Christopher Hodge, chief American economist at the Natixis Bank, is participating in his ideas regarding the forces that make up the American economy. Through a profession that extends to the Federal Reserve in New York, the US Treasury and the hedge funds, it provides a public and special perspective about the scene that depends on politics today, the increasing risks of economic slow, and how modern political decisions may increase.
Global Funding: How does financial and monetary policy interact during your period in the US Treasury?
Christopher Hodge: There was a high degree of coordination between the cabinet and the federal reserve, but the decisions related to the place of the revenue curve to issue debt only within the jurisdiction of the treasury. There were accusations that the Treasury (Minister of Minister Janet Yellen) was involved in “ghost mitigation” by issuing an front load at the short end to create a scarcity in the belly of the curve. But in my view, most of the decisions followed by Minister Yellen were consistent with historical standards. During my presence in the Treasury and FED (2020-23), I never noticed any erosion of institutional independence or bypassing delegations.
GF: Are the last fluctuations in the US or structural dollar?
Hodge: It is a little bit of both, my role and perhaps structural. The dollar remains historically strong; The most likely index has recently achieved unprecedented levels since the Plaza Agreement (in 1985), so some correction was inevitable. After “Tahrir’s Day”, we saw a wide sale in the dollar, shares and treasury. This reflects the growing suspicion of the United States as a commercial partner, a military ally in Europe, and a generally reliable global representative.
With foreign reserves currently more than 50 % in dollars, it is possible to wear. I do not see one of the clear beneficiaries – whether it is the euro, the yen, the Swiss franc or the gold – but more than public diversification away from the dollar. And when the President tweets things such as threats of sanctions or customs tariffs on countries that coordinate with the BRICS or follow up on “anti -Americans” policies, this type of inability to predict makes foreign reserve managers consider twice their exposure to the dollar.
GF: How did the customs tariffs and modern economic transformations restore the priorities of the Ministry of Treasury on liquidity and working capital?
Hodge: One of the things that really surprised me increases the fluctuation – especially in the short end of the curve – and how the markets look increasingly comfortable with it. The Federal Reserve used to work as a successor, and he is mainly the buyer of the last resort, but it is now clearly trying to reduce its mark in the US debt market. We have seen what you might call miniature stress tests, and the market has proven significantly flexible.
This cuts two ways. On the one hand, this tolerance with fluctuation can make the markets more powerful to go forward; On the other hand, this may lead to a lack of the greatest regular risks. I am not sure of the place where this question fell, but what is clear is that the markets have absorbed a great deal of fluctuations, whether they are inherited by politics or trade related or linked to the Federal Reserve Slowly its quantitative tightening.
GF: Soon, someone will have to choose a new chair for the Federal Reserve. If it is up to you, what are you looking for?
Hodge: I was looking for someone who respects him by both markets and within the federal reserve, with a non -partisan reputation and intellectual curiosity. The ideal candidate should lead the data, not associated with hawks or harmony, and show elasticity as conditions change. Christopher Walir fits this profile. He was honest and Duvish as needed and is considered an intellectual intellectual leader. I tend to agree with his current point of view that, under normal circumstances, the Federal Reserve should be a reduction in rates, which are in line with standard economic textbooks.
Wheeler is already in the Federal Open Market Committee, and last September, when the Federal Reserve reduces 50 basis points – a step criticized by the Trump campaign at that time – he did not oppose this, which reflects his tireless position at the time. It is now. His record shows that he resists political pressure and allows data to be directed. Among the general candidates, I think it stands out as the best option.
GF: Natixis recently hosted an event that highlights a set of views on the impact of artificial intelligence on jobs and global economy. What is your point of view on job loss? Do you expect widespread destruction, or a more balanced effect?
Hodge: I think the drag is on artificial intelligence may be exaggerated. Twenty years from now, jobs that we cannot even imagine now will be present and displace people in the workforce. But this is not different from any kind of revolutionary technological change that we have seen throughout history. So I am more optimistic than most of them. Artificial intelligence will definitely replace some roles, but it will also generate new types of work. While the disorder is real, it matches the opportunity. Any percentage of each of them is the real question mark, but I tend to adopt technological changes instead of being skeptical.
GF: In corporate financing, do you expect artificial intelligence to reduce the banking and legal differences?
Hodge: Amnesty International can quickly automate tasks such as credit analysis and due care, making some roles out of need. However, this allows talent to re -allocate higher value activities, and may raise productivity. Although short -term job loss is inevitable, especially for repeated tasks, new opportunities should be established. The transition brings challenges, but it is also great gains, especially for those adaptable to new roles.
GF: How much do you look at the levels of consumer debts and companies, and how do you look at the economy?
Hodge: We expect slow growth during the rest of the year 2025: especially the slowdown in the third quarter, about 1 % in the fourth quarter, then return to the growth of the direction from 1.6 % to 1.8 % in 2026. It is subpair, but not the collapse.
On the side of the company, public budgets remain strong, especially for companies that have reached capital markets during the epidemic. Many of the benefits that have been re -funded or extended, and therefore the “ripening wall” of fear was not achieved. Even bilateral loans were largely pushed to soften the course.
On the side of the consumer, there is a clear complexity. The highest 20 % of the waves are still spending, generally, the public budget is relatively strong. But the bottom is 40 % under pressure. We are witnessing an increase in the wounds in cars, mortgage, credit card and student loans. The precautionary savings exceed, and the income remains stable, but the spending has eased.
This type of decline is a typical late course. Companies are cautious about sales, and consumers in job security. We expect growth in the Q3 to help, but the main public budget force should help prevent a downward cycle.
GF: Can the United States grow reasonably from the burden of its debt of $ 36 trillion?
Hodge: definitely. Countries do it all the time. If you assume 3 % growth forever, definitely, the debt track looks better. But the potential growth of the United States is closer to 2 %, and at this rate, the debts will continue to rise. None of the political parties does not address this issue seriously, and the confidence funds in social security are on the right path until they are exhausted by the early thirties, and perhaps sooner. I think, by 2028, this will become a major political issue; Everyone who takes office will inherit a financial bomb.
We already see the signs of stress. Among the total US debt of $ 36 trillion, the public keeps about $ 29 trillion and about 32 % of foreign investors. Even the humble decline in foreign demand can raise the term installment and borrowing costs.
We did not do anything meaningful to bend the cost curve. The Ministry of Government barely touched the problem; Federal salaries, for example, are only 3 % of estimated spending. Without treating entitlements, religion will continue to bloat.
One of the plans I often share how the number of workers has collapsed for each social security beneficiary, from 25 in the fifties, to 2.1 by 2030. Add in slowing down migration and other demographic trends, and the idea of growth begins on our way until it looks much less.
