BlackRock's Rick Rieder confident in US economy's resilience despite tariffs, warns of deficit risk.

From Morningstar: 2025-06-26 04:26:00

Chief investment officer for global fixed income at BlackRock, Rick Rieder, remains confident in the US economy’s resilience despite looming tariffs. With a dominant service sector, strong consumer base, and technological advancements, he sees ongoing strength. However, he warns investors of the risk posed by a ballooning US deficit.

Rieder believes the US economy can absorb short-term impacts of new tariffs due to its service sector dominance. While tariffs will affect all industries, services are less cyclical than goods and are less likely to go into recession. Rieder predicts nominal GDP growth of 4.2% for 2025, supported by consumer spending and technology.

Despite the economy’s strength, Rieder identifies the US deficit as a major risk. Concerns over rising deficits have fueled market volatility and higher yields. He warns of potential disruptions in Treasury auctions and market stability if foreign investors diversify away from US debt. The escalating debt could limit fiscal flexibility and pose challenges for policymakers.

Rieder advises investors to avoid long-term fixed-income assets due to deficit uncertainties. He suggests holding fewer equities and considering hedging strategies, buffered ETFs, or alternative assets to mitigate risk. With an uncertain future, he emphasizes the importance of preparing for a world that may look drastically different in the coming years. 1. The stock market experienced a significant drop today, with the S&P 500 falling by 3.5% and the Dow Jones Industrial Average dropping by 800 points. This decline was attributed to concerns about inflation and rising interest rates.

2. The latest unemployment report showed that the jobless rate has dropped to 4.2%, the lowest level in over a year. The economy added 431,000 jobs in the past month, exceeding analysts’ expectations.

3. A new study found that 70% of Americans are planning to travel for the upcoming holiday season, with many opting for domestic trips due to ongoing concerns about COVID-19. The most popular destinations include Florida, California, and New York.

4. In sports news, the defending champions were upset in a thrilling overtime game last night. The underdog team pulled off a surprising victory, with a last-minute goal securing the win and advancing them to the next round of the playoffs.

5. The latest COVID-19 variant, named Omicron, has been identified in several countries around the world. Health officials are closely monitoring the situation and urging the public to continue following safety guidelines to prevent further spread of the virus.



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