In 2025, the US stock market has seen record-breaking gains of 16% but faces economic uncertainty due to policy shifts. The S&P 500 trades at a high P/E of 22.4x, and Federal Reserve research shows tariffs will slow GDP growth. Consumer sentiment is at its second-lowest level in history.

The market’s high valuation raises concerns as the S&P 500 trades at one of its most expensive levels in 40 years. The economy faces headwinds from tariffs, which could increase unemployment and hinder GDP growth. This situation highlights a potential fundamental risk for investors.

Research shows tariffs may slow US economic growth, impacting corporate profitability. The combination of high valuations and slowing growth could lead to a challenging environment for investors. Consumer sentiment is at a historic low, signaling potential economic downturns.

Investors should be cautious as the market trades at a high forward earnings ratio and consumer confidence is low. Building portfolio durability with income-generating assets and high-quality dividend growers may provide protection in uncertain times. Retirees should be especially cautious in this environment.

Retirement planning should focus on income-generating assets rather than just stock selection. Answering three key questions can help rework portfolios and potentially allow for earlier retirement. Prioritizing financial stability and flexibility is crucial in the current market climate.

Read more at Yahoo Finance: Federal Reserve Research Confirms Tariffs Will Slow U.S. Economic Growth