#254 Dr. Lacy Hunt: The Five Recessionary Forces Creating an Economic Interregnum

In Episode 254 of The Julia La Roche Show, legendary economist Dr. Lacy Hunt, Chief Economist at Hoisington Investment Management, analyzes what he calls an economic "interregnum" where five convergent forces are aligning to depress growth. Dr. Hunt methodically explains how tariffs will ultimately prove deflationary rather than inflationary, why the Fed's restrictive monetary policy is misplaced, how federal spending cuts are creating headwinds, why massive debt overhang limits policy effectiveness, and how changing demographics will impact long-term prospects. With over 56 years of experience and historical perspective dating back to the 1920s, Dr. Hunt delivers a sobering but authoritative prediction that recession lies ahead in 2025, describing it as "a long, difficult slog" rather than a brief downturn.Sponsor: This episode is brought to you by Monetary Metals. https://monetary-metals.com/julia Dr. Hunt is an internationally known and award-winning economist. He received the Abramson Award from the National Association for Business Economics for "outstanding contributions in the field of business economics."  Dr. Hunt is Executive Vice President and Chief Economist of Hoisington Investment Management Company (HIMCO).This is the 56th year in Dr. Hunt's career. He served as a Senior Economist for the Federal Reserve Bank of Dallas. When he entered the Fed, William Martin was chair and was grappling with severe inflation and when Dr. Hunt left the Fed, Arthur Burns was chair and also trying to contain rampant price increases.  Dr. Hunt served 23 years on the Board of Trustees at Temple University where he received his PhD in 1969, and is an honorary life trustee as well.Timestamps: 0:00 - Introduction and welcome1:16 - "Interregnum" explanation1:28 - Tariffs discussion begins2:08 - Economic boost from tariff announcements2:49 - Consumer buying ahead of tariffs3:42 - Employment impact of demand surge4:26 - Inventory accumulation5:03 - Federal spending decline (FY 2025)6:18 - Economy in frail condition7:05 - Beverage ratio analysis7:45 - Average hourly earnings indicator8:11 - April's wage growth weakness9:30 - Late Easter timing challenges10:31 - Recession prediction10:58 - Five convergent economic factors11:32 - Microeconomics of tariffs12:55 - Price elasticity in international trade14:31 - Historical context (1920s-1930s)15:44 - French devaluation of 192517:43 - Smoot-Hawley tariff impact19:45 - Chart explanation of M2 trend21:03 - Tariffs' impact on money supply22:15 - Monetary policy restrictiveness22:51 - Fed's "data dependency" critique25:31 - Other deposit liabilities explained28:38 - Fed policy recommendations29:37 - Tax cut potency limitations31:16 - Fed's need for longer-term view32:08 - Forward guidance discussion33:22 - Asset reallocation issues35:48 - Net national savings analysis37:39 - Birth rate economic connections39:46 - Immigration discussion42:52 - Recession confirmation43:49 - Historical economists on debt44:37 - Interest expense approaching defense spending46:18 - US debt impacts (125% of GDP)48:30 - Gross vs. net debt explanation49:48 - Fisher equation for bond yields53:00 - Tariffs' deflationary nature55:32 - High-tech sector growth analysis56:38 - Aircraft sector growth unsustainability57:11 - Federal spending outlook1:00:03 - Need for tariff dispute resolution1:01:18 - Closing remarks