like, therefore, AI. First of all, that's not much of the overall story because recent college grads are not much more, much of the overall population. And trying to discern these things in real time is kind of tricky because there's, you know, measurement error and seasonal adjustment and blah, blah, blah.

I'm not at all convinced that's the issue. I could believe it in specific sectors. So, for instance, I'm quite confident the last interpreter has been hired. I am less confident that last Coda has, although I'm aware that things are a lot tougher for coders right now. But when you look at data on the adoption of AI by American businesses, it's still remarkably weak. So it's very much a forward-looking story.

I think it's one, I am glad you've got your own. The issue is, Scott, because I think it is the biggest disruption coming to the labor market in decades. I'm just not yet confident we're there yet, except at the very sharpest edge of the wedge. What are you saying? You hear about the kids at business school not getting as many offers, but they're still getting offers. And the employers on the demand side, they say they're not letting up their hiring, even law firms. Well, that's interesting because, like, law firms are one of the places where we won't know them anymore. I wonder if there's a bit of a bias among, quote, unquote, the expert class to catastrophize

because it makes you sound more intelligent. But I'm not saying the collapse in employment that the, I don't know, that the experts are, I'm not saying it's not going to happen. I just don't, I don't see it yet. Talk a little bit about, so our thesis has been that if you look at the valuations, the underlying valuations of these companies, they're so extraordinary that built into those valuations is the expectation. they're going to in incremental three to five trillion dollars in revenue gains for their clients

who've purchased these expensive site licenses or they'll get efficiencies, which is Latin for layoffs. We haven't seen a ton of incremental businesses from AI. What we do see evidence of is these efficiencies, whether it's Disney saying they're going to spend less money on legal or JP Morgan, less money on compliance officers. But our thesis is one of two things have to happen. And curious to get your feedback, you're either going to see chaos and labor markets that justifies the expenditure on these companies from efficiencies, or you're going to see the valuations of these companies come way down. Any thoughts? So you actually had a questioner about capital markets and a question about labor markets. Let's take them in turn. The question about capital markets is these companies are valued at a billion dollars. That seems crazy. I don't think capital market valuations are very informative about how transformative the technology will be. The logic is simply this. If this remains a market with many competitors and switching between competitors is very simple. In fact, apparently there's been a lot of people, jumping off of Open AI and implementing Gemini in their corporate systems. In some sense, then that says Google and OpenAI and Anthropic are like, you know, when you drive to a corner where there's a gas station on every corner, very easy to go from one gas station to the other if you save a couple of pennies.

At the moment, when you talk to IT folks, it looks a lot like there's a gas station on every corner or an AI station on every corner. And so there's a lot of competition. Competition pushes price down to marginal cost and it pushes economic profits approximately to zero, which means you can have an utterly transformative technology, but capital doesn't get rich. Instead, the gains go elsewhere. The prices aren't high enough for these companies to be worth a ton of money. The other possibility is that one of these companies will come to be seen as the clear leader. When you hear all this talk of America needs to lead the tech revolution, it sounds like, or we need to win a AI, that sounds like a claim that it's some form of winner-take-all market, and there are some aspects of this in which that's true, right? Every one of these AIs can go and read all of Wikipedia, but whoever gets the most customers has more customer chats that they can train on and stuff like that. If it's the latter that matters, now we're in a winner-take-all world, in which case whoever gets the lead becomes better, in which case they pull ahead, in which case we end up a monopoly, in which case that company becomes a monopoly provider

of AI services, in which case that company will come to be worth trillions, literally trillions of dollars. And so you can have the same AI revolution, one where companies are worth trillions and another where it's worth zero. And that's all about the market structure of the market for AI services, which right now remains remarkably competitive. Let me pause there. That's the capital market question you asked Scott. And then I do want to bite on the labor market question you asked. I can't figure out if it's going to be labor chaos or this will be like previous technologies where we have new opportunities, new markets, new businesses that will somewhat backfill and create a soft landing in the labor market. So let's take ATMs and the market

for bank tellers. Go back to the 1960s and what you would do is you'd walk into a bank and there was a teller behind the counter and you would ask for money and they would hand it to you. You'd hand over your passbook and they'd give it back to you. Then someone figured out a way to automate almost all of their work, and that's called an ATM. And now you don't walk inside the bank, you go outside the bank, you put your card in and it gives you cash. You might think that this technological revolution, which is literally labor replacing, would have led to a sharp decline in the number of bank tellers. In fact, there are as many bank tellers today as they were prior to the ATM. So that's an interesting story. What happened? Well, the ATM revolution actually was quite

slow. It took a while for them to be deployed everywhere for older people to trust them and so on. And the set of tasks that bank tellers used to do is now fully automated, which is they used to predominantly count money. That's all done. They don't count money anymore. What they've done is they've moved up the value chain instead. There are just as many tellers inside the bank, but now what the teller is doing is selling you a moderately sophisticated financial product. And so what's happened is the set of tasks done by the people in the job has evolved where we got rid of the old stuff. And here we could even editorialize and say we got rid of the boring stuff, the repetitive

dehumanizing factory work stuff. And we've left them with much more creative work where they get to look other people in the eye if you're an optimist and say, find the right product that fits them. If you're a pessimist, say, figure out how to rip off the sucker in front of them. But either way, they remain fully employed. So that's a fascinating case study. And so the question is, does AI look like ATMs? Now, there's lots of other jobs that didn't survive.

For instance, the word processor got rid of the typing pool. So every building used to have a floor of typists in it. I don't have an assistant at all at the University of Michigan. I answer all my own emails. I write my own letters, and I ignore all my own phone calls. So the typing pool did get eliminated. So is AI more like the typing pull or more like the ATM? And that's a real question.

Let's bring this back to Economics 101. The question is, is this a substitute for labor or is it a compliment? That would be a natural way of thinking about it. When we're trying to justify a new investment to our bosses, I want you to give me X million dollars so that I can AI this joint. The easiest story to tell is to go to the boss and say, I'll get to fire 10 people. so therefore I'll save this much, therefore the ROI is very positive.

And so we have a tendency when we tell stories to focus on the labour saving part, and that's because of the bean counters above us in the org. It's much harder to say what I'm going to do is I'm going to use AI to supercharge the productivity of the people already in the office. Let me make a guess. My guess is in the background of Prof G markets, the people who make your thumbnails for YouTube, probably use AI. My guess is that 10 years ago they did, five years ago they did not.

My guess is you haven't stopped employing those people. What you've done is you've allowed them to do the boring part a lot more quickly and you've moved them forward into sort of a more high value added part. Like they just wrote that brilliant question that you just asked me. But you didn't end up firing a lot of people because of the AI that Prof G is using in the background. And that is your assumption for what we are probably going to see. next year. I guess I'm glad that you bring up the typists because I feel like part of the conversation that is missing oftentimes when we talk about AI, it's like we know that there is a tangible

positive return on, say, GDP, or we know that ultimately as with the ATMs, it could lead to more employment, more creative jobs. But I feel like what often gets left behind is there were certainly typists, individual typists, perhaps even individual bank tellers when the ATM was being brought online, same with the computer, and those individuals did lose their job. I mentioned I wanted to use time, and I'm glad you brought me back to it. My met a half Betsy Stevenson just wrote a beautiful essay about this, in which the speed at which this transformation occurs basically determines how much it's pure substitution versus complementarity. So if slowly I can learn the scale, skills so that AI becomes the cape that gives me superpowers, then I keep my job. If I don't have the

time, the skills and the bandwidth, you're going to fire me and hire a 22-year-old who can put the cape on straight away. And so the pace of technological adoption, I think, is absolutely central to the extent to which we can reinvent jobs. A job is just a social construct, right? So you've got someone who's working at the fourth floor of the big tall building in Manhattan. It used to be the typing pool, but now it's the typing in sketch. scheduling pool. And then it becomes the typing and scheduling and phone answering pool. And then it becomes the help me with my ideas as well, pool. And then those jobs, including the people in them, evolve. Look, all of this is the optimistic story. I want to come back and give a lot of weight to

the pessimistic story. This is a freaking amazing technology. And I love being told by people who have spent no time with it that I'm wrong. But it is. It's a freaking amazing technology. And it appears to be coming quite quickly, not as quickly as Silicon Valley or much of Wall Street thinks, but compared to past technological revolutions. Remember the old expression, the personal computer is everywhere, but in the productivity statistics, it took 20 years to get a computer on everyone's desk. There's an AI on everyone's desk within two. They're just not using it. So if we move as quickly as could be, you know, things like coding, coding was difficult. because you had to write in computer code.

Well, AI use natural language. AI is written with APIs that make them modular and plug and play and so on. So there's a lot of reasons to believe adoption is going to be very quick. But the quicker the adoption is the more collateral damage, I suspect, they'll be along the way. We'll be right back after the break. And if you enjoy the show, send it to a friend. And please follow us if you haven't already.

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I suspect 2026 will be the year of AI as well. That, to me, is the big question for economists. is to what extent is this new technology going to fundamentally transform the world in which we live? And it appears that there are some, there's maybe a fork in the road here. It could be unbelievably great. It could also be pretty terrible. It seems as though it is the administration's job to figure out how to pave the best path forward. And I look at what has happened in the past a couple of weeks, where Trump has decided an executive order saying, no, the states are not allowed to regulate their own AI. We're going to leave that up to Washington. The federal government's

going to figure that out. And then I look, okay, what is the federal government's AI policy? And I look online, I try to figure it out, there is none. And it seems as though their, their philosophy is regulation is bad. It basically means you're anti-AI or your anti-capital capitalism. And so we're just going to say, no, the chains are off, let it run its course. What do you think of that as a strategy? Do I have that wrong? And where is that going to lead us? Coming back to failures of the Trump administration, the most fundamental failure is that the outrage of the day, the president was mean about Rob Reiner. And we're all pissed about it, and it's graceless, and it sucks.

Or the president just started the new meme coin. Or the president just knocked over the east wing. None of these are actually about the fundamentals of our future prosperity. And what they've done, though, is they've crowded voices, including yours and mine. I'm as guilty as anyone. Out of the most important issues of the day. And from a domestic economic policy perspective, AI is, I think, by any measure, the most important economic change. of the day, probably of the decade, and possibly of the first half, likely the first half

of the 21st century. We need political change, economic change, social change. Markets work well, that's true, work well when we have well articulated rules of the game that make sure that the profit motive is directed in ways that are pro-social rather than anti-social. Anti-regulation means we get rid of any of that. Um, so people talk a lot about our political marketplace being distorted by deep fakes and the like. That's one possibility. Where's the regulation around that? A lot of it's actually come from the firms themselves. Um, but what's going to happen? What's the pace of adoption? What's this going to do to, um, mid-tier white-collar workers? What is an appropriate welfare state

that is to say a social safety net in the world in which jobs may be about to be automated away. All of these rules of the game really, really matter. And in the United States, we have made 0.00 progress on them. Who is the administration's chief AI economist? Where's their working group? Where are the sociologists thinking about broader social implications? Where's the public debate? Where are the white papers? Where are the discussions? Where are the ideas being floated? Nothing, point, nothing, nothing. It's a profound disappointment. an enormous mistake occurring as you and I chatter right now. I mean, it seems like it's all up to David Sacks, who is a part-time employee,

who's in charge of AI and crypto, and who spends his time investing in AI companies or talking about AI on his podcast or posting on Twitter. I'm sure you like the idea of podcasters running the world, but some of the things are actually running the world. That's the problem. That's the problem. whole-time job. He gets me excited.

That's great. Can I shift us to tariffs? Scott, any AI questions here? Another one of our thesis is that AI, that's similar to jet transportation or vaccines or the PC, that it'll have a huge impact on society, but the winners will be all of us. The very few companies will be able to sequester

shareholder value, and that it'll be absorbed or the value will be absorbed, or the value would be absorbed by the general public. What do you think of that thesis and what happens if that's the case? And these companies that now represent 40% of the S&P, people just wake up and say, these are airlines. And that's not to say they won't add huge value. They're just not going to make that much money because there's pretty, you know,

there seems to be substitutes everywhere, including these open weight models from China. What do you think of that thesis? I think it's possible. And it actually, your point, I'm not saying it's right, but it's possibly right. and it reinforces Ed's point, which is this seems strikingly important. So to go back, and it actually speaks to exactly the way I was trying to conceptualize competition in this space, right, if it turns out to be a competitive model and we end up with an AI gas station on every corner, the price is low, but everyone gets gas.

And that gas could supercharge us to do all sorts of things, which means the companies are worth nothing. The other possibility is that somewhere deep inside this, there's some sort of win-a-take-all dynamic. And it could be an algorithm development. It could be in finding the data that go into it. It could be just in attracting the world's top scientists. And then we end up in a monopoly world and the monopolist eats everything. And the important thing about that, Scott, is there is a utopian view. The utopia is, it is like airlines that, you know, everyone can buy a ticket for 400 bucks and get across the country by flying. Can you believe it? Flying,

humans fly. It's freaking amazing. Every time I think about it, right? And it's only a few hundred dollars. I know a few hundred's a lot for people, but it's still only a few hundred dollars to be like a bird. That's crazy, right? That's utopia. And dystopia is we all lose our jobs. The machine does work for us, and the machine makes Sam Altman richer. And the important thing is it doesn't take much in terms of the structure of our economy to flip us from utopia to dystopia.

In the story that I just told, it's all about the competitive forces within the industry. Last time I was on your podcast, or maybe the time before, I talked about how differences in ownership, if I gave Ed ownership of his own AI, then Ed could get his job done for him and still enjoy getting paid. But if I gave Scott the ownership of the AI that could do Ed's job, then Ed would be unemployed, and Scott would be rich. And so that's another domain where very small differences in economic parameters. is movers between utopia and dystopia. And the point is, the pot of gold, which is to say the potential future productivity, the gains here are huge. So what we got to do is start thinking about how do you compensate the losers, how do we set it up so that pot of gold is evenly shared. If that pot of gold is, in fact, the result of a simple algorithm inhaling

the intellectual work that you and I and every other American has done, our data, then how do we set up a dated dividend so they get paid for that. Like, so many important issues here. So, Scott, I agree. It could be incredible. Could be horrible. What we need is real work and real regulation. I read an article this week from the Wall Street Journal.

It said, why everyone got Trump's tariffs wrong. That was the headline of the article. It said, economists missed the mark. So I read this, it's based on your reaction, it sounds like we agree. I thought this was a ridiculous article, basically saying that, oh, it turns out that the tariffs were different than what we thought. Economists thought it was going to be all bad. It's like, I thought economists thought the tariffs were going to cause more layoffs and it was going to increase inflation. We're at 4.4% highest in four years on the unemployment rate.

We're at 3% inflation. We were 2.3% pre-liberation. And the way I look at it, economists were right, people like yourself, sorry if I'm jumping in the line of fire here, but I don't really understand that. Your reactions to that article. I'm overjoyed that you're frustrated with pointless both sides'ism, which was in the top of that article, but you read the further down, it actually wasn't that bad, and it's partly because we lacked the ability to have mature and responsible, serious economic discussions.

So I'm pretty sure I've even said this on your show. If we've gone back and talked about how much inflation will tariffs cause, let's do the arithmetic together, because I know I've done this arithmetic 100,000 times. Imports are 15% of the economy. If tariffs are 20%, that means the average price level will rise by 3%. Realize, though, that there's a lot of holes in the tariff regime, so let's just call that 2%. Let's let that happen slowly over two years.

That would boost inflation by 1% each point in each year. of two years, which is within the range of the upy downiness, statistical noise, hard to figure out, hard to see that you would see anyway. And as you point out, it turns out actually kind of that's what's happened as well. Right. Here's the problem. If I went on television and I said tariffs are going to raise inflation by a whole percentage point, then you never get invited back. Now, I try to tell the truth. And actually, I've had some success at telling the truth. But that's not a narrative that sells. So what you have instead is people that don't understand the Mac, don't understand numbers,

and everyone on this podcast does, we understand one percentage point per year is a reasonable baseline and then we could go to Wall Street guys who have long spreadsheets and they'll give us more sophisticated versions. But then when you go to the next level of the media, all they are thinking is, well, tariffs are big, and that's going to cause big inflation, oh my God, the sky's going to fall. And so they were sort of led rhetorically. They used language as if inflation was going to rise to 6 or 7%. They never said a number because they don't know what numbers are.

And they spoke about it that way. There's also some liberal wishcasting here, which is it's not realistic to expect an enormous effect on inflation, but that's not the point. One of the points I've tried to make over and over and over again is a tariff-fueled inflation is fundamentally different than the usual inflation we have. A demand-driven inflation causes prices to go up. The price of what I produced just went up. That means I'm more valuable to my boss.

I generate more dollars for him. He has more dollars. As a result, probably a year later, my boss will offer me a wage-rise, and wages keep up with prices. I'm frustrated. It takes my boss a year to get around to it, but I'll get over it. When it's tariffs, costs for the boss have gone up. What I produced didn't get more valuable.

He doesn't have more cash. there's no reason for him or her to pay me a penny more so prices go up but my wage never catches up so here's the thing the problem isn't the tariff and it never has been that tariffs are going to cause a hyperinflation and so they're going to cause prices to rise without wages keeping up and that is immensely more painful that fundamentally undermines your real wage your quality of life what you can afford forever whereas a regular inflation is the transitory thing And so the frustration here is, why can't we have a mature and serious conversation? The effects will be small.

They'll be persistent. It's still a bad idea, but I'm not going to tell you it's the worst thing I've ever heard. I've spent the whole last six months telling you it's a bad idea. I really think it's a bad idea. It's because it's not often that a single president can use their failure to understand economics 101 to cost 340 million people. a moderate, but not huge amount of money. So reversing that's worth it, but this isn't World War II either.

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So maybe it'll be higher than 3% by the time this episode is out. But that's what we've seen. Meanwhile, we've got two-thirds of Americans saying that they think Trump is losing the battle against inflation. People do not think that he's handling this very well, which is very interesting in and of itself. We also got this rate cut in December because we're trying to battle against the unemployment thing,

which is not very good for the inflation thing. You mentioned that you see this playing out over one or two years. What do you think inflation is going to look like in 2026? Is this all just going to keep getting worse? Don't bother ever asking anyone that question. the single best indicator of the future path of inflation is the Fed's forecasts. They beat every single private sector forecaster. They beat, and they beat the combination of the private sector forecasters.

So my honest answer is whatever Jay Powell says, good enough for me. What Jay Powell says is we're not there yet. Inflation is not coming down any time soon. He does say tariff-adjusted inflation might be back to 2% right now. Meaning inflation without the tariffs. Problem is we do have tariffs. Right. But if you're trying to get a sense of the underlying speed of things, and, you know, as I said, I really don't think the best way to talk about the effects of tariff is it's inflationary impact. It's actually its effect on purchasing power. It's the reality that there will be many kids will get fewer toys this Christmas. And that's because most of our toys come from China and the tariff rate on China is enormously high. Trade with China has been one of the greatest forces lifting. It's very unpopular thing for a centre left guy to say.

trade with China has been one of the greatest forces lifting the purchasing power of working class Americans. And that's getting knee-capped right now. There's another side of the coin, though, which is, well, I don't know if it's equally bad, worse, or less bad, but in addition to that 2%,

over two years, 1% per year, sounds manageable. But basically what you're saying is it's a 1% decrease in just prosperity, full stop. Forever. Well, for as long as the tariffs last. And then the other side is that there's reciprocal tariffs from nations that counterpunch and our markets shrink, which means lower wages,

which means, okay, so prices are up and there's less demand for my labor because the market for my products has shrunk because Europe no longer. Europe's also implemented tariffs, which has increased the prices and value proposition of my product. So it just, I'm having a difficult time finding a way, a more elegant way to reduce prosperity, both on, I don't know if you call it demand and supply side, but it just doesn't, I guess, is that side as bad as the increase in prices, the decrease in our market, the markets for our products overseas? What I talked about the effect on consumers, that effect is persistent as long as the tariffs exist. So every year the tariffs are there, there's an effect on, you reduce people's prosperity

buy, and I want to correct you, Scott, at two percentage points, right? So if you're a guy who owns $100,000, it's like you're earning 98. I don't need to throw away $2,000, but I can still feed my kids. And you're absolutely right. What's totally bizarre is, at the moment, the administration is bailing out soybean farmers. And it's like, no, the rest of us are being taxed. The rest of are worse off. And the soybean farmers, though, because Trump refuses to accept the reality that Americans pay tariffs that he levies on Americans, the soybean farmers are getting bailed out partly because their collateral damage from countermeasures from China. Now, the retaliatory tariffs will continue to hurt us for as long as they're in place. So that's very much like

the effect on consumers. But there's one more thing I think it's really worth considering is what's going on with. So there are other domains where we have pissed people off in a way that has destroyed American leadership for at least a generation. So you and I, Scott, work at an export industry, education. We have kids come in from all around the world who want to pay 40, 50, in your case,

$60,000 a year to be blessed by you. 68. So you're worth a lot more than I. I like you to state school. And I just want to add to that, 95 points of Ross Morris. I can't think of a single product globally that has that price point with those levels of gross margins. And let's think about this. These high-quality jobs, let me now interview a professor. Professor Galloway, does your back ache at the end of the day? It's the opposite of dirty and dangerous work. I mean, Justin, this is the dirty secret. All the young kids like Ed want to go to work for Google and Bain, they don't realize if they have any talent and they go into academia, it's a fantastic job.

Well, it's a few zeros less than the paycheck, but it's immensely joyful. I believe anyone in economics or finance are at a business school who's any good, if they're making seven figures from different revenue sources, it means they're not very good. Fuck. There's no, yeah, don't play humble with me, brother. I see you on MSNBC almost as much as I see 30 under 30 at Elson. And I got to tell you, once you get that sweet MSNBC money, goes straight to my Lamborghini, I think it's a great profession, and that's where you were headed.

I think it's a great job. These are beautiful jobs. These are jobs I want my kids in. And it has the soft power ROI of people who come and take your class go home, and they love America, and they like you, and they like Michigan, and they don't want to declare war on us, and they want to send their kids here, and they want to do trade deals with us. It's got incredible knock on effects, I think. And these are the places that Google's founded, and the places that Facebook's founded,

and the places that Microsoft has founded, not. and on the list goes. These are the places that vaccines are developed and cancer cures are developed and on and on and on and yes, it's frustrating that some of our colleagues in the humanities might spend a few moments to, a few too many moments inspecting the lint in their navels, but that's not the entire enterprise. So these are great jobs and these are export jobs and I can, I personally do everything I can to help the president close the trade gap because everyone who comes in and spends 50,000 at the University of Michigan and another 20,000 on housing and so on, is in fact currently as an export. But I can't do it because right now a kid wants to come in and take a

four-year degree, a doctoral program, for instance, and they're being told we will only promise you visas for the next two years. If they're from a country, no matter what the size of the bank balance is and how much they're willing to blow, if they're from a country that's a little bit too disfavored by the president, they can't get a visa at all. So this is an industry that's being destroyed for no reason. But mine is not the only industry. No one is coming from Canada or Europe to visit the United States anymore. We have the Soccer World Cup this year, but we will never have it again under this sort of regime.

Every scientific society around the world holds an annual World Congress. Usually they're held in the U.S. because we've got these big hotels in Las Vegas, and they generate millions of dollars, and again, soft power. And they can't hold their conferences in the United States because we can no longer guarantee people can get across the border. There are companies that want to start engineering and creating incredible new products, but they can't get H-1B visa holders in. And so they're relocating research and development across the border to Canada. So these are things that just drive me up a wall. But we, we, the American voters, Trump will end. But we, the American voters, have shown that we will elect someone twice who will put a ring fence around the United States and refuse to engage with the rest of the world.

And the rest of the world will not forget that. And so I'm sure trade with Canada will rise a little in a couple of years after. But I am absolutely sure that the closeness of that relationship will never be repaired, which has immediate economic impact before we even start to talk strategic. So when we just summarise like 2025, if I had to summarize it in maybe two words, it would be AI and tariffs. Actually, I want to take tariffs out and I want to say incompetent governance. I mean, we have had fools at every level of government. The idea that Cash Patel is going to help find the, the. guy who gunned down people on Bondi Beach is absurd on its face.

Cacistocracy. We have fools and charlatans at every part of our government. And Scott, you said cacostocracy because you also want to say thieves as well. And you're absolutely right. They are tearing down institutions. And the good thing normally is that you can undo what the last guy did. But the thing is building takes time and energy and work. Tearing down is easy.

And so none of us know how long it will take to. So it's been the destruction of American institutions. and if you want to be melodramatic, and I'm not very good at this, the destruction of the foundation of American greatness. So those were our themes for 2025. If you had to make predictions or just get overall thoughts on the kinds of themes that you think are going to drive the story of the economy and of economics in 26, what do you think they'll be? I agree. AI is going to continue to be wildly important. Maybe we'll actually figure out where we're at, Once we've got all these data centers, maybe we'll figure out if there was some froth at the edge or if it was a bubble or what was going on there.

We'll get a stronger sense of what the rest of the world's going to do given us. If you remember it in the wake of the COVID pandemic, there were these new words like onshoreing and friend shoring. We don't hear those words in America anymore, but you hear them in every other capital around the world, which is countries are trying to reduce their, including explicitly, Mark Carney has set explicit quantitative targets. They're trying to reduce their exposure to the United States, and we'll see how enduring those changes turn out to be, if there's going to be, for instance, large-scale trade deals or closer alignments that exclude the United States. Many people look forward to 2026 and say, well, it's going to be the midterm, some of the destruction will stop. But here's where I'm a little less optimistic. Nothing Trump has done apart from his budget went through Congress. He has had no interest in Congress.

So even if Congress would have flip what would happen, they'd have investigations and discover that the guy who was destroying American institutions, which you can already read about in the newspaper. So the fact that it's, you know, it could be, you know, past administrations have said, oh, we don't have the house, how much can we do with executive action, and they managed to find a flurry of activity for three months, and then they get to the bottom of their playbook and there's nothing left to do. It is possible he's picked the last executive action, Apple, off the ground, and there's no more

that will fall. Although the creativity of these guys and their disdain for standard legal interpretations means a year in, they're still going at it, and they don't look like they're slowing anytime soon. Remember, the West Wing, that got destroyed just by bringing in bulldozers, East Wing, sorry. I don't actually care about that building. I think it's a metaphor, and that metaphor, I think, speaks very, very loudly. So I, you know, look, the honest thing to admit is none of us know. The second most honest thing to admit is whatever you saw happening last year is probably your best bet for what's going to happen next year. And then the third rule of thumb is everyone who has a complicated story for what will play out next year is a little bit too cute and a little bit too clever because the world is more complicated than that, which just means go short everyone else's prediction.

If the next or someone running for president said, give me. a country or benchmarks or role models for really thoughtful economic policy and fantastic economic advisors, Fed chiefs. What countries or regions do you point to? Historically, I would have spoken about the United States. And that's because I would have looked at personnel and the quality of our debate. The quality of American economists, whether you love them or not, is extraordinary. And the vibrancy of our debate. And part of the reason our debate is so vibrant and so well-informed and so keenly debated this because this is such a big country and there are so many people debating it so many more than my native country of Australia. So I would have said based on personnel,

let's look to the US and it turns out that you need to go a step further beyond that because if the people are here but the institutions aren't, you're screwed. So then the standard centre left answer is always look to the Nordic countries. You know, they have healthy welfare states and a real commitment to looking after each other, there are deep questions about how much one can apply that to the United States. Those questions are, these are often ethnically homogenous countries. And if everyone looks like each other, no wonder they can all look out for each other. I'm not sure I'm that pessimistic about our ability to be race blind, but maybe I should be. So then that leaves me with some boring countries that I happen to love, one is Australia, where

we get a lot of things wrong, but a tolerable number of things wrong. We have a very strong two-party system. We have a profound commitment to democracy. Actually, I'm going to plug something if I may. I was just back in Australia a couple of months ago. I gave, they have like the big annual public lecture series. It's meant to go to someone fancy, but they chose me instead. And it was a great honor. It was called the Boyer Lectures. And I actually gave a speech entitled Australia is freaking amazing. That speech is a love letter to the underlying institutions that recognize the mistakes that we make, but it says fundamentally we are all in favor of democracy, for instance. We don't have gerrymandering in Australia. We have an independent electoral

organization that draws the districts, and everyone trusts them to do the right thing, and they do the right thing because everyone trusts them. We vote on a Saturday. We have compulsory voting. We have preferential voting, so everyone's vote counts. It's this, speech is this intense love letter. We have an independent public service that talks without fear or favor. But it's not just Australia. Australia is actually a mismash of British institutions, American institutions in our own colonial history. You see a similar mismatch, for instance, in Canada as well, which strikes me as a relatively well-run coherent economy. We have, you know, you actually see it over the last, this week we had a tragic shooting

at Brown University that led to an outpouring of thoughts and prayers and nothing else. And we had a tragic shooting in Sydney in Bondi Beach, which has now led immediately to a meeting of National Cabinet, which is the equivalent of every governor, meeting with the Prime Minister, to change gun wars. I mean, just to press pause there, it was a single-bolt action and a shotgun. It could have been 150 people, not 15, had that taken place in America. And you guys have this terrible habit of having a mass shooting every 20. 27 years. We have one every 27 hours. I mean, it's just, I said this and I'm not just kissing your ass, Justin. I'm like, can we put the management team from Austria? Can we do a hostile takeover Australia and have their management team run our? I mean, you have really well run a government. You're super, I forget it was called super return fund. Super annuration. I mean, it's just, it feels like bodily autonomy, you know, not this, this like these cudgel issues around.

transgender rights, an elected populace that isn't 130 years old. And the social media laws. Now, granted, you've kind of been, or Australia, it's kind of been, I don't know, China's, I think it's good to be regionally, resource-rich and regionally located, or proximity to China, but they've done an amazing job. What about places like, and I agree with you around Northern Europe, but what about places like, and it's a different model, but of Singapore, and I'm curious if you think China's a well-run economy. So first of all, I want to summarize everything you just said, Scott, is

hugging Australia. And you should. Great huggers. There you go. True story. I love hugging, and I'm actually quite affectionate, and I don't do it at work anymore because I'm so much older than everybody else, I don't want to creep anybody out. But as soon as, as soon as someone's worked with me for two or three years, I've become a hugger. I was just back home. I have a group of men who I, we all get together and discuss life. And one of my mates, Dan taught me, he just learned, he went to a retreat and he said, what you want to do is you want to hug someone and then hold it for the full breath in and then out. It was beautiful. I'm just saying next time you hug, do the full breath cycle, nice and slow. The other person will feel your

chest expand and contract. It will feel oddly long and no one's sure why. Make sure you've got consent, but I took hug 101 from my mate, Dan, and it was a good hug. He gave me a great hug. This is not where I was expecting to go. This is more important. I 100% agree with you, Justin. All right, last question, Ed, and then we're going to hug it out. I guess we've talked about our outlook for 2026 a little bit. I guess my question would be, it's been a little bit depressing episode. I mean, we ended on hugs. We ended on hugs. We ended on hugs. end on another nice note. What are you most optimistic about in 2026? What do you think could go right this year? So I want to continue the hug. Scott, one of the things you've been talking a lot

about is the role of masculinity in men. This group I belong to in Australia, it's quite beautiful. Every Wednesday you meet on the beach and you work out for 20 minutes because men are not very good without some endorphins or alcohol. Then we gather in a circle and we talk. And we talk. deeply. We talk about what's going on with our lives. And the other men in the circle have learned their job is to listen. And then we all run in the ocean, even in the middle of winter. And then we all go for coffee. That's nice. And then my mate, Dan, teaches me how to hug. Why do I tell that story? When I look around, I can't tell what's me aging versus what's the world changing, because both happen at the same time. But when I look around, I see people who are,

interested and excited to reinvent masculinity, men who hug. And that fills me with tremendous excitement because there is so many toxic things associated with masculinity. But those who are out there trying to reinvent it, I tip my hat to you. Justin Wolfers is a professor of public policy and economics of the University of Michigan and a regular contributor to, I think, every TV network in the world right now. Justin, can you make it stop? I can't turn on the TV without to see you. I mean, I just want to teach the world economics, and the problem is people keep raising questions. There you go. We appreciate your contribution to the property pot over the last 2025 and look forward to seeing more of you in 26. 100%. Thanks, Justin. Happy holidays.

Thanks, Justin. This is great. Thanks to both of you. Take care. What do you think, Ed? He's always the best. I'm waiting for the Justin Wolf's podcast. I mean, our research associate, Dan Chalon put it best the other day. He said every minute spent not podcasting, he's losing money. It's just very true. Yeah, he's one of those guys, though, that I don't understand.

And that is he's more interested in self-actualization and purpose and meaning than money. so I can't really relate to guys like that. Yeah. Yeah. He's one of these. I want to add value and be happy kind of people that I don't understand. Yeah, I'm like, academia is a platform to make serious bank. And he's like, what?

I just teach kids into research. I'm like, advised Monty Burns on the next nuclear power plant. Actually, 25 has been a big year for him. I had never heard of him at the beginning at 25, and now he's everywhere. What did you make of what he said about the year and the grade on this administration so far? I mean, I think my big takeaway,

and I think we all probably just agree with this, but the extent of the damage, which we haven't seen yet, I feel like everyone's looking at the year and being like, oh, it's fine, you know, maybe Trump's crazy, maybe he's doing some crazy stuff, but look, the economy is okay. And then we interestingly then justify his ridiculous policies because we look at what's happened in the past six months as evidence that it's fine. My big takeaway is like this is going to show up years from now, perhaps even decades, and it's going to be extremely damaging.

I just want to get your reactions to what he said. You know, Biden lets in a quarter of a million people in one month by just raising their hand and saying it sound of him. I think that's, you know, running into a wall. head first, you break your nose. Your nose is going to heal, you can repair. I feel as if what Trump is doing is exposing the nation to radiation and you're not going to feel anything, but in 20 years, the nation's going to have leukemia. And that is not bringing in human capital, the most talented human capital, forcing our trading partners to develop new supply chain routes around the U.S. there's the next president, whether it's J.D. Vance or a governor's Newsom or Shapiro or pickier

Democratic candidate, there's no way they're going to be able to repair this shit for years. They're going to be like, go back to Canada and say, we're sorry. And I'm like, sorry, we have new trade relationships with South Korea and Brazil and China. And it's working out really well. And so what he said that I, you know, this is, it's like if you ask chat GPT, how would I undermine, if I were the devil, Jonathan Haidt asked us, if I were going to try and destroy American youth, what would I do? And he said, you would do it with dance videos and, you know, and TikToks. And it basically described social media. And I feel as if you said, okay, I really want to fuck America over the medium and the long term, it would be, okay, massive deficits that reallocates

money to the wealthiest 1%, a series of economic policies that destroy trade relations. that took decades to build. You know, we got to check there. Discourge the best and brightest from coming to America to build companies and do medical research. Check, did that. I just feel as if it's almost sort of in a weird way, like, elegant the way they are figuring out a way to create a legacy of a lack of prosperity.

And the strange thing is, is that we're transferring all this money, the one And I don't think what people have come to fully recognize is that the 1% no longer really have a vested interest in the United States. And there's this notion that they should be smarter because people are going to show up with pontoons or I'm sorry, pitchforks and lanterns. About five years before that happens, they're piecing out to Dubai, Milan, London, somewhere else. The thing about the 1%, especially the 0.1%, is they're really mobile. You know, France gets angry. Rich people in post. is a wealth tax. Bernard and Oaken have a really nice life, having a place in Brussels and spending time in the south of France or in Capri. The really wealthy will take advantage of the monetization of everything and the flow, this massive income inequality, and this regulatory policy that's like, or government or economic policy that's just say try and figure out a way to put as much money in the winter's pocket, it's the 1%. And then when the 1% are sitting on a decaying, a country of decaying rights, decaying infrastructure, decaying education, polar

authorization, anger, they'll just piece out to a beautiful place somewhere else and buy their rights and by their freedoms. So there's something, I feel like America, to a certain extent, is kind of being a little bit hollowed out from the inside out. And then where I try to be optimistic is what Heather Cox Richardson says and that she says that America has faced a lot of these kind of constitutional crises are really, I don't know, depraves the right word, but moments where the metal of our constitution has been tested, and we've always bounced back even stronger, whether it was slave owners controlling the nation, whether it was the Great Depression, whether it was interning Japanese families. But the thing I worry about is that the people

with all the capital are going to piece out to another nation, and that we're not going to, they're going to leave behind them a polarized society with a dearth of resources. So I'm still, you know, like Warren Buffett said, you never want to, you never want to bet against America. But I just think Trump is exposing the nation of radiation. And even if it doesn't feel that bad right now, it's going to hurt people, you know, a lot of people. The real impact of Trump won't be felt until after he's dead. Yeah, I think that's sort of the big question that I had is, when is it all going to come do? whether it's AI in the bubble behavior that we're seeing,

whether it's the tariffs, whether it's the deficit spending, whether it's ruining our reputation on the global stage as a reliable trade partner and an ally, all of these things are obviously, as he puts, destructive inputs. And the question is, when do you start to see it in the outputs? I don't know the answer to that question, but I guess the question that I'm thinking about going into the year

is, will it come due, 2026. Is that a possibility? I fear it might be. This episode was produced by Claire Miller and Alison Weiss and engineered by Benjamin Spencer. Our research team is Dan Shillan, Isabella Kinsel, Chris Nodonoghue, and Mia Silverio. Drew Burrows is our technical director and Catherine Dillon is our executive producer. Thank you for listening to Profty Markets from Profty Media. If you like what you heard, give us a follow and join us on Monday for our annual Ask Me Anything episode.

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