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Stephen Myron went viral in the wonky world of economic policy. It's all because of a forty one page economic paper from November that offered some pretty jarring strategies for trade policy and currency intervention, including what everyone refers to as the marl Lago Accord. It made huge waves, and to Myron's dismay, he can't quite shake it.
It's not advocacy, and nobody should construe it that way. It's just it's been a zombie that I just haven't been able to kill.
There's more going on for this economist. Since the Senate confirmed him in March as Chairman of the White House Council of Economic Advisors, Myron has been part of the administration's efforts to reshape US economic policy, from near universal tariffs that triggered a massive upheaval in markets to tax policy still in progress. He's also focused on sharing Trump's pro growth message and touting the president's transparency.
Almost every single day, the president hosts a press conference straight from the Oval, and he tells you exactly what he's thinking exactly what he wants to accomplish, exactly what he's going to do, and one by one he does what he says he's going to do, and he's very transparent about that.
And as news of fresh trade deals with the US come through, triggering angst across currency markets, we had some questions for the chairman himself. I'm Saliah Mousson and this is the Big Take DC from Bloomberg News. Today. On the show, I sit down with key White House economists Stephen Myron to take a deeper look at the volatility and uncertainty hitting global markets, and I ask him what every investor is wondering, what's the future of the US dollar?
Chair Stephen Myron, so great to have you here, Thanks for having me.
It's great to see you again.
The world's economic landscape has shifted rapidly since you were confirmed for your job in March. We've had the shock of the April second tariffs, the change after the ninety day pause, and right as the Sell America trade was starting to look stale, we saw that Moody's cut the US's pristine credit rating. And I'm curious, what do you make of all this turmoil.
It shouldn't be surprising there would be some volatility in the wake of the president's historic actions. You know, the move in teriff rates that we've seen has been substantial. Tariff rates have been used like that by a president to defend America in many decades. However, that volatility, as we've seen, doesn't last forever, right it peters out. Policy has limited effects on the long term. With that, and the volatility has come around. With respect to Moody's, what
I would say is it's somewhat backward looking. You know, the fiscal scenario of America really deteriorated a bit during the Biden administration. One of the issues with both Moody's as well as well as the CBO scoring. The Congressional Budget Office puts a score in the legislation that's in front of Congress. They tend to focus on the tax legislation in a very narrow sense, and they tend to miss a number of things that are going on in the background, which we'll serve to reduce deficits.
The shift that you're talking about is huge. We're seeing near universal tariffs for the first time in many, many decades coming from the US we're seeing an addition to the deficit from the tax bill, at least in the short term, until the growth kicks in at a time when our deficits are expected to be the largest ever. Sure, it's backward looking, but the outlook ahead is cumulative effect.
You're also talking about doge, but we've seen cuts and savings in billions, not trillions, in such a small timeframe, for so many changes to happen, it sounds like a really big gamble on the shifts that President Trump is imposed on the economic landscape. How do you deal with You have such confidence when you're sharing the figures. Are you worried at all that one little thing shifting? A black swan event, a pandemic. No one saw that coming, something could break.
So look, of course we're concerned about deficits. And this underlines why it's so unfortunate that we inherited such a bad fiscal hand from the previous administration, and why previous administration's policy was so misguided. You want to run deficits when you're in the middle of a significant emergency. These are things like a war, right or when you're in a recession that's so deep that Monterey policy alone can't handle it, and you want to engage in material degrees
of fiscal support to the economy. This was something like COVID like the depth of the pandemic with the Cares Act, when Monterey policy alone wasn't enough to get the economy through a problems.
Some of the growth forecasts that you're talking about their predictions. Of course, you don't know what's going to come, but we're seeing retailers who visited the White House talking about empty shelves at their stores because of supply chain constraints depending on what tariffs kick in. We're talking about in consumers maybe seeing price increases. And Trump has acknowledged that there's going to be short term pain for long term gain.
That short term pain is going to come at a time when we are teetering at the edge of deficits that maybe the US can't handle. We haven't found out what that threshold is. So talk to me a little bit about the short term pain. Are you prepared for a recession, because that's what it sounds like Trump is talking about.
I don't expect the deficit to be nearly as bad as some of these numbers that are being tossed GDP growth. Do you think we're going to say that short term? As I said, it's a mistake. It's a mistake to focus exclusively on something like a CBO score and ignore all the other things that are going on, like tariff revenues. I mean, I think that's just bonkers, and yet that's what people seem to want to do. But I think
it's a mistake. And sometimes, you know, people people live in narratives, and they focus in a narrative and then eventually the market realizes it's wrong, and that'll happen in this case too, And it similarly won't be surprising if there's volatility in other economic data as well. For instance, we're in the middle of more than twenty serious trade negotiations with our partners. There's one hundred others that have
expressed interest in talking. Right These are very material and we will get resolution on these within coming months, and we will get resolution on the tax bill, hopefully very soon. And while we're waiting on resolution, you know, it is not surprising if a company delays an investment or delays hiring or whatever, you know, delays some economic activity from
one month to another, from one quarter to another. But waiting for the resolution dealing with the uncertainty that doesn't cause a recession, that just pushes activity from one time period to another.
Talk to me a little bit more about the short term volatility. The President has signaled, essentially given almost forward guidance that there could be a couple of quarters of pain as we work on the long term picture. That is sort of the essence of any kind of revolution in economic landscapes. What are you expecting? What's the worst that could happen? Do you have any estimates of where you expect the fourth quarter of this year to end?
So I don't have a precise number, in part because the policy is still fluid and I can't prejudge the outcome of those policies, right, and so you know, there can be differences based on the ability of other countries to make the concessions they need to keep the teriff rates where they are or even lower, you know, and prevent the April second tariffs from snapping back. It really would be wrong for me to prejudge their outcome and give a precise number.
Do you have any sense of when we would expect to see a smaller trade deficit? Since that is the ultimate goal here.
Yeah, So first you have to continue making the trade deals, and I am confident that we will be able to finish off a number more in coming weeks. And as we succeed in creating a fairer trade environment in which other countries treat us the way we treat them, that will succeed in bringing trade deficits down because we will be able to export so much more. And that's a world of more trade. That's a world of more balanced trade.
It's a world of fair trade, and it's still a world of prosperity for America and prosperity for everyone, for all countries.
Before we shift gears here, Steve, you're an economist, your spokesman for the administration's economic agenda. If things get a little hairy later this year, early next year, as the trade deals are being hammered out, as tariffs kind of hit companies, as the world adjusts, what is your message going to be to investors, to everyday consumers when they're worried is this a blip or is this a deeper economic slowdown?
So, look, I think it's really important to have some context here. And at the end of the day, imports, our fourteen percent of the economy. Right, there are limits to how much fourteen percent of the economy can move the whole. And you have to look at what we're doing on the other stuff as well. If you look at the tax policy, if you look at deregulation, if you look at energy abundance, these affect eighty six percent
of the economy. Right, they affect everything, and so there are really just profound limits on the ability of fourteen percent of the economy to matter so much that it can create mark.
It's reacted strongly based on what could happen to this fourteen percent of the economy.
Well, as I said, I think that financial markets were a little surprised at the scope of the president's policies. And also financial markets are maybe a little bit more dependent on the international environment than the economy is right, they're not. You know, financial markets in the economy are related, but they're not exactly the same thing.
It's a very big shift to do for fourteen percent of economy based on that number.
Yeah, but I mean stocks have recovered right, most of their losses. So what I would say is is this is an extremely pro growth administration. We are focused on one hundred percent on getting the tax bill over the line, on creating an investment boom in America, cutting red tape, which I think is profoundly powerful and really underappreciated by economists. Economists dramatically underappreciate the importance regulation because it's not quantitative,
and it's difficult to study. The regulations you're subject to vary based on what line of work you're in, how big your firm is, how old your firm is, what your aisstictions you operate in. All of this stuff is qualitative, and we've made enormous progress already, but it still takes time. We're a nation of laws. It takes time to change the rules. It takes time to write regulations, their question periods,
their common periods. This is a process, and so we think that over the next few years we can get there.
After the break, I ask CEA chair Stephen Myron about the Trump administration's plans for currency policy and the possibility of a Mara Lago accord. There's a lot of talk about currencies these days. Markets are just it seems insatiable, there appetite for any kind of detail on this. Oddly, what is the connection between the trade deals that are being worked out right now, you said there's twenty currently being worked out.
And currency policy, there is none there, you know, there there is none.
So when we hear from the Japanese finance minister that I'm going to bring up currencies when I speak with Besant, that's the other side bringing you to the.
Table, not the US Secretary. Bessant is the one who you know, has the policy authority over over the dollar, and he's been He's been pretty clear in saying that, you know, the United States continues to continues to have the same dollar policies it's had for decades, right, the United States continues to have the strong dollar policy. The United States will you know, Will Will Will Will continue with the policies that we've had for a really long time.
He has been very clear. The nature of currency accords is that they seem to happen in secret, right, the Plaza accord, the Liubra accord, they happened when no one realized that they were being planned. And I think that is something that's on Trader's minds quite a bit about what could be happening behind the scenes that we don't know. But I'm wondering what you're thinking, is that we've heard from Trump for a long time that he wants a
weaker dollar. I mean, this goes back to the nineteen eighties. We have people like you and Lutnik and especially Scott Besten, the Treasure Secretary, saying over and over again that the US does have a strong dollar policy. We want investments in the US that drives up the dollar. But the markets don't seem to believe it. Do you have any sense as to why.
I think folks in markets often, you know, they get these little obsessions and it takes ten thousand reiterations at the same point to finally get them to believe us when when we say something. And I think you saw something similar with this, like a decade ago. I remember the FED being extremely clear that it was never going to do negative interest rates, and you know, like every day they'd come in and get that question, and every day, you know, they had to say, that's ridiculous, We're never
going to do that. And I remember at the time, you know, like being really annoyed. Why am I seeing this red headline on my Bloomberg every day that you know, FED speaker X says will never do negative interest rates? And now I have some sympathy because now we have
to do the same thing. Almost every single day. The president hosts a press conference straight from the Oval, where he's got lots of reporters directly there, asks him questions, and he answers those questions, and he tells you exactly what's on his mind, and he tells you exactly what he's thinking, exactly what he wants to accomplish, exactly what he's going to do, and one by one he does what he says he's going to do.
It's interesting that there's so much talk about a currency accord when actually in the nineteen eighties, the last time we had a real one, central bankers and finance ministers had a lot more sway in currency markets. Currency markets were much smaller. Now we have something like eight trillion dollars changing hands. Even if you wanted to do an accord, is it even possible because of the some of the constraints for central bankers and finance.
Ministers in general. I tend to think that policymakers can be creative when they need to. But like you know, again, like there's no there's nothing here, right, there's you know, we're not secretly at work on any of this stuff. There's nothing there.
There's no work going on right now on a marlogo accord or any kind of currency accord.
This look, you know, Secretary has been has been clear.
It's a little confusing as to what the dollar policy is. I know has said several times that the US is strong dollar policy is intact. But you have said, and the President has said, and Vesson has signaled that there are benefits to a week dollar, and that came from Trump's first term. His first treasure Secretary, Stephen Mnushin also said some of the same things. Do you think that a week dollar is okay for America, that it's okay for the exchange rate to be a little bit lower.
This is really the type of thing that you should address the Treasury Secretary and not to me. And you know what I could do is repeat his words that you know, a strong dollar is good for America. And that's not just merely a statement about levels. It's a statement about the strength of the dollar system and dollar dominance and the fact that that gives us many other benefits that come with that.
It looks like we're seeing finance ministers wanting to talk to Bassant the right person to talk to you about currency policy. They want to talk to him about currencies. We're seeing in Asia that some of the you know, the South Korean Wan, the Taiwan dollar, they are increasing. It looks as if economic authorities in those countries are letting their currencies appreciate, whereas before they targeted them, weaken them, letting them appreciate against the dollar to kind of pave
the way for a trade deal. So is it kind of a case of Trump wants a weeker dollar but he doesn't really have to ask for it.
Now, Look, you know again, I can just say the same thing, which is that, you know, I think that we've all been very straightforward in what we say about this policy, and nothing has changed. There's been no change in currency policy.
All right, Well, thanks so much for joining the show.
Steven, thanks for having me.
This is the Big Take DC from Bloomberg News. I'm Salaiavosen. This episode was produced by Rachel Lewis Chrisky. It was fact checked by Julia Press and mixed and sound designed by Alex Sugia. Special thanks to Brendan Palmer, Nicholas Bach, Susie McCrory and Wendell Thorman. If you like this episode, make sure to subscribe and review The Big Take DC wherever you listen to podcasts. That helps people find the show