Moody's Analytics chief economist Mark Zandi joins Chuck with a stark warning: the U.S. economy is heading toward a recession largely of its own making, driven by Trump's tariff policies, immigration crackdowns, and federal spending cuts that are creating a perfect storm of economic headwinds. Zandi explains that while tariff impacts are just beginning to surface as companies burn through pre-tariff inventory, the real damage will come from unfilled jobs due to deportations, AI displacing professional services workers, and federal layoffs hitting employment just as troubling indicators emerge—from empty Vegas casinos reminiscent of the 2008 financial crisis to homebuilder sentiment at its lowest levels since COVID. The economist argues that Trump's potential corruption of Bureau of Labor Statistics data makes forecasting nearly impossible at the exact moment when reliable economic intelligence is most crucial for navigating mounting risks.
The conversation reveals how global economic interconnectedness makes America's policy mistakes everyone's problem, with Zandi warning that U.S. recession would likely trigger worldwide downturn while protectionist policies reverse decades of beneficial globalization—pointing to Brexit's GDP damage as a cautionary tale. He explains why the Federal Reserve faces impossible choices between supporting growth and fighting inflation, while businesses turn to shrinkflation rather than price increases and courts may ultimately strip Trump of tariff powers. Looking ahead to spring 2026, Zandi sees persistent inflation, unfilled jobs, and productivity gains from AI investment that won't materialize quickly enough to offset immediate economic damage, all while massive national debt creates long-term fiscal pressures that could force a reckoning sooner than anticipated—making this recession uniquely self-inflicted through deliberate policy choices rather than external shocks.
Timeline:
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00:00 Introduction
01:00 Housekeeping note - Will release 3 different versions of audio pod
02:45 Mark Zandi joins the Chuck ToddCast
03:30 Tariff impacts starting to show up in the economy
05:15 Surprising the impacts haven't been more stark?
06:30 Companies haven't gone through all pre-tariff inventory
07:15 Are there conditions for an interest rate cut?
08:30 Fed will weigh growth over inflation
10:30 Federal layoffs and funding cuts impact on employment
12:00 Major trouble for the jobs market on the horizon
13:15 Immigration policy will leave jobs unfilled
14:15 AI is impacting professional service jobs
16:45 Vegas is empty, similar to before the financial crisis
17:45 Indicators of brewing economic trouble?
19:45 Homebuilder sentiment the lowest since Covid
20:30 If we don't dip into recession, what prevents it?
22:30 What will the economy look like in the spring of 2026?
25:15 Will tariff increases lead to persistently high inflation?
26:45 Businesses are choosing shrinkflation over price increases
29:15 Courts could take tariff power away from Trump
30:45 Is there hidden productivity in the data due to AI?
33:15 AI will boost productivity in the future, just not yet
34:00 Will huge investment in AI create jobs/growth?
35:30 How can we forecast economics if BLS data is corrupted?
39:30 The BLS needs more resources to produce better data
40:00 If government data isn't reliable, what's the alternative?
43:15 The economic impacts of unreliable government data
45:15 If U.S. goes into recession, the world likely does too
46:45 The long term effects of a global race toward protectionism
49:00 US benefitted from globalization, reversing it is a negative
50:00 Brexit the perfect example of protectionism hurting GDP
51:45 U.S. economy bounced back best from Covid
53:00 When will the massive national debt catch up with us?
54:45 Trend lines show a day of reckoning over debt is coming
56:00 U.S. policy will be directly responsible for a recession