# The Most Worrying — and Reassuring — Signals in the US Economy

An episode of [Big Take](https://invisiblenetwork.ai/podcast/1578096201), 13 Nov 2025, 17 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/UVBrz8bN8aM2Xe47PEPu/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/825d4e29-b616-46f4-afd7-ae2b0013005c/784fd04b-a9d6-4db3-9efa-b3940167e480/audio.mp3?utm_source=Podcast&in_playlist=8b1dd624-a026-43e9-8b57-ae2b00130066

In recent weeks, a number of economic warning signs have put investors on edge, from growing skepticism over the possibility of an AI bubble to bankruptcies that have rocked the private credit market. On today’s Big Take podcast, Bloomberg Opinion columnist and senior markets editor John Authers and host David Gura tackle the question: How worried should we be about the US economy? See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. I've noticed something recently,
[0:11] Speaker 1: more professional investors sound worried about how much money is
[0:14] Speaker 1: being spent on artificial intelligence with the promise that it'll
[0:18] Speaker 1: pay off eventually.
[0:19] Speaker 2: After the tech John's disclosed huge AI spending plans in.
[0:23] Speaker 1: A meta, committing to spend seventy billion dollars on AI
[0:26] Speaker 1: this year, Microsoft reporting a nearly thirty five billion dollar
[0:31] Speaker 1: AI spending spree, five billion dollars in a single quarter,
[0:36] Speaker 1: and it's not at all clear how that money is
[0:38] Speaker 1: going to come back. There's also a chorus of concern
[0:41] Speaker 1: about how concentrated the stock market is, how this record
[0:44] Speaker 1: setting run has been thanks in large part to just
[0:47] Speaker 1: a handful of companies companies that have these sky high valuations.
[0:52] Speaker 1: Alphabet shares advanced four and a half percent in regular trading,
[0:55] Speaker 1: with that company achieving a three trillion dollar Nvidia.
[0:58] Speaker 2: In the main one five trillion, five trillion is extraordinary.
[1:01] Speaker 2: Apple briefly traded above a four trillion dollar market cap,
[1:04] Speaker 2: only the third company in history to ever do that.
[1:09] Speaker 1: There's also been a string of mega deals lately and
[1:12] Speaker 1: a few bankruptcies that have alarmed investors, and all this
[1:15] Speaker 1: is happening against this backdrop of an economy in which
[1:17] Speaker 1: there are some signs of strain. The Federal Reserve is
[1:21] Speaker 1: shifting its focus to the jobs market, but inflation is
[1:24] Speaker 1: still above the Fed's two percent target. One of the
[1:27] Speaker 1: great things about working at Bloomberg is at a moment
[1:30] Speaker 1: like this, there are plenty of people to talk to,
[1:33] Speaker 1: to call up to email, including John Authors. He's a
[1:37] Speaker 1: columnist for Bloomberg Opinion who focuses on global markets. And
[1:40] Speaker 1: John is someone who has lived through and written about
[1:43] Speaker 1: a fair share of bubbles and booms and busts. So
[1:47] Speaker 1: let's pull back the curtain a bit. And I sent
[1:48] Speaker 1: you this email yesterday and I said I had the
[1:51] Speaker 1: conceit for an episode, which was, Gee, it seems like
[1:54] Speaker 1: things may be bad, and maybe they are, and maybe
[1:56] Speaker 1: they're getting worse. How worried should we be? And I'd
[1:59] Speaker 1: like to start with just what your reaction was to that.
[2:02] Speaker 2: Oh, I mean, you're on the pulse. Don't worry this
[2:05] Speaker 2: is there is always reason to worry about whether you're
[2:09] Speaker 2: worried enough.
[2:10] Speaker 1: I asked John if he joined me in the studio
[2:13] Speaker 1: to tell me what Wall Street is worried about and
[2:15] Speaker 1: what that means for everyone else, it's a.
[2:18] Speaker 2: Big, big, reasonable question. And in my case, yes, I
[2:23] Speaker 2: worry about things for a living, and I find there
[2:26] Speaker 2: are plenty of things to worry about.
[2:31] Speaker 1: I'm David Gerret and this is the big take from
[2:33] Speaker 1: Bloomberg News Today. In the show, I sit down with
[2:36] Speaker 1: Bloomberg Opinion columnist and resident reader of Market Tea Leaves
[2:40] Speaker 1: John Authors to discuss the trends he's watching in markets
[2:43] Speaker 1: and the economy and where he thinks it's all headed.
[2:52] Speaker 1: The first thing Bloomberg Opinion columnist John Authors wanted to
[2:55] Speaker 1: talk about was valuations. How expensive US stocks are. The
[3:00] Speaker 1: market has been on a tier.
[3:02] Speaker 2: In the markets. The biggest reason for concern is valuations
[3:06] Speaker 2: writ large, but ultimately, the only reason any stock can
[3:10] Speaker 2: be more expensive than it normally would be is because
[3:13] Speaker 2: it's going to do much better in the future, which
[3:16] Speaker 2: is always unknowable. At the moment, US stocks are very,
[3:21] Speaker 2: very expensive. You can then get into arguments about whether
[3:25] Speaker 2: they're quite as expensive as they were in the top
[3:27] Speaker 2: of two thousands, But if you're even having that discussion,
[3:30] Speaker 2: you're conceding that we have a serious problem with though evaluation. Now,
[3:33] Speaker 2: that doesn't mean that you can't use valuation as a
[3:38] Speaker 2: timing tool at all, But for long term investing, the
[3:43] Speaker 2: single most important factor in how well you do is
[3:47] Speaker 2: the price at which you bought. If you buy when
[3:50] Speaker 2: things are too expensive, you will not do as well,
[3:54] Speaker 2: and if you manage to buy when they're too cheap,
[3:56] Speaker 2: you will do excellently. And plainly, moment you have at
[4:01] Speaker 2: least to think about, is AI really going to do
[4:05] Speaker 2: so fantastically that it's worth paying far more for the
[4:09] Speaker 2: book value of these assets, far more for the projected
[4:13] Speaker 2: future earnings, not the current earnings, far more for the
[4:16] Speaker 2: projected future earnings of these stocks than people have ever
[4:18] Speaker 2: asked in the past. So that's plainly front and center
[4:22] Speaker 2: the biggest issue.
[4:25] Speaker 1: Like a lot of us, John says he's been struck
[4:27] Speaker 1: by how many headlines there have been recently about AI,
[4:30] Speaker 1: about deals valued at tens and hundreds of billions of dollars.
[4:35] Speaker 1: On Wednesday, Anthropic announced plans to spend fifty billion dollars
[4:39] Speaker 1: to build custom AI data centers across the uas.
[4:42] Speaker 2: The companies that are actually doing the buildouts of the
[4:45] Speaker 2: infrastructure are still making more rather than less profits, so
[4:51] Speaker 2: it plainly has longer to run. I'm not expecting this
[4:54] Speaker 2: whole house of carts to collapse anytime soon. The sheer
[4:57] Speaker 2: scale of the investment just the sh The amount of
[5:00] Speaker 2: money that needed copper and rare earths we are discovering
[5:04] Speaker 2: is intense. The amount of money that will be spent
[5:06] Speaker 2: on electricity is intense. We still need to be clear
[5:10] Speaker 2: about exactly how much AI is really going to help us,
[5:15] Speaker 2: how it's going to improve our lives. Is AI really
[5:18] Speaker 2: so wonderful that it justifies the immense spending on electricity
[5:24] Speaker 2: that appears to be necessary. That is the question in
[5:27] Speaker 2: the medium terms of the long term, I'm very dubious
[5:31] Speaker 2: as to whether this is really going to work. The
[5:34] Speaker 2: great transformative technologies do all have a bubble connected to them,
[5:40] Speaker 2: and the bubbles do burst. That's of canals, railroads, cars,
[5:44] Speaker 2: the Internet, all of which contributed to the sum of
[5:48] Speaker 2: human happiness, and all of which created an investment boom
[5:54] Speaker 2: followed by serious economic problems because the economy the society
[5:59] Speaker 2: couldn't have at first, I think it's reasonable to expect
[6:03] Speaker 2: that something like that will happen with AI.
[6:05] Speaker 1: But at this moment, it doesn't seem frothy to you
[6:08] Speaker 1: or bubbleicious, you're not prepared to say so.
[6:11] Speaker 2: Yeah, frothy. I'm very happy to use the word frothy
[6:16] Speaker 2: in terms of calling that it's the top of a bubble. No.
[6:20] Speaker 2: I was around in nineteen ninety two thousand doing something
[6:23] Speaker 2: quite similar to the job I'm doing now. There's no
[6:26] Speaker 2: one moment people can connect to explain exactly why the
[6:30] Speaker 2: bubble burst when it did in the spring of two thousand.
[6:32] Speaker 2: It just gets to a point when it's just gone
[6:35] Speaker 2: too far and people aren't prepared to pay the price anymore,
[6:38] Speaker 2: and then confidence falls out from under it. I don't
[6:44] Speaker 2: see any particular reason to assume that's about to happen.
[6:49] Speaker 2: And there are differences in the way this bubble works
[6:51] Speaker 2: compared to the other one. What in video has done
[6:54] Speaker 2: in the last two or three years was beyond compare
[6:57] Speaker 2: to anything that happened in two thousand.
[7:01] Speaker 1: John As I talked to investors, another area of concern
[7:04] Speaker 1: I hear a lot about involves private credit. We saw
[7:07] Speaker 1: the subprime model under Tricolor Holdings collapse along with the
[7:10] Speaker 1: car parts manufacturer First Brands, and then we had Yes
[7:13] Speaker 1: Jamie Diamond, the CEO of JP morgansha is saying quite
[7:15] Speaker 1: memorably now that there could be cockroaches in the economy.
[7:19] Speaker 1: These couldn't just be sort of singular events. There could
[7:21] Speaker 1: be more. What did he mean by that comment? How
[7:23] Speaker 1: did you interpret what Jamie Diamond said after the collapse
[7:27] Speaker 1: of those two institutions.
[7:28] Speaker 2: Well, first of all, to be clear what Jamie was saying.
[7:30] Speaker 2: He wasn't saying Tricola is a cockroach, that these guys
[7:34] Speaker 2: are these horrible six footed insects scuttling around your kitchen.
[7:39] Speaker 2: He was saying that when you see one or two,
[7:41] Speaker 2: there tend to be a lot more out there, which
[7:43] Speaker 2: is a valid point about the way credit markets tend
[7:46] Speaker 2: to work. And his comment then got taken as being
[7:49] Speaker 2: an attack on private credit rather than a point about
[7:52] Speaker 2: the credit cycle, and I think both are valid. I
[7:56] Speaker 2: am very struck by a point that Scott Bessn't made
[8:00] Speaker 2: y secretary a few months ago, which is that he
[8:03] Speaker 2: was pointing out that there was so much more growth
[8:07] Speaker 2: in private credit than there was in the banks, and
[8:10] Speaker 2: he took that as meaning that the banks were being
[8:12] Speaker 2: too heavily regulated and that they should be regulated as
[8:15] Speaker 2: lightly as private credit. And by the same logic, it
[8:20] Speaker 2: is exactly as plausible to say that that is because
[8:23] Speaker 2: private credit isn't being regulated enough and should be regulated
[8:28] Speaker 2: as tightly as the banks. The changes in regulation since
[8:31] Speaker 2: the crisis mean that the manifestly systemically important banks that
[8:37] Speaker 2: also control the payment system, they are less vulnerable. I
[8:41] Speaker 2: think it's fair to say than they were before. But
[8:44] Speaker 2: we don't know exactly how systemic the big private credit
[8:47] Speaker 2: issuers are and whether indirectly we will eventually get to
[8:52] Speaker 2: such a point. I'm not predicting two thousand and eight. Again,
[8:56] Speaker 2: people will find ways to stop it before it gets
[8:58] Speaker 2: as bad as it got in two thousand and eight.
[9:00] Speaker 2: But that is the issue that it's reasonable to think
[9:02] Speaker 2: that we ought to be close to the top of
[9:04] Speaker 2: the credit cycle, and yet we're not priced for that,
[9:06] Speaker 2: and that creates the risk of quite a come down.
[9:10] Speaker 2: Since Jamie Diamond said that there haven't been any more
[9:12] Speaker 2: cock coroaches, people haven't slammed their feet down and squelched
[9:18] Speaker 2: anymore cock coroaches over the kitchen floor in the last
[9:21] Speaker 2: few weeks. Plainly, if we do get a couple more,
[9:24] Speaker 2: that's going to be a problem.
[9:27] Speaker 1: So that's what John Arthur's has been watching in the markets.
[9:30] Speaker 1: Up next he turns his attention to the Federal Reserve
[9:33] Speaker 1: to its fight against high inflation and its competing concerns
[9:37] Speaker 1: about the labor market. We also talk about vibes now
[9:40] Speaker 1: everyone is feeling about the economy. That's after the break.
[9:52] Speaker 1: Bloomberg Opinion calumnist John Authurs says there are a lot
[9:55] Speaker 1: of contradictions right now. Above target inflation and a record
[9:59] Speaker 1: high stock market is one. For years now, the Federal
[10:02] Speaker 1: Reserve has been trying to get inflation down to a
[10:05] Speaker 1: target of about two percent, and while policymakers have made progress,
[10:09] Speaker 1: it's still not where they wanted to be. But Wall
[10:12] Speaker 1: Street is convinced the Fed is going to keep cutting
[10:15] Speaker 1: interest rates.
[10:16] Speaker 2: In the last six months, inflation has gone up and
[10:19] Speaker 2: interest rates have gone down, both not by all that much,
[10:24] Speaker 2: but it's the direction of travel that counts. That's unusual.
[10:27] Speaker 2: If inflation keeps doing this for much longer, it will
[10:30] Speaker 2: imperil the move to cut interest rates. Basically, I would
[10:35] Speaker 2: argue that the stock market is currently priced on the
[10:39] Speaker 2: assumption that the Fed is going to make a dubvish mistake.
[10:44] Speaker 2: In other words, it's going to cut rates when it
[10:46] Speaker 2: doesn't need to. That was one of the things that
[10:48] Speaker 2: contributed to the Great bubble of two thousand.
[10:52] Speaker 1: Even as the FED remains concerned about inflation, it's had
[10:55] Speaker 1: to shift its focus more to the labor market, where
[10:58] Speaker 1: cracks are starting to emerge. But John says, if you
[11:01] Speaker 1: look past the headline numbers, there are some bright spots,
[11:04] Speaker 1: some reasons for optimism.
[11:06] Speaker 2: The thing that is very positive about inflation is that
[11:09] Speaker 2: services inflation does appear to be coming under control, which
[11:12] Speaker 2: has of late been by far the biggest area that's
[11:17] Speaker 2: been more than half of all of inflation is inflation
[11:19] Speaker 2: in services. That's driven more than anything else by people's wages.
[11:23] Speaker 2: Services businesses rely far more on their wage bills as
[11:26] Speaker 2: a proportion of their budget than manufacturers retailers. Therefore, it's
[11:30] Speaker 2: reasonable to hope that we're not going to get inflation
[11:33] Speaker 2: rise significantly from where it is.
[11:36] Speaker 1: We're also getting a clearer picture, John says of the
[11:39] Speaker 1: effect President Trump's trade policies are having on inflation.
[11:43] Speaker 2: You do see tariffs beginning to have an effect. There
[11:46] Speaker 2: is much sharper inflation of the imported goods. You do
[11:52] Speaker 2: see core goods inflation is rising. It is still a
[11:57] Speaker 2: very small proportion of the whole but it's positive, and
[12:02] Speaker 2: for most of the last ten to twenty years, core
[12:04] Speaker 2: goods inflation has actually been negative. The things that come
[12:08] Speaker 2: from China typically have been getting cheaper over time. This
[12:15] Speaker 2: is a part of the inflation mix of what we
[12:18] Speaker 2: spend that we are used to actually getting cheaper over
[12:21] Speaker 2: time and creates the space for us to spend more
[12:25] Speaker 2: on services on iPhones.
[12:30] Speaker 1: We're at this moment where there is uncertainty. We're waiting
[12:33] Speaker 1: to see if the US Supreme Court will side with
[12:35] Speaker 1: the White House and agree with the President that many
[12:38] Speaker 1: of the TIFFs is put in place on national security
[12:40] Speaker 1: grounds are legal. But it's also a moment when there
[12:43] Speaker 1: is less uncertainty about the level of those tiariffs. A
[12:47] Speaker 1: lot of negotiations have happened, John says, and those tiariff
[12:50] Speaker 1: levels have settled.
[12:52] Speaker 2: That's probably been the first time that's been true for
[12:54] Speaker 2: a while. If you think these tarifs are only going
[12:56] Speaker 2: to be at these levels for three months, and you're
[12:58] Speaker 2: a company that wants to maintain competitive advantage, you'll eat them.
[13:02] Speaker 2: If it's plainly going to be there for a year,
[13:04] Speaker 2: you just can't do that. It's certainly true given that
[13:09] Speaker 2: I have been one of the many people said, if
[13:11] Speaker 2: you do tariffs like this, it's going to cause inflation,
[13:14] Speaker 2: and it hasn't immediately caused a sharp rise in inflation.
[13:17] Speaker 2: Inflation still strikes me in the medium term as a problem,
[13:21] Speaker 2: and potentially a very serious one. Companies are still putting
[13:24] Speaker 2: in their measures to alleviate the impact of tariffs, and
[13:27] Speaker 2: so it's probably not going to get in the way
[13:30] Speaker 2: of the rosy assumptions just yet.
[13:33] Speaker 1: Late Wednesday night, President Trump signed a bill that officially
[13:36] Speaker 1: ended the longest government shut down in US history. But
[13:40] Speaker 1: during that shutdown, economists and investors and policymakers didn't have
[13:44] Speaker 1: access to all the economic data and reports they usually do.
[13:48] Speaker 1: But we did get data from other sources on employment,
[13:51] Speaker 1: on inflation, and consumer sentiment. And I asked John how
[13:55] Speaker 1: much that sentiment data can tell us about what's happening
[13:58] Speaker 1: in the economy.
[13:59] Speaker 2: Much less than we used to be able to because
[14:03] Speaker 2: because we're polarized and what appears to be new is
[14:09] Speaker 2: that fairly simple, straightforward questions about how are things for
[14:13] Speaker 2: you are now being viewed through a political lens. In
[14:19] Speaker 2: the closing months of Joe Biden, when the economy was
[14:22] Speaker 2: actually growing quite nicely by any sensible measure. Republicans thought
[14:31] Speaker 2: their lives were worse than they had been during the
[14:34] Speaker 2: worst of the pandemic. After the election and the return
[14:38] Speaker 2: of Donald Trump Democrats, it's as though all the Democrats
[14:43] Speaker 2: suddenly lost their job. The lines cross very dramatically. It's
[14:48] Speaker 2: literally as though they're living in two different countries. Republicans
[14:52] Speaker 2: are suddenly convinced that their lives are much better, that
[14:54] Speaker 2: current conditions are great, and Democrats suddenly think everything is terrible.
[15:02] Speaker 2: Not only cannot both be true at once, both are
[15:05] Speaker 2: obviously untrue. That is a social phenomenon rather than an
[15:10] Speaker 2: economic one, but it does mean you've got to be
[15:12] Speaker 2: very much more careful than you ever used to be
[15:15] Speaker 2: with sentiment data.
[15:19] Speaker 1: Crucially, John says the way people think about the economy,
[15:23] Speaker 1: how they feel about the economy, is important because it
[15:27] Speaker 1: can have real impact on the economy itself.
[15:30] Speaker 2: One of the concepts I found most useful throughout my
[15:34] Speaker 2: career since I've had it explained to me is from
[15:36] Speaker 2: George Soros, who has this idea of reflexivity, the idea
[15:41] Speaker 2: that markets can create their own reality. So if people
[15:46] Speaker 2: think rates are going down, they're more likely to go down,
[15:49] Speaker 2: and so on the reflexivity. Once people start having really
[15:55] Speaker 2: extreme views of the present and of the immediate future,
[16:00] Speaker 2: it's very difficult to gauge. None of this really helps
[16:04] Speaker 2: you say when the top of the market is in.
[16:07] Speaker 2: If we wake up tomorrow to discover meta platforms, it's
[16:10] Speaker 2: gone bust or something that's probably the top of the
[16:12] Speaker 2: market that isn't going to happen. But you know, I
[16:16] Speaker 2: don't see anything at the moment that says this is
[16:18] Speaker 2: the top get out. I see plenty of reasons to
[16:22] Speaker 2: think this is more overblown, more positive than it should be,
[16:28] Speaker 2: and there are reasons for caution in the medium term.
[16:32] Speaker 2: But maybe I'm just too old.
[16:40] Speaker 1: This is the Big Take from Bloomberg News. I'm David Gerra.
[16:43] Speaker 1: To get more from The Big Take and unlimited access
[16:45] Speaker 1: to all of Bloomberg dot com, subscribe today at Bloomberg
[16:48] Speaker 1: dot com slash podcast offer. If you like this episode,
[16:52] Speaker 1: make sure to follow and review The Big Take wherever
[16:54] Speaker 1: you listen to podcasts. It helps people find the show.
[16:57] Speaker 1: Thanks for listening. We'll be back tomorrow.

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