I'm here at Carlyle's event and sitting down with the man of the hour. It is the CEO of Carlyle, Harvey Schwartz. Harvey, great to see you and thank you for having us.
Great to be here. And thanks for joining us.
And look, you're convening hundreds of your investors here today. And it's probably not lost on anyone that if we were to just walk about a mile away, we'd be at the Eccles building where the Fed is starting their rate decision. If you were to give them advice, Harvey, because you see into the lens of hundreds of your companies, what are you seeing? Are rates restrictive? Is inflation a problem? Is this a Fed that needs to be hiking rates tomorrow?
Well, then again, thanks for being here. As you said, we have 400 investors from all over the world of travel here. Some of the most sophisticated investors in the world. And these are questions that are front of mind. And we have a very unique proprietary data set, as you mentioned. And 15 years ago, we started breaking down the data set and the insights into these portfolio companies. So it's several hundred portfolio companies that employ about 750,000 people around the world. What that data set says is amidst all the backdrop of noise of structural change around the world, the globalization, the conflict in Iran, the war in Europe. What that data tells us is the economy's doing quite well. GDP coming out of August looks like two and a quarter, 2.5%. The consumer has been quite resilient. EBITDA is growing. And so really against a backdrop of uncertainty, the economic engine is doing quite well. Inflation has remained sticky. But it's not accelerating. But it's not decelerating. And so I think in terms of the Fed, our folks are not that focused on what any one individual Fed decision means. I would say we're at a period where the Fed will continue to watch the data. The markets obviously are expecting a hike, but it doesn't feel like we're entering a hiking cycle. It doesn't feel like we're entering a cycle where we're going to be cutting rates aggressively. And for those that are always wishing for rates to go back to zero, that generally is not consistent with an economy that's doing as well as ours. So I think the Fed's got their hands full, but I think the market's already made its prediction on what the Fed's going to do.
Well, I remember in the last rate hiking cycle in 2023, you basically had said, look, we can handle higher rates. It's predictability that's important. We were in a scenario now where you have a Fed chair who wants to give less forward guidance. You have an activist Treasury, you have issuance from the hyperscalers that's moving around rates. You have an energy crisis. Do we have a predictability problem with rates right now?
I don't know that we have a predictability problem. I think that the Fed chair has announced a series of initiatives which we think are welcomed by the markets over the long run. I think it's a question of the pacing of how those get implemented. I think that there was a series of policies for the past decade which really were anchored around lower rates, lower rates globally. We have for years now, for three years, been working under the assumption that rates would be structurally higher. Why? Because deficits are larger, the demand for capital around the world is very high. Deglobalization is really driving a complete reordering of priorities around the world in terms of how governments and companies think about economic growth. And these structural changes are not going away. And when you think about the priorities that countries have, companies have around security, whether it's national defense in a traditional sense or investing in economic growth, data security, energy security. All of this investment requires durable capital. And with deficits being as large as they are, we would expect rates to be structurally higher. But on any relative basis, historically, they're really not that high for us. And working with our clients, it's about the cost of capital, being disciplined about deploying that capital. And that's how we're focused. We've been really active throughout this whole period.
Presumably higher rates doesn't really curve that activity. If it's not higher rates, it's not oil at 100, it's not 10-year yields at 5%. Is there anything that can slow this train down at the moment, Harvey?
Well, when you have economic growth like we're seeing in the United States, and when you talk about, for example, the stimulus that is being brought to the marketplace globally from the hyperscalers, if we were talking about fiscal stimulus on this order, we'd be talking about a massive fiscal stimulus. And we're seeing that across the economy. We're seeing it spread globally across the global economy. And so this massive period of investment does have a crowding out effect. So it puts pressure on bond spreads. It puts pressure on the cost of capital that should be expected, not feared. But it's fueling economic growth in a very, very powerful way. And we're seeing very unique opportunities to deploy capital. And unlike a lot of other people on the issue, we've been returning a lot of capital.
I was gonna say you've returned $37 billion over the past 12 months. It's a large amount. But I do have to ask because there does seem to be this disconnect. You're leading the market there, but shares of Carlyle itself are lagging your peers. You're down something close to 30% year to date. What do you think accounts for that?
You know, the industry went through a period of really accelerated share growth. And then when there were all the if we were sitting here a year ago, the whole conversation might have been about private credit. It seems like the private credit window's in the rearview mirror. It should probably have come out, by the way. I would be happy to talk to you about it. We had very strong views on it. They seem to have come to fruition, so at least we were right about that. So we feel good about that. But in terms of the industry, we are very focused on executing our plan. We announced a three-year plan. Second quarter we had record results. We just keep doing our job. The share price will follow. We're very active. Our board approved that to be in our share buyback in the first quarter. We were very active in the second quarter. We like where the shares are priced. We'll keep buying back share. We do our job, share price will follow.
By the way, you've also announced that you're also announcing today that you're joining MIT.
