The most significant trade transformation in 135 years is currently underway.
In April, tariffs reached levels not witnessed since the 1890s, causing ripple effects across the economy.
There’s a noticeable discrepancy between official economic indicators and individuals' perceptions of their financial outlook.
Although the economy saw an addition of 177,000 jobs in April, surpassing expectations, consumer confidence has drastically declined.
Nearly 70 percent of Americans now predict rising unemployment in the future, contrary to the positive job data.
The tariffs have led to some unexpected behaviors; businesses hurried to import goods before prices rose, which paradoxically inflated the trade deficit to unprecedented levels.
Consumers indulged in purchasing vehicles, electronics, and other costly items, fearing imminent price hikes.
At the same time, inflation expectations have surged to their highest levels in many years.
What implications does this have for investors? Bond markets experienced significant fluctuations, with Treasury yields witnessing one of the sharpest increases on record in mid-April before stabilizing.
The dollar weakened considerably, and economists have raised the likelihood of a recession to 45 percent, up from 30 percent just a month ago.
Small businesses are also grappling with uncertainty.
After a period of initial optimism regarding potential tax reductions and deregulation, their expectations have turned negative in light of concerns about the disproportionate impacts of tariffs on smaller enterprises.
Market volatility has particularly affected retirement savers. We received a call from a listener named Johanna, who reported a 30 percent loss in her portfolio due to recent tariff-induced fluctuations.
She is questioning whether she still meets the criteria for “Coast FIRE,” even as market upheavals affect her retirement plans.
Join us as we analyze the economic data from April, explore the causes of market volatility, and discuss the potential implications of these unprecedented tariffs for your financial situation in the forthcoming months.
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The largest trade transformation in 135 years is currently taking place.