So Larry the big issue everyone's discussing is can the Fed bring about what is called a soft landing. I guess that's to say
avoid a recession. As you know Bloomberg did a survey of 72 economists that show their economies are getting more and more
skeptical. It's at the twenty seven point five percent in April before it was 20 percent. If you go two months back it was 15
percent. Look I think the risks are going way up. Twenty seven and a half percent this year because next year is riskier than
this year translates to something getting towards two thirds for a two year period. And I'd be a bit above that in my judgment.
Here's the key fact. We have never had a moment in the United States when inflation was above 4 and unemployment was below 4
when we didn't have a recession two years within the next two years. So we may pull it off. And certainly it's hugely
important that we succeed in pulling it off. But the combination of overheating followed by ISE policy delay followed by supply
shocks means I think it's a very difficult set of challenges. And recession in the next couple of years is clearly more likely
than not. Some of the banks are starting to move in that direction. Your survey moved in that direction and I suspect
that's how the consensus will evolve. And Larry I feel like we're quite a little bit between a rock and a hard place that is
between inflation on the one hand and recession on the other. And we worry particularly about how the people who are less
fortunate are affected. You have a research paper from the National Bureau of Economic Research this week talking about
what happens with wage growth. You would like to think that when wages grow that helps everybody. Not necessarily so. Here's the
here's the fact. David if you just look at nominal wage growth just measured wage growth and growth in
workers purchasing power up to a point perhaps four percent four and a half percent they move together. But pass that point
because when inflation is running above 4 percent you start to have inflation that serious inflation things move in the high
opposite direction and higher wage growth seems to go with lower growth in workers purchasing power. That's why I was so anxious
on this show over the last year about the possibility of overheating labor markets. And unfortunately that's what seems
to be materializing with average real wages having one of their worst performances over the last year that we have seen.
Larry we've got a big event coming up on the weekend. That's the first round of the presidential election over in France. We have
Marine Le Pen who is often thought to be just almost impossible to elect. Although it's a closer race at the moment than we
would have thought. What's going on there. Look I'm not a political expert on
France but what I see is eerily reminiscent of the period before Brexit in the US in the in the UK and the period before Donald
Trump's 2016 election in the United States. I think by far the more likely thing is that President Krohn will win. But we have
to recognize that the fact that Marine Le Pen will ultimately be elected looks at least as plausible now as Donald Trump's
election did a bit before the US election or as Brexit did a bit before the British election. So I think we need to be nervous as
we watch that situation and all people of goodwill have to be standing with the French people. But I think this shows
the power of pocketbook issues for regular people and frustration with elites
which has been a potent political force all over the world. Again I think this is going to end with President Macron but
nobody should be serene or complacent that that's the case. And part of the reason why Mrs. Le Pen is catching up with them is
Macron actually has to do with Ukraine because Mr Macron has really been focused on Ukraine international issues while Marine
Le Pen is focusing on how much people pay at the gas tank and also for their food. So let's talk about what's going on right
now with Ukraine and Russia. And my question is is Russia really prevailing or at least fighting to a stalemate. The United
States when it comes to the economic war as opposed to military work much the way Russia seems to be losing or at a stalemate in
the military war. I think we're going to need to ratchet it up if we want to do grave damage to the Russian economy. We can't
allow it to continue to be the case that Russia is able to get huge levels of hard currency from the sale of products. It can't
continue to be the case that there's a way that the Russian financial system can connect in a global context but that is
going to mean some sacrifice. And I think the question is whether the West is going to be prepared to make those
sacrifices. I certainly hope so. And I think President Biden has shown wonderful leadership
on this. But a huge amount depends on Europe right now. I hope we will be prepared to spend a dollar on arming Ukraine for
every two or three dollars that we allow Russia to get in hard currency by exporting energy products to Europe. If we do that
Ukraine would be in a much stronger position to win this win this war and repel this barbaric invasion. And Larry in the
meantime the Covid pandemic is not over. Just ask the people in Shanghai. Look at what's happened in Shanghai is so dramatic.
Who'd have thought this would happen at the same time. China seems to be backing off a little bit some of its distance from
the west for example with respect to the audit its position with publicly traded companies from China. Is President Xi feeling
the pressure there. I think there must be sweaty palms behind the facade in China right now. David I've been saying for some
time that it's a mistake to view China as a rampaging economic giant in the way that many in the United States viewed Japan at
the end of the 1980s that between exit from Covid profound financial strains internal
issues around inequality tension over state enterprises. China has real economic vulnerabilities. What I'm fearful of is that
those vulnerabilities will translate into hostile nationalist. Impulses as a way of holding the country together when the glue
of rapidly growing prosperity starts to peel and flake off. So I we need to be doing a lot of hard thinking about how we're
approaching China going forward. And finally let's finish with a couple of rapid fire questions first. Elon Musk very much in the
news this week because he took that big stake in Twitter. What did you make of that.
Elon Musk and Twitter seemed almost made for each other. It's hard to imagine a less passive shareholder. I suspect that's
going to give the business press a lot of stuff to cover going forward. And finally Larry I'm used to seeing your name in the
front section New York Times not so much the sports section. And by the way it was tied to the Masters. I thought maybe you were
competing this year. No such no such luck for May. The course record is 40 strokes behind my score. But I was talking about
record inflation in the Augusta Pimento and cheese sandwiches which is an illustration alas of how pervasive inflation now is
in our economy.