Make Me Smart Buy less, pay more?
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May 1, 2025 President Trump acknowledges that tariffs are making life more expensive for American consumers, fueling concerns about a potential recession. The hosts discuss how economic uncertainty prompts some shoppers to reconsider luxury purchases, like gourmet cheese. They define recession in modern terms and explore the impact of rising costs on consumer behavior. Investments in technology are on the rise, sparking debate about whether this signals resilience or just a strategy against inflation. The importance of accurate financial information is also stressed.
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Modern Recession Definition
- A recession is now defined by the NBER as a significant widespread decline in economic activity lasting months.
- It is not just two consecutive quarters of negative GDP as commonly thought.
Economic Uncertainty Hits Luxury Sales
- A Canadian cheese shop owner noted luxury purchases drop due to economic uncertainty, not just tariffs.
- Customers are buying about 10% less, showing how uncertainty tightens spending.
Tariffs Reduce Real Income
- Tariffs lead to higher prices and fewer goods consumers can buy, effectively reducing real income.
- This aggregate decline in real income can cause a recession.