Growth forecasts continue to be moderate if not better than that, says Stanford's Jared Bernstein

December 26, 2025 • 4m 50s
? (Host) 00:00.150
all major issues for the economy now and in the new year we're getting both sides of the coin now from former biden administration council of economic advisers chair jared bernstein he's now a fellow at the stanford institute for economic policy research and peter earle senior
? (Host) 00:14.350
economist at the at the american institute for economic research and cousin of steve earle the guitarist no no no unfortunately let me start with i guess jared jared four point three percent GDP number according to howard ludlow the commerce secretary means you're all going to
? (Host) 00:32.430
get four point three percent wages we know that not to be true however it's a good number and it's a better number than perhaps many expected given the disruption that was expected from for example the tariff policies and some of the other policies of the of the trump
? (Host) 00:45.910
administration how do you respond to that well it was much better
Jared Bernstein (Fellow) 00:50.160
than expected at full point and the consumer just keeps on plowing along and investment of course has been pretty strong it weakened a bit over the quarter but AI investment continues to help the economy plow ahead and the american consumer as unhappy as he and she say they are
Jared Bernstein (Fellow) 01:09.160
has been relentless look there are risks to the outlook the labor market has weakened and in fact we've seen wage growth slow particularly for folks in the bottom half and if you talk to businesses they will tell you that most of the spending has been driven by folks at the top
Jared Bernstein (Fellow) 01:26.110
so there's this K shaped story that i i believe is pretty accurate but you're talking aggregate numbers and in the aggregate consumer spending and investment has been strong of course there's probably some government fiscal oomph coming a punch there from tax cuts coming next
Jared Bernstein (Fellow) 01:41.710
year so the forecasts are for growth to continue to be moderate if not better than moderate
? (Host) 01:51.350
hitting the policies aren't that bad
Jared Bernstein (Fellow) 01:54.750
well i never said they were that bad i think the policy in particular that has been extremely problematic is tariffs and yes i i maintain that the tariffs are hugely problematic but they certainly haven't stopped the economy from growing and i've written extensively about that
Jared Bernstein (Fellow) 02:11.190
same same with the negative vibes i mean the gap between how consumers feel and what consumers do again in the aggregate is real but the tariffs have made life more expensive for people it's not a coincidence affordability is a huge issue healthcare childcare housing electricity
Jared Bernstein (Fellow) 02:29.190
costs groceries all of those remain highly problematic for consumers but there's a difference between how people feel and these aggregate indicators
? (Host) 02:38.550
steve steve not steve not peter is what i want to say peter earl you're steve no steve earle is is to my brain this morning but my problem with these policies is not even the individual ones could be OK with an immigration policy the way it is are OK with the tariff policy the
? (Host) 02:58.360
way it is it's figuring out how they all interact and they all do interact and when you put them all in the pot it's a stew that's kind of difficult to figure out what the heck is going on here so when you think about for example this idea of AI coming in and it's going to cut
? (Host) 03:16.840
some jobs but we also have this immigration policy out there that could what actually lift up jobs how do you put it all together and and and spin out a a forecast for next year
Peter Earle (Fellow) 03:28.170
well what we do is we try to think of a couple of things first of all the lag effects meaning how long they take to get into action how long they take to hit the economy we try to think about which may supersede others those that are on say a federal level versus those that are
Peter Earle (Fellow) 03:41.810
a little more patchwork like where where where and how AI will enter a private business and then you know a little bit of it is also historical precedent what happens when we have you know structural technological change hitting you know cyclical forces so i mean you know it's
Peter Earle (Fellow) 03:56.960
it's it's it's it's a it's a hazardous business forecasting but it's what we get paid to do and you know you every forecast has a sort of hanging out there waiting to be exposed
? (Host) 04:07.640
what do you come up with for next year
Peter Earle (Fellow) 04:10.030
well for next year what i think is we're going to have we're going to have continued GDP growth you know i think as jared said consumer spending is resilient but it's uneven i think we're going to see investment brought behind the or or rather beyond the AI leaders you know as
Peter Earle (Fellow) 04:23.790
financial conditions ease uncertainty diminishes we've got a couple of different sources of fiscal stimulus i think the ingredients are in place for investment abroad and beyond the very narrow group of AI names and so for that reason i think that capital spending is likely to
Peter Earle (Fellow) 04:37.310
become a growth engine next year and that is it can be overcome you know as you just mentioned there's other forces if it can overcome you know the the kind of slowdown we're seeing in employment which fed easing may assuage