with maria." we hope you'll start your day with us every weekday. that'll do it for us for now. thank you so much for joining us. have a wonderful memorial day weekend, everyone, and a safe one as we honor men and women who make the ultimate sacrifice serving our country and delivering freedom and liberty. we'll see you again next time. ♪ ♪ ♪ gerry: hello and well welcome to the "wall street journal at large." this week we're in davos, switzerland, for the annual meeting of the world economic forum. we'll be talking with the secretary general of nato. with the u.s. sending tens of billions of dollars to help ukraine with, could we get dragged deeper into conflict? plus, we'll discuss the darkening prospects for the u.s.

economy with a leading economist who predicted a year ago exactly the nightmare we're now living. but first, the news this week, of course, was dominated by another horrific act of violence with another deranged individual with a gun and a mind full of hate. exactly what kind of mind you must have to kill 19 incident fourth graders and 2 teachers is beyond the understanding of any of us. rather than exemployable ploit it, perhaps we should just reflect a little harder on the sort of sickness we seem to be breeding in so many young men. our hearts break for those the families in uvalde, texas, and we hold them in our thoughts and prayers. the horror, to some extempt, overshadowed the talks here in switzerland. even the problems that face the world's political and business leaders seem quite trivial ya, but the challenges are mounting, and the big takeaway is it's the increasingly hard to have confidence that our leaders are up to the task.

the annual meeting of the global elite was a little different this year. because of the pandemic, there was no meeting last year, and this year year's was moved to may. so instead of the snowy landscape, it was against the backdrop of green mountains and quite persistent rain. chief executives, presidents, central bankers and media people gathered. the other thing was different was the meeting was much smaller. no russians, of course. they've been a heavy presence here in the past, and almost no chinese, a country that's still in covid lockdown. it's all a stork stark reminder of how fractured the world order is becoming. after years in which the people of davos like to celebrate global citizenship, a world in which decisions are made increasingly at a super-national level, in the last few years we've once again seen the importance of nationed hood, national identity and national self-determination. the pandemic has demonstrated the risks of being exposed to events beyond our own shores,

and companies are increasingly looking to secure their supply lines and serve their own domestic needs and markets first. meanwhile, russia's war in ukraine and china's support for its ally in moscow has further undermined the idea that we're all citizens of a global village. the world seems to be dividing into two camps and it's an increasingly dangerous time. we need, above all, to protect our national interests with our allies to help us if they can. all this was underscore by the two major topics this week; the war in ukraine and the economy. we'll talk later about the economy where the mood here was one of rising pessimism amid increasing alarm at surging inflation. let's start with ukraine and the u.s. and the west east response to it. joining me now, the secretary-general of nato the, jens substitute -- stoltenberg. you spoke of the desire to see ukraine win the war. what does that mean for ukraine? >> that means, first and

foremost, that they are able to get the solution to this war which is acceptable for them. so i have full confidence in the political leadership and the people of ukraine to make those decisions. our task as nato and nato allies is to support them. we know the war will end at the negotiating table, but we also know that the ukrainian position around the table is linked to the position on the battlefield. so the better outcome they can -- gerry: does that mean pushing russian forces out of ukraine, does it mean perhaps possibly retaking crimea? finally getting full ukrainian control? does it mean a complete return to the borders of ukraine as they were before 2014? >> the main focus now is, first of all, to stop the russian advances. they're slowly moving forward and having forced back around

kyiv in the north and also in kharkiv, but we also see that they're pushing hard in the rest of the donbas. that's the main focus. and, again, nato has provided critical support. we support the sovereignty of ukraine. we support them to uphold the right to self-defense for crepe withen territory. this is actually -- the for ukrainian territory. but, again, to define exactly where this should stop, what matters is we support them so they're able to defend their own territory. gerry: you're doing a remarkable job with, i think everybody greece, of supporting ukraine. it's tricky -- of ukraine. it's tricky though, isn't it? you don't want to do so much that perhaps it escalates into an all-out war between nato and russia. do you think you're succeeding in walking that line at the moment? >> yes. nato has two tasks -- one task. one is to support our ally,

ukraine, and we've done that since 2014 as united states and others have trained and equipped ukrainian forces for many years, and that is extremely important on the battlefield. and the other task and correspondent is, of course, to prevent this war from escalating. that would cause even more damage and more death and destruction. we with we make it clear that we support ukraine, but nato's not part of the war with. we're not on the ground with nato troops and forces. and sec, we have significant -- second, we have significantly increased our presence to send a message to moscow that there's no room for miscalculation, misunderstanding about nato's promise to protect and defend our allies. gerry: are they getting that message, do you think, the russians? do they understand that? >> yes, i think they absolutely understand that, and this is not to provoke war, it is to prevent war as well as stand united.

gerry: coming up, with massive u.s. support for ukraine and now nato enlarging possibly, how great is the risk of escalating the war? we'll take that up next. ♪ ♪ is it possible the only thought that comes to mind is... ♪ finally? this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪ big game today! everybody ready? alexa, ask buick to start my enclave. starting your buick enclave. i just love our new alexa. dad, it's a buick. i love that new alexa smell. it's a buick. we need snacks for the team. alexa, take us to the nearest grocery store. getting directions. alexa will get us there in no time. it's a buick. let's be real. don't make me turn this alexa around. oh my. it's painful. the buick enclave, with available alexa built in. ask “alexa, tell me more about buick suvs.”

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♪ ♪ gerry: this week former secretary of state the henry kissinger speaking to the audience here by remote video with, a man who played a crucial role in easing hostilities between the u.s. and china in the 1970s. he warned of the risk of pushing russia too far with our unconditional support of ukraine. >> negotiations for peace need to begin the next two months or so. the dividing line should -- status quo and pursuing the war

beyond that point is not about the freedom of ukraine -- [inaudible] fracture itself. gerry: back with secretary general jens stoltenberg. he warned that russia's major country whatever we think, whatever it's done, but it needs to be treated, it needs to maintain. we're going to have to live with russia, but especially the europeans are going to have to live with russia for the foreseeable future, and he warned about the risk of pushing too far here and maybe pushing russia into humiliation. are you concerned about that? >> again, the most urgent thing now is to stop russia from continuing its war of aggression. and even though there has been pushback in the north around kharkiv, they're still making some progress in parts of ukraine. so that is the most urgent part. i think we can all agree that

some states -- hopefully there'll be a negotiated solution which can be sustainable as soon as possible. russia will remain our neighbor. we need given the bad relationship -- to manage a bad relationship with russia including lines of communications to prevent stent to happen and if it happen, make sure it doesn't spark a really dangerous situation. so, yes, we need to contact russia, but russia needs to respect international law and stop war of aggression. gerry: the the u.s. congress recently passed a huge new package of aid for ukraine, $40 billion. americans support that, but a lot of them are asking maybe shouldn't the europeans be doing more? the u.s. has provided more than the european countries combined. these are wealthy countries, shouldn't they be doing much

more rather than leaving most of the work to the united states? >> first of all, i welcome the support of the united states providing and also together with, for instance, canada and also united kingdom and many other european countries. second, of course, we urge all nato allies and border countries to step up, and several of them have done a lot. also some of the the smaller, for instance, estonia with have supported equally one-third of their defense budget. so for estonia, a huge effort. but, yes, we need burden-sharing, we need allies to work together and to carry their part of responsibility, and that's one of the reasons why i'm urging nato allies, not only the united states, to provide as much support as possible. gerry: talks of the possibility of sweden and finland of joining, there's opposition within nato. turkey is particularly opposed

to it. are you thinking it's likely to happen? >> there are some concerns with turkey, nato ally, and then, of course, we have to take those concerns into consideration. with we, i have contacted, close contacts with helsinki and stockholm and also spoke with -- [inaudible] saturday and then we are doing -- to find common ground -- gerry: so, again, this is a provocation to russia. russia, you know, has cited nato expansion in the past as being one of the reasons why it did what i it did in ukraine. both of these countries are traditionally neutral countries. is that a concern, perhaps, that russia could take this as an enlargement, this enlargement of nato as a threat? >> russia has always been against any nato enlargement, but at the same time, we need to respect the right of every nation to choose its own path. finland and sweden should

decide, it's not for russia to decide that. are russia wants -- sphere ifs of influence but they decide what smaller neighborhoods can do and can't do, we don't want to live in that kind of a world. nato -- [inaudible] was when russia actually attacks ukraine and tries to close the door to nato, what they get is more nato on their borders and also more nato members, and that's just the price they pay for aggressive against ukraine. gerry: thanks very much for joining us. when we come back, we'll look at the u.s. and global economies and the prospect of further inflation and the rising risk of recession. don't go away. ♪ ♪ ♪ liberty mutual customizes your car insurance so you only pay for whatchya... line? need.

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♪ >> in your view, is a recession in the united states inevitable? >> no. >> why not? >> look, you're talking about the significant progress we've made -- >> we feel very good about where the united states is. >> president biden has been very deice we've in his leadership beginning with the american rescue plan. we rescued the economy, put shots in arms, money in pockets, can kids back in school, laid the foundation for a robust economic recovery -- >> by any metric, with the exception of inflation, this country has move forward under his leadership. gerry: president biden and his allies continue to insist the economy's in great shape. but with the exception of inflation everything is going great, that's a little bit like saying if it hadn't been for john wilkes booth, mrs. lincoln's trip to the theater would have been a great success. the federal reserve has

belatedly responded by raising interest rates and will have to go much further. economists and business leaders here in davos and back at home are increasingly gloomy. the international monetary fund said the global economy faces, quote, its biggest test since the second world war, the u.s. not excluded. how bad could it get? let's change it -- take this up with harvard professor jason furman. jason, thanks very much for joining us. >> thanks for having me. gerry: you were one of the handful of economists on the democratic side who warned that inflation was going to be a problem and that a some of the policies of the biden administration could exacerbate the problem. you were right. inflation really is now seems to be well set in. how bad is the problem now? how long does this, do we have -- does this last? and what do we do to get out of it? >> i wish i was wrong, but thank you. i think we're going to be with in the for a while.

this for a while. not at 8%. some of that really is transitory, some of that really is due to putin's invasion of ukraine but way above the fed's 2% target because a lot of it's gotten embedded in wages which then go to prices, which then go to wages. there's still additional sources of bland in the economy, and we're seeing inflation shift. it's appearing in a big way in services, especially housing. gerry: and wages, as you point out, inflation's at 8%, you say it may come down. wages are rising 5%. workers are seeing quite significant cuts in their real wages that's -- especially at a time when unemployment rate is so low, with the quit rate so high, that's not sustainable, is it? >> i don't think so. look, we have a low up employment rate, we're adding a lot of jobs, consumers are spending. there's a lot to like in the economy. but we also have wages adjusted for inflation falling at the fastest pace they've fallen in

40 years, and so it's not that surprising to me why people aren't thrilled with this economy. i think it's going to get somewhat better, but it's going to be a bumpy path to better. gerry: the fed's, obviously, started raising rates, has committed to raising rates perhaps quite aggressively. it's going to try to pull off a soft landing, as people call it, bring inflation down without crashing the economy, without recession. can it do it? >> i don't know. the fed got six months behind the curve, they lost a lot of ground. once they woke up to what was going on in the economy, they pivoted very quickly. i don't have a complaint with what they're doing right now. i think they're going at roughly the right pace. maybe they'll need to put. 5 -- 75 basis points on the table instead of 50 if the inflation continues, but they're moving very aggressively. i think it's worth a try, it's possible we'll get lucky, it's possible they'll be able to bring inflation expectations down and in the will all work

painlessly, but that's not my best guest. gerry: there's a lot of fear, a lot of talk here in davos of recession. some people think we might be in a recession. we mad if negative growth in the first quarter. what's your sense of that? is the economy actually slipping now into recession, do you think? >> i'm actually worried about too much demand propping up inflation than i am too little moving up into an imminent recession. and when i say imminent, i mean over roughly the next year. consumer spending in the second quarter is tracking at over a 4% annual rate. consumers are really pessimistic everywhere except when they actually spend money. in our economy businesses have more room to rebuild inventories. the fed has cooled down the housing market, but businesses can still borrow just as much as they want to, and i hear from ceo, a lot of them continuing to make big plans for investment and growth. gerry: and president biden tweeted about a week ago you want to bring down inflation,

let's make sure corporations pay their fair share. can you explain the link between making corporations pay more in taxes and bringing down inflation? >> look, i think there's room for some recalibration on corporate taxes, i think 21% wa- gerry: but not tackling the current inflation. >> i don't -- look, right now everyone in every political party has whatever idea they like, and they say, oh, by the way, it'll also lower inflation. i think this, you know, rebalancing the tax system, investing more in children, investing more in education, investing more in climate change, that, to me, is a good idea. it's not really about inflation, but everyone's trying to make everything about inflation. gerry: coming up, more on the outlook for the u.s. economy and the twin threats of inflation and recession. stay with us. ♪ ♪

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can afford to completely ignore the supply part of inflation either at a time like this. gerry: finally, jason, you've been coming to davos for a few years. this is always a lot of talk about save the world, save the economy. this is the world's elite. somebody once said it's where billionaires come to lecture millionaires on how to live their life. one of the impressions you always get is whatever the consensus is, it is often wrong. so that said, what's your sense of what people are saying about the outlook for the u.s. and global economies? people seem cautious, nervous? >> i think it's two tracks. you go to a panel and listen to the latest economic forecast, and it's dour, it's recession risk, it's china shut down, etc. i talk to the a lot of people who are actually making decisions in the economy here, they're not planning to lay off workers. they're actually looking to still hire, they're looking to expand, taking advantage of capital. it's not as cheap as six months ago, but it's a lot cheaper than it was the six years ago.

so i come away maybe with a little bit more optimism temp therred by fear, temp therred by caution but a little bit of optimism. gerry: that's it for us this week from switzerland. i'll be back next week with more commentary right here on "the wall street journal at large." thank you very much for joining us and enjoy a very happy memorial day weekend. >> "barron's roundtable" sponsored by jpmorgan asset management. ♪♪ jack: welcome to "barron's roundtable" where we get behind the headlines and prepare you for the week ahead. is it finally time to start buying stocks? we will ask adam cecil if companies can thrive whatever happens with the economy. investors lost billions of dollars in the massive crypto crash. we