William Lee, Chief Economist and Executive Director of The Milken Institute said that the slowdown in US consumer spending is a positive development, as the economy was previously growing at an unsustainable rate above 2%.

“There is without a slowdown in the US economy because it was growing at a very unsustainable pace, well above 2.5%, and coming down to close to 2% is where the natural rate of growth is,” Lee said. He explained that this slowdown is necessary to bring the economy back to its natural growth rate.

Lee also dismissed the widespread predictions of a recession as “incredibly absurd,” arguing that many forecasts rely heavily on unreliable “soft data” like consumer confidence surveys. He stated that these surveys are often influenced by factors like stock market fluctuations and job market conditions, which don’t always accurately reflect actual consumer behaviour.

“People say they feel awful, they think the world is coming apart, and they go out and buy a new car,” he said, highlighting the disconnect between survey responses and spending habits.

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Regarding trade policy, Lee stated the Trump administration’s approach is an attempt to “level the playing field” with trade partners. He said that the concept of reciprocal tariffs is aimed at encouraging other countries to lower their tariffs, rather than necessarily raising US tariffs.

He said, “The notion of reciprocal tariffs does not mean that we’re raising our tariffs. It means we’re raising our tariffs up to where our counterparties, our trading partners, have their tariffs.”

He sees the administration’s actions as an “opening round” in establishing a new World Trade framework.

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For the entire interview, watch the accompanying video

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