14. America’s Unfixable Economy: Are We Headed for Another Great Depression? w/Economist Lauren Saidel-Baker
Jan 30, 2025
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Economist Lauren Saidel-Baker from ITR Economics shares her alarming predictions about an impending depression by 2030, driven by government actions rather than traditional market failures. She discusses immense investment opportunities arising from the predicted downturn and explores the fluctuating housing market and rising interest rates. Additionally, Lauren highlights the impact of labor shortages and AI on productivity, as well as the implications of geopolitical conflicts on the U.S. economy. Prepare for significant changes as we navigate these economic shifts!
The anticipated economic depression around 2030 is primarily driven by government spending challenges and demographic shifts rather than traditional market failures.
Despite looming economic challenges, there will be significant investing opportunities for those prepared to navigate the changing landscape over the next five years.
Deep dives
Impending Economic Contraction
A significant economic contraction is anticipated around 2030, deviating from typical recessions and forecasting a depression. The prevailing view is that delaying current economic issues may exacerbate their severity in the future. Experts indicate that this pending downturn could be unprecedented, driven by demographic shifts and government spending challenges. Economists emphasize that while some may view this as a crisis point, it may also present substantial opportunities for savvy investors.
Shifting Dynamics in Housing Markets
Current housing prices are experiencing fluctuations due to elevated mortgage rates and an ongoing affordability crisis. Existing homeowners with low mortgage rates face dilemmas when considering selling their properties in a high-rate environment, dampening new home construction efforts. Although new home prices are beginning to show signs of decline, overall demand is still hindered by affordability issues. This situation reflects long-standing trends of underbuilding that have not kept pace with household formations.
Labor Market and Inflation Trends
The labor market remains tight, posing challenges for businesses due to rising wage pressures that contribute to inflation. With the unemployment rate at low levels and a lack of available workers, companies are compelled to adapt their strategies, focusing on efficiency and automation. Predictions indicate that inflation will persist over the upcoming years, primarily driven by service sector costs. Although commodity prices may stabilize, the tight labor market will likely sustain upward pressure on wages and overall costs.
Interest Rates and Economic Policy Outlook
The Federal Reserve has commenced gradual cuts to interest rates, yet significant downward movements are not anticipated in the near term. Analysts believe that persistent inflation and fundamental economic pressures, including liquidity and labor demand, will limit further cuts. Moreover, geopolitical factors and external pressures could influence market dynamics, leading to sporadic volatility. Overall, a steady growth trajectory is expected, but businesses should be prepared for continued inflation and adapt their strategies accordingly.
The next great depression is coming faster than many of us realize, but this time, it won’t be because of the stock market, the real estate market, bad banking practices, or anything we’ve seen before. Instead, the government will be the one to drive us into a depression, and only those who are watching the economic signs will see it coming. If you’re reading this right now, you’re one of the lucky ones, and we’ll explain why.
Lauren Saidel-Baker, economist at ITR Economics, has been growing concerned about where our economy is headed. We money-printed our way out of what should have been a recession and continued to do so whenever the economy began to feel even slightly weak. But what’s coming over the next five years is almost inevitable. Even the new Trump administration, with its talks of budget slashing and cost saving, might not even dent the growing forces pushing us into the unavoidable.
In today’s show, Lauren explains in detail why her firm is predicting a 2030 depression, what will cause it, whether we can avoid it, and what the economy will look like leading up to it. There’s good news, though, both in the long and short term, but you’ll need to be prepared to take advantage of the enormous opportunities to come.
Insights from today’s episode:
Why Lauren believes we could be headed into a great depression in 2030
The tremendous investing opportunities you must prepare for over the next five years
Home price and interest rate predictions and whether we’ll ever hit three percent rates again
The government’s growing debt and whether lowering rates could help us pay it off
The unemployment squeeze hurting employers and causing labor costs to rise
Inflation forecasts and why we may not be out of the woods yet