00:00 Speaker A
So, the cool thing about my my my life is I get to travel around the country and the world talking about the US economy and the global economy. The last year has been very instructive.
00:10 Speaker A
You know, if you go out and you try to tell somebody or the public that they don’t have an affordability problem, I’ve seen people get laughed at, mocked, booed, and heckled.
00:23 Speaker A
What’s going on out there is is is we’ve had five years of a of a price shock and people are beginning to make up their minds about where they’re at, relative to the to the greater economy. And for many people, it’s it’s not good. So Jared, that that affordability issue is front and center with what I call the post-pandemic economy and the regime change that we’re we’re undergoing right now.
00:46 Speaker B
But what happens after this bill spurs consumer spending? Because we’re hearing it’s going to lift companies like McDonald’s and people are lower income consumers are going to be able to go back to them. But what happens when that
01:10 Speaker A
that cash
01:10 Speaker B
Right. Yeah, the rising tide they don’t have it anymore. where are we at at the end of 2026?
01:17 Speaker A
Well, my sense is is that uh we fall back towards the 2% growth trend. Again, that’s a macroeconomic aggregate, right? It will just depend what area of the very segmented economy you have exposure to.
01:34 Speaker A
Right? So the economy may this year is going to grow probably somewhere between two and a half percent and 3%. It’s looking like, right? Okay, if you’re working in tech, if you’re working in services that have exposure to tech, you’re going to probably look back on this year and smile.
01:46 Speaker A
If you work in manufacturing, no. You’re you’re going to have another stagnant year at best. If you have exposure say to agriculture, which is taking it on the chin due to tariffs, another year of contraction.
01:59 Speaker A
Right? So, we really are falling into this new world where we have a highly segmented economy and we need to talk to people where they are in order to understand what’s happening.
02:14 Speaker A
Now, as an investor, you’re going to be overexposed to the areas that you know are are going to do well on the back side of this. Yes, money’s now spilling out into the broader economy.
02:26 Speaker A
You no longer just have to look at Nasdaq or the S&P 500. You can look at the Russell 2000 or 3,000 and think, hey, this is looking pretty good. And we are small and mid caps are looking
02:37 Speaker B
Even micro caps.
02:37 Speaker A
much but even micro caps. That’s right. Things are looking pretty good because money’s now spilling over. and one would think following a very large uh unfunded tax cut, we would likely see that.
02:51 Speaker A
But when we get into 27 and we get into 28, we’ll we’ll see what the conclusion is. When you engage in a tax cut, the idea is to cause the chart to move up and to the right.
03:02 Speaker A
If you think your long-term trend rate, trend growth rate is 1.8%, at the end of that, you’d rather see it at 2.2, 2.3. Now, we don’t know if that’s going to be the case. I don’t expect it to be, right? But it’s good that you ask that question.
03:14 Speaker A
because we’re adding debt rapidly getting to the point where 2 trillion a year is going to become normal. And that’s why we see um the shape of the curve beginning to get a bit steeper. Those long-term rates are rising.