Explore why the US economy continues to defy recession forecasts, powered by innovation, energy independence and capital access amid persistent deficits and inequality.
Panelists argued that US “exceptionalism” shows up clearly in aggregate performance but feels uneven on the ground. Wells Fargo CEO Charles Scharf cited strong consumer and business fundamentals—spending up “3 to 5%” year over year, controlled delinquencies, rising business borrowing—while warning prosperity is “very, very uneven,” with lower-income households “continue to struggle and live on the edge.”
On AI, Deloitte’s Joe Ucuzoglu urged humility: diffusion is early and “embedding it into established organizations is really hard work.” Displacement is inevitable, but so is job creation; the risk is a disruptive gap with “significant political consequence.” Nasdaq CEO Adena Friedman highlighted early pilots showing “a 2.8 times return on investment,” yet enterprise-scale gains require “top down change management” and aggressive reskilling.
Friedman contrasted US agility with Europe’s fragmented oversight: multiple national and EU regulators raise “friction” and the cost of capital, though Sweden demonstrates what pro-innovation policy can deliver. Qualcomm CEO Cristiano Amon emphasized US technology leadership but Asian manufacturing concentration; supply-chain resilience is driving diversification to Vietnam and India and selective US reshoring.
On policy risk, Scharf advised separating rhetoric from enacted rules; targeted deregulation is letting banks “lend more” while staying safe. Both he and Friedman cautioned that price caps and affordability politics often ignore supply-side constraints; a 10% credit-card cap could mainly reduce “availability of credit,” not just profits.
Waiting for the camera director to give us our cue. If I can see her. Are we ready? Okay. Well, thank you very much for, coming to this, session with this distinguished panel. We were originally scheduled to have a secretary Lutnick joining us. Unfortunately, he couldn't make it. Fortunately, now everyone is going to be exceptionally candid. In, in offering their sense of of the US economy and US, economic exceptionalism, which, of course, is visible in some of the aggregate data about the performance of the economy and, of course, the performance of the economy compared to some of our, our competitors, some of America's competitors, or partners, overseas. But I guess I want to start with you, Charlie, to ask if you ask, I think the latest I saw was six out of ten Americans. They would be surprised to discover that the US economy is all that exceptional. The headline data that President Trump, some of the headline data that the president was citing, just yesterday, doesn't seem to be filtering into the everyday experience of Americans. And it raises the question of whether the US economy is performing as exceptionally as we think or whether we have a two speed economy where things are going very well in some sectors masking profound weaknesses, in, in others. So just give us a broad read of where you see things.
Yeah. I think, listen, I think both are true. I think, you know, what we have seen consistently is that, the economy is performing really well overall. Almost every statistic we look at suggests that it doesn't matter whether you look at consumer spend, debit cards, credit cards every week on a year over year basis, up 3 to 5%. If they're slowing in one category, it's just moves moves to a different category. On the consumer credit side, delinquencies are incredibly well controlled, probably ticking down a little bit having returned after Covid to normalize levels, but really, really strong consumer balances and deposit accounts are strong. Investment accounts are strong. Businesses are in good shape, starting to borrow again which which is a good thing. So overall those things just translate to a really, really strong set of consumers and businesses. And then you marry that with the regulatory environment where businesses are able to do more and move more quickly, do deals, those things feel really good. But at the same time, when you look at who's doing well and who's not doing well, it's very, very uneven. That's not new. That's been the case for a long time. So those with more money, are bringing up all of the averages and those with less money, continue to struggle and live on the edge. Our data suggests it's not expanding and it's not getting worse, but it's not getting better.
You know, one of the questions that I think a lot of Americans are asking themselves is, the effect that AI is going to have on the jobs market going forward. And I know just talking to my kids, two of whom are in college, that's that's what's on their mind. Is AI going to take out the lower rung of the ladder for many people entering businesses, or, or careers where, where AI provides an adequate, substitute. What are you seeing Joe about? I mean, how does AI affect the future jobs market? Are you are you an optimist? Do you feel like this is another technology that we will master and that will eventually be more jobs producing than destroying? Or even if that's the case, is the disruption going to be significant and politically significant in the next few few years?
Well, we should approach this topic with some humility. We are very early in the diffusion of the technology, which is staggering in its capability into the heart of the real economy. And one of the things we're finding is that actually taking the technology and the conceptual use cases, which everyone would buy into and embedding it into established organizations, is really hard work and historical. Large shifts in technology would suggest that takes some time, and that's exactly what's transpiring. We are in the early stages, as with every prior wave of tech disruption, there will absolutely be labor market displacement. There will absolutely be certain tasks that used to require X amount of labor, and that requires x minus in an AI infused world, no doubt. But every prior wave of tech change also suggests that with that comes the creation of new jobs, many of which people could have never imagined in the moment. But ultimately, the creative genius and the disruption that takes place, and the brilliance of the free market system to come up with new needs and new services and new goods gives rise to new opportunities. That doesn't necessarily happen in a neat pattern. And so the potential disruption and the political consequences of that, particularly in an environment where you already have anxiety. Hi. We're Charlie articulated the sort of differential in terms of different strata of the income spectrum. Then you layer on to that the potential for disruption that's going to hit sort of additional sectors and additional job tasks. And we all have the imperative. And this is a sort of a joint public private partnership requirement to to be able to accelerate the creation of the new, because to the extent that you have a gap, that absolutely will be a significant political consequence in upcoming elections.
Let me just ask a follow on question of you, Joe. You know, we've had major technological disruptions in the past, along with the promise of major productivity gains. And that promise doesn't always hasn't always materialized. I mean, we saw that 25 years ago in the original sort of.com boom. Do you think this time is different that we're going to see just transformative productivity gains? Or or is it going to be more of what we experienced before?
Well, I agree with the premise that it doesn't always materialize, but I'd suggest that it's generally a matter of time frame. So if you looked at those prior introductions and there was a famous saying from an economist in the mid 80s, you actually see the impact of the PC revolution everywhere except economic productivity statistics. It ultimately manifested itself. But it goes back to that issue of big entrenched organizations with ways of doing things don't change quickly. There's a stickiness now, this has the potential to be different, but it's going to require some sort of top down forcing mechanism to actually take layers that might be resistant to change and to drive that in an accelerated pace. And there's a lot riding on this, because if you look at the big macro level, risks, fiscal spending, government deficit imbalances, the only way out of that is a productivity boom. And many people are actually counting on that to to bail many countries around the world, which right now have deficits and debt to GDP levels that are unsustainable, on a, on a more fiscally responsible trajectory. And if we don't see that productivity boom, you're going to see the implications of that deficit spending actually increase.
Adina, you you, at Nasdaq, your business is not only in the United States, it's very much here in Europe as well. You've practically replicated the medieval Hanseatic League, in, up, up, up north. One of the restraints on productivity growth is the regulatory environment. And I was wondering if you could spend a little time, taking us through where you see the regulatory advantages and disadvantages between American and European markets. And if you want to go past that, please do.
Sure. Well, I want to actually add on to Joe's comments on productivity levels. So the early analysis of the impact of AI in organizations, when they've been experimenting with the technology and creating proof pieces against it, is that they're seeing a 2.8 times return on investment in a very short period of time. That is massive potential for productivity enhancement. Now, scaling that to the enterprise level, though, requires a totally different level of investment and focus and top down change management. So, you know, the technology works, you know, it can be it can create massive productivity gains. But you have to then really focus on how do you change an organization to be able to kind of infuse that technology across, let's say, the product development life cycle, the client success lifecycle, marketing, sales, legal, finance, all of these areas. I mean, like just in audit, for instance, I'll just I was actually just talking to our audit firm, and they were basically pointing out all the ability for them to do many more test cases against our financial performance or financial controls with just so much faster, so much more productively. But how do we then kind of take that in and make that an enterprise capability? So I, I actually do think it's going to take time, but then the J curve will accelerate very quickly because the opportunity is so high. The job, the job element of it is going to be really, really critical though. How do you as a company reskill? How do you how does the public sector and the private sector allow for reskilling? That is actually something that I would say the entire private sector is, is actively focused on and talking to the administration about. So it's important. But in Europe, I'll get to your question now. So in Europe I do want to make sure we talked about that. But so we operate most of the most of the exchanges in the Nordics and most notably in Sweden. I'll highlight Sweden. Sweden looks very much like the United States. It is an incredibly it's its GDP growth expectations are nearing the United States in 2026 from the IMF versus and growing much faster than the rest of Europe. Their equity ownership in in Sweden is literally equal to the United States. Now that indirect equity ownership of the citizens of of Sweden is almost as high as direct equity ownership in the United States, the level of innovation, the amount of new companies coming to market, the small to medium enterprise business model, and the markets that support that are very vibrant. And it is kind of this beautiful kind of confluence of a lot of public sector effort to establish a tax regime, establish a regulatory regime, put a lot of investment in education and innovation in the education, the private sector, including a firm called investor AB. You know, that group puts an enormous amount of money into the educational system to drive innovation learning and to continue to reskill and advance their, their, their population. And all of that is done within the regulatory realm of Europe. So I would say that the but, you know, the challenge that we have in operating in Europe, the challenges that banks have on operating in Europe is not just that we have to work with the Swedish regulator, we have to work with the Swedish regulator, the Finnish regulator, the Danish regulator, the Icelandic regulator, you know, regulators in each country plus the European regulators. And oftentimes there's more than one. And for the banks there's even more. And that then creates an enormous amount of friction in the ability to effectuate change, to advance the markets, to advance anything. But also just the cost of capital goes way up. And so I really do think that there's no perfect system, but I, you know, you hear if there's a will, there's a way I would like to see Europe have more of a will because they all know that there's a path, the CMU, which is the capital markets union or the Siu, the Draghi report, when I've asked almost every politician policymaker, do they agree with the Draghi report? The universal answer is yes. Then they say okay. And I say, well what are the next steps. And it's a it's around the the construct of the European Commission that makes it extremely difficult to be able to take what is a great construct and turn it into reality. And that's where I think Europe has a real opportunity to come together to change that paradigm, because it is a sleeping giant of an economy. And so I think that if you can continue to drive that across Europe and then use Sweden a bit as a as a marker of success, it can become an economy that rivals the United States. I really believe that. But the United States will continue to plow ahead, and they're in a deregulatory phase. So that means the regulation is going to become more favorable in the United States, while Europe tries to figure out how to create a new union.
Cristiano, I want to take us to another sphere geographically, which is Asia. And, you know, I think more than 40% of your business is is directly tied to China. The great economic story of the 21st century is us, US-China, competition. There's a lot of anxiety, East Coast anxiety, I would say. I don't know if it's West Coast anxiety, but a lot of East Coast anxiety that, we suffer, we in the United States and I guess also just in the free world in general, suffer basic sort of structural disadvantages when it comes to competing with the Chinese because of their government's ability to essentially, invest a great deal of energy and effort and prestige into sort of champion projects. And to kind of direct state funds to where they think the, the, the important competition of the future lies. Tell us a little bit about whether you think that the United States maintains structural, competitive advantages vis a vis our Chinese competitors, or, or should we be a little more alarmed about the state of, state of play between the two economic superpowers?
No. Very good. There's a lot in there. Happy New Year to you, too. Look, so, so I think I think we need to probably break this question because there's a lot of different things. So one thing that happens in, in general, I think let's just talk about the electronics industry and consumer electronics in general. I think every company right now, Qualcomm is no different than all the other semiconductor peers. A lot of the electronic manufacturing had moved to Asia, you know, and you've seen that there's a lot that was in in the 80s and some part of the 90s when Japan then went to Taiwan, then went to Korea. And it's also China. So, so a lot, for example, a lot of our chips, if you look, if you look from a from a revenue standpoint, you have, you know, about 25% is, chips that get consumed in China. It's just a function of the GDP size when you look about, you know, their size of the, of the economy. But then a lot of things goes through China, to, to a lot of other different countries because that's the manufacturing base. So I think the first part is when you think for a technology standpoint, I think the United States semiconductor industry is it's it's really incredible. Some of the, you know, not only Qualcomm, but some of other peers among of a lot of companies are driving a lot of technology innovation. Those are American companies. If you look of the of the TSMC manufacturing in Taiwan, the majority of the chips that go to American companies, but a lot of the a lot of the industrial base that actually get that technology and produce products, some a lot of those has not been in the United States, has been in Asia, I think, which has been an interesting dynamic of the United States economy. We have some of the most innovative technology, but the path to market of some of those technologies comes to industries that are somewhere else. And I think that has, you know, it has part part of it has been also the driver that started in the 90s, which, I mean, you make the biggest possible factor you can imagine is all about scale, which is changing a little bit with technology. Right now, just what we see in smart manufacturing, you don't need to have that scale. But I think, I think that it's likely to continue. However, we see that that trend, propagates. Like for example, one of the things that people don't talk about a lot in that. But if, for example, you see a lot of manufacturing now going to Vietnam, there's a lot there's a lot of companies there, and there's now a big consumer electronics manufacturing going to Vietnam. Also India. India is creating a manufacturing hub for electronics. So so I think.
Just quickly, to what extent is that a calculation that to what extent is that a purely economic consideration? And to what extent is it one of a sense of political risk, particularly political risk associated with doing business with China?
Look, I it's.
I think I think you have all of the above, you know, you you saw you saw that there is because of because of concentration. So many different companies started to diversify, their manufacturing base. Some of it is it's economic, some of it's incentives. You see some of the recipes that have been very successful, for China is being replicated by some other countries. So I think you're always going to have, especially on electronics, a very big industrial base in, in Asia. And I think that's going to continue now. Then they're going to get the second part of of your question. Look, yes, everybody talks about it about, the importance of resilience, of supply chain and that and that conversation will continue and that conversation will become louder and louder and louder just because. And I'm going to say that with, with a bias since I am from the semiconductor industry, everything needs chips. Everything there's and and when you talk about AI, when you talk about everything becoming smarter, you're going to have more chips. People realize during the the great shortage of semiconductor, during the pandemic that cars were in the parking lot. Why cars are not moving because any chips, it is and it's more the industry gets digitized in addition to phones and computers. You saw that in the automotive industry. Now you see that in in the industrial sector. You're going to have a lot of robotics. So it conomic now the economic development growth is now directly connected with technology. And I think more that you analyze I think the resilience of supply chains, you're going to you're going to continue to see a debate. Do we do we need to continue to build diversification? Diversification is not only in the manufacturing of chips. How also in the path to market do you need to have, different places that you have concentration of electronic manufacturing. And I think it's a healthy debate, and I think we'll continue to see movement in that direction. And, I am actually more optimistic than pessimistic. I have been I have been following industry's move in, in scale. I think the phone industry, for example, now the scale of Vietnam is not small. It's, starting, starting to be significant, I think compared with with China. You started to see now that happens with the PC manufacturing now well distributed across Taiwan, China, Vietnam. And I think it's going to be continue across to other industry and other industry is going to have different requirements. So, diversity of of manufacturing, it's it's important. And then the last point I want to make on this is we also see some interesting development, which is some manufacturing, even though it's small scale, certain critical industries actually coming back to the United States. And and, like we we have established some partnerships with companies, for example, in the state of Ohio that are starting to do manufacturing, and then you have some critical industries that will have, a different requirement on the supply chain. So there's going to be an ongoing development.
I want to I want to turn the conversation to two traditional sources of American economic, exceptionalism that are undergoing changes are in some ways, at risk. The first is our system of higher education. For years, we've been able to, through collaborations with great universities, turn out a workforce that's prepared to kind of innovate. And, Lead, global economies. The second is immigration, and our ability to attract, very high, high talent on this panel, not least, to, to our shores to lead to lead great American companies. Those are those are two hot button issues in the United States. Right now, I guess let me start with you, Charlie. There's a lot of there's a real concern that our higher education system is no longer appropriately geared to producing the kind of employees that companies need and who have the skills that can produce sort of, sort of, you know, thriving economies. Do you worry about what the kind of what you're getting out of colleges and universities today? What would you what would you advise your peers who are who are running major American research universities?
I don't worry about that. Just in the business that we're in now, this might be very different than other businesses, which are much more technical, that need very specific training. In my experience, is, across our entire organization, that the people who are the most successful are the people who learn the most as they go through higher education, and they learn the most about a broad range of things, whatever people need to be successful in finance, we can teach them when they get to the company. What we can teach them are is the broader context in which they live. The understanding with which the U.S. operates, relative to the rest of the world, all the things that you learn through history that you can reapply. And I think all those things are still very much there and are very much part of the higher education system in the country. And I the other thing which we're, you know, which we're incredibly blessed with in the United States is so many strong universities and colleges of all sizes, all types, four year schools, two year schools. So lots of conversation about the elite universities, about all the things going on there. We hire from a very, very broad range of schools. And that desire, that exists in the U.S. population to become educated and then to use that to go on and do something with is still very, very much there doesn't mean that it's perfect. It doesn't mean that there aren't issues that we should be dealing with. But I think, you know, a broad based liberal arts education, is the most valuable thing someone can get, at least coming into our company.
Adina, you wanted to jump in.
So I have to sit on a university board. And so I've had a really interesting seat in what's happening in higher education in the United States. And I look at it as, I'll take it, you know, I actually look at the business of the university, like I take everything through a business lens. But it's been fascinating. Any industry or company that starts to rest on their laurels as hubris starts to come into that institution, they slow down, they don't adapt, and they start to become less relevant. So I have to say, I happen to sit on the board of Vanderbilt, and that is the opposite.
Of president of chancellor, I should say.
The chancellor of Vanderbilt is is incredible, because I think that he has taken this moment to drive that university forward and a lot of new ways educationally and and operationally. And I think that what they've recognized is that there are new skills that need to be developed. The broad based liberal arts education is incredibly valuable. And I agree with Charlie that it's an incredible education. But then applying that great education into certain skill bases or fusing it with more technical skills, bringing they have a lot of master's programs that they're bringing together business and technology, engineering and healthcare, you know, things like that, where they're creating joint degrees across the university, across the schools, where as a lot of other schools in the United States remain quite siloed in their schools, and they don't tend to try to work together to try to create a modern outcome for the student. And I think that we just have to just stay focused on the student, stay focused on what that student needs to understand to be able to enter the job market in whatever field they choose to. With the fusion of technology and the traditional industry that they're going into. And I think that is where universities have an opportunity to evolve and not rest on their laurels and not get complacent. That's that's a strong view.
I saw you you wanted to jump in on this, Joe.
Brett, you've hit on a hot button. I think this is a topic that we care deeply about, in large part because if you go back to the the thesis of the panel around the exceptionalism of the American economy, one of the key ingredients over time has been this exceptional system of higher education that is produced, the workforce that is driven, that economic productivity. I don't worry about the technical dimension sort of similar to Charlie's perspective. We still have phenomenal technical production of people and we can teach the skills that we need. I worry a lot about the culture of the institutions and the ability to produce great employees and great citizens who have the ability to adapt a learning mindset and to handle the complexity of diverse points of view. And when you look at what's happened on some of these campuses over the past several years, ideologically, and the sort of the the difficulty in some cases of being open to divergent points of view, when we talk about AI embracing the potential, what is the role of the human in driving that transformation? One of the most important skills is actually keeping an open mind and wanting to understand a perspective that might be different than the one that I hold, or the prevailing orthodoxy. And yet the culture, in part because of what's happening on these campuses, is actually sort of pushing in the opposite direction greater polarization. People living within their own echo chamber and not actually thriving on a good rigorous debate of ideas. And we have to get that fixed. And we're starting to see that pivot back.
And on the second you wanted to jump in, but I was hoping you might also address the second part of my question, which is about immigration and whether we're still able to attract the kind of talent that traditionally helped drive American growth.
No, actually, that's that's the comment I want to make. So, look, we, we we are, you know, fundamentally an innovation company. I think the majority of our employees are in engineering. I think we take a lot of pride of creating technology, like just in 2025 of all companies in America were the number one in terms of patent applications. And what you realize is what makes some of the American technology companies, you know, so unique is do you have the ability to attract, the best of the best talent? And they are going to be a combination of things. They're going to be they're going to be folks. They're going to come from great universities, and there's going to be individuals that just, you know, have such a capability, no matter what they are. Like we have we're very fortunate to have some, you know, engineers in our company. Those are the people that assemble Lego a little bit different when they were when they were kids. And and some of those people that are going to write the books, they're going to be used on, on the universities later. So the question is, the American companies need to continue to be able to attract that talent and bring those to those companies. And I think what we do in the in the company today, we hire them in the United States, we hire them where they are. But I think that we'll continue to be a necessity. I think you'll have you have to continue to be the place that people want to work. People want to work because they think this is where I will be able to contribute or be able to innovate. I'll be able to have success. And I think when you lose the ability to attract some of the best of the best, I think you're going to have an impact on the US technology sector to continue to innovate.
Another another risk to American economic growth. And maybe, maybe this is a more of an opinion than a fact. But I would say that another risk to American economic growth are political prescriptions that sound attractive. In as as a political matter, less attractive as, as a, as a business matter. And one thing that's been on people's minds, in, in the last few days, is, for example, capping, credit card interest rates at 10%, which, sounds great for consumers. I think banks are a little less thrilled about it. There are other, populist nostrums like driving interest rates down, which carry opportunities as well as as as risks. Charlie, talk us through some of these, these political, storms or efforts as you see them in the extent to which you are, you are worried that American growth could be capsized by, you know, efforts to drive the economy too hot in order to achieve political rather than economic results.
Well, I think, you know, because my observation is, especially when it comes to this administration, you do need to separate out, what is actually the litany of things that are said and ultimately what actually winds up as policy. And whether.
That to the Danes.
Well, listen, I mean, it is what it is. I mean, it's, you know, the president's the president, he's got his prerogative. He was elected, and he's going to go about doing things the way he's going to go about doing things. I'm just observing what the outcomes are. And listen, I can look at what whether it's the president or the administration says, I could go through each individual thing and forget about my personal opinion. That has nothing to do with what I represent working for Wells Fargo, but I can have an opinion on whether I think that is good or bad for the economy. And, one of the things that I think you've heard from many leaders is this is an administration which is very accessible, which is very, very interested in the opinions of business leaders about what the ultimate impact is, even when it comes to just broad regulation. We hear lots of comments about deregulation, deregulation, deregulation, especially in the banking sector. And what I mean, if you actually look at the change in regulation in the banking sector so far, it's actually not that much, but it's very impactful. But there's a long list of things that they're looking at. But they're doing the work. They're studying things. They're doing the analysis. They're putting things out for comment. And so.
And what's most impactful.
What's most impactful are, is the things that they're doing to allow institutions like ours to do more of what we're supposed to do, to be able to lend more, to be able to take more deposits, provide more advice, while still keeping the level of stability. And, and the quality institution that exists, and to find that right balance and that's what they're and that and that is exactly what they're doing. They're not coming to the banks and saying, okay, what's stopping you from doing something? We're going to change that. It's okay. What's stop you from doing something? What's the right answer? What's the right way to calibrate it? Let's look at the work. I mean, the administration, has talked about capital standards. You've got the different regulators looking at how to recalibrate US bank capital. And the way they're doing that is by they're going to do 6 or 9 months of study, but it's going to get done, and it's going to wind up in a much more reasonable place, which allows us to do more than we historically were able to do and be safer than we've ever been.
One of the things that has puzzled, I think, a lot of conventional economists, particularly those who write, in newspapers, is how the economy has been able to succeed, despite two things, tariffs, the tariff regimes that the administration has, imposed sometimes removed. And then the question of predictable, environments for businesses. And yet that does not seem to have had the effect that was anticipated, say, a year ago. So, Adina, do you have some idea of why that's the case?
Well, first, just to layer on to this issue of the sort of politically popular prescription, what tends to be particularly in a short attention span environment, politically popular, is to promise an outcome, enforce it, whether that be the price of housing and the sort of idea that you're going to cap the rents or the price of credit, versus focusing on the supply side, which is more complicated and more nuanced, but ultimately what's required to be sustainable. So how do I get rid of the red tape and foster more building, or get rid of the sort of unnecessary constraints on capital and increase the availability of credit? And so this is one of those very difficult conundrums of how do you engender a more complicated conversation in an environment where, the sort of the attention span is, is the length of a social media video? In terms of why is the economy been so resilient? This is not a new theme. If you go back over the last several years, there's constantly been these predictions and the recession is coming and the soft versus hard landing, and whether it was sort of supply chain shocks and then the rise in inflation and then some sort of global conflicts, the business community has almost learned to assume that there will be phenomena introduced that are complicated and difficult and sort of get on with it. And I think you're seeing the latest iteration of that. And yes, there's a couple of items that businesses have had to navigate, but there's also some real tailwinds in terms of the pro-business and pro-growth environment created by this administration, the sort of very affordable energy prices, the big boom in investment spending, as we sort of look to capitalize on the wave of AI innovation. And so this has become almost the new norm.
I see you're shaking your head vigorously, Adina.
Well, I'm.
Nodding.
I think I think a few things. One, what was originally constructed to be a tariff regime, you know, as they as dialogue started and as, countries started to work both with the United States and with each other, the actual tariffs implemented were much lower than what was originally proposed. So I think also we have to realize the reality was a little bit different than what was originally was originally reported on. And I think that's been helpful. You asked why. You know, why things aren't as as, as why things haven't taken shape the way you would have expected. That's one. Number two, not only are companies adaptable, highly adaptable, and the private sector is highly adaptable, we showed that through Covid. I think the the height of adaptability was Covid, and we've just been able to carry that attitude forward to say, okay, this next change is coming. We've got to figure out what to do differently. But the countries have adapted to, you know, a lot of internal policies have been enacted over the last year to be able to absorb tariffs into the economy, to be able to spur, you know, domestic consumption in some large economies, like India, to be able to absorb a lot of some of the tariff impact. And then, of course, I also think companies have been absorbing some of the tariff impact, too, by by creating other elements of efficiency in their organizations to be able to manage through some of the higher costs of inputs. So it is the adaptability of countries and companies to be able to deal with what's coming. Technology is also I mean, it's just we can use technology in new ways. We can make data driven, driven decisions. We can be smarter about how we're allocating capital as we're managing through a very dynamic environment. And I think that's what's really going to sustain us in helping us understand and navigate what is a changing world.
Can I say one thing, which is, to to Dana's point, when you think about tariffs, people see these big numbers. The reality is when you look at, the entire flow of a product from production all the way to the end user, there are a lot of people that participate in that value chain. And, you know, a lot of them are our clients and our middle market businesses and small businesses and large corporate businesses. And the reality of what's happened is everyone's taking a piece of it, and everyone has actually looked at themselves and say, how do they deal with that? So it's not all winding up in the end user's wallet. That's number one. The second thing, which I was completely surprised by very early on in the tariff conversation, is because it's characterized as a tariff conversation. When I would travel around the country and talk to our middle market clients who I thought would be incredibly unhappy, incredibly nervous about the tariff conversation. It was actually, for the most part, just the opposite, including places like California and whatnot. They would not expected it where they would sit there and they would tell you it's not just about the tariffs, it is about trade competition. And it's example after example about people they compete with in this U.S. market, where they're dealing with people from outside the country whose businesses are subsidized. Ours are not, and they can't compete on a level playing field, and they can't sell their goods into those countries. That is very, very real. And so the tariff conversation, it's a little bit of an unfair way to characterize it. It's a trade conversation and it's not perfect. And tariffs are a byproduct of that. Sure. Which do have an impact. But there are these other pieces which I think are a big contributor towards why you're not seeing the impact that people initially predicted.
We have a couple of minutes left. And so if there's anyone in the audience that wants to ask a question of one of our panelists, please raise your hand. Is there someone who has a question? All right. In that case, I'm going to I'm going to move. I'm going to ask the oh, you have one here, sir. Please stand up and just tell us who you are.
Hi. Robin Niblett with Chatham House. Affordability? Not necessarily an exceptional issue. We're sitting in Europe. Big affordability problems. Hasn't been touched on anything you can say about that, inflation, etc..
I mean, I can say a few things. Affordability is a very significant issue. I don't think it's just an issue. Over the last year with tariff regime, it's been an issue for a long time. And, and it's a broad based issue in the economy. I do, I agree with everything Charlie had to say about the resilience of the consumer. But there are there is there is a large group of citizens in many countries that are living paycheck to paycheck, are not able to save, are not able to have that. And then with the disruptions of Covid and all of the all of the aftermath of that, I think that the affordability issue has become a major, a major challenge. And and then you also have supply chains. I mean, the the best way to address affordability is to increase supply. I mean, it is exactly what Joe said it. You know, housing supply is constrained because the cost of capital has gone up so significantly, it has made it uneconomic to build new buildings, new new homes, new things like that. So that is that is a and then of course, supply chains made it harder to get the to get the materials worker labor shortages made it more expensive to get the labor. So it has it is really constrained supply of one of the major costs that that every individual faces. And so that is an affordability issue. If you had changes certainly in Covid, you had also supply shocks in terms of just basic goods and services. Some of that has been most of that has been resolved, but not all of it. And that's also changed. And so having to change supply chains creates shortages in certain areas. I do also think, you know, if you are making a change in the cost of goods, it's going to create short term disruptions and it will bring up, it will bring up the prices. And as and I think affordability is a significant issue, I think it's going to continue to be without really stated policies to increase supply in certain critical elements of the economy, to make it so that we can we can drive that down and make it so that every citizen has a better ability to save. So that's that's definitely a major issue.
I also think just can I just add on affordability is, you know, there is a when people talk about affordability, it's there's an expectation, across the broad masses, when you talk about affordability, that prices will go down. And it's very, very hard to believe that prices on a broad based basis will actually go down. Inflation will slow. But that is a very, very different level of expectation. And then the other thing which there needs to be more conversation about is wages, right? Is the fact is, you know, you can have price increases as long as there's broad based wage growth. And the issue is the wage growth needs to be more broad based than it currently is.
We have two questions. Gentleman in the front and there. And maybe we can get both in in the two minutes that we have left.
I am J gala from Amr Raheja Group India. My understanding of the whole tariff issue was to bring jobs back to America, bring manufacturing back to America. Is that happening?
And then the gentleman right there.
Ken Choi from Korea, just wondering, is this a credit card cap 10% thing? Is this going to work? Do you think it's a doable thing in a capitalist society? And if it works, would it spread to the rest of the world?
So insourcing and credit card cap, maybe Cristiano and Charlie, do you want to take those last two questions? In the minute or so we've got.
Look, I was just going to add the comment and I think, Charlie, comment on that. I think this whole conversation was about, more related to trade. And I think how, how to balance trade. I also, I also believe that on the topic of how companies have adapted and actually looking at technology like I have, this is true on our company. It's true many other companies, which is this is the new environment. You know, if, if things are going to be 10% more expensive, how do you become more efficient? And you actually, you know, necessity is the mother of our innovation. So I think I think this is going to stabilize. I can't really predict if this is going to be the norm, everywhere. But I, I want to go back to what Charlie said. I think this is actually more related to, the rebalance of trade than anything else.
And, Charlie, do you want to quickly take that last question on the on the cap?
I think listen, I think first of all, what the president proposes is not a permanent reduction. It's a temporary reduction. I think we all have here in the U.S., we all have programs that have, we have 0% rates for a period of time. And so we, you know, I think that is something which makes sense and will continue. You know, our experience has been here in the U.S. whenever there are price caps put on things, even temporarily, they don't always turn out the way you'd expect. And the reality of when you look at the credit card industry, the issue will not be as much as what will happen to our profits. It will be availability of credit. And that's what we're really concerned about. And so, you know, again, affordability in this issue understand why it's the conversation. But we got to make sure that the solution actually achieves the goal. That we're all supportive of.
Unfortunately we're out of time. I want to thank a really distinguished and terrific panel. And I want to thank our, our our audience. I hope you enjoyed that.