The Outsider Perspective Issue 442 | The Beltway Outsiders

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Good Friday Morning! Especially to the woman who got compared to Darth Vader at work, sued over it, and won $40,000 in compensation. The NYPost reports: “Litigators deemed it harmful to be compared to the half-machine-half-human ‘Star Wars’ baddie, who was known in the films for force-choking underlings who failed to carry out his orders.”

The company quiz was supposed to be more light-hearted, with Darth Vader representing someone who was a “very focused individual.” But no one took it that way.

So be careful about those company personality tests. It could end with you in the courtroom.

This week, I’m going to examine the economic data surrounding the United States and China as the trade war continues—links to follow.

Quick Hits:

Fake job seekers flood the market. I watched a corporate recruiter talk about a new issue hitting the business world: AI-generated job seekers. Companies are experiencing fake job seekers using AI-created people to apply for and get jobs and scam companies out of cash and benefits. One of the scammers even went so far as to create an AI-generated video version of the person to interact with on a video call. I’ve personally experienced the opposite, where I talked with an AI via video call as an interview. It wasn’t a scam in my situation, though. I’ll keep beating this drum: AI is growing faster than anyone understands.
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Where you can find me this week

Please subscribe, rate, and review The Horse Race on YouTube — the reviews help listeners, and readers like you find me. Make sure to sign up for the Conservative Institute’s daily newsletter and The American Almanac.

Trump’s Economy Is Ignoring All The Trade War Waves – Conservative Institute

Democrats Continue To Lie About John Fetterman’s Health – Conservative Institute

An American Pope Truly Is A New Era – Conservative Institute

China’s Economy Teeters On The Edge

The trade war continues, with the United States and the U.K. signing a trade deal. The deal is largely symbolic, as the trade between us isn’t huge.

In the NYPost, Charles Gasparino says, “More trade deals will be announced probably as early as next week with India and Japan. India would have emerged first if it weren’t for its government being distracted with a possible war with Pakistan, my sources with contacts in the White House say. Australia and South Korea could follow.”

This specific list of countries doesn’t overly surprise me. A potential war between India and Pakistan, the threat of which seems to be subsiding, throws a wrench in things. But we should get some deals on the table, which will start clearing the air of broader fears in the market.

That still leaves the 800 lb gorilla in the room: China.

I’ve seen and read several stories on possible shortages in the United States, and people scaremongering about scarcity. While certain things could become scarce in a trade embargo with China, it’s not clear we’ll see true shortages (at least yet). Further, the fears around “empty ports” aren’t supported by the data.

A few years ago, I started listening to Sal Mercogliano, who runs the “What’s Going On With Shipping?“ channel on YouTube. He’s great, walks through marine and shipping data, and pushes back against the idea that ports are empty. That’s not to say things aren’t slowing down, but we’re not talking about an end to shipping.

And then we get into the April data: “U.S. container imports remained resilient in April 2025, with volumes reaching 2.4 million TEUs, marking a 1.2% increase from March and a significant 9.1% rise year-over-year. According to the latest Descartes Global Shipping Report released today, the impressive performance represents one of the strongest Aprils on record.“

What’s happening? The same thing we saw in the GDP report: businesses are loading products onto ships and into the ocean to avoid possible tariffs. Eventually, even if tariffs drop tomorrow, we’ll see this data cool.

So while there’s a lot of doom and gloom, as I keep noting in columns, we’re not seeing that in the data yet. Democrats and media pundits have predicted the worst possible outcomes for the country since February, and it has not shown up. That doesn’t mean it won’t, but it’s hard to tell what the exact impacts will be.

Nick Timiraos at the WSJ found a similar thread in the latest statement from the Federal Reserve:

Federal Reserve Chair Jerome Powell played down any impressions Wednesday that the central bank was looking ahead to cushion economic weakness from President Trump’s tariffs by cutting rates.

At a news conference, he used some version of the word “wait“ 22 times to underscore how the Fed isn’t in a rush. “The costs of waiting to see further are fairly low, we think, so that’s what we’re doing,“ Powell said.

That’s different from 2019, when the Fed cut rates three times to shore up the economy from deteriorating sentiment after Trump’s first trade war with China. “It’s not a situation where we can be pre-emptive because we actually don’t know what the right response to the data will be until we see more data,“ Powell said Wednesday.

What’s different between Trump’s first term and now is the sheer scope of tariffs and the inflationary spike in the United States. It’s hard to read where things are going.

Then there’s this weird dynamic where Trump is screaming at the Fed to lower rates, and his critics are screaming about how the economy is tanking. In short, Trump and his critics seem aligned on the direction of the economy, which suggests rates should be lower.

But the Fed lacks the data to move. Their conclusions are similar to what I’ve been writing: people keep saying the U.S. economy is rolling over, and like we’ve seen several times, it’s not happening as predicted.

Because the Fed knows something, too: Trump is going to try to stimulate the economy with tax cuts. Suppose you get this combo of higher prices from tariffs and the economy getting slightly juiced. In that case, lowering rates into that possible stagflation scenario is a bad deal. It’s not just inflation and tariffs; Trump wants tax cuts, too.

That leaves us with “wait and see“ as the phrase of the moment. The Fed wants more certainty about our situation before making more cuts.

Meanwhile, China is shifting to more stimulus. Unfortunately for them, markets don’t think it’s worth much. CNBC reports:

China’s latest push to revive growth with broader stimulus measures has failed to cheer its stock market as worries over economic deterioration outweigh policy optimism, with investors focused on trade talks with the U.S.

The scope of the stimulus package, including interest rate cuts and a major liquidity injection, drew some comparisons to a sweeping policy rollout last September that had fueled a market rally, lifting the CSI 300 index over 32% in a six-day winning streak.

However, the story did not repeat this time. The benchmark index barely budged on the day of the announcement, adding just 0.61%, and rose by nearly the same Thursday. Hong Kong’s Hang Seng Index gained less than 0.4% over the two days.

Note the two radically different problems of the U.S. and China. The U.S. is struggling with inflation, demand, and prices. China is struggling with deflation and trying to kickstart its economy.

The Wall Street Journal did a lengthy expose on China, detailing how they’ve stopped sharing economic statistics with the outside world. The ones they are sharing are presumed to be cooked in their favor.

In short, we know the Chinese economy is in danger. This was true before Trump’s election, and it’s getting worse now. China is pessimistic about a possible trade deal and is holding back stimulus measures.

For the upcoming tariff meeting with Bessent, China “doesn’t believe this talk will lead anywhere,“ said Wang Dan, China director at risk consultancy firm Eurasia Group. “Things could get worse and that’s why they are saving the big gun for later,“ she said, alluding to potential stronger measures to support the Chinese economy.

The trillion-dollar question is this: Can China’s stimulus save it? So far, multiple rounds of stimulus haven’t moved the needle. With trade chopping the legs out from underneath the Chinese government, there’s not much room for navigation.

All these pieces can talk about being proud and more. But there are hard economic realities at play, too. China has to play ball, so we’re getting the negotiation stories now.

Where that goes is anyone’s guess. However, if Trump starts landing more trade deals with other countries, it will put pressure on China to do something. They’re increasingly trying to get Europe to be a shield against Trump, but Europe can’t even agree internally on what to do about anything.

Ultimately, Trump will be judged by the deal he scores with the Chinese. That’s the thing to watch. Everything else is window dressing for whatever deal he gets or does not.

Links of the week

Pope Leo XIV heralds a renewal of Catholic social justice – Unherd

The New Pope Must Purge the Church of the Lavender Mafia – Crisis Magazine

An American Pope: Welcome Leo XIV – National Review

The New Pope’s Brother Was Forced To Address Claims That The Pope Is A Cubs Fan And Informed The World That Pope Leo Is Actually A White Sox Fan – Barstool Sports

EU countries soften push to stop Chinese tech buyouts: Capitals are set to weaken rules that would require them to scrutinize foreign investments in sensitive technologies such as semiconductors and artificial intelligence, a draft document shows. – Politico EU

It Looks Like Democrats Are Once Again Choosing the Wrong Side of an 80-20 Issue – Guy Benson

Psychiatrist Fired for University-Disfavored Views Vindicated – Kristen Waggoner, RealClearEducation

‘Defund the police’ led to more people being killed – NYPost

Trump makes Fox News’s Jeanine Pirro DC’s top prosecutor – Washington Examiner

FBI opens formal investigation of NY Attorney General Letitia James: U.S. Attorney’s Office also involved in probe of property transactions that date back decades – Times Union

X/Twitter Thread(s) of the week