As the U.S. economy faces a stagflationary shock, how will the Fed navigate this tricky environment?
I'm Alison Nathan, and this is Goldman Sachs Exchanges.
My guest today is Rob Kaplan,
the vice chairman of Goldman Sachs and the former president of the Dallas Fed.
Rob, welcome back to the program.
Good to see you, Alison.
So, Rob, there is so much to talk about today.
But of course, there is a lot of concern that the U.S. is headed for a stagflation shock,
monetary policymakers to deal with.
So first of all, let's just get your view.
Do you think that we are facing stagflation ahead?
We are facing most likely slower growth and stickier prices.
So I guess that might be the definition of stagflation.
And there's several reasons why, not just tariffs.
We're right now in the middle of an effort to cut government spending and lower deficits.
So it's a question mark how effective it's going, but that would normally...
Slow growth.
You've got a regulatory review in every industry that should help growth,
but it might take a year or two.
You've got immigration flows due to deportations.