Plain English with Derek Thompson If Trump’s Economic Ideas Are So Bad, Why Isn’t the U.S. Economy Doing Much Worse?
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Jul 17, 2025 
Harvard economist Jason Furman, former Chairman of the Council of Economic Advisers, joins to discuss the U.S. economy's surprising resilience despite Trump's tariffs. He explores how these policies, initially feared to cause a recession, have not significantly hurt growth or employment. The conversation also dives into the potential fallout if Trump were to fire Jerome Powell, questioning the implications for Federal Reserve independence and economic stability. Furman challenges traditional economic models and underscores the complexities of monetary policy today.
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Macroeconomic Models Hold Up
- Despite fears, Trump's tariffs haven't triggered a dramatic economic crisis so far.
- This suggests macroeconomic models accurately estimated the tariffs' moderate impact and ignored overblown uncertainty effects.
Tariffs' Effects Are Delayed
- Tariffs' impact is delayed by inventory buildup and phased implementation.
- Businesses initially absorb costs, postponing price increases until tariffs stabilize.
Tariffs and Fed Actions Intertwined
- The Federal Reserve's higher interest rates partly counterbalance tariff-driven inflation pressures.
- Tariffs may weaken global trade, indirectly lowering prices like gasoline, helping to moderate inflation overall.