Latest / Trend Watch / Episode 59: The Fourth Turning—Democracy on the Edge

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Episode 59: The Fourth Turning—Democracy on the Edge · Trend Watch

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  Ready to take a deeper look at where history,
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  politics,
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  and economics all intersect?
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  SPEAKER_01: Well, then you've come to the right place.
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  SPEAKER_01: Each week,
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  SPEAKER_01: here's where we pull back the headlines and focus on the big trends,
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  SPEAKER_01: the stuff that actually shapes our future.
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  SPEAKER_01: Through the noise, we focus on the signal.
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  SPEAKER_01: I'm your host, Neil Howe, and this is Trend Watch.
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  SPEAKER_01: Today is April 23rd, 2025, and this is Trend Watch.
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  SPEAKER_01: Welcome back, everybody.
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  SPEAKER_01: As usual, I have on my fellow analyst, Christian Ford.
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  SPEAKER_01: So, Christian, how was your week?
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  SPEAKER_00: It was good, Neil.
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  SPEAKER_00: I had a good Easter weekend,
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  SPEAKER_00: had some friends visiting from out of town,
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  SPEAKER_00: and I spent a little bit of time up near your old neck of the woods.
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  SPEAKER_00: I was in Great Falls.
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  SPEAKER_00: I'm hiking on the Billy Goat Trail of the Potomac.
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  SPEAKER_01: You know, classic D.C.
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  SPEAKER_01: area hike.
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  SPEAKER_01: Yeah, that's right.
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  SPEAKER_01: That's the Maryland Great Falls.
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  SPEAKER_00: Yes.
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  SPEAKER_01: Yeah, and in Virginia, we don't talk about that.
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  SPEAKER_01: That's the Virginia Great Falls.
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  SPEAKER_01: It's interesting that from,
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  SPEAKER_01: you know,
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  SPEAKER_01: from the Beltway all the way up the next 70 miles,
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  SPEAKER_01: there is no bridge over the Potomac,
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  SPEAKER_01: right?
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  SPEAKER_01: Right.
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  SPEAKER_01: So it's very difficult to get from Virginia to Maryland out there.
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  SPEAKER_01: So they don't mix.
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  SPEAKER_01: Yeah.
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  The boundaries that it makes,
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  and you can tell that all the people who work in D.C.
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  SPEAKER_01: by which side of the river they live on, right?
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  SPEAKER_01: A very different crowd lives up in Maryland than lives in Virginia.
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  Well,
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  I'll tell you,
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  Neil,
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  to an outsider,
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  the houses look just as big on both sides.
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  SPEAKER_01: Oh, indeed they do.
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  SPEAKER_01: That hasn't changed.
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  SPEAKER_01: That just goes up as you get away from D.C., right?
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  SPEAKER_01: Oh, yeah.
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  SPEAKER_01: Yeah.
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  SPEAKER_01: the luxurious suburbs and exurbs of the D.C.
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  SPEAKER_01: area.
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  SPEAKER_01: Well,
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  SPEAKER_01: as always,
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  SPEAKER_01: let me remind you,
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  SPEAKER_01: if you like this podcast,
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  SPEAKER_01: please go ahead and share it with friends and family.
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  SPEAKER_01: Repost it on social media.
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  SPEAKER_01: Let's get into today's podcast, Christian.
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  SPEAKER_01: As always,
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  SPEAKER_01: I guess I'm going to list the stories we're going to get into,
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  SPEAKER_01: and then we'll come back and look at markets.
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  SPEAKER_01: They have been a little bit topsy-turvy over this last week.
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  SPEAKER_01: I think we can both agree.
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  SPEAKER_01: Our big stories at home,
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  SPEAKER_01: our domestic stories,
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  SPEAKER_01: over the past week,
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  SPEAKER_01: President Trump escalated his attacks on Fred Chairman Jerome Powell,
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  SPEAKER_01: even threatening to fire him.
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  SPEAKER_01: But by Tuesday, he reversed course, easing market tensions.
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  SPEAKER_01: We're going to go a little bit into that.
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  two federal judges in two separate cases have accused the Trump
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  administration of
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  SPEAKER_01: defying immigration-related court orders,
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  escalating the threat of contempt of court proceedings against
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  the White House.
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  SPEAKER_01: That will lead us to talk a little bit more broadly about the
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  just the whole executive versus judicial confrontation we could
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  be seeing coming up,
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  SPEAKER_01: which is really kind of interesting and revealing.
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  SPEAKER_01: Switching gears a bit,
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  a new Pew survey shows that the decades-long decline in the
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  share of Americans who
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  SPEAKER_01: identify as Christian may have leveled off in recent years,
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  SPEAKER_01: with Christian identification holding steady since 2019 at 64%.
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  SPEAKER_01: And then let's move abroad.
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  SPEAKER_01: Last weekend,
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  The Trump administration apparently presented a final offer
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  peace plan to Ukraine,
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  proposing territorial concessions to Russia that President
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  Volodymyr Zelensky
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  SPEAKER_01: yesterday categorically rejected.
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  SPEAKER_01: And on Monday, the U.S.
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  and Philippines launched their largest ever joint military
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  drills in the Pacific
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  SPEAKER_01: near contested waters,
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  SPEAKER_01: with Japan joining for the first time.
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  SPEAKER_01: And China,
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  SPEAKER_01: as you can imagine,
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  SPEAKER_01: watching closely,
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  SPEAKER_01: observing closely,
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  SPEAKER_01: if not on the official invite list,
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  SPEAKER_01: they are certainly watching closely.
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  SPEAKER_01: So with that, we're going to go back up and take a look at markets.
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  SPEAKER_01: What have they done?
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  SPEAKER_00: All right, Neil.
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  SPEAKER_00: Today, the S&P 500 closed up 1.67%.
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  SPEAKER_00: And over the last five, market days is up 1.9%.
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  SPEAKER_00: As for the global Dow, that closed up today as well, 1.09%.
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  SPEAKER_00: And over the last five days, looking a little better, up 2.37%.
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  SPEAKER_00: As for the VIX, that closed at 28.41%.
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  SPEAKER_00: So we did get below 30.
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  SPEAKER_00: You know, we've been seeing higher recently.
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  And as for the 10-year Treasury,
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  that is at 4.39%,
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  up 10.8 basis points over the last five days.
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  Yeah,
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  I mean,
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  it's really interesting how it didn't really go down much today.
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  SPEAKER_01: You know,
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  SPEAKER_01: given how it's been moving lately,
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  SPEAKER_01: you would have thought it had gone down a little bit,
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  SPEAKER_01: went down almost nothing today,
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  SPEAKER_01: despite the fact that it was a pretty good.
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  SPEAKER_01: Pretty good day for global equities, right?
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  SPEAKER_01: Look,
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  SPEAKER_01: I mean,
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  SPEAKER_01: obviously today and to some extent yesterday,
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  markets were buoyed by Trump easing off his threats against
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  Jerome Powell.
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  We're going to talk about that in a little bit because it's
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  unclear that those threats were
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  SPEAKER_01: have been permanently pocketed.
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  SPEAKER_01: I can easily imagine Trump taking those out of his pocket again, right?
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  And the other was the announcement by an unnamed senior White
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  House official that
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  SPEAKER_01: China tariffs were likely to come down.
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  SPEAKER_01: We don't know how or how much.
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  SPEAKER_01: Well,
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  we actually do know how much because this one official said
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  they could come down to
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  SPEAKER_01: between 50% to 65% of current levels.
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  SPEAKER_01: Of course, that still means really high.
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  SPEAKER_01: That means from, I guess, 145% to where they are to 73% to 94%.
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  SPEAKER_01: Oh, wow, that's great.
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  SPEAKER_01: I still think at that point it's kind of prohibitive.
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  SPEAKER_01: Some other official mentioned that
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  SPEAKER_01: Apparently,
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  SPEAKER_01: these are White House whisperers,
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  SPEAKER_01: right,
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  that the president may want to move toward a new formula that
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  was actually proposed
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  SPEAKER_01: by a House committee on China last year,
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  SPEAKER_01: which is that they adopt a 35 percent tariff for non-security policy.
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  SPEAKER_01: goods,
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  SPEAKER_01: meaning goods that did not threaten America's security,
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  SPEAKER_01: and 100% or more for goods that the U.S.
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  SPEAKER_01: really wanted to be more self-sufficient in,
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  which is the first time ever that anyone in the Trump White
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  House has actually
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  acknowledged there might be different purposes to different
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  kinds of goods.
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  SPEAKER_01: You know what I mean?
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  SPEAKER_01: It's kind of a nuance that I've never yet seen, right?
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  SPEAKER_01: But anyway, so that's there.
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  SPEAKER_01: Take it for what you will.
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  SPEAKER_01: What about...
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  SPEAKER_01: Economic indicators, anything?
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  SPEAKER_00: I have one from the US, one set.
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  SPEAKER_00: We got the Flash S&P Global PMIs for April.
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  SPEAKER_00: Manufacturing actually rose, Neil, from 50.2 to 50.7.
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  SPEAKER_00: That beat market expectations and marks four months of expansion.
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  SPEAKER_00: And as for services, that fell from 54.4 to 51.4.
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  SPEAKER_00: And that was below expectations, though.
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  SPEAKER_00: Of course, it still signifies growth.
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  SPEAKER_01: That's a global, right?
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  SPEAKER_01: That's the, but yeah, but this is for the U S the flash.
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  SPEAKER_01: Oh, this is only for the U S got it.
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  SPEAKER_01: Okay.
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  SPEAKER_01: Well, that is definitely a drop.
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  SPEAKER_01: Um,
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  SPEAKER_01: like considering,
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  SPEAKER_01: uh,
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  SPEAKER_01: what 85% of,
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  SPEAKER_01: um,
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  SPEAKER_01: uh,
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  SPEAKER_01: but you know,
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  SPEAKER_01: goods and goods and services are services.
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  SPEAKER_01: Right.
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  SPEAKER_01: Right.
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  SPEAKER_01: So I guess we ought to wait them accordingly.
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  SPEAKER_00: Yep.
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  SPEAKER_00: I also have some international if you want me to go through those.
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  SPEAKER_00: Yeah, please.
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  SPEAKER_00: Please go on.
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  SPEAKER_00: We have two from the Eurozone.
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  We have flash consumer confidence for April,
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  which fell from negative 14.5 to negative 16.7.
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  SPEAKER_00: That's the lowest reading the Eurozone has seen since November 2023.
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  SPEAKER_00: And then we also have Eurozone economic sentiment for April.
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  SPEAKER_00: That fell from 39.8 to
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  SPEAKER_00: to negative 14.0.
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  SPEAKER_00: That's the lowest reading since December 2022.
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  SPEAKER_00: Not looking great in Europe.
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  SPEAKER_01: Wow, that is quite a shift.
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  The only thing I can give you is the IMF came out with its new
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  World Economic Outlook,
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  SPEAKER_01: in which they downgrade global economic growth since their last outlook,
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  SPEAKER_01: which updated in January.
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  SPEAKER_01: So this is basically January to April, right?
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  SPEAKER_01: The IMF's chief economist said the odds of a U.S.
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  SPEAKER_01: recession had risen from 25% to 40%,
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  SPEAKER_01: which is roughly in line with what you see from Goldman Sachs,
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  SPEAKER_01: J.P.
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  SPEAKER_01: Morgan, a lot of these other people.
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  SPEAKER_01: And that U.S.
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  SPEAKER_01: inflation is expected to rise to 3%,
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  SPEAKER_01: one percentage point over earlier expectations,
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  SPEAKER_01: I guess largely due to tariff policy.
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  SPEAKER_01: And looking at global growth, it's interesting.
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  SPEAKER_01: Global growth.
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  SPEAKER_01: is expected to decline from 3.3% in 2024 to 2.8% in 2025.
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  SPEAKER_01: And U.S.
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  SPEAKER_01: GDP growth from 2.8% in 2024 to 1.8% in 2025.
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  So it's a full percentage point down and even a little bit
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  further still to 1.7% in 2026.
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  SPEAKER_01: So by then, their expectation is the U.S.
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  SPEAKER_01: will no longer be the fastest growing economy
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  In the developed world,
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  it'll be sort of down,
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  you know,
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  among the others.
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  SPEAKER_01: Although, since the U.S.
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  economy obviously has one of the fastest growth in working age population,
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  SPEAKER_01: some of these other countries will be lower.
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  You know,
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  the Germanys and I think France will be considerably lower by then.
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  SPEAKER_01: That's kind of where we are.
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  SPEAKER_01: A lot of this news obviously is on the downside lately.
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  SPEAKER_01: I think that's a pretty consistent theme of our story.
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  So with that,
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  why don't we launch into Trump ripping into Fed Chairman Jerome Powell.
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  SPEAKER_00: That's right.
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  SPEAKER_00: What's going on?
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  SPEAKER_00: All right, Neil.
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  Well,
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  the long simmering tension between President Trump and Fed
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  Chair Jerome Powell...
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  SPEAKER_00: This week,
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  SPEAKER_00: Trump intensified his attacks on Powell,
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  accusing him of keeping interest rates too high and dragging
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  down the economy.
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  SPEAKER_00: He reportedly called Powell a,
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  SPEAKER_00: quote,
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  SPEAKER_00: major loser and posted on Truth Social that his,
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  SPEAKER_00: quote,
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  SPEAKER_00: termination can't come fast enough.
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  Markets took notice and investors grew increasingly uneasy over
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  whether Trump may
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  SPEAKER_00: actually attempt to remove Powell before his term ends in 2026.
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  SPEAKER_00: Under the Federal Reserve Act of 1913,
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  SPEAKER_00: central bank governors can only be dismissed for cause,
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  a standard traditionally interpreted to mean serious misconduct
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  or malfeasance.
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  But Trump has argued that presidents have the authority to
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  remove commissioners of
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  SPEAKER_00: independent agencies at will.
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  SPEAKER_00: Now,
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  that legal question is heading to the Supreme Court in two
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  related Trump cases,
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  SPEAKER_00: which we've covered around Kathy Harris and Gwen Wilcox.
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  Nevertheless,
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  late Tuesday,
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  Trump appeared to soften his stance on Powell.
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  Speaking to reporters,
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  he said that he had,
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  quote,
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  no intentions of firing him.
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  SPEAKER_00: He framed the conflict as more a disagreement,
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  SPEAKER_00: not a dismissal,
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  and pivoted to more market-friendly headlines talking about
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  negotiating with
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  SPEAKER_00: countries on tariffs.
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  SPEAKER_00: Markets rallied in response.
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  SPEAKER_00: Powell has also responded,
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  SPEAKER_00: saying,
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  SPEAKER_00: quote,
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  SPEAKER_00: the Federal Reserve will continue to make decisions based on data,
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  SPEAKER_00: not political pressure.
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  SPEAKER_00: He also said, we don't respond to headlines.
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  SPEAKER_00: We respond to the economy.
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  SPEAKER_00: So where do we stand now?
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  SPEAKER_00: Powell remains in place.
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  SPEAKER_00: Trump is dialing back the threats.
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  SPEAKER_00: the markets are breathing a little easier.
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  SPEAKER_00: Well, you know,
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  SPEAKER_01: Yeah.
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  SPEAKER_01: But of course, markets weren't too happy even before those threats.
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  SPEAKER_01: I mean, remember why Trump made those threats.
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  SPEAKER_01: Trump made those threats because the market was crashing.
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  SPEAKER_01: I mean, he was desperate.
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  SPEAKER_01: He had to blame somebody.
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  SPEAKER_01: Jerome Powell was out there.
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  SPEAKER_01: So look, this is going to come out again.
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  SPEAKER_01: This isn't the first time Trump has lashed out against Powell.
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  SPEAKER_01: He did so on the campaign trail a little bit.
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  SPEAKER_01: He's done it before.
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  SPEAKER_01: He will do it again.