“A Global Macroeconomic and Market Outlook” Ronald Temple, Chief Market Strategist for Lazard’s Financial Advisory and Asset Management businesses, talks inflation, tariffs, and labor supply - and their impact on GDP - together with the latest developments in Europe, China, and Japan, and where the U.S. fits in going forward, before a September 15, 2025 meeting of The Economic Club of Florida.

Show Notes (for complete Show Notes, please visit https://www.economic-club.com/2025-ron-temple)

Mr. Temple took the Club on a world tour of geopolitical issues covering the Eurozone, China, Japan, and the United States. He discussed two areas of concern – inflation and tariffs – and focused on three primary themes:

1. The convergence of GDP growth across developed economies- “US growth rates are likely to slow in the years ahead,” he said. “If we go back in 2023 and 2024, real GDP growth in the United States was 2.8 to 2.9% each year. That's well above what most economists would say is a sustainable growth rate.” He predicted U.S. growth will slow to 1.5%, while sustainable growth is 1.7-2%. He predicted European growth to narrow the gap by increasing to about 1.2%.
2. Impact of Tariffs on Inflation - “What you're going to see is higher inflation in the United States this year and next because of our trade policies and the tariffs. This is a short-term issue, because tariffs, once you raise the price, you don't get another increase the next year. This would be a one-year inflation divergence.”
3. The beginning of the end of American exceptionalism in the markets - Mr. Temple said that in the last 15 years, U.S. equities have gone up 10-11% a year, Euro and Japanese stocks up by 2-3%, and emerging markets about 2%. “I think the U.S. will continue to outperform non-U.S. countries, but the gap between us is likely to narrow, and we're likely to see improving economic conditions in some of the non-U.S. countries that are finally being forced to reform their economies and try to improve productivity.”

Mr. Temple pointed out that most U.S. consumer spending is on services – housing, shelter, doctors, financial advisors, lawyers, etc. Only about 24% is on physical goods.

He said that while U.S. job creation is basically at full employment, the year-to-date job creation is the slowest since 2010. This year, there is a significant decline in the number of people who were born in another country, so there are fewer people in the workplace.

“I think for the Federal Reserve there's a real challenge,” he said. “Inflation is still grinding higher as tariffs work their way through to prices. Unemployment has ticked up a little bit, but job growth is much weaker. And if we look at the number of open jobs in the United States per unemployed person, for the first time in years, we're now below 1.0 − meaning there are more unemployed people than open jobs.”

“I think what you're going to see over the next year is the Fed will be cutting rates. But it's not a slam dunk. It's not a clear-cut case that the Fed should be hitting the alarm bells about unemployment, because there's a chance that we will see unemployment at or below four and a half percent by year end, but inflation looking much more worrisome, and it's going to be very hard for economists in the Fed... (for complete Show Notes, please visit https://www.economic-club.com/2025-ron-temple) A TeleDirections podcast

“U.S. and Florida Economic Outlook” Jackie Benson, vice president and economist with Wells Fargo’s Corporate and Investment Bank, assesses the U.S. and Florida economies for the rest of 2025 into 2026, before a July 17, 2025 meeting of The Economic Club of Florida.

Show Notes (for complete Show Notes, please visit https://ecf.memberclicks.net/2025-july-jackie-benson)

Ms. Benson began her discussion at the national level and particularly looked at tariffs. She said that the real GDP – the sum of all goods and services produced in the economy domestically – contracted by a half-point in the first quarter of 2025.

“What we saw is businesses rush to get ahead of the incoming tariffs that were to be applied on April 2,” she said. “And that import spike drove down the headline GDP number. Imports are not counted in GDP. So, the act of buying a foreign good in itself is not a drag on the economy, but the act of buying a foreign good instead of a domestically purchased good, does reduce the overall level of economic activity.”

She said that tariff concern also affected consumer spending.

“Consumer spending grew at a very slow pace, only half a percentage point in the first quarter, and that's largely driven by those tariff threats increasing economic concern among consumers and causing them to be a little bit more cautious.”

She told the Club that current policy tariff rates are at 16%, compared to just 3% in 2024. She says the rate changes cause uncertainty.

“Tariffs are a one-time increase in prices,” she said. “It's not an ongoing push in inflation rates, so theoretically, it should be a temporary shock.”

Nevertheless, the economic consensus is that tariffs are a drag on the economy, “although that’s changing a little bit. We've seen it play out in history before. It depends on the magnitude of the tariff rate. It depends on the uncertainty they cause. But generally speaking, any added cost, whether taxes or tariffs, are going to slow economic activity.”

She pointed out that the U.S. economy added 140,000 jobs in June 2025. They were primarily in the fields of government and health care with health care being the larger share. Sectors such as finance, real estate, and technology all lost jobs.

She predicted Federal Reserve interest rate cuts of 25-basis points each in September, October, and November of 2025.

Ms. Benson moved on to Florida and pointed out that the state’s economy is very resilient. It has generally outpaced the nation since 1998. “Florida was only one of a handful of states to post positive GDP growth,” in 2024 into first quarter of 2025 she said, noting the state economy grew at 1.4% in that period compared to a national contraction of 0.5%.

The Florida labor market has grown 1.5% over the past 12-months and the state is adding jobs at a rate almost equal to the pre-pandemic rate.

“Florida has recently seen an acceleration in information technology payrolls,” she said. “Also, in professional and business services, and that includes some technology and professional consulting, scientific research, things like that... (for complete Show Notes, please visit https://ecf.memberclicks.net/2025-july-jackie-benson)

“How the SBA is Viewing a Changing World” Lamar Taylor, Chief Investment Officer for the Florida State Board of Administration, discusses the SBA's $275 billion asset management, focusing on asset allocation, assumptions, and potential changes in the economic landscape, before a June 26, 2025 meeting of The Economic Club of Florida.

Show Notes (for complete Show Notes, please visit https://ecf.memberclicks.net/2025-june-lamar-taylor)

With his slides, Mr. Taylor showed the Club how the Florida pension plan ranks very well against the top ten defined benefit plans in the country. He said he achieves that through asset allocation. Currently about 47% of the fund is in global equities, about 10% in real estate, and the rest in fixed income assets such as treasuries, mortgage-backed securities, and commercial paper.

He reviews asset allocation every three to five years and works to get the most efficient return for the asset mix.

Mr. Taylor said that Covid exposed weaknesses in the supply chain which led to an effort to re-shore and near-shore those supply chains. The changes have required people to spend money. Add in labor expense, energy transition, and an aging population, and those expenses affect equities.

“Equities are about as expensive as they’ve ever been,” he said, “and particularly U.S. equities are expensive.”

The price-to-earnings (P/E) multiples are now about 21-times forward-looking earnings.

He said that it was his opinion that U.S. equities are primarily expensive because of concentration, particularly in:

• The Magnificent Seven (principally tech companies in Artificial Intelligence - AI) of the S&P 500 Index
• Spending by wealthy U.S. consumers

“A quarter to a third of the growth in U.S. GDP is attributable to capital expenditures in AI,” Mr. Taylor said, as he expressed concern about how large capital expenditures in the past, such as the Dot-Com boom, have not ended well. “Maybe AI is different. Who knows? I don't know. These are huge companies. They can afford it. They have fantastic earnings.”

He said that half of U.S. spending is attributable to the top 10% of income earners. Their spending used to be in the 30-35% range. The top 20% of incomes now own 90% of equity securities, and the top 1% own almost 40% of those securities.

Recently there have been calls for returning manufacturing to the country and reducing our trade deficit. Mr. Taylor said he has begun to look at those changes differently through a concept called identity-of-payments. He said the United States has been the destination for foreign capital for more than 40-years.

“Because we are buying more than we're selling in the goods market, by definition, you’ve got to be importing capital to be able to do that,” he said. “It doesn't mean that trade deficits... (for complete Show Notes, please visit https://ecf.memberclicks.net/2025-june-lamar-taylor)