Recession in 2025? Here’s What No One’s Telling You…

Everybody is asking the same exact question right now, are we headed for a recession? I know a lot of you guys are trying to figure this out. There's tons and tons and tons and tons of videos on this right But I think what's happening with you know, the moves that are being made right now, especially with the tariffs and kind of what we're starting to see with the European central banks. So some of you might know that, you know, when our dollar. Gets weak, which it's low right now, it affects other currencies, it affects other central banks. And I think you know a lot of times people are looking at this like centrally and locally, there's really a processional thing that hits globally. And I think that's the bigger issue. We have a trust issue, we have a safe haven issue around our dollar, and I. Think it's it's going. To start affecting so we can look at today, which we have to look at today, of course. And Pal just got Pal just said he thinks we're a maximum employment and we're actually fairly stable on prices. That's what he just said. So the question is it This is why him and Trump are going at it in the news, right. Yeah, because the FED basically monitors two things. They monitor unemployment and they monitor inflation. And it's confusing for Powell because he's in a tough spot because right now inflation is calming down but could easily go back up, and unemployment, while increasing, is still within the bounds of considered a healthy amount of unemployment. So right now it seems pretty easy to focus on inflation. If unemployment continues to go up, you know, the FED then is in kind of a tough bind because they have to then decide. And he basically said they're going to monitor both and if both are going in the wrong direction, they're going to see which one's going in the worst direction. Is unemployment worse or is inflation worse? So I think you know what's interesting is I mean, if you just focus on let's say China and then all this stuff going on there, there are some things on YouTube. I would encourage you guys to look at this. Uh. I've looked at a bunch of them. I watched a bunch of them where people are actually posting on YouTube even though the Chinese governments. Trying to keep everything you know, down right, and. What we're what we're seeing is things are severely slowing down because US as a consumer isn't buying like like we were because of the pricing. So we do think that initially at least this is gonna stall growth, and I think it's actually gonna it's going to create job loss here in the US. It has to, right, you know, we're already seeing I know, corporate we're going to talk about corporate profits and those are up, but corporate profits are going to go down if things, you know. Are priced differently from these tariffs. So before we dive into kind of what we're seeing in the economy right now, let's maybe discuss what a recession is, because I think in a lot of people's mind, our recession means two thousand and eight, Like two thousand and eight recession is the only thing people think of. And the truth is is that there's been a lot of other recessions that weren't as extreme as two thousand and eight. Two thousand and eight was a major, major recession. Well, that was really different. I went through that that was based on people losing their homes and you know, all kinds of things we're not in this scenario. Hera basically a recession means two negative quarters of negative GDP. That's what that's essentially what that's the technical word. And so I think, like anything, you. Know, we are going to see, especially with these tariffs, a significant change in GDP. Yeah. Absolutely, But just keep in mind that it's not all or nothing. It's not you know, twenty twenty one where everything's booming, or twenty twenty two or two thousand and eight. You know, like you're only two options, right, there can be dips and highs that just aren't as extreme as that. As we're talking about whether we think there's going to be a recession and then what we think you should be doing. Right, I think this is like the you know, like you know how quiet it gets before a storm or tsunami. You know, like when the tide kind of goes out and we don't see the the you know, the weave offshore. That's where this is headed. You know, these tariffs are creating massive disruption. Like I said, you know, if you go back and just take a look at some of the hutube just look, there's there's a number of them out there. I don't know how quickly they're getting pulled down, but I looked at a couple actually this. Morning, and you know, this is a this is a big thing. Obviously there's a huge, huge trade war going on between China and the US, but we are a huge, huge consumer, and so now they're forced with taking all these products that they made and pushing them back into their domestic economy as opposed to centiment and ationally, so there's all these all these dots that are being connected as a result of this, and I actually. Think that you know, while the goal here is to. Is to get manufacturing back to the US, this is in some ways the weaker dollar is some ways could be a tool where the US is trying to reindustrialize, you know, by keeping our dollar weak. Yeah, maybe we'll see if that, you know works. It certainly is, I mean it's it's the lowest it's been in three years. The x y is is like ninety eight, it's gone down eight or nine percent. And so so if we're paying if we're paying dollars to somewhere else, it doesn't really matter who they're holding our dollars and we're using that, you know, we're manipulating that the value of what we gave them has gone down eight or nine percent. Right, and they do care about that. Correct, Yeah, right, That's kind of the point the dollar has always been. There's a there's been an inherent trust and a safe haven with the US dollar like that, you know, and there's usually a flight to safety for currency, doesn't matter where you are. And and so what's really been interesting is the ECB, the European Central Bank, they've lowered their rates seven times that they just lowered them again by a quarter point. You know, we're gonna be there in two weeks, right, We're going to be in London. But I will tell you. What does that mean. What what that means is is that the economies are starting to react. You know. The only one that hasn't is is Japan, and Japan actually increased their rates, but they're basically there already, right. So, but it's really really interesting to see. One of the things I'm telling you you got to watch is what's going on with with the central banks around the world, because we are a global economy and everybody kind of looks at this as as you know, you know, we're on an island on ourselves, We're not. Everything we buy typically is from somewhere else. And of course we're selling things abroad as well, so everything's pretty connected. But it's interesting because you know, we have this additional responsibility because we are the world's currency that Powell can't necessarily just drop rates when everybody else is dropping rates because if it inflates our money supply, that's not good either. Right, And that's why you guys may know we have a weminar today with George Gammon because this is an extremely complicated topic. The reason I bring this up is this is this is today actually just a couple hours because you know, whether it's the dollar we're talking about, whether it's interest rates. So George believes that interest rates are going to go down. Yeah, I think that's an interesting perspective because if you take a look at what potentially could happen with inflation here rates. You know, last time we had inflation, guys, and you know twenty twenty two, Uh, they increase rates, and so it's gonna be interesting to see whether tariffs create inflation and if the if the rates go down, it's it's just going to fuel it even more. In my opinion, Well, so let's look at the actual warning signs that we could have a recession, right, So to your point that you already made, we are seeing a slow slowing in growth and the tariffs are not helping that currently. There might be some kind of long term play on the tariffs. I don't think any of us really know, but right now they're slow in growth. Yeah. And by the way, guys, this is like a lesson in economics, Like if you go back and take a look at when we even posed tariffs, what's supposed to happen is other currencies are supposed to get weak, you know, And what's happened is the US has So I'm telling you, you know, it's gonna be really really interesting to see you know, the lag here. And I think that's actually what we're all in, uh, you know, ready to embrace for is is the lag. And and one of the reasons I think that Trump has pissed at Powell is because the the last meeting, they didn't do anything. They basically held held the line. And Powell said because the he felt like we're at maximum employment. That's what he said, and he also felt that prices were stable. Now, yes they're a little bit over the two percent mark, but that is their goal. And while all while that the other central banks like the ECB are lowering rates most of this. Most of the central banks. Are lowering Yeah they are, But we have this you know, inflation impacts everybody, and our dollars the world currency at the moment, so we do have this responsibility. We're inflation of our currency is a bigger deal, uh than other currency. But we're also paying people in it. That's the issue. They're they're getting our money, right, they're getting the US currencies and so they're they're not happy if if our dollar is weak. Correct, Right, So it's just like you if I gave you, if I gave you rent money from last month and this month is ten percent less or three months later, let's say you'd be you wouldn't be happy it buys you less. But when we print more of it than it also buys you. Less potentially, I guess yeah, yes, yes, there's a whole right. That's where Brent Johnson comes in right with his milkshake theory. But yes, I get it. And what it is is what according to him, if you if you guys follow Brent Johnson and I would google the milkhake theory. What he's saying is when we print others print and so everybody's printing at the same time. So it you know, when sometimes when we look at printing, like the stuff that you're going to see on YouTube, they go, oh my god, we're printing the dollar's going to crash. Well, the the other central banks are actually respect at the same time because they're trying to manage their own currencies. And I think that's kind of the point. Yeah, normally we do what they do. Normally, we lead and they follow. Right now we're not leading. We're doing something totally different. That's why I think Trump's all over Powell. It's very very interesting. I think it is. It is the federal reserves. Is Trump's next targets. You watch, I'm telling you it's just starting to come out. Two mail egos putting against each other. It's supposed to be a dependent. So another warning sign to your point is inflation is still above the target. Inflation just came in at two point eight percent. Powell wants did at too. He's a dead set to get it to two. Yeah, it's still good. I mean, I don't think everybody's bitching, but. He's not happy though. He keeps doing what he's doing. Well. The problem though, is is this increase in rates. It's really put pressure on the housing market, people starting new businesses, anybody that needs to borrow money for a car loan or anything because rates are so high. So it's really. Stalling the economy. Him out lowing rates is stalling. I'm going to challenge you a little bit there. Are they high? No? Or are they just higher than they were a couple of years ago. They're higher than they've been in a long Yeah. I get so everybody got used to these lower rates. But if you look at history, right, we're not that high. Ask as you take a look at you know where we've been. It's just disruptive as to the last many years. But it is pretty crazy when you compare it just in the housing market alone to prices right because right now you can rent in a lot of markets for about half a vote it would take to have a mortgage at eight percent. Almost exactly why we're in the rental business. So you know, so it's not It definitely is stalling people wanting to buy homes because it doesn't work for investors wanting to cash flow, and it's priced out for a lot of people that are renters looking to buy. Right, and that's showing up in the new home sales. Like I think we did something about Lenar Holmes recently where they're spending was it thirty forty thousan dollars on these rate buy downs because people are still solving to that monthly payment, so their marketing costs went up significantly just to try to sell these new homes. So that's why we're starting to see the listing amount of listings grow because I mean, you technically can do that if you've got your own listings, but it's tough to compete with some of these big home builders that are traded publicly, you know, and they have these programs where they're getting people into brand new homes at these low rates, which makes it harder for them to make a choice because if let's say you got a home in the subdivision next door a price about the same, you know, given the two choices, they're. Going to go to the one that has the lower payment. So you know, we're starting to see that, but historically, I still think rates are low, even though they're not low enough for people. Right, Yeah, I get things going, and home prices are not really being disrupted like they were in eight I think that it's the big difference. When we went into that recession, there was a people people there's today. They have equity in their homes. Back then, they did it. That's the big thing. If you take a look at your own personal net worth back there, in a wit, a lot of people's got wiped out, didn't matter what you were in today. It's true the economy slowed down, rates are up and all that kind of stuff, and it would be great to have them come down a little bit, but the reality is is that people are still sitting on a fair amount of equity and there's not a lot of disruption because if there was, it would show up and mortgage delinquencies and credit card delinquencies, even though those are up a little bit. Don't get me wrong. So yeah, you know, it's interesting. I don't see, you know, I don't see at least right now, any signs of a recession. But the real kind of on the kind. Of misnomer is going to be what happened, what's going to happen here in the next six months. So we're continuing to go though before we say that, So the labor market is showing cracks, right, So you have to look at that. So unemployment is now at four percent, it's projected to rise to four point four percent later this year, which is still historically low. It's still a good number for unemployment. But the issue is is the layoffs are kind of happening in more higher end industries sure, like technology, finance, those kind of things that are pretty high paying jobs. So they're more impactful to the economy than lower wage jobs because people that make more spend more. Well. I also think there's another point here to be made, and that is, you know, who needs those jobs now with AI. And all this stuff. So let me just explain it. You know, you guys probably don't remember this, but there was a time where you would have to use like travel agents. There was a time where you have to use insurance agents. There was a time where you'd have to use real estate agents. As technology starts to replace a lot of these you know, I guess technically white collar and you know, and we're talking specifically about the insurance industry. We're talking about the wealth management, wealth planning industry. Things that are commodities that can be you know, kind of traded. That's a lot of a lot of. The colleges are focused on this kind of stuff. These are white collar, a lot of middle managements. As inflation starts to hit corporations, you start to take a look at those middle management cuts. And so I think that the winner of all this is going to be the blue collar and the lower you know, the service jobs, because you can't you can't replace those people with tech, right, yeah, absolutely. So another reason that you know, we're still looking that maybe we could have a recession this year is the yield curve is still inverted and that's a big indicator for and by. The way, guys, I'm not going to go there today on the Yokur, but we're definitely bringing that up with George this afternoon. Yeah, so for those of you who want to watch this George Gammon video our webinar today actually is it's going to be about that because that is something that everybody's watching. Absolutely, So look at let's look at reasons we might avoid a recession, right because there is an argument that we're going to see a recession. There's an argument that we're going to avoid a recession. So one of the reasons we might avoid a recession is because consumer spending is still resilient and Jerry, if you can bring upslide for Yeah, this is interesting. Too, right, Yeah, this is really interesting. But consumer spending is not really down because most people, as Jerry pointed out to me, don't pay in cash, so they're usually paying with their credit or debit card, which then is going to be showing in this chart. So you're really not seeing a decrease there. That is a really interesting chart. What that shows is stability, right. Yeah, if people you know, what would make a recession is if people stop spending money, and if people are still buying things, that's going to help. And people are going to argue, well, they're buying things because they're not buying things like houses, so they're shopping and they're doing this, and that's all true, but that still moves the economy. It doesn't really necessarily matter what they're buying. As long as consumer spending is still going, we are not in a recession. We are seeing a few of things emerged though, and I think it's worth noting that is we are seeing people finance stuff that they've never financed before. So that's making it. They're financing groceries, they're financing rent like those are things that are getting financed. You know, there's we use a company called Flex where we get paid and then the tenant actually pays Flex over a period of time. And I know there's there's Apple Pay and there's Apple Pay Later, and there's other kinds of these programs out there, and so so I think that's something to watch because so good because people are financing things that they don't typically finance. And I think that. Is something that you know, that could be fire before there's smoke, or smoke before there's fire. How are you saying? Mm hmm, Well, and I think it's interesting too. You know, people are commenting on here. You know, the tariffs are a big part of all of this, right, it's a big part of the unknown. Like people are saying that you know, people are getting laid off, you know at higher amounts. They talked about the job, you know, the unemployment. You know, tariffs are any kind of uncertainty that hits the market can create a recession, right because it's changing things up. That's kind of what you know, the housing crisis started the Great Recession in two thousand and eight. Like it wasn't all just housing, but housing is what started the ripple effect. Right, A really good point, and that could be what's happening now. I think you know, if you look at what is a recession obviously, so it's a decline in gross domestic product. You know, tariffs will mean slowed growth period, that's what it means, So slow growth. Potentially there's a lag to that, and I do believe that we're going. To start to see that, right. And I think one of the reasons Trump's so pissed at Powell is that they said we're not going to have a rate cut, right, and so Powell's holding the line because he's trying to get that inflation down of the two percent more. And so that I think is something to watch over the next month or two because he's going to come straight at the Fed. Well. That's another thing though, is we might avoid our recession if the Fed cuts rates. Like, if the FED starts cutting rates, it's going to hurt inflation, but it might it would boost the economy. Or kick the can down the road, right, because what it does, there'll be a whole new wave of By the way, you know me, I'm a real state guy. I would love to have lower rates, but you know, I think This is precisely why. Because the ECB European Central Bank lowered by a quarter point, and they lowered seven times and and we have I think what twice, Jerry, is that right? Twice two or three ten, something like that. So we're way not not that we need to measure up to them, but it is something to what And and I think that to your point, a lower rates would fuel things, right, create consumer spending and all those things, right, because the one thing that you need to keep the GDP up is consumer spending. So you know, the jury's still out, so you know what's going to happen. But I do think these TIFFs they're starting to we're starting to see a lag here. We're starting to see a lag We're starting to see some job loss, and for sure we are going to see more of that because I don't think that I don't think Trump's done playing in a sandbox. Well, here's the thing, too, is something that could avoid a recession or cause one is corporate earnings. So right now, corporate earnings ended the end of the year really good and even in Q one they continue to be fairly good. They but terrorists worry troduce. Yeah, this is pre two, right. So we don't really know yet, you know, the effects on corporate earnings. We do know there's been more layoffs, you know, and there's been a lot less growth. The thing whenever you bring something into the economy, when people don't know what's going to happen, businesses aren't hiring. They might be letting go of people. You know. There's just people aren't going to buy a house. There's just a lot of uncertainty. People get scared to move forward, so they just wait. They're like, we'll just wait. Well, the problem with that is if the economy starts to just wait, you are going to see a recession. So that's precisely what the videos say from these Chinese manufacturers, m h. Every single one leads to the story over there is if you have a job, you know, or you have good savings, make sure that you're maind may make sure you're maintaining you know. Some a safety net personally. That's precisely what the videos that we're starting to see in in China, and and so basically what that means is that there's factories that are slowed way down, there's more days off, they're not making as much stuff all that stuff that. Would normally come here. That's that's kind of part of the lag, is what I'm saying. And so it's it's important to kind of take a look at what is actually going on there. And and see how it might affect what's what's going on here. Yeah. Absolutely, And I think too, you know, I believe that there's going to be some kind of recession. I don't believe at this point it's going to be a major recession, but I do think we're going to see us slowing down because I think this terrorist part of the plan is to slow everything down. Whether it's a good plan or not, we'll see, but I think that is part of the plan. Well, if it's interesting, because I read a bunch of articles on this, you know, could the weakening of. The dollar be strategic? Mm hmm, right, Like that is something to think about because what that does is it makes the the manufacturers in the US more competitive. That's essentially what it does. So you know, is it is it a tool for reindustrialization? Right? Like, you know, it could be a strategy maybe? Yeah, Well we're the world currency because you know, you said we pay people in dollars, right, so you know, they buy, we buy things from them in dollars whatever. So if we're trying to weaken our dollar so that they buy more stuff from us, then that kind of negates the point of us paying every body and dollars. Right, Yeah, but they they at this point they have to, right, so they But to your point, there's a couple of things that happened. One, as we pay them in dollars and our currency gets weaker, then all of a sudden that inflates their currencies. That's what it does, right as ours get weaker, let's say, And so what does that do that makes them move toward rate cuts? And that's exactly what's happening. If you took I look, I took a look at the central banks. What's going on with all the central banks? Right, and all of them except for Japan lower have lower rates and we're. Holding the line. And I think that's actually so, you know, the central bank issue and the rate cuts and the stuff that's. Going on globally is important. And let's let's keep in mind this is only eight or nine percent, but it's still a lot. If we're paying somebody in those dollars, they can't be you know, they can't be happy with that. But the I think the real point here is the dollar historically has been trusted, it's been a safe haven. And potentially this could also lead to digital assets, you know, like crypto that kind of stuff. You know, as as. You know, there's a lot of all has to happen for the dollar to lose its world reserve currency. But this, it is a very interesting thing that's happening right now. So somebody commented on YouTube. I'm sorry I can't find it, but they. Were saying that Lenar they were in a contract to buy a home and Lenar raised all the prices on the homes due to teriffs. So you know, you. Are tariffs are going to create that's right, it was Nemo. So tariffs are going to create inflation, right, and inflation is going to put pressure on pal to not lower rates. However, however, you know, tariffs could also put you know a lot of people out of a job because if business is slowed down, it's not going to just move right away. Everyone's like, oh, the businesses just come to the US. Well, that takes a lot of planning, it takes a lot of time, it takes a lot of you know, infrastructure to get them here. Right, So there's definitely going to be a. Lag where people lose their jobs and that's going to put pressure on the FED to then lower rates. So I think, you know, if you boil this all down to whether we're going to see a recession or not see a recession, it really comes down to Powell on his decision whether or not he's going to lower rates. Well, right, so there's a vary astute observation that that person posted about the Lannur house. Right, So I think we all know those kinds of things are. That is inflationary guys, period, right, That's exactly what that is. When somebody increases the price of something as a result of something else, price goal is went up. That's inflationary. The question is. Does that put the home further out of reach for the consumer? The answer is yes, right, and will that stall growth? I believe the answers yes. And so that's exactly the fight to your point where Trump is going to be coming after Powell and the Fed. I think, in fact, I think he even said he wanted to resign or something like. He came out with that. You know, that's how big this argument is because if Powell holds the line. But if he doesn't, he's going to be fighting inflation again because that Lenard price of that home, that's inflationary period. And so Powell didn't create that. But it's funny because you know, this goes back to what you and I have been talking about when we have people that are renting, sitting on the sidelines, waiting for a crash to buy a home and everything else, and we always tell them that, you know, get in the game. Get in the game because there is a chance at your own Poal caves to the pressure, lowers rates and inflation goes up and people are gonna start buying again. And the thing is is like there's this window right now where it is a buyer's market, But I don't know how long that window is gonna last. If rates start going down and two lenar is. Raising the price of their homes they're building, why because the terraffs which are costing more money for them to build a home. So if the prices of new homes go up, then the prices of used homes go up. You know it's they move together, right, Because so you have to look at all these things when you're sitting there and you're debating on well, I'm just gonna wait, this just seems overwhelming. I'm just gonna wait the way bye it is. I mean, there's a lot here. And so if you guys are feeling that way, you know, that's okay. But the Daniel's correct. You know, in times of inflation you want to be in hard assets, right, I can assure you of one thing. The housing market is not going to crash, right. Prices are actually going up month after month, right, Just go look at the National Association Real Tours. The rent is a redfin zillo. They're all showing, they're all going on not a lot, but they're they cracked the four hundred mark, as you know, on the average. Of course, I'm sure you might have a housing market near you that that's not the case. But the reality is is nationally, prices have actually going up. This tariff thing could make them go up even more. And so if you're looking to get into the landlord game like you know, like like we are, and I told you guys our aggressive plans to buy properties right now, we are doing that specifically because the gap between the rent and mortgage has never been wider. I mean, it's been a long time since it's been that been this month. So that the if somebody wants to jump from a rental to a homeowner, it's a significant jump. One because the prices are going up, so they have to downpayment. But two, if rates stay where they are and prices go up, their mortgage payment goes up. So you all of those things matter. And all that does is force people more into the rental market. And so either way, I think we have inflation. We have inflation now because of tariffs. We're already starting to see it, as we just explain with this Lenar example. And then if and only if a frates go down, what you're going to see is a temporary lag. That would be the time, guys, if the Fed starts lowering rates, load up, man, because you're going to start to see another asset bubble exactly. Yep. And that's what happens when rates go down. You see asset bubbles because historically hard assets. Gold, real estate, everything trades when the price of money goes down, like cars, electronic houses, you name it, right, lines of credit for people, all that kind of stuff. People starting to renegotiating all that stuff. The other thing. There's so much money sitting on the sidelines with this call it trapped equity of people that are have locked rates in the force. Let's say, so if rates go down that much, which is a lot, I don't think it's gonna happen anytime soon. You'll unlock all of that too. So C Smith said, I think four oh one ks are called three to zhero one k's now because they're going down. That's funny. Well, I'm gonna end with this. Lyle says, don't wait to buy real estate. You buy real estate and. Wait ah good one. Yeah, but remember, don't forget if you buy something and your tena pays it off, it's really just your down payment that you're out. So all right, see you guys next week, and we hope to see you with the webinar later today, Jerry, if you want to put that link. Back up, Yeah, hope, see you guy guys here. This is gonna be fun. And get your questions ready too, because I'm confused on a lot of stuff, just like you and and and George believes rates are going down, so I will give you that. Uh So, that was one of my first questions to you, is why would rates go down when inflation is up All right, See you guys next week.