Special Briefing: The New Administration’s First Month
The first Special Briefing of 2025 will offer a deep dive into the new President’s first month and the implications of new policies. Featured speakers include former US Representative Carolyn Bourdeaux (D-GA); Jeffrey Holland, Vice President, Research, Peter G. Peterson Foundation; Eric Kim, Senior Director, U.S. Public Finance at Fitch Ratings; Vikram Rai, Fixed Income Strategist, Head of Municipal Markets Strategy at Wells Fargo; Torsten Slok, Partner and Chief Economist at Apollo; and Mark Zandi, Chief Economist, Moody’s Economics.
Moderated by William Glasgall, Volcker Alliance Public Finance Adviser and Penn IUR Fellow, and Susan Wachter, Co-Director of Penn IUR, this briefing is the fifty-seventh in a series of sixty-minute online conversations featuring experts from the national research networks of the Volcker Alliance and Penn IUR, along with other leading academics, economists, and federal, state, and local leaders.
Special Briefings are made possible by the Volcker Alliance and members of the Penn IUR Advisory Board.
Recordings of the entire Special Briefings series are available on the Volcker Alliance website: SPECIAL BRIEFING SERIES ARCHIVE.
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SPECIAL BRIEFING: THE NEW ADMINISTRATION'S FIRST MONTH - EVENT RECAP
Although inflation has remained a pervasive challenge since the COVID-19 pandemic, key indicators including a stable unemployment rate and strong GDP growth signaled a robust economy coming into 2025. These metrics may shift amid the current political landscape, however; Zandi noted that they are marked by an overwhelming “uncertainty of economic policy.”
Downsizing efforts led by the Department of Government Efficiency (DOGE) exemplify this uncertainty. “One thing that we’ve been watching more recently is, of course, the impact of DOGE,” said Slok. While the unemployment rate has remained stable during President Trump’s first month in office, the looming threat of large-scale government layoffs could change this. “The implications from a macro perspective could become very, very important for interest rates, especially, of course, if the layoffs begin to show up in the form of a high unemployment rate,” Slok explained.
In tandem with the Office of Management and Budget, DOGE “is introducing an extraordinary amount of uncertainty to state and local governments,” Bourdeaux emphasized. “State and local governments really need to take this moment to do an assessment of how the federal government, federal spending and federal tax policy, even the economic impacts, will affect their budget,” she advised. Particularly through “big cuts in Medicaid,” Bourdeaux noted, “the impact on the economy of rural areas is likely to be substantial, and that has economic development consequences across big swaths of the country.”
With federal support uncertain at best, “state and local governments realize that they have to rely on their own sources to meet their projects and financing needs,” added Rai. Economic impacts across states, however, could be disparate: “the wildcard for states is in terms of those that implemented major tax policy changes,” Kim said, adding that “we haven't seen what that actually means in a more normal economic environment, so there's a risk there that the revenue reductions coming from those tax policy changes are going to be more significant than anticipated, but slower revenue growth on the state and local government side is absolutely what we're seeing.” Nonetheless, Bourdeaux said that “the states generally are still pretty strong” where substantial reserves have been maintained in relation to their operating budget.
Alongside concerns of unemployment shocks, budget cuts, and inflationary pressures, a runaway national debt is at the forefront of the discourse on the macro economy. The country is currently on track “to exceed the all-time high deficit-to-GDP ratio of 106% in 2029,” Holland said. “So why does that matter? Well, high and rising debts crowd out savings and investment, which could lower future output and income relative to what would otherwise occur,” he said, adding that “the risk of a sharp jump in interest rates, perhaps related to a flight from U.S. Treasuries or U.S. assets more generally, would be heightened. Higher rates of inflation or loss of confidence in the dollar would have a greater chance of occurring, and tax revenues would be used to pay interest rather than to finance our current programs.”
Tariffs are also set to disrupt the macroeconomic landscape as President Trump implements one of his central campaign promises. Kim observed that “midwestern state economies could be particularly vulnerable to the imposition of blanket tariffs on imports from [Canada, Mexico, and China], and natural resource-rich states could face the most direct consequences from retaliatory tariffs by those nations. North Dakota, Louisiana, and Texas are the states with the most in exports to Canada, Mexico, and China as a percentage of their state GDP.” Among the greatest risks to the economy is “the potential for an unexpected recession, perhaps one brought on by material escalation and trade protectionism,” said Kim. Rai had a more optimistic perspective, however, noting that beyond the current executive orders, “tariffs need to be legislated to count as revenue offsets” which in turn may afford the implementation of tax cuts.
Speaking to the overall health and trajectory of the macro economy, Zandi described the 10-year Treasury note yield as “the single most important barometer of what's going on in real time.” He shared his view that “the risks are decidedly to higher interest rates. The biggest risk is that we see a major sell-off in the bond market. The bond market feels incredibly fragile.” Given the current climate, “the best forecast for long term interest rates is that they're going to be at the end of the year where they are today,” Zandi said. Slok echoed the sentiment, “Inflation is already too high, and that brings us to the conclusion that interest rates are probably going to stay higher for longer,” he said.
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Carolyn Bourdeaux has built a career at the intersection of policy, politics, and governance. She served as a Democratic Member of Congress from Georgia’s 7th from 2021-2022 after becoming the only Democrat in the country to flip a Congressional seat in 2020. She ran the closest race in the country in the same district in 2018. During her time in Congress, she focused on health care, small business and infrastructure and worked extensively with the bipartisan Problem Solvers Caucus to help pass the Infrastructure Investment and Jobs Act, one of the most significant investments in infrastructure in US history.
Prior to entering politics, Dr. Bourdeaux built a career as a noted state and local public finance expert and professor of public policy at Georgia State University. During her time there, she often served as a consultant to state and local governments and to elected officials in both parties. Among her many accomplishments, she served as Director of Georgia’s Senate Budget and Evaluation Office during the Great Recession, where she received special recognition by the Senate for her service (S.Res. 1598). She was elected by her peers to the National Academy for Public Administration, served as Chair of the Association for Budgeting and Financial Management, founded the Center for State and Local Finance at Georgia State and wrote an award-winning dissertation on the use of special purpose governments to finance critical community infrastructure.
Jeff Holland came to the Peter G. Peterson Foundation in August 2017. As Vice President of Research for the Foundation, he oversees the analyses produced for the public, participates in outside engagement, and manages many of the grants distributed by the organization.
Before coming to the Foundation, Jeff worked for 26 years at the Congressional Budget Office (CBO). For 18 years, Jeff was Chief of the Projections Unit at CBO, where he oversaw the data compilation, writing, and production of large parts of publications such as The Budget and Economic Outlook and Analysis of the President’s Budget.
Jeff specializes in fiscal and economic policy, budget process, and data analysis.
Eric Kim is a Senior Director in Fitch Ratings’ U.S. public finance department and head of the U.S. states rating team. He is based in New York and is a member of the tax-supported ratings group, focusing on state and local government credits in the U.S.
Eric joined Fitch in March 2007, and before joining the tax-supported group he also worked in Fitch’s education and non-profit institutions group. Prior to joining Fitch Eric was chief of staff for the first deputy commissioner at the New York City (NYC) Taxi and Limousine Commission. He also worked as a project manager at the Lower Manhattan Borough Commissioner’s Office in the NYC Department of Transportation (DOT). Eric began his career as a NYC Urban Fellow, providing research and analytical support in the commissioner’s office at the DOT.
Eric was a member of the Bond Buyer’s 2016 inaugural class of Rising Stars in the municipal finance industry and has spoken at national and regional conferences on topics ranging from infrastructure investment to Medicaid. Eric earned a BA from Brown University and an MPA with a public finance specialization from the Wagner School of Public Service at New York University. Eric is also a member of the Municipal Analysts Group of New York and the National Federation of Municipal Analysts.
Vikram Rai is the Lead Strategist at the municipal division at Wells Fargo. In his last assignment before Wells Fargo, Vikram was the Head of Municipal Strategy team at Citigroup where his role entailed developing macro and sector specific trading strategies by performing macro and fundamental credit analysis. In addition to Municipal Strategy, Vikram also led the Short Duration Strategy effort with a focus on money market instruments (USTs and Corporates) to optimize funding and returns while ensuring risk and liquidity levels for Citi’s institutional clients. He also covered ESG Strategy. Before joining Citi's municipal division in 2013, Vikram was a Mortgage and Rates Trader with a focus on Constant Maturity Mortgages (CMM), TBAs and Total Return Swaps (TRS) on Government Bond Indexes. Vikram was also Citi's liaison to the U.S. Treasury. He is frequently interviewed on TV (CNBC, Bloomberg) and widely quoted in print (WSJ, FT, Bloomberg etc.) Vikram has consistently been top ranked in the All-American Institutional Investor survey and the Greenwich Survey, in multiple categories.
Before joining Citigroup in 2008, Vikram worked for the hedge fund, Old Lane LLP in the private equity division. Vikram started his professional career as a microchip designer at Sun Microsystems and then worked in the same capacity at Oracle Corp. Vikram has an MBA in finance from the University of Chicago and bachelor’s in civil engineering from the Birla Institute of Technology, India. Vikram is a CFA Charter holder.
Torsten Slok joined Apollo Global Management in August 2020. Prior to joining the firm, he worked for 15 years on the sell-side, where his team was top-ranked by Institutional Investor in fixed income and equities for ten years, including #1 in 2019. Previously he worked at the OECD in Paris in the Money and Finance Division and the Structural Policy Analysis Division. Before joining the OECD he worked for four years at the IMF in the Division responsible for writing the World Economic Outlook and the Division responsible for China, Hong Kong, and Mongolia. He studied at University of Copenhagen and Princeton University. He frequently appears in the media (CNBC, Bloomberg, WSJ, NYT, FT), and he has published numerous journal articles and reviews on economics and policy analysis, including in Journal of International Economics, Journal of International Money and Finance, and The Econometric Journal.
Mark M. Zandi is chief economist of Moody’s Analytics, where he directs economic research. Moody’s Analytics, a subsidiary of Moody’s Corp., is a leading provider of economic research, data and analytical tools. Dr. Zandi is a cofounder of Economy.com, which Moody’s purchased in 2005.
Dr. Zandi is on the board of directors of MGIC, the nation’s largest private mortgage insurance company, and is the lead director of Reinvestment Fund, one of the nation’s largest community development financial institutions, which makes investments in underserved communities.
He is a trusted adviser to policymakers and an influential source of economic analysis for businesses, journalists and the public. Dr. Zandi frequently testifies before Congress and conducts regular briefings on the economy for corporate boards, trade associations, and policymakers at all levels. He is often quoted in national and global publications and interviewed by major news media outlets, and is a frequent guest on CNBC, NPR, Meet the Press, CNN, and various other national networks and news programs.
Dr. Zandi is the author of Paying the Price: Ending the Great Recession and Beginning a New American Century, which provides an assessment of the monetary and fiscal policy response to the Great Recession. His other book, Financial Shock: A 360º Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis, is described by the New York Times as the “clearest guide” to the financial crisis.
Dr. Zandi earned his BS from the Wharton School at the University of Pennsylvania and his PhD at the University of Pennsylvania.
