The following is a lightly edited transcript of the June 9 episode of the Daily Blast podcast. Listen to it here.
Greg Sargent: This is The Daily Blast from The New Republic, produced and presented by the DSR network. I’m your host, Greg Sargent.
The economic news has not been great for President Trump. The new Labor Department report found that hiring has slowed, with the economy adding 139,000 jobs in May, and we actually lost 8,000 manufacturing jobs. Meanwhile, Trump still has yet to announce any meaningful trade deals with other countries, which is forcing his advisers to undertake some really creative spin to explain this away. Interestingly, on these fronts, Fox News is actually putting harsher pressure on the administration than you would have expected. Its top anchors have been sharply questioning senior officials about the tariffs, about the trade deals, and about the future of manufacturing under Trump. So today we’re going to try to take stock of where we are economically and what the politics of that will mean with economist Kathryn Edwards, one of our favorite commentators on all these issues. Katherine, thanks for coming on.
Kathryn Edwards: Thank you for having me back.
Sargent: OK, Catherine, so where are we economically? A lot of the headlines about the Friday jobs report said hiring has slowed. Many of the news stories said that uncertainty caused by Trump’s tariffs is the culprit. What’s your reading of the overall picture?
Edwards: We are where we have been mostly for the last, I would say, five to six months. Not just starting with January 20 but for a few months before then, there was a lot of uncertainty in the economy. And this has stemmed from basically a rotating set of candidates, of, Where did this uncertainty come from? Four years ago [or] three, it was, How fast will it take to come back from the pandemic? And then it was, Are we going to be able to bring down inflation without causing a recession? Now it’s been substituted by this incredibly volatile economic policy that is coming out of the White House, which almost all has some degree of destruction and very little hope of construction. Companies are saying quite plainly [that] they do not know what is coming, and you can’t really plan or move forward without standing on firm ground. So the reasons for our concern have shifted from larger economic pressures to a manmade disaster.
Sargent: Everybody joked about TACO, “Trump Always Chickens Out,” on the tariffs and so forth. But what I take from TACO and this whole thing is that even if he is backing down on the tariffs from time to time and in certain ways, all that does is just contribute to the uncertainty—because it’s never clear why exactly he’s backing down or whether he’s going to retake them and pick them up again. Can you talk about that, how the uncertainty is being generated by this really, I guess, enormous vacuum in our understanding of what the hell is going on and what’s going through his head?
Edwards: So I think of it on another level, which is that the three primary policies that the Trump administration has championed for the economy are to fire as many federal employees and cut as much government spending as possible; to deport as many people as possible; and to start trade wars. Those policies all contract the economy. So it’s just a matter of how much they’re actually going to do it before they rapidly backpedal and change their mind. And what we are seeing is basically that happening in real time to the extent that these policies are being pursued at all.
The Washington Post reported this morning that across federal agencies, there have been desperate attempts to rehire formerly fired federal employees. Some of them are coming back from probation. Some of them are coming back from paid administrative leave, waiting for their layoff to take effect. And some of them are coming back from just a pure layoff: You are not employed, and they need you to come back. And this has been reported from people at the USAID, people at the Department of Energy—some of them came with even a day of being laid off. They were asked, Actually we need you to come back in. That reflects just how little thought went into this process of we need to make a big show of destroying the federal government. If you have an economic policy that’s built on not truth and destruction, you either pursue that to economic catastrophe—or you stop halfway through, start making up a lot of things about how it was really successful and you did it, and start backpedaling.
Sargent: Right. And a big sore spot in this jobs report is the loss of 8,000 manufacturing jobs. I want to play some audio of Fox News host Stuart Varney questioning Labor Secretary Lori Chavez-DeRemer about those 8,000 lost jobs. Listen to this.
Stuart Varney (audio voiceover): How come we’re losing 8,000 manufacturing jobs in May? And when there’s a big push to bring manufacturing jobs back to America, how come we’re losing those jobs?
Lori Chavez-DeRemer (audio voiceover): Well, we’re certainly holding steady. And as we increase construction jobs, as we increase health care jobs, and again, that focus on building those manufacturing plants, it will take some time. The president has done a wonderful job in negotiating the level playing field as far as the tariff discussions have gone. But those onshore of those jobs, we’re seeing tens of trillions of dollars being reinvested here in the United States. And I’ll continue to focus on that skilled workforce as those manufacturing jobs continue to grow.
Sargent: There are a couple things here. Note that she admits that it’ll take time for the tariffs to reshore manufacturing jobs. I think that’s an understatement.
Edwards: I’m glad someone finally said it from the administration that manufacturing is not something that you can start and stop on a dime. I think it allows the space to explore, hopefully on a national level, that manufacturing takes a lot of planning, a lot of investment, a lot of certainty about where markets are coming from. And if you wanted to use tariffs to bring back manufacturing, they would look exactly opposite from what we’ve seen so far. Manufacturing plants require so much capital and investment in lead time, they need a ton of runway to know what exactly is going to happen in the economy. That’s why tariffs, to the extent that they are part of a portfolio of manufacturing resurgence, really come at the end.
Most of the policy is here’s the regulatory clearance, here’s the investment clearance, here’s the jobs backstop, here’s a community college we’re going to partner with to make sure you have good employment. Let’s put it in a place where there are lots of people looking for jobs. And at the end, we’re going to put in a little bit of trade protection to make sure you have some clearance for the first few years. That is actually what something like the CHIPS and Science Act looks like: We’re going to give you the guarantees of the federal government as a primary investor in order to make sure that you will make this private sector investment, and we’re going to put in some trade blocks as part of that so you know what is coming. So I think her saying it’s going to take time was at least an admission from the administration that you can’t just snap and have manufacturing employment.
Sargent: And Kathryn, she also says that tens of trillions of dollars are being reinvested here. What is she referring to there? And is that right?
Edwards: I don’t know. I couldn’t tell if she was trying to make it sound like it was a private investment or federal government investment. The federal government investments—the trillions of dollars that are being invested here—would come from the bipartisan infrastructure law, the CHIPS and Science Act, and the Inflation Reduction Act that passed under the last administration, which were big reinvestments in the economy. As for private sector investment, there has been reports of people announcing investment in the U.S., but a lot of that reporting has been that they were doing it anyway. They just made the announcement bigger, as opposed to a private company’s internal policies have changed in response to the tariffs because, of course, we don’t know what the tariffs will look like, not even tomorrow.
Sargent: Yeah, no, it’s crazy. Let’s listen to a little bit more audio. Here’s Fox’s Maria Bartiromo questioning Trump trade adviser, Peter Navarro. Listen.
Maria Bartiromo (audio voiceover): Are you expecting more trade deals in the near term? Because Peter, we keep hearing that India could be next, and the EU is doing this fast tracking. When are we going to have more deals to talk about in terms of tariff deals?
Peter Navarro (audio voiceover): Well, the U.S. Trade Representative building, I don’t know if you ever been over there. It’s right across the street. It’s a historic building. It played a really important role in the Civil War. It looks more like a deli now where you go in and you get your number and you stand in line. And you do that so you can negotiate with Jamieson Greer, the USTR, and Howard Lutnick, the secretary of Commerce. And that’s what we’re doing. We will have deals. It takes time. Usually, it takes months and years. In this administration, it’s going to take more like days. We’re on task and on target.
Sargent: So, Kathryn, that’s some pretty harsh questioning right there. And again, Peter Navarro says the trade deals are going to take time. Where are we on the trade deals, and what did you make of that exchange?
Edwards: I thought the most interesting part was about the USTR building during the Civil War. I’m a massive history buff. I was like, Do tell, I would love to hear this. Yeah, trade deals take time. It’s interesting. Sometimes I think that the way an economist would look at this would be to say, You can take an introductory game theory class in undergrad and it will teach you that people anticipate what the other person is going to do in any type of classic economics game. And that informs how we think about negotiation. And we’re negotiating with a lot of countries that know that the U.S. has midterms, a lot of countries that know that these tariffs are not popular amongst us businesses and that most members of Congress are under incredible pressure to walk back these tariffs by businesses in their constituency. And they also know that kowtowing to a bully, especially one who has been so brutal about immigrants and the place of people who are not born in the U.S. in the U.S. that could be from their own country, is not politically popular. And they will not score points by rushing into a trade deal with someone that the people in their country do not like who might not have hardly any power at all in, what, 15 months?
Sargent: We could look at the larger picture in terms of uncertainty here, right? For one thing, the lawsuits are proceeding against the tariffs. They’re actually making some headway. I think there’s reason to believe that it’s at least possible that the tariffs could end up getting blocked in court. But either way, that’s another thing that I think probably encourages other countries to hold off and not make deals. You’ve also got the uncertainty flowing out of these immigration policies as well. As you mentioned earlier, we’ve got Stephen Miller now ramping up the deportations; he’s transferring immense amounts of federal resources over to deportations. So we could be seeing larger raids on farm workers and so forth. And you’ve got these federal cuts that you’re talking about, which also cause uncertainty. As you pointed out, The Washington Post had that amazing report essentially saying that the government is scrambling to put people back into place to fill the functions that were removed by DOGE. And so it seems to me you’ve got a triple whammy of uncertainty.
Edwards: What you’re lacking here is any type of thoughtful deliberation, which I know we’re not…. That’s not a phrase that you would necessarily, or easily, apply to Congress. But of course, this is why tariff policy and tax policy lies with Congress because there is deliberation. And it’s interesting to watch the…. This is the “big, beautiful bill.” The “big, beautiful bill” is the big tax cut. But even watching that go through, you are seeing the difference between an executive body and a legislative body. This tax bill is under such intense scrutiny and I don’t know what it will pass, but we are watching this process of you have to win over a lot of people in order to get it passed.
There was even reporting from The Washington Post in the run-up to the House passing the bill that Speaker Johnson was basically telling people, I know you don’t like this part, but the Senate will take it out. So just vote for it so we can get it out of the House, which to me sounds perfectly plausible. Imagine if tariff policy had to come under this type of deliberation, and constituents would have a chance to weigh in and before policy is being made and reversed. So part of this is a reflection of poor economic decision-making and policy. But of course, part of it is a reflection of why we don’t vest this much power in the executive in the first place. And he’s proving multiple points of incompetence at the same time.
Sargent: So where does this all go, do you think? What’s your sense? I think Elon Musk, in the middle of his immense war with Donald Trump, predicted a recession in the second half of this year, which I’m sure made people inside the White House very happy. What do you expect to happen?
Edwards: I think I fall with a lot of economists into the uncertainty camp of we can’t…. We can make predictions of what uncertainty will do. It will continue to have sluggish … It’s a slow slowing is what I read this morning. This is a slow slowing of the economy. We were basically inching toward recession, and that is what uncertainty looks like. If you can’t plan, you can’t aggressively hire, you can’t make plans for expansions, you don’t know what interest rates are going to look like, you don’t know what tax bills are going to look like. And keep in mind that if the federal government adds $3 trillion to the national debt, it gets more expensive for everybody to borrow. Not just the government but also businesses, but also you for your car and your mortgage. And that has to be planned around, which of course we still don’t know.
I think the only thing we know is the path of an economy with major actors under uncertainty. And it’ll keep looking like this: sluggish reports, not big numbers, trending close to zero, happening slowly. To the extent that these destructive policies are pursued in full force—like deportation, or we do have permanently, say, bad tariffs—it’s just a matter of how quickly the economy decelerates and leads to recession. So we’re basically on two paths. We’re on one path to recession, which is the slow boat; we’re in the right lane. We could jump into the left lane and speed right ahead, depending on the policies pursued. But we have not seen anything from the White House that would say we are going to pursue a growth strategy that looks like x, y, and z. They’re still basing their economic policy on three destructive policies. And that’s to say nothing of the cuts from the tax bill for Medicaid and food stamp recipients. Kicking 10 million people off of Medicaid is not a trivial effect on our economy, although that will happen over a 10-year period.
I’m not sure if I quite answered your question. This is where economics gets … [It’s] just impossible to talk to people like me. Well, there’s the path of uncertainty, and then there’s the variations in uncertainty that can decelerate or recelerate our path toward more certainty. I realize I sound a little circular here.
Sargent: No, no, I think the story is slow boat to recession, right? Isn’t that the story? Let me ask you this, though: Isn’t the big story ultimately that none of this has to be happening? Right? So Donald Trump came in, he inherited an economy that was in decent shape. There were some flaws, right? And people really were sour on it in many ways. And there’s a whole big argument over whether that’s justified or not. Putting that aside, it’s clear that the current situation—all these uncertainties, all the signs that we are on a slow boat to recession—[is] created by Donald Trump’s policies. Is that the deal?
Edwards: Yes. And you know because I host a podcast called Optimist Economy; we always talk about, in every show, what there is to feel good about in the economy. And for the most part, it always comes down to our potential and the economy we could have if we chose to, of the policies we could pursue, of the fixes we could make. And we can dwell in how poor of a manager Trump is for as long as we want, but we should remember that we have … The U.S. economy has everything going for it. We have a massive economy that bounces back from recessions pretty quickly, an unemployment rate that does climb but also falls. We’re almost always producing jobs. Even in the extent of the turmoil in economic policy right now, the fact that we’re still producing jobs is testimony to just how incredible this economy is. You’ve got 170 million people employed from the ages of 14 to 95 from every level of education in every sector and occupation imaginable. We are sitting on top of a gold mine. It is not being well managed by people from the congressional or executive branch necessarily, but we can rest in the fact that we have probably one of the best brain trusts of central banks—of any central bank in the world. If we were able to make better choices from public policy, we could really ride this to an era of prosperity.
That’s never going to come from Trump, because he’s stuck in the past and trying endlessly to recreate something that’s been gone for decades. And he lies about how to get there, and you can’t build a future based on lies. You can’t recreate a past that is gone, but we can build a better future and we have everything we need to do so. So I am eternally optimistic about the U.S. economy—not that that means that nothing bad will ever happen, but that we will continue to have the strongest and best economy in the world. Maybe we just have to get some stuff off our chest, like terribly destructive policy that people kind of like but are going to learn is terrible like these tariffs.
Sargent: Well, I think that was really beautifully said. And I want to remind everybody, in the spirit of what you said, that Trump will not be there forever. Kathryn Edwards, it’s so good to talk to you. Thanks for coming on.
Edwards: Thank you so much.
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