Notes on the Week Ahead

When I was growing up, school holidays weren’t packed with organized activities. Sometimes, to relieve the boredom of a rainy day, I would tackle a jigsaw – I remember one particularly challenging 1000-piece puzzle which, when completed, promised to reveal a charming picture of Dutch skaters on a frozen lake.

This week, after a very busy few months, I am putting down my pen, picking up my metaphorical spade and bucket and taking some vacation time. 2025, so far, has been a challenging year for analysts and it is tempting, as I’m trying to clear my desk, to assert that not much has changed over the past few weeks and so I don’t need to update any analysis of federal government policy, the economy and markets. However, the reality is that events in Washington and on Wall Street over just the last two weeks do require a reassessment.

There have only been two U.S. recessions since 2001 – the Great Financial Crisis and the Pandemic Recession. Both of these were huge – accounting for two of the only three times since the 1940s that the unemployment rate has vaulted to double digits. However, because the recessions of our recent memory have been so dramatic, investors may not appreciate the risks from a softer sort of slowdown.

A crowd is gathered around the sickbed of the economic expansion. Among the multitude are the workers, consumers and business people who would be most impacted by its demise. There are political partisans too, some fervently praying for recovery, others quietly hoping for the opposite. At the foot of the bed are fiscal and monetary doctors, the former preparing a sugary solution to inject into the patient and the latter casting nervous eyes both on the patient and the fiscal doctors, concerned about a renewal of inflationary fever. Foreign governments and central bankers also stand vigil, from as safe a distance as they can manage, conscious of the infectious nature of the patient’s disease. And close by the door are investors, contemplating a quick exit from American assets but haunted by the memory of the many past remarkable American recoveries. There is a knock at the door. It is the last week in April and a battery of tests are in that should shed further light on the delicate health of the economic expansion.

The podcast dives into the U.S. economy's aging expansion, emphasizing the need for investors to rethink strategies in light of changing policies. It also examines how potential recession risks could impact immigration patterns and consumer spending, which surprisingly remains robust. Additionally, the discussion highlights the paradox in the labor market—rising layoffs exist alongside historically low unemployment rates, showcasing the resilience and adaptability of the American economy amid uncertainty.

The recent tariff announcements have stirred significant market chaos, sparking discussions about their broader economic implications. Experts analyze potential risks of retaliation while critiquing the data behind these tariffs. The conversation shifts toward investment strategies, emphasizing the importance of balancing portfolios in these uncertain times. Listeners gain insights on navigating financial turbulence with a structured approach to analysis, leveraging lessons learned from past market crises.

The host shares a nostalgic tale of childhood fudge-making, drawing parallels to the intricacies of fiscal management. They discuss the looming challenges of the 2025 Omnibus Reconciliation Bill and the necessity for innovative financial solutions. The episode dives into the anticipated fiscal stimulus for 2026, contemplating its effects on inflation and debt. Additionally, it explores proposed stimulus checks and their economic implications, raising crucial questions for investors amidst rising deficits.

Explore the intriguing dynamics of the current economic climate, characterized by uncertainty and its far-reaching impacts on growth. Discover how consumer and business behaviors are influenced by political changes and fluctuating monetary policies. Learn about the significance of adopting diversified investment strategies to navigate turbulent waters and prepare for potential market corrections. This insightful discussion urges listeners to consider smart investment choices in a 'wait and see' world.

The podcast dives into the economic consequences of tariffs, highlighting their impact on consumer prices and economic growth. It discusses how tariffs disproportionately affect lower-income households and may trigger retaliatory actions against U.S. exports. The discussion also explores the implications of tariffs on global trade and international relations, shedding light on corporate investment challenges amid uncertainty. Historical contexts, like the founding of the EU for economic cooperation, provide a backdrop for understanding current trade dynamics.

In December, the Census Bureau announced that the U.S. population had grown by nearly 1% in the year ended July 1st, 2024, marking the strongest annual gain since 2001[1]. Given this, it seems strange to be already talking about slowing population growth. However, the reality is that the gap between births and deaths is continuing to shrink, with almost all of our recent population growth coming from immigration. Going forward, if immigration is dramatically curtailed, overall population growth could turn negative by the middle of the next decade while the working-age population would immediately start to contract. [1] See Net International Migration Drives Highest U.S. Population Growth in Decades, U.S. Census Press Release, December 19th, 2024.