Brad Olsen: Infometrics Principal Economist on the market's response to Donald Trump's comments about the economy

Stock markets across the US have taken a significant hit over concerns about the negative economic impact of President Donald Trump's tariffs.

After the President refused to rule out a recession, the S&P 500 dropped 2.7 percent, the Nasdaq fell 4 percent and the Dow Jones Industrial Average dropped 2 percent.

Infometrics Principal Economist Brad Olsen says US markets have a right to be worried following Trump's comments. 

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Episode Transcript

Speaker 1 (00:00):
Like we predicted for you yesterday. The US market's got
the jitters today, this after Donald Trump's comments about the
economy refused to rull out of recession. Wall Street worst
day for twenty twenty five so far, S and P
five hundred down two point seven, NASDAK down four. Here
in Australia and New Zealand, we were down. The NZEX
fifty the ASEX two hundred, both down point eight percent.

(00:21):
Brad Olsen is Informetric's principal economist. He's with me now, hey, Brad,
good evening. Is this an overreaction do you reckon or
a real concern?

Speaker 2 (00:30):
I think it's some pretty valid concerns coming out of
the US. And really this is just condensing all of
that risk, all of that worry, all of that uncertainty
that's been coming through. When you know, the president is
asked directly, are we on track for a recession and
he doesn't immediately say no, we're not. I think that's
a pretty strong signal to investors, and certainly that's how

(00:51):
the market's taken it. That Actually the worry from the
new US president over how people's stocks do, how the
markets are going, how the economy is going he's willing
to sort of give that up, and he's showing that
that's already happening. So I think people have been sort
of wavering. If you look at where the markets were
after Trump was elected, there was a real sort of

(01:12):
rally that came through an expectation there was a lot
of growth possibly coming forward, and everyone sort of ignored
the negatives. But I think there's been something like three
point four trillion US dollars that's been wiped off since
you know, those some of those higher points have come through,
So you are now into a position where I think
people are really going, look, we're just not sure what

(01:32):
the fundamentals of growth in the US economy are. Of course,
how the US economy goes has implications for global growth, exports,
and everything else, which is why our markets and the
Asian markets have also taken a dive. Long story short,
no one's quite sure where they're making money in the
short term from.

Speaker 1 (01:49):
Yeah, and it is a concern for I mean, I
was saying last night that forget about Hipkins, Luckson's biggest
problem or biggest political opponent is actually Trump, because he
could potentially put the kibosh on our growth plans, right.
I mean that is a real risk, absolutely.

Speaker 2 (02:06):
And given that, you know the focus of our sort
of trade growth over the last year or two has
been a lot more around the US economy. You know,
that was an area that did quite well for US,
but it's now in a much shakier position. I think
also it doesn't help the economic tone. You know, economists
in New Zealand and to be fair, across the world
have talked about some of those greenish shoots starting to
show through this year. Some of those better economic numbers.

(02:28):
Really hard to convince people that that's actually coming through
when all they're reading about is that the markets are
losing money. If they do go and check their kei
we saver or you know they're investing account at showing
a bit of a blood bath there. I mean, none
of those numbers are easy to comprehend, and I think
it does just put the jitters amongst not only the markets,
but actual real households going, well, look, I'm putting my

(02:49):
money into these investments. I'm a little bit worried. I
do think it's important that people realize that there always
is quite a lot of volatility in the numbers that
sort of the nature of the stock market and less
you're really good at putting three phones to her ears
and yelling into all of them like they do at
the New York Stock Exchange. You probably shouldn't be too worried.
You shouldn't be thinking about those sort of day's day variations.

(03:10):
You should be hopefully thinking about it for the long term,
but assessing your risk because let's be clear, this risk tone,
this worry, this volatility, it's not going away anytime soon.

Speaker 1 (03:20):
Brad, thank you for that. Brad Olsen and the metrics
principle economist on News Talks.

Speaker 2 (03:24):
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