Optimistic on the U.S. Economy | Claudia Sahm and Jimmy Connor

Jimmy Connor May 1, 2026 1:00:14

Kevin Warsh's takeaways

Top takeaway The guest expects Kevin Warsh to take over as Fed chair in June — he passed committee but still lacks full Senate confirmation as of the interview — and warns he inherits a Fed that is not positioned to cut rates anytime soon.
Having overlapped with Warsh at the Fed, the guest says he knows the institution well as a former governor (2006-2011) and one of the 12 votes, but forming consensus as chair will take time.
The guest notes Warsh argues inflation is 'a choice' — a monetarist idea she says is easier when the economy tends toward 2% than 3% — and that he wants to use the Fed's staff to work on his 'new theory of inflation' and productivity questions.
The guest does not expect big changes in interest rates or the balance sheet under Warsh anytime soon, but expects a different style in communication and press conferences, with the Fed staying in wait-and-see mode for quite some time.

Top takeaway The host argues higher oil is squeezing consumers, citing Delta's extra $2 billion fuel cost for Q2, new surcharges at Amazon, FedEx and UPS, and his own Toronto pump price rising to roughly US$5 per gallon equivalent by the time of the interview.
The host keeps pointing to the resilience of the US economy and stock market, noting the S&P and NASDAQ keep grinding higher despite policy uncertainty.

Top takeaway The guest says she is more bullish than bearish on the US economy as of the interview — and more optimistic the longer the horizon — citing a resilient consumer, a good labor market, and AI investment firing on all cylinders.
She frames the economy as a 'Whiplash Economy' of repeated supply shocks — pandemic, energy, tariffs, immigration swings, AI — that rewire the fundamentals, break the usual rules of thumb, and worry her most as they layer on top of each other.
She expects the Fed to hold rates for quite some time, waiting for tariff-driven inflation to roll off and watching for energy-price spillovers into core, while seeing no evidence yet that inflation expectations are becoming unanchored.
She describes a low-hire, low-fire labor market at 4.3% unemployment that is good overall but vulnerable, arguing that with labor-supply growth near zero, a good monthly payroll print is close to zero — so negative prints are not automatically a recession signal.
She warns White House pressure on the Fed — the attempt to fire Governor Lisa Cook and the criminal investigation of Powell — is counterproductive, arguing institutions under enough pressure for long enough will break.