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welcome to money is freedom

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a podcast

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exploring how finance and freedom connect in our lives

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created from thoughtful research

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and narrated by Notebook LM AI

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this series brings you clear

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meaningful insights into finance and beyond

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welcome back to episode 37

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where we dive into a financial thriller

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unfolding as we speak

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picture this

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the US economy is estimated to shrink at a shocking

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minus one point five %

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investors are more scared than during the Covid crash

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and Trump's tariffs are throwing fuel on the fire

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are we headed for a recession

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or is this just a bump in the road

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grab your coffee because we're unpacking the data

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the drama and what it all means for your wallet

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let's get into it

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welcome back everybody to another deep dive

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and today

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we are going to be taking a look at the US economy

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in 2025 yeah

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it's a really interesting time right now

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there's a you know

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there's some conflicting signals out there

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definitely some mixed messages

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a lot of anxiety among investors

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yeah lot of anxiety

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and we're gonna dig into all that

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so um

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to set the scene a little bit

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you know we've got the SMP 500 hitting record highs

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yeah it's been a great run for the market

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but at the same time we've got this

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you know potential recession looming on the horizon

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yeah so it's kind of like a head scratcher right

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like everyone's bracing for a downturn right

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but the market's telling us something different

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at least for the moment exactly

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and that's what's so interesting

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is that despite the market's success

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investor sentiment is like extremely bearish

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yeah that's the big paradox

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so yeah

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why why is there this fear factor

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what's behind it well

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according to the AI Sentiment Survey

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which tracks investor sentiment

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a whopping 60.8% of investors are bearish right now

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60.8% bear which is huge

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I mean to give you some context

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that level of pessimism is usually only seen during

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like major market crashes

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wow okay

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so it's definitely noteworthy

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yeah so what is driving this

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what is going on is it just

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you know

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a knee jerk reaction to the possibility of a recession

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or is there something deeper going on here

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I think it's a little more nuanced than that

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um this fear feels different from what we saw in 2020

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for example at the beginning of the pandemic

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interesting yeah

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I mean back then

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there was a lot of panic too sure

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but there were also you know

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some pretty strong government safety nets in place

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right you know

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remember the cares act yeah

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yeah the Fed also

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you know slashed interest rates really quickly

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right which helped the market rebound very quickly

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yeah I think I remember

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you know there was a sense

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at least the government was gonna step in

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right and

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you know try to cushion the blow exactly

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so you saying that we shouldn't expect that

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this time around well

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the feds options are a little bit more limited now

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because you know

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we're already grappling with inflation right

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um and

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you know the

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the lack of those safety nets that we saw in 2020

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is definitely contributing to the current anxiety

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among investors right

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and they're feeling a lot more exposed this time around

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yeah no

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no safety net it feels riskier

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yeah that makes sense

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and to complicate matters further

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we have the wild card of Trump's policies

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of course um

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and a lot of people are pointing to his tariffs as

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you know a major source of economic uncertainty

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yeah the terrorists are definitely a significant factor

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okay so can you kind of remind us like

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what's the deal with the Terrace

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what's the purpose of them

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so right now

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we've got a 25% tariff on goods from Canada and Mexico

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right and there's also

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you know plans for a 10% tariff on all imports

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wow not to mention

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you know a potential 60% tariff on Chinese goods

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yeah a lot of tariffs

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yeah a lot of tariffs flying around

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so what is the point like

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why are we doing this well

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the stated goal is to protect American jobs

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okay and

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you know encourage companies to bring

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manufacturing back to the US

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but the unintended consequences are starting to show

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well higher prices for consumers

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for one yeah

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yeah I think

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I've noticed that

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everything seems more expensive these days

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exactly The Institute for International Economics

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estimates that these tariffs could add between 26 and

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seven thousand six hundred dollars

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wow to the average households annual expenses

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that's crazy that's a big chunk of change

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so you're right

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consumers are definitely feeling the pinch

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yeah and there's another consequence

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that's causing a lot of concern

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and that is the impact on GDP

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you're talking about the the recent GDP bombshell right

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the Atlanta Feds GDP now estimate yeah

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for the first quarter of 2025 took a nosedife

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yeah it went from a positive 3.9% to a negative 1.5

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yeah that's a big drug

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that was a big surprise yeah

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and while we technically need

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two consecutive quarters of negative GDP growth

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oh right

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to officially declare a recession okay

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this sharp drop is definitely a red flag

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so is it

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is it all about the tariffs

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what is causing this well

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the decline in net exports is definitely a major factor

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and that's largely driven by the tariffs right

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you know

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when goods become more expensive because of tariffs

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yeah it reduces demand for those goods okay

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which leads to a decline in exports

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yeah that makes sense

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so we've got this mix of

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you know slowing economic growth yeah

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extremely high levels of investor fear

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and then

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these tariffs are kind of adding to the uncertainty

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no wonder everyone's feeling a bit uneasy

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yeah it's definitely a time for caution

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yeah but also a time to be informed

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okay good advice

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so let's talk about that

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let's talk about what we can do to be informed

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and how we can navigate

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this uncertain economic landscape yeah

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and and I think

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it's important to remember that these economic

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you know shifts rarely impact everyone equally right

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I mean some industries are gonna be

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you know more vulnerable than others right

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so you know

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while the

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the overall picture might seem a bit gloomy that

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you know the impact on your personal finances will

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really depend on your you know

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specific circumstances that's a really good point yeah

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yeah it's easy to get swept up in the headlines

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and kind of forget that

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the economy is made up of lots of different

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moving parts exactly

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um so

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let's shift gears a little bit

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and talk about some of Trump's other economic policies

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okay we've talked about the tariffs right

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but there's also his push for tax cuts

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uh huh deregulation yeah

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changes to immigration policy right

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and his attempts to like influence the Federal Reserve

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yeah a lot's going on yeah

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there's a lot going on a little interconnected

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which makes it even more complex

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very complex uh huh

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um can we start with the tax cuts

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I know Trump's been talking about extending the tongue

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17 tax cuts um right

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um maybe even making them bigger potentially

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what are the implications of that

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like what could happen well

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on the surface tax cuts

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you know sound appealing

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yeah right

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because they put more money in people's pockets right

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which can stimulate spending and boost the economy

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right in the short term right

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but there's a potential downside

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The Congressional Budget Office has projected that

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extending these tax cuts could add a whopping

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$4.5 trillion $4.5 trillion to the national debt

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wow over the next decade

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didn't Congress just raise the debt ceiling to like

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40 trillion they did yeah

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so the timing of this is interesting

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you know it's a delicate balancing act right

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you know

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the potential benefits of short term economic stimulus

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right have to be weighed against the long term risks

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of increasing the national debt yeah

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which can lead to things like higher borrowing costs

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okay so it's kind of a gamble

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it is a bit of a gamble um

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what about deregulation I know

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that's another big part of Trump's economic agenda

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yeah he's a big believer in that

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he seems to believe that you know

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cutting red paper will unleash economic growth right

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what are your thoughts on that

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well there is some evidence to support that idea okay

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um we did see a surge in business confidence

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you know during Trump's first term

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which some economists attribute to deregulation

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you know it can certainly foster a more business

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friendly environment right

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leading to potentially increased investment

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so less regulation could actually be a good thing

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for the economy it's possible

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but it's important to note that deregulation alone yeah

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might not be enough to offset

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the other economic headwinds that we're facing right

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like the tariffs and the global slowdown right

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and it's also important to remember that regulations

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often serve a purpose of course yeah

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you know like protecting consumers or the environment

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right it's about finding the right balance exactly

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um now

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what about immigration I note

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Trump's plan to increase deportations

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has been a very hot button issue

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yeah very controversial

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what kind of economic impact could that have

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well the potential impact on the labor market

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is a big concern

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especially in industries like agriculture and services

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yeah that rely heavily on immigrant labor right

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so you know

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if there are fewer workers available

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wages could go up okay

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which sounds good for workers

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but it could also lead to higher prices for consumers

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right further fueling inflation right

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so again

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is like kind of this you know

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potential positives and negative

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yeah it's hard to predict yeah

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it's hard to say what the ultimate outcome is gonna be

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and to add another layer of complexity

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oh god

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we have Trump's history of

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publicly criticizing the Federal Reserve

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oh yeah

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and trying to influence interest rates

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yeah he's not shy about that

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not at all how is that impacting the current situation

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well it creates a lot of uncertainty yeah

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which is never good for the markets right

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the Fed is trying to balance

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slowing economic growth with rising inflation

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00:09:26,566 --> 00:09:29,533
okay and they've hinted at rate cuts okay

280
00:09:29,533 --> 00:09:32,000
but Trump's policies especially the tariffs

281
00:09:32,000 --> 00:09:33,533
are putting upward pressure

282
00:09:33,533 --> 00:09:34,933
on prices right

283
00:09:34,933 --> 00:09:37,300
which could complicate the Fed's decision making

284
00:09:37,300 --> 00:09:38,533
so it's like a tug of war

285
00:09:38,533 --> 00:09:39,366
it's a bit of a tug of war

286
00:09:39,366 --> 00:09:41,366
yeah between the Fed and the White House who

287
00:09:41,366 --> 00:09:42,933
with the economy caught in the middle

288
00:09:42,933 --> 00:09:44,800
caught in the crossfire um

289
00:09:44,800 --> 00:09:46,466
and all of this is happening

290
00:09:46,600 --> 00:09:49,800
against a backdrop of slowing global growth right

291
00:09:49,800 --> 00:09:50,866
that's right I mean

292
00:09:50,866 --> 00:09:52,166
both Europe and China

293
00:09:52,166 --> 00:09:54,266
are projected to experience slower

294
00:09:54,266 --> 00:09:56,533
economic growth in 2025 yeah

295
00:09:56,533 --> 00:10:00,066
the US is not alone in facing these challenges

296
00:10:00,066 --> 00:10:01,800
we're all interconnected right

297
00:10:01,800 --> 00:10:04,000
and economic shifts in one part of the world

298
00:10:04,000 --> 00:10:05,933
yeah can have ripple effects globally

299
00:10:05,933 --> 00:10:06,700
okay

300
00:10:06,700 --> 00:10:09,266
so we've got a pretty complex economic picture here

301
00:10:09,266 --> 00:10:09,800
we do

302
00:10:09,800 --> 00:10:14,000
we have slowing growth both in the US and globally

303
00:10:14,000 --> 00:10:16,200
right high levels of investor fear

304
00:10:16,200 --> 00:10:19,166
and a lot of uncertainty surrounding Trump's policies

305
00:10:19,166 --> 00:10:19,966
uh huh

306
00:10:20,466 --> 00:10:23,266
it's starting to feel a bit like storm clouds

307
00:10:23,266 --> 00:10:25,300
gathering on the horizon yeah

308
00:10:25,300 --> 00:10:28,900
the outlook is not great is it time to start panicking

309
00:10:28,900 --> 00:10:31,766
I don't think panicking is ever a good strategy okay

310
00:10:31,766 --> 00:10:34,100
but I do think it's important to be aware

311
00:10:34,166 --> 00:10:35,933
of the potential risks okay

312
00:10:35,933 --> 00:10:36,866
and to take steps

313
00:10:36,866 --> 00:10:39,100
to prepare for whatever might come next

314
00:10:39,100 --> 00:10:40,833
so what should we be doing to prepare

315
00:10:41,133 --> 00:10:43,066
you know batting down the hatches

316
00:10:43,133 --> 00:10:45,266
stock up on canned goods well

317
00:10:45,266 --> 00:10:47,166
maybe not canned goods okay

318
00:10:47,166 --> 00:10:47,366
but

319
00:10:47,366 --> 00:10:49,400
there are definitely some practical things you can do

320
00:10:49,400 --> 00:10:50,366
okay um

321
00:10:50,366 --> 00:10:51,200
you know remember

322
00:10:51,200 --> 00:10:53,133
we're not officially in a recession yet

323
00:10:53,133 --> 00:10:55,966
it's about being informed and proactive

324
00:10:55,966 --> 00:10:57,933
rather than reactive okay

325
00:10:57,933 --> 00:10:58,600
I like that so

326
00:10:58,600 --> 00:10:58,900
you know

327
00:10:58,900 --> 00:11:01,766
just because things are a little shaky right now yeah

328
00:11:01,766 --> 00:11:03,966
doesn't mean you need to go into full panic mode

329
00:11:03,966 --> 00:11:04,666
okay

330
00:11:04,666 --> 00:11:07,266
so what kind of proactive steps are we talking about

331
00:11:07,700 --> 00:11:07,933
well

332
00:11:07,933 --> 00:11:10,200
one of the most important things is to stay informed

333
00:11:10,200 --> 00:11:10,933
okay you know

334
00:11:10,933 --> 00:11:14,000
keep an eye on economic news and data releases

335
00:11:14,000 --> 00:11:14,500
okay

336
00:11:14,500 --> 00:11:17,366
and pay attention to what's happening in your industry

337
00:11:17,366 --> 00:11:20,133
and how your company might be affected okay

338
00:11:20,133 --> 00:11:21,733
you know knowledge is power

339
00:11:21,733 --> 00:11:23,733
especially in uncertain times

340
00:11:23,733 --> 00:11:25,866
got it stay informed

341
00:11:25,900 --> 00:11:27,466
what else um

342
00:11:27,466 --> 00:11:29,966
it's also a good time to review your personal finances

343
00:11:29,966 --> 00:11:30,766
okay you know

344
00:11:30,766 --> 00:11:33,400
make sure you have an emergency fund in case of

345
00:11:33,400 --> 00:11:35,700
you know job loss or unexpected expenses

346
00:11:35,700 --> 00:11:36,766
that's always good advice

347
00:11:36,766 --> 00:11:38,600
yeah for a session or not exactly

348
00:11:38,600 --> 00:11:40,366
um what about investments

349
00:11:40,366 --> 00:11:42,233
should we be you know

350
00:11:42,533 --> 00:11:44,300
pulling our money out of the stock market

351
00:11:44,300 --> 00:11:46,666
that's where things get a bit more nuanced okay

352
00:11:46,666 --> 00:11:47,500
um you know

353
00:11:47,500 --> 00:11:50,133
remember the stock market is forward looking right

354
00:11:50,133 --> 00:11:53,200
so it's already pricing in a lot of this uncertainty

355
00:11:53,400 --> 00:11:56,266
pulling out now might not be the best strategy

356
00:11:56,266 --> 00:11:57,066
so what are you suggesting

357
00:11:57,066 --> 00:11:57,966
like write it out

358
00:11:57,966 --> 00:12:00,800
it depends on your individual risk tolerance

359
00:12:00,800 --> 00:12:02,200
and investment goals sure

360
00:12:02,200 --> 00:12:02,733
but remember

361
00:12:02,733 --> 00:12:05,766
that market downturns can present buying opportunities

362
00:12:05,766 --> 00:12:07,733
for long term investors okay

363
00:12:07,733 --> 00:12:08,733
so maybe

364
00:12:08,733 --> 00:12:11,166
all this fear in the market isn't such a bad thing

365
00:12:11,166 --> 00:12:12,133
after all right

366
00:12:12,133 --> 00:12:13,700
it's creating opportunities

367
00:12:13,700 --> 00:12:15,933
for those who are prepared to take advantage of them

368
00:12:15,933 --> 00:12:17,766
that's a good way to look at it okay

369
00:12:17,933 --> 00:12:21,566
um but what about this stagflation buzzword

370
00:12:21,566 --> 00:12:22,266
oh yeah

371
00:12:22,266 --> 00:12:24,333
that keeps popping up what exactly does that mean

372
00:12:24,333 --> 00:12:28,666
so stagnation is basically a combination of stagnant

373
00:12:28,666 --> 00:12:29,966
economic growth okay

374
00:12:29,966 --> 00:12:31,933
and high inflation okay

375
00:12:31,933 --> 00:12:33,966
it's a particularly tricky situation

376
00:12:33,966 --> 00:12:36,466
because the usual tools for fighting

377
00:12:36,466 --> 00:12:38,066
either slow growth or inflation

378
00:12:38,066 --> 00:12:40,033
often make the other worse oh

379
00:12:40,100 --> 00:12:40,866
so for example

380
00:12:40,866 --> 00:12:43,066
lowering interest rates to stimulate growth

381
00:12:43,066 --> 00:12:45,033
can lead to even higher inflation

382
00:12:45,066 --> 00:12:47,000
that sounds like a lose lose situation

383
00:12:47,000 --> 00:12:48,066
it can be yeah

384
00:12:48,066 --> 00:12:51,266
if the economy stalls while prices continue to rise

385
00:12:51,266 --> 00:12:52,800
it can lead to you know

386
00:12:52,800 --> 00:12:54,266
a decline in living standards

387
00:12:54,266 --> 00:12:56,466
and create a sense of economic Malays

388
00:12:56,566 --> 00:12:59,433
so is stagflation a real possibility right now

389
00:12:59,933 --> 00:13:01,900
there's a lot of debate about that okay

390
00:13:01,900 --> 00:13:03,400
some economists argue that we're

391
00:13:03,400 --> 00:13:05,266
not in danger of stagflation

392
00:13:05,266 --> 00:13:08,366
because inflation expectations are anchored okay

393
00:13:08,366 --> 00:13:09,166
meaning

394
00:13:09,166 --> 00:13:12,133
people don't expect inflation to spiral out of control

395
00:13:12,133 --> 00:13:15,100
right but others are concerned that Trump's tariffs

396
00:13:15,100 --> 00:13:18,000
which are directly contributing to higher prices

397
00:13:18,000 --> 00:13:21,866
right could push us closer to a stagflationary scenario

398
00:13:21,866 --> 00:13:24,366
okay so it's definitely something to keep an eye on

399
00:13:24,366 --> 00:13:27,900
okay so uncertainty is the name of the game pretty much

400
00:13:27,900 --> 00:13:28,933
we got a lot to think about

401
00:13:28,933 --> 00:13:31,266
we do a lot to keep an eye on absolutely

402
00:13:31,266 --> 00:13:33,066
it's all a bit overwhelming honestly

403
00:13:33,066 --> 00:13:33,700
I understand like

404
00:13:33,700 --> 00:13:35,400
what are the key takeaways here

405
00:13:35,466 --> 00:13:37,333
it can definitely feel a bit overwhelming

406
00:13:37,333 --> 00:13:39,500
you know trying to make sense of all this economic data

407
00:13:39,500 --> 00:13:42,133
yeah it is a lot to digest yeah

408
00:13:42,133 --> 00:13:44,200
and conflicting signals absolutely

409
00:13:44,200 --> 00:13:46,200
but I think you've done a great job of kind of

410
00:13:46,200 --> 00:13:48,133
breaking down you know

411
00:13:48,133 --> 00:13:49,600
the key factors at play well

412
00:13:49,600 --> 00:13:50,766
I appreciate that and

413
00:13:50,766 --> 00:13:53,866
and highlighting what we should be paying attention to

414
00:13:53,866 --> 00:13:55,733
hopefully it's helpful for folks yeah

415
00:13:55,733 --> 00:13:57,800
so let's bring it back to our listener okay

416
00:13:57,800 --> 00:13:58,300
and you know

417
00:13:58,300 --> 00:13:59,600
what they can do to kind of

418
00:13:59,600 --> 00:14:02,900
navigate this uncertain economic landscape right

419
00:14:02,900 --> 00:14:04,133
it's all about you know

420
00:14:04,133 --> 00:14:06,200
focusing on what you can control right

421
00:14:06,200 --> 00:14:07,700
you can't control what the Fed does

422
00:14:07,700 --> 00:14:10,333
or what policies the government implements yeah

423
00:14:10,333 --> 00:14:13,500
but you can control your own financial decisions

424
00:14:13,500 --> 00:14:14,200
absolutely so

425
00:14:14,200 --> 00:14:15,866
what are some specific questions that

426
00:14:15,866 --> 00:14:17,566
our listeners should be asking themselves

427
00:14:17,600 --> 00:14:18,700
right now well first

428
00:14:18,700 --> 00:14:19,500
you know

429
00:14:20,166 --> 00:14:21,100
how might

430
00:14:21,100 --> 00:14:24,100
these economic trends that we've been discussing yeah

431
00:14:24,100 --> 00:14:25,200
particularly

432
00:14:25,766 --> 00:14:28,566
the potential for recession or continued inflation

433
00:14:28,566 --> 00:14:31,600
right impact your personal financial situation yeah

434
00:14:31,600 --> 00:14:35,000
are you prepared if the economy takes a downturn right

435
00:14:35,066 --> 00:14:37,933
do you have a plan for managing your expenses

436
00:14:37,933 --> 00:14:39,866
if prices continue to rise

437
00:14:39,866 --> 00:14:41,500
that's a really important point

438
00:14:41,566 --> 00:14:43,100
it's easy to get caught up in this

439
00:14:43,100 --> 00:14:45,500
like abstract discussion of the economy

440
00:14:45,500 --> 00:14:48,366
I know and forget to connect it to our own lives right

441
00:14:48,366 --> 00:14:50,233
it's gotta be relevant yeah

442
00:14:50,500 --> 00:14:52,000
but ultimately that's what matters most

443
00:14:52,000 --> 00:14:54,166
that's what it all comes down to exactly

444
00:14:54,166 --> 00:14:56,000
so um

445
00:14:56,200 --> 00:14:57,700
what are some other things like what

446
00:14:57,700 --> 00:14:59,933
what other questions should we be thinking about

447
00:14:59,933 --> 00:15:00,866
well the second question

448
00:15:00,866 --> 00:15:03,300
I would encourage our listeners to consider is

449
00:15:03,933 --> 00:15:05,166
what specific

450
00:15:05,166 --> 00:15:08,000
economic indicators should you be watching okay

451
00:15:08,000 --> 00:15:11,200
to stay informed and make smart choices okay

452
00:15:11,200 --> 00:15:13,333
are you tracking you know

453
00:15:13,333 --> 00:15:14,933
GDP growth okay

454
00:15:14,933 --> 00:15:18,333
are you paying attention to inflation data okay

455
00:15:18,333 --> 00:15:21,366
are you following the Fed's decisions on interest rates

456
00:15:21,366 --> 00:15:23,200
it's about being informed and proactive

457
00:15:23,200 --> 00:15:24,533
like you said exactly

458
00:15:24,533 --> 00:15:27,300
the more you understand the forces at play right

459
00:15:27,300 --> 00:15:29,466
the better equipped you'll be to make

460
00:15:29,533 --> 00:15:31,000
you know sound financial decisions

461
00:15:31,000 --> 00:15:31,566
absolutely

462
00:15:31,566 --> 00:15:33,466
regardless of what the economy throws your way

463
00:15:33,466 --> 00:15:33,933
and remember

464
00:15:33,933 --> 00:15:37,033
while economic uncertainty can be unsettling

465
00:15:37,300 --> 00:15:40,266
it can also create some unique opportunities

466
00:15:40,400 --> 00:15:42,100
how interesting for example

467
00:15:42,100 --> 00:15:45,300
if the stock market does experience a correction okay

468
00:15:45,300 --> 00:15:47,266
it could present a chance for long term

469
00:15:47,266 --> 00:15:49,733
investors to buy stocks at a discount okay

470
00:15:49,733 --> 00:15:52,166
or if inflation continues to rise yeah

471
00:15:52,166 --> 00:15:54,300
certain assets like real estate or commodities

472
00:15:54,300 --> 00:15:55,166
by perform what yeah

473
00:15:55,166 --> 00:15:56,766
so there's a silver lining potentially

474
00:15:56,766 --> 00:15:58,100
potentially yeah

475
00:15:58,100 --> 00:16:00,866
it's all about understanding the potential risks

476
00:16:00,866 --> 00:16:03,766
and rewards and making informed choices

477
00:16:03,766 --> 00:16:06,466
based on your individual circumstances

478
00:16:06,466 --> 00:16:08,233
yeah I love that perspective

479
00:16:08,566 --> 00:16:10,000
it's not about panicking right

480
00:16:10,000 --> 00:16:12,500
it's about empowering yourself with knowledge

481
00:16:12,500 --> 00:16:14,366
right and using it to your advantage

482
00:16:14,366 --> 00:16:16,666
exactly and I think that's a great note to end on

483
00:16:16,666 --> 00:16:17,500
I agree

484
00:16:18,066 --> 00:16:18,766
um so

485
00:16:18,766 --> 00:16:19,666
thanks for joining us

486
00:16:19,666 --> 00:16:21,666
on this deep dive into the US economy

487
00:16:21,666 --> 00:16:24,266
my pleasure we hope you found it insightful and helpful

488
00:16:24,266 --> 00:16:25,766
absolutely um

489
00:16:25,800 --> 00:16:28,233
stay curious stay informed

490
00:16:28,400 --> 00:16:31,233
and remember you've got this you got this