Podcast Episode 10: War and the Economy with Keds Economist
synopsis
The host interviews Katherine Edwards, a PhD economist and Bloomberg columnist known online as Keds Economist, who ends up arguing that the US economy was already weakening before the Iran war on structural grounds built up over five decades, and that the resulting crisis — however painful — may finally create the political room to fix problems, like employer-linked healthcare, that ordinary policy has never been able to touch.
Credentials and framing. Edwards recounts her RAND Corporation career and PhD from Wisconsin, and objects to social-media "economists" without doctorates being pitched to journalists in her place, framing credentials as earned rather than self-declared — a point she extends to Jill Biden's disputed use of "Dr."
Is this a recession? She explains that recessions are declared with a lag by the National Bureau of Economic Research's dating committee, which weighs multiple indicators rather than any single bad report. By her reading, hiring has been effectively frozen for roughly a year and a half, and 2025 saw the smallest annual job growth outside a recession this century, with the last four months of the year showing job losses or near-flat growth — enough, she says, to build a case that a recession began in the fourth quarter. She cautions that GDP growth this period was inflated by an import surge ahead of tariffs and shouldn't be read at face value.
Energy and the war's economic transmission. The host raises a claim, attributed to the analyst "Mr. Global," that a Strait of Hormuz closure lasting two to three weeks would push the world into recession; Edwards doesn't confirm or dispute the figure but stresses that oil is an input as much as a consumption good, feeding into everything from fertilizer to plastics, compounding an inflation problem she says predates the war and was already being driven by tariffs.
"Third rails" as the piece's organizing idea. Borrowing a term from a friend's Medicaid-administration interview, Edwards argues that crises let policymakers "touch third rails" — reforms too politically costly to attempt in normal times, as remote work became during COVID. She predicts the current affordability crisis, after the 2022 inflation spike pushed middle-income household budgets to a breaking point, could finally force a rethink of employer-sponsored health insurance: ending the tax exemption that subsidizes employer health plans, shifting primary care toward a Medicaid-style universal system, and leaving private insurance to cover only catastrophic care. She traces today's inequality partly to the minimum wage losing its statutory link to inflation after the late 1970s, a link the host says dated to a 1950 Truman-era law.
Assessment of Trump. Both agree Trump is an effective campaigner who mobilizes anger but a poor economic leader who cannot admit mistakes, and Edwards predicts little of his substantive policy legacy will persist five years out, though she is unsure whether current tariffs — including those on Canada, the source of some 60% of US oil imports — will survive contact with the Iran war's energy pressures.
Closing optimism. Reading Frances Perkins's memoir of FDR, Edwards highlights his portrayal as a pragmatist driven by "people need help" rather than a visionary architect, and argues the next US leader doesn't need to be a savant — just someone willing to enact already-popular policies. She calls this a source of optimism heading into 2028, downplaying the importance of finding a singularly compelling candidate.
- Multiple recession indicators are already flashing, the guest argues, even as GDP looks fine. PhD economist Katherine Edwards, a former RAND researcher and Bloomberg columnist, says hiring has been frozen for roughly a year and a half and 2025 saw the weakest job growth outside a recession this century — possibly marking a Q4 recession start by that measure alone — while GDP still looks healthy partly because it was inflated by import stockpiling ahead of tariffs.
- She likens the economy to cars braking toward a red light, not yet stopped. Growth, jobs, and unemployment data show slowing rather than collapse, and she argues the US "has everything it needs" to avoid a recession, but says the administration lacks the leadership or willingness to act on the warning signs.
- Her proposed "third rail" fix: delink healthcare from employment entirely. She would end the tax exemption on employer-provided health benefits, redirect that revenue into a universal Medicaid-style system covering primary care, and let private insurance shrink to catastrophic-only coverage.
- She frames the moment as needing an "FDR," not a visionary. Drawing on a memoir of Frances Perkins, she argues Roosevelt succeeded not through grand design but by simply acting on the fact that people needed help — a model she says fits an economy where wage stagnation since the Reagan era and rising healthcare costs have built decades of pressure now reaching a breaking point.