Last week the NY Fed published the results of a survey of regional manufacturers and service providers titled, “Are Businesses Absorbing the Tariffs or Passing Them On to Their Customers?,” Federal Reserve Bank of New York Liberty Street Economics, June 4, 2025.

Earlier this week, Axios interviewed Anthropic CEO Dario Amodei and they advertised the comments from Amodei with the stunning headline, “AI could wipe out half of all entry-level white-collar jobs.”

“We expect federal deficits to widen, reaching nearly 9% of GDP by 2035, up from 6.4% in 2024, driven mainly by increased interest payments on debt, rising entitlement spending, and relatively low revenue generation. We anticipate that the federal debt burden will rise to about 134% of GDP by 2035, compared to 98% in 2024.” Moody’s Friday May 16th

It is very unlikely we see a recession without a housing recession or an acceleration in the economy without housing leading the way.

Markets are intuitively rallying as it appears trade wars are ebbing and institutional investors find themselves wrong-footed. That said, tariffs have not gone away altogether, and they are and will be a regressive tax on working class Americans. They will also continue to disincentivize capital spending and hiring intentions.

Yesterday, Diamondback Energy (FANG), a $40 Billion exploration and production company in Texas, and a darling of Wall Street analysts wrote an extraordinary letter to shareholders. The CEO Travis Stice wrote the following:

CEO confidence recently hit the lowest level, by one measure, in fifteen years and yet Q1 earnings have been strong and ahead of Wall Street expectations.

Consumers, according to The Conference Board and the University of Michigan, are in a panic and yet spending at retail and among Visa customers show few signs of weakness.

Consumer confidence has taken a significant hit over the last couple of months and the impact of tariffs has not even materialized yet. Barring a policy reversal from the Trump administration, it is hard for us to envision an economic scenario that does not involve a recession when such a large cost of living shock is looming for working class Americans. - Tim Pierotti

"We don’t have a time machine. We can’t go back and re-write NAFTA or the terms by which China entered the WTO. We can play the hand which we are currently dealt. The US needs high ROI investment. The US needs to focus on ensuring that our population is the best educated in the world so that we continue to be the center of global innovation." - Tim Pierotti

The current consensus Wall Street narrative regarding this administration’s economic policy goes about like this: Bessent et al want to slow the economy to get rates down.  With lower rates, companies will be able to refinance more cheaply and that will put the economy in a better position to grow longer term. 

The decline of stocks and property held amid an increasingly concentrated minority risks economic weakness. The markets tail wags the economy dog.

We have been making the case for more than a year now that the unprecedented fiscal support in the economy, the easy financial conditions, the secularly tight labor market and the generational transfer of massive, accumulated wealth would drive the economy and risk assets higher until inflation and interest rates get in the way.

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As a financial professional, your role isn’t just about numbers—it’s about helping women achieve the financial independence and security they deserve.

Valuations? We’re Talking About Valuations?

There is a lot of debate happening right now, largely along partisan lines, about whether tariffs are inflationary.  Market participants in support of the President-elect are loudly making the case that the example of the tariffs of 2018 prove that tariffs are not actually inflationary.  The Fed Staff and the economics team at Goldman Sachs have empirically demonstrated those claims to be misleading at best. The chart below from Goldman illustrates the reality of what happened last time around.  The chart shows that while broad measures of inflation showed little impact, the industries impacted by the tariffs saw meaningful inflation.