The Spillover

This episode unpacks the concept of a K-shaped economy, examines how AI, war, and climate shocks may be widening inequality within and between countries, and explains why the divide is so hard to measure. It also explores competing responses to the affordability crisis—from Trump’s to Mamdani’s—and asks if a more centrist path could offer better solutions. Hosts: Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) We discuss: How a true K-shaped economy features a widening divergence in which some groups accelerate upward while others fall behind. Why measuring the K-shaped economy is complicated, with major disagreements over data and methodology. How asset ownership, not just wages, helps explain why wealthier households pulled ahead during and after COVID through equities, housing, and cheap credit. Why inflation, war-driven energy and food shocks, and different household spending patterns can deepen economic divergence, especially for lower-income households. How the “mega K” concept applies globally, with geopolitical shocks like the Iran and Ukraine wars worsening divides between rich and poor countries. How artificial intelligence and climate change could worsen the K phenomenon, disproportionately pressuring workers, poorer countries, and those without capital. How contrasting policy prescriptions—from Trump’s tariffs and immigration restrictions to Mamdani’s proposed taxes on wealthy second-home owners—reflect competing populist approaches to affordability. How a revival of “radical centrism,” combining fiscally responsible reforms with practical policies to manage inequality, AI disruption, and long-term economic inclusion might help. Mentioned on the Episode: “America’s Affordability Crisis Is (Mostly) a Mirage,” The Economist “Going Bananas Over Affordability,” Inside Economics “Compare Wealth Components Across Groups,” The Federal Reserve Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

Live from Washington, DC, this episode unpacks how war, AI, financial innovation, and global institutions are reshaping monetary policy, market stability, and the future of the international economic order. Host: Rebecca Patterson, Senior Fellow, Council on Foreign Relations Guest: William C. Dudley, Chair, Bretton Woods Committee; Former President and CEO, Federal Reserve Bank of New York We discuss: Whether monetary policy can still do the heavy lifting in a war-shaken macro environment. AI, productivity, and the inflation debate. The future of the Fed as an institution. The rise of non-bank finance and new financial stability risks. How global financial institutions and digital finance must adapt to structural change. Mentioned on the Episode: Pierre-Olivier Gourinchas, “War Darkens Global Economic Outlook and Reshapes Policy Priorities,” International Monetary Fund (IMF) “Chair Powell’s Press Conference” The Bretton Woods Committee Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

This episode dives into how the opaque growth and structural risks in private credit, combined with global supply shocks and market stress spurred by the Iran war, are creating a uniquely fragile and unpredictable economic landscape. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) We discuss: The rapid rise of private credit, its lack of transparency, and why recent bankruptcies are raising red flags. How $10 billion in redemption requests were submitted to major private credit funds in the first quarter of 2026—including major funds Apollo, Ares, and Blackstone. Why this moment isn’t a repeat of 2008, but still presents real risks due to government debt levels and the lack of safety nets for private credit. As Rebecca Patterson, CFR senior fellow, puts it: “No one has any idea what’s going to happen—and that’s exactly the challenge right now.” Current structural risks in private credit, including liquidity mismatches, redemption limits (“gates”), and growing exposure to retail investors. Why financial markets are behaving unusually, with rising bond yields and weakening traditional safe-haven assets. How central banks are stuck between fighting inflation and supporting growth, creating a far more complex policy environment than past crises. Mentioned on the Episode: Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released. The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

As the U.S.-Israel conflict with Iran escalates, global markets are absorbing the shocks: oil prices are swinging, inflation expectations are rising, and safe-haven assumptions are being tested. China, by contrast, is looking relatively resilient, buoyed by strategic energy reserves, diversified supply chains, and policy flexibility. This episode examines how the conflict is driving inflation, complicating monetary policy, and handing China a geoeconomic edge. Submit Your Question For a Chance to Win a Copy of Sebastian Mallaby’s Book The Infinity Machine! Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Mentioned on the Episode: Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House Coco Feng, “China Issues New Safety Rules for OpenClaw. Here Are the Dos and Don’ts” South China Morning Post Hany Abdel-Latif and Adina Popescu, “Spillovers From Large Emerging Economies: How Dominant Is China?,” International Monetary Fund (IMF) Michael Langemeier and Joana Colussi, “Farmer Sentiment Drops Sharply at the Start of 2026 as Economic Concerns Increase,” Purdue University/CME Group Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released! The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

On the 250th anniversary of Adam Smith’s The Wealth of Nations, this episode revisits a book that laid the foundations of modern economics and then considers the tensions between free markets and industrial policy today. It highlights the ways in which specialization and global trade remain powerful drivers of prosperity, reflecting Smith’s insight that self-interest can benefit society when shaped by competition and institutions, while noting the ongoing relevance of his warnings about moral judgment, the rule of law, and resistance to cronyism. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Mentioned on the Episode: “Adam Smith is Misinterpreted and His Influence Overstated,” Economist Gita Gopinath, “Geopolitics and its Impact on Global Trade and the Dollar,” International Monetary Fund (IMF) Caitlin Oprysko, “Trump’s Return Supercharges Lobbying Revenues,” Politico Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released! The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

Is there an AI bubble, or just an OpenAI bubble? Markets remain focused on whether valuations can be justified by sufficiently fast revenue growth, while the real economy braces for AI’s impact on productivity, jobs, and other disruptions. With global leaders and tech CEOs convening in India to debate AI governance, the stakes are rising fast. Credit markets, hiring data, and business sentiment could signal whether this year will bring a continued jobless expansion or something more concerning. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Mentioned on the Episode: Sebastian Mallaby and Sebastian Elbaum, “The AI Trilemma,” Foreign Affairs Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence Alap Shah, “The 2028 Global Intelligence Crisis,” Citrini Research Matt Shumer, “Something Big Is Happening in AI — and Most People Will Be Blindsided,” Forbes Martha Gimbel, “An AI Productivity Boom? Don’t Count Your (Productivity Data) Chickens,” Yale Budget Lab Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released! The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.

European leaders are at an inflection point. After high-level meetings in Munich and Brussels, they must decide what role Europe will play in the unfolding new world order, politically and economically. Can China, India, and Brazil provide lessons on how to navigate the U.S. trade war? Can a “multi-speed” Europe with less and simpler regulation become a reality? As the world’s second-largest economy, the EU’s choices will shape global growth—and markets are watching. Hosts: Sebastian Mallaby, Paul A. Volcker Senior Fellow for International Economics, Council on Foreign Relations (CFR) Rebecca Patterson, Senior Fellow, Council on Foreign Relations (CFR) Guest: Edward Fishman, Senior Fellow and Director of the Maurice R. Greenberg Center for Geoeconomic Studies, Council on Foreign Relations (CFR); Author, Chokepoints: American Power in the Age of Economic Warfare Mentioned on the Episode: Edward Fishman, “Want to stop Trump bullying your country? Retaliate,” The Guardian “MEPs propose new legal framework for innovative companies,” European Parliament “How Polymarket Is Turning Bitcoin Volatility Into a Five-Minute Betting Market,” Yahoo Finance “Why a dart frog poison believed to have killed Alexei Navalny points to the Kremlin,” NBC News Want to keep up with The Spillover? Sign up to receive an email alert when new episodes are released! The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.