Warning of economic downturn due to government spending cuts, increased volatility, and rising inflation expectations.

From Yahoo Finance: 2025-05-24 07:11:00

President Donald Trump’s promise of an economic boom has turned into a warning of a coming economic downturn. Treasury Secretary Scott Bessent cautioned that cutting government spending would impact the economy, with government expenditures at 34% of GDP in 2024. Despite efforts to reign in spending, the federal budget deficit has increased by 15%.

The stock market experienced unprecedented volatility due to tariff uncertainty, with JPMorgan raising recession odds to 60%. This economic uncertainty has eroded optimism. Investors are turning to gold as a safe haven, with prices expected to reach $3,675 by 2025 and $4,000 by 2026, providing a hedge against market turmoil.

Amidst the economic turbulence, diversifying portfolios with real estate and art investments is gaining attention. Homeshares’ U.S. Home Equity Fund offers accredited investors exposure to owner-occupied homes with potential returns of 14-17%. Additionally, investing in blue-chip art through platforms like Masterworks has provided annualized returns of up to 21.5%.

Consumer confidence is waning, with inflation expectations rising to 4.9% in the year ahead. Long-term inflation expectations have reached a 32-year high of 3.9%. Treasury Inflation Protected Securities (TIPS) offer investors a safe haven against inflation, particularly for those concerned about cost-of-living increases or living on fixed incomes.



Read more at Yahoo Finance: US Treasury Secretary Scott Bessent warns of ‘detox period.’ 3 ways to shockproof your portfolio.