The ‘biggest risk’ to the US economy for the rest of 2025

00:00 Speaker A

Whether Powell pointed out, or something else that you and your team discovered, we will finish it with a kind that you see as the biggest disadvantage risks for the economic look.

00:13 Michael Gapen

I think there is a story here, let’s say the next few quarters and then. Perhaps in the first quarter of the year, the biggest risk for the economy and labor market is that we are in just three months until the time when companies go through tariffs to consumers. UH, we think that they can pass too much not to cut the labor, but I think the risk maybe they can not pass from all these costs to the consumer. If that’s the case, I mean that the tariff bill is a big invoice. If you make the last 60 -day tariff collections annually, about $ 355 billion. So someone has to pay it. The risk must maintain margins and earnings by reducing labor that companies cannot transfer it. And I think now and maybe between the first quarter, this is the primary risk. Nevertheless, if we pass that period, then the financial invoice starts to come into play, I think that monetary policy mitigation may start to have an impact, and then the risk balance may shift in 2026.

01:54 Speaker A

Well, we’il leave it there. Michael Gapen is Morgan Stanley’s chief economist. Always appreciate time.

02:01 Michael Gapen

Thank you.