Whack of all trades: America’s economy

0:02The Economist

0:10Hello and welcome to The Intelligence from The Economist. I'm your host, Jason Palmer. Every weekday, we provide a fresh perspective on the events shaping your world.

0:25There's been much talk and posturing about who's providing how much aid to Ukraine. We look at a donor that's quietly been helping the country's economy, its entrepreneurs, even its cultural sector, and sharing wisdom about recovery from disaster. And we take a look at Adolescence, which has topped the Netflix viewing figures in more than 70 countries. Our correspondent says that despite the name of the series, its troubling themes are not just about adolescence.

1:01First up, though.

1:10America's economy had been remarkably strong. There are indications that it is slowing right now, largely as a result of Donald Trump's policies. Simon Rabinovich is our U.S. economics editor. One closely watched indicator shows that consumer confidence is falling down to its lowest in 12 years. But President Trump still believes that relief is at hand. And you'll be hearing about that on April 2nd. And it will be Liberation Day because we'll be taking in large amounts of money for our country. He has said that April 2nd will be the day that he'll slap hefty new tariffs on imports from all over the world.

1:49In fact, he got a bit of a head start on those, announcing some this week. What we're going to be doing is a 25 % tariff on all cars that are not made in the United States. But for all of Mr. Trump's insistence that more tariffs are coming, there's still a lot of confusion and fear about how high the tariffs are going to be and what it all means for the American economy. For many companies, that's leading to something like a state of paralysis. And you hinted there that an economic slowing might be on the horizon. What is it that you see in the data that suggests that? Well, we're in this strange in-between stage right now where, on the one hand, the hard data is still holding up okay, but a lot of that reflects momentum from last year.

2:31I mean, let's remember that for the last number of years, America has been the strongest growing large economy in the world. On the other hand, we're seeing a lot of weak sentiment data, both from the business side as well as especially from the consumer side reflecting worries. And that's beginning to spill over into the beginnings of a slowdown in spending. If you look at high-frequency data, it would suggest that GDP growth in the first quarter might be as low as less than 1%, so the lowest in quite a number of years. And certainly there are concerns that when you look at how wobbly the stock market has been, that there could be quite a bit more pain in store.

3:08And when you say that all of this is leaving businesses in a state of paralysis, what do you mean by that? Well, the basic point for businesses is that if you're going to be making investments, you're not making it based on what you think is happening next week or next month, but really what is the outlook for the next number of years, if not decades, if we're talking about a multi-billion dollar investment. Now, you have had a lot of companies that have come out and have said, we are going to be pouring billions of dollars into Donald Trump's America. Hinday this past week said they'd be investing about$21 billion over the next few years.

3:40Apple, TSMC, the big semiconductor company, they've all made similar announcements. The problem is that if you actually look at what their business plans involved, many of these investments were already entrained. They appear to largely be PR jobs trying to assuage President Trump. The reality for a lot of businesses is that when you're thinking about the potential of tariffs going up, tariffs going down, it makes for a highly, highly uncertain environment. And so speaking to a larger range of businesses, surveys that look at small and medium-sized enterprises suggest that a lot of companies right now are simply sitting on their hands waiting to see what the business landscape is actually going to look like.

4:21So this isn't a reduction, a sort of downturn in sentiment so much as a manifestation of uncertainty. Well, it's both. Uncertainty is basically off the charts. There's a few different ways that economists try to measure uncertainty and measures of trade policy uncertainty, of general economic policy uncertainty are remarkably high. Some indexes suggest that trade-related uncertainty is at its highest going back more than half a century. That has a real impact then on business sentiment. And so surveys of whether CEOs are confident in the economy, whether consumers are confident about the economy, are all looking extremely weak.

4:58Now, these can all turn around. There's sentiment-based indicators, so people have a yo-yo sometimes in the way that they view the economy and are pessimistic one moment and more optimistic the next. But I think it's the accumulation of indicators on top of the fact that the stock market is off to an awfully weak start to the year. That leads to the belief that future investment is going to be quite a bit slower. And a lot of the uncertainty here surely is how serious the administration is about tariffs. In particular this week, we've had the announcement of some coming 25 % tariffs on all foreign cars.

5:33What do you make of that? What do you think the effect of that will be? Well, it potentially could have a dramatic impact on both the global and the American auto industry. The auto industry everywhere in the world is an integrated industry that relies on cross-border trade. America, of course, is tightly, tightly woven in with production networks in North America, with parts from Mexico and Canada and finished product often crossing the border as many as seven or eight times finally culminating in the finished auto. So the fact that they're now going to have a 25 % tariff on all autos imported as well as eventually on all auto parts coming in from abroad is massively disruptive to the global but also to the American auto industry.

6:15Very bad for countries like Germany, South Korea, Japan that ship finished product to America. Very, very bad for America's two biggest, closest trading partners in Mexico and Canada. And ultimately, not very good for America either. Now, Donald Trump believes that these tariffs will bring investment to auto factories in America. And over time, he's right, because the 25 % tariff is really onerous. Nevertheless, what that means is you're going to end up with a highly protected, highly uncompetitive American auto industry that is producing inferior vehicles. at higher prices, not going to be able to export to the rest of the world.

6:55So this is not a recipe for success, either in the short term or the long term, for the American auto industry. And equally, it's not going to be good for American manufacturing writ large. And in your estimation, what do you think we should expect for so-called Liberation Day when more tariffs come? Nobody knows exactly what to expect on April 2nd. The one thing that we can say with absolute certainty is that President Trump wants to see much higher tariffs on the rest of the world. On the campaign trail, he talked about a universal across-the-board tariff of 10 or 20 percent. More recently, he's talked about reciprocal tariffs, the idea that whatever tariff is levied by a foreign country on America, America will do likewise.

7:33But exactly what goes into those reciprocal calculations is a matter of debate. He's talked about tax rates. He's talked about non-tariff barriers like regulations. Most recently, he's said that he will provide pleasant surprises to the rest of the world. He really ought to be very harsh, but in fact, he might be somewhat lenient. But I think it's fair to assume that the tariffs announced on April 2nd are not going to be small, insignificant rounding errors. They will be something substantial. They will target the countries that Donald Trump is most exercised about for running big trade surpluses against America.

8:09They will certainly target the European Union, quite likely China, Japan, India, Vietnam, Canada, Mexico. The list goes on. Probably what we see on April the 2nd is not going to be the end of the story because other countries are highly likely to retaliate. And President Trump has said that he will retaliate against any retaliation. So I think it might be the potential beginning of an escalatory cycle of tariffs. I mean, some hints of which we have already seen as the initial tranches of tariffs have gone out. I mean, to your mind, at what point might this stop? At what point did the effects become real enough on the American economy or manufacturing or inward investment for Mr.

8:52Trump to wind back, to put on the brakes? Look, I think the sorry reality is that it does not appear that there's any kind of imminent forcing event that could lead to a big moderation from President Trump. In the first term, a lot of investors took comfort that he seemed to really respond to the stock market. This time around, he seems to be a man on a mission. He believes that that whatever we see in the market is just a kind of short-term pain that ultimately will be that long-term gain. So the market itself does not appear that it's going to restrain him. The economy, yeah, the indicators are looking softer.

9:27We're talking about weaker growth than previously had been expected. But we're not talking about an imminent recession. It is possible that if we get a sustained problem in the market, as well as a true crash of the economy, that his approval ratings would crater to a level that would actually hold him in check. But we're still a long, long way off from that happening. So I think in the short term, there's no reason to think that Donald Trump is going to ease off his tariff war. Now, it probably will not last for the duration of his term in office, but we're talking about a period of years then rather than months.

10:01So I think this really is quite worrisome for the global economy. Simon, thanks very much for your time. My pleasure, Jason. Thank you.

10:38Transcription by CastingWords That is caused by and is causing some really complex social and political effects. We've done quite some digging to understand why it's happening so suddenly and what it means for the future.

11:01In Ukraine, international military support has meant the ability to keep fighting. It meant access to foreign military intelligence, the ability to protect some cities from Russian aggression using modern air defense systems. The focus has been on military aid to Ukraine, but that's not the country's only form of support. While I was reporting from Odessa, southern city in Ukraine, I kept coming across signs in the street or programs while I was doing research that had the Japanese flag on them, reading from the people of Japan. Sarah Lornuk is an audio correspondent for the intelligence. Now, this is just not one of the top donors that you think of when it comes to Ukraine, but it is still the fourth largest single nation donor behind the US, Germany, and the UK.

11:52And because Japan is largely demilitarized, none of that support comes in the form of military aid, which I suspect is why we don't hear about it as much. But it does come in the form of economic support for other sectors. By which you mean grants, loans, piles of cash? All of the above, really. So, I mean, it starts with some of the most obvious stuff. They rebuild the broken things. This includes everything from schools, bridges, water pumping, infrastructure, hospitals, post offices, basically anything that you need to keep the country running. And all of that support is run through the United Nations Development Program, or the UNDP.

12:32And so I spoke with the UNDP's Oleg Chankotadze. Japan is one of the major contributors to UNDP in Ukraine. Actually, since I started working with the UNDP in 2016, they've been constantly supporting a variety of initiatives, but specifically on economic recovery. That's something they were interested in. And like you said, loans, piles of cash. One of the things they direct that cash at is the labor market, which principally involves retraining people for new jobs. The profile of the workforce is changing, obviously, because of millions of Ukrainians being abroad and hundreds of thousands being drafted.

13:08And in specific professions, we have exclusively women applying for. We have groups of tractor drivers, and those groups are formed exclusively by women. And so in retraining people, they are going to the training centers in Ukraine, refurbishing them, ensuring their curricula are up to snuff. They're providing training equipment and paying for the trainers themselves. But Oleg is actually the entrepreneurship specialist. And so he also oversees grants being doled out to small and medium-sized enterprises. And that makes up about 99 % of all of Ukrainian business entities and 74 % of all jobs in the country.

13:49And what does entrepreneurship and running SMEs look like in Ukraine these days? So I asked him if there was any stories about handing out these grants that really stuck with him. And as in many cases in Ukraine, you never are far from someone who's been displaced themselves. Oleg in 2014 lived in Luhansk and was displaced. And he told me the story of a man who was displaced from the same region at the same time. And he owned a business for agricultural equipment manufacturing. He and his wife relocated with one memory stick, a flashcard in the pocket. That flashcard had all the designs of the machinery, all the information to recover their business in a new place.

14:32And luckily we had an active grants program funded by the government of Japan. Obviously they have their own savings and they invested and they managed to restore their businesses and their production capacity to a degree that they could again export the products all over the world. And so the reason this sticks with them is when the full-scale Russian invasion came in 2022, it turns out they had not moved their business far enough away from that front line and they had to rebuild again. And again, that family came to Oleg and he was able to support them with yet another grant that came from the Japanese government through the UNDP.

15:11And again, this man rebuilt his business. I think the story really highlights that continued external support is a big factor in what allows Ukraine's economy to maintain its resilience. And the economy does have a great deal of resilience because even in the midst of all of this war, the OECD estimates the Ukrainian economy grew by 4 % last year. And to Oleg's story, the agricultural industry is a big pillar of that growth. And so presumably with that in mind, Japanese support is focused pretty much entirely on the economic realm then? It is focused in great part on the economic realm, but it is not exclusive.

15:49And so they're effectively supporting anything that is behind the front line, the parts of Ukraine worth protecting so that the soldiers are fighting for something to come home to. And so I met with an archaeologist named Lyudmila Mironenko, a research fellow at the Institute of Archaeology at Ukraine's National Academy of Science. We have the materials from the Stone Age till the early modern time. And so they oversee all of the country's historical artifacts, which has a heightened importance in this war where Russia is claiming that Ukraine and Russia are cut from the same cloth, have the same shared history.

16:26These are the materials that go back hundreds and hundreds of years to document Ukraine's distinct history and society. And Lyudmila, along with some of her teammates, were invited to Japan to learn from their archaeologists, and she just returned from her second trip in January. They suggest to us that they can give the experience which they have because they have a deal with the results of natural disaster. And maybe some of their experience will be also helpful in our situation. So from the Japanese experience of dealing with things like tsunamis and earthquakes, the Japanese team is able to impart best practices so that the Ukrainians can learn to cope with things like power cuts, vibrations, and the earth shaking.

17:10And in Ukraine's case, obviously not from a natural disaster, but from shelling. And then Japan has also provided the Ukrainian Museum and the Institute of Archaeology with different materials that they need to protect their collections. I mean, what's really interesting there is this notion that it's not just keeping businesses going or indeed sending shells and guns and what have you, but as you say, protecting everything that's behind the front line, giving Ukraine something to fight for, to come home to. Yeah, and Japan seems to have understood that from far before the 2022 full-scale invasion, because Japanese support, while it did increase then, has really stretched back to 2014 when Russia launched its first war of aggression on Ukraine.

17:51And that's something I really saw at the National Ballet of Ukraine. It's now, and here we are dancing, and the audience are there, but it's closed, So we can't really see that. It's still very cool. I went to Keeve's iconic opera house and I met 21-year-old ballerina Kate Mikluka. And she was telling me about how the connection in the arts, in her realm, has lasted for a decade. She herself has been to Japan five times. And her ballet director is also from Japan himself. And so this is a deep connection that's formed between Ukraine and Japan that can't be explained by being proximate to a conflict as it can be for European countries.

18:35Here, she said that over time, she's really felt that her role is more of an ambassador than it is as a dancer. Not a lot of people are ready to watch the videos or read some horrible stories about how our cities are destroyed. They are really tired of that. But with Bali, they are just starting to pay attention to what is really in Ukraine happening. Right. By being, you know, impressed by you guys. Yes. By attaching to you guys, then all of a sudden they care about where you're from. Yeah. I think so. It's nothing to do with the world. She said one of the most memorable moments of any of her trips there was in visiting Hiroshima, where she had a chance to tour the museum and meet people who had grown up in the shadow of the bomb.

19:22And there she said it was just this impactful moment where she understood a little bit more about why she thinks the Japanese people feel something so deeply for the Ukrainians. And there's something a little bit more virtuous about their connection than just about supporting their businesses or supporting their museums. Sarah, thanks very much for joining us. Thanks, Jason.

19:56Like cats, many teenagers have their own neighbourhood maps, marked with dangers. This street is dodgy, that one is safe, that are invisible to adults. Andrew Miller writes Backstory, our column on culture.

20:16Adolescence, the hit new drama on Netflix, charts another shadowy world. this one online, which is often opaque to parents. Its genius is to position its viewers as explorers alongside the characters, and together they discover undreamed-of perils and emerge shaken and aghast. Police! What's going on? What are you looking for? You're making a big mistake. He's only a kid. Dad, I haven't done anything. Adolescence tells the story of 13-year-old Jamie Miller, who stabs to death a female classmate named Katie. For a gritty drama set in northern England, it's been a scorching global sensation. Do you know a girl called Katie Leonard?

21:08Yeah. Netflix says it's topped its viewing charts in a whopping 71 countries.

21:17Each of its episodes consists of a single continuous shot so that the camera rides with Jamie to the police station, say, or in the second episode, which is based in a school, it tracks a copper on a foot chase and then soars on a drone to the murder scene. This bold technique hints at the sweep of connections that are the context of the crime and it immerses you as the viewer in the rush and claustrophobia of events. But for adult viewers though, especially those who are parents, I think the show's power also comes from watching their TV counterparts realise how little they've understood the youngsters' lives.

22:05We thought he was safe, says Eddie of his son's internet habit. and as viewers we see the parents and the detectives begin to grasp the nasty teenage codes of emoji and what to them on first sight had seemed to be friendly interactions on social media and it becomes clear over the series that Jamie and some of his classmates have been tainted by the toxic manosphere, an online culture that portrays women and girls as a mix of objects, enemies and prey. Now whether it's music or slang or fashion, grown-ups often tend to be the last to grasp teenage trends. Adolescence dramatizes the nauseous fear of finding out too late what the kids have been up to.

22:56In Britain and elsewhere it's revived debates about restricting smartphone phone and social media use among children, as some countries already do. By no means is this a flighty moral panic. It's clear that misogyny in the manosphere, along with violent pornography, are warping minds and attitudes and causing enormous damage. The show was actually partly inspired by recent cases of teenage boys murdering girls. But murder is only the most extreme of a continuum of awful harms and abuse inflicted by boys and young men on girls and young women. It's totally understandable that this online culture has been the focus of responses to adolescence.

23:47This after all was a revelation for many viewers as it is to some of the characters in the story but the tragic truth is that this problem is part of a much wider one. the blight of male violence against women, that's much older than social media and stretches far beyond childhood. On average, for instance, in England and Wales, where the show is set, more than one woman is killed every week by a current or former partner. And when a child is killed, the suspect is much more likely to be a parent than a peer.

24:25Although much of the commentary on adolescence has missed this wider context it's there in the drama if you watch closely this show knows that male rage and violence are not confined to teenagers and that internet culture and noxious influences are only part of the explanation for what the character Jamie did The moving final episode hints at how anger and insecurity can cascade down generations of men, even in what looks like a normal, loving family. Eddie is a caring dad, but he's also a coiled spring, and he describes being thrashed by his own father and talks about his determination to be gentler with his kids, one of whom nevertheless ends up committing an appalling crime.

25:18He has a terrible temper, Eddie's wife Manda says of their son. But so have you.

25:43That's all for this episode of The Intelligence. The show's editors are Chris Impey and Jat Gill. Our deputy editor is John Joe Devlin, and our sound designer is Will Rowe. Our audio correspondent is Sarah Larniuk, our senior producer is Rory Galloway, and our senior creative producer is William Warren. Our producers are Benji Guy, Jonathan Day, and Henrietta McFarlane, with extra production help this week from Peter Granitz. We'll all see you back here tomorrow for The Weekend Intelligence.

26:15Thank you.