inflation – The Support Economy

Gold Shines Amid Economic Uncertainty

Posted on June 6, 2025June 6, 2025 by Alyssia Dosifey

Gold Prices Surge

Gold prices climbed 1% in early June, driven by a weaker dollar and disappointing U.S. economic data. Investors turned to gold as a safe-haven asset amid growing uncertainty. The U.S. services sector, which makes up two-thirds of the economy, contracted for the first time in a year. This contraction sparked fears of stagflation, where slow growth meets high inflation. Gold thrives in low-interest-rate environments, making it a go-to choice during shaky times.

Tariffs Stir the Pot

President Trump’s tariff policies have rattled markets, adding to economic unease. Businesses, from retailers to airlines, hesitated to issue financial guidance due to tariff unpredictability. The whiplash from announced, paused, and imposed tariffs left companies struggling to plan. A federal court’s decision to block some tariffs eased concerns temporarily, but the threat of a global slowdown lingers. Gold’s appeal grows as investors seek stability.

Why It Matters

Economic indicators paint a mixed picture. The services sector’s PMI dipped below 50, signaling contraction. Meanwhile, job openings rose unexpectedly in April, suggesting labor market resilience. However, economists warn that tariffs could dampen growth and job creation, while inflation trends continue to shape investor sentiment.

Looking Ahead

Gold’s recent gains highlight its role as a hedge against uncertainty. Investors should watch for shifts in monetary policy and trade negotiations. If inflation cools, the Fed might cut rates, boosting gold further. For now, the metal remains a bright spot in a cloudy economic landscape.

Global Growth Faces New Hurdles in 2025

Posted on May 11, 2025May 20, 2025 by Alyssia Dosifey

Global economic growth is projected at 3% for 2025. Trade tensions and policy shifts are creating uncertainty. Businesses and consumers feel the impact.

Trade Tensions Rise

Proposed tariffs are shaking up global markets. U.S. policies, including 10-20% import tariffs, could disrupt supply chains. Higher costs for businesses and consumers are likely. Retaliation from trade partners might shave 0.5% off global GDP growth. This affects commodity demand, with oil potentially losing half a year’s growth. Companies must adapt quickly to stay competitive.

Inflation Pressures Persist

Inflation remains a concern despite cooling trends. Public worry about rising costs is high. Household budgets are strained, especially for essentials like food and energy. Consumer debt in the U.S. hit $17.3 trillion, with credit card and auto loan delinquencies rising. Central banks face tough choices. Lower interest rates could boost spending but risk fueling inflation further.

Consumer Confidence Wavers

Consumer confidence is up slightly, reaching 114.8 in early 2024. Yet, challenges loom. Gen Z struggles with high debt-to-income ratios, making homeownership tough. Over 40% lack savings for down payments. Baby boomers face retirement with insufficient funds—many have no savings at all. These pressures could curb spending, slowing economic growth. Businesses need to focus on affordability to retain customers.

Business Strategies Shift

Companies are rethinking operations. Geoeconomic fragmentation pushes 34% of businesses toward new models. Some are offshoring, while others re-shore to reduce risks. Flexibility is key. Firms that adapt to policy changes and consumer needs will thrive. Innovation in cost-cutting and sustainable practices can also drive growth.

Global Economy on Edge: Tariffs, Tensions, and a Slowing World

Posted on April 11, 2025April 23, 2025 by Alyssia Dosifey

Growth Forecasts Slashed

The International Monetary Fund (IMF) has cut its global growth forecast for 2025 to 2.8%, down from 3.3% in 2024. This marks the slowest pace since 2020, excluding the pandemic years. (source: Reuters)

U.S. Tariffs Trigger Global Retaliation

President Donald Trump’s administration has implemented century-high tariffs, prompting retaliatory measures from major trading partners like China. This trade war has introduced significant uncertainty into global markets. (source: Brooking; 5Financial Times; Business Insider)

Financial Stability at Risk

The IMF warns that escalating trade tensions and high corporate leverage increase global financial stability risks. Emerging markets are particularly vulnerable to rising borrowing costs and market volatility. (source: The Guardian)

Inflation and Consumer Impact

Inflation is expected to decline more slowly than previously forecasted, with notable increases in the U.S. and other advanced economies. Consumers may feel the pinch as prices remain elevated. (source: Reuters)

Call for Structural Reforms

The IMF emphasizes the need for structural reforms to bolster economic resilience. Without decisive action, medium-term global growth may remain sluggish. (source: Financial Times; Reuters; The Guardian)

Global Economy Faces Uncertainty as Interest Rates Remain High

Posted on March 11, 2025March 13, 2025 by Alyssia Dosifey

Inflation and Economic Slowdown

Rising inflation continues to impact global markets, making everyday goods and services more expensive. Central banks in major economies, including the U.S. Federal Reserve and the European Central Bank, have maintained high interest rates to curb inflation. While this approach aims to slow down consumer spending and bring prices under control, businesses and consumers face increasing financial strain.

Higher borrowing costs have led to reduced investments, slowing business growth. Many companies have put expansion plans on hold, and job markets in some sectors are showing signs of weakening. The real estate market, particularly in countries with high mortgage dependency, has been significantly affected, with home sales slowing down and prices stabilizing after years of rapid growth.

Stock Markets React to Uncertainty

Global stock markets remain volatile as investors struggle to interpret economic signals. Uncertainty surrounding inflation, interest rates, and geopolitical tensions has contributed to sharp fluctuations in stock indices. Once dominant in the market, technology stocks have seen sharp declines due to concerns about reduced consumer spending and regulatory challenges.

On the other hand, energy and commodities are performing well as global supply chains stabilize. The oil and gas sector, particularly, has seen price increases due to ongoing geopolitical issues and production cuts from major exporters. Investors looking for safer bets have turned to gold and other commodities, increasing prices.

Debt Crisis in Developing Nations

Several emerging economies face growing debt burdens as they struggle to pay off international loans. With a strong U.S. dollar and high interest rates, borrowing costs for these nations have skyrocketed, making it difficult to manage debt repayment. Countries like Argentina, Pakistan, and Ghana are seeking financial assistance from the International Monetary Fund (IMF) to stabilize their economies.

This debt crisis raises concerns over potential defaults, which could trigger financial instability in global markets. Developing nations that rely heavily on imports struggle to keep up with the rising costs, leading to inflationary pressures and reduced economic growth.

Future Predictions

Experts predict the economic slowdown might extend into next year unless inflation is controlled. While some analysts believe interest rates could begin to drop in the second half of next year, others warn that central banks may need to keep rates high for longer to ensure inflation does not come back.

Businesses are advised to adopt cautious spending strategies, focusing on sustainability and efficiency. Consumers are also urged to manage their budgets carefully, avoiding unnecessary debt as financial conditions remain tight.

Stock Markets React to Central Bank Policies

Posted on February 27, 2025February 28, 2025 by Alyssia Dosifey

Global stock markets are experiencing heightened volatility as central banks around the world reassess their monetary policies. The U.S. Federal Reserve and the European Central Bank (ECB) have signaled a possible pause in interest rate hikes, leading to mixed reactions from investors. Some view this as a positive step toward stabilizing financial markets, while others remain cautious about the long-term effects on economic growth.

Interest rates play a crucial role in shaping investor sentiment. Higher rates make borrowing more expensive, slowing business expansion and consumer spending. However, a pause in rate hikes could relieve markets, encouraging investment in equities. Investors are closely watching policy updates, inflation reports, and economic indicators to gauge the future direction of financial markets.

Rising Inflation Pressures Consumers

Although inflation has shown signs of easing in certain regions, the cost of essential goods remains high, putting pressure on households. Rising food and energy prices continue to affect consumer spending habits, forcing many to reconsider their budgets. While wage growth has helped offset some inflationary effects, the purchasing power of consumers remains a significant concern.

In response, businesses adjust their pricing strategies to maintain profitability while retaining customers. Some industries, particularly retail and hospitality, offer discounts and promotions to attract cautious consumers. Meanwhile, central banks must balance controlling inflation with sustaining economic growth, creating an ongoing challenge for policymakers.

Tech Stocks Lead Market Recovery

Despite economic uncertainty, technology stocks are showing resilience and leading market recoveries. Companies in artificial intelligence (AI), financial technology (fintech), and cloud computing are attracting strong investor interest. The rapid development of AI-powered solutions, digital payment platforms, and enterprise cloud services has positioned these sectors as key growth drivers.

Investors see tech innovation as a long-term opportunity, even during financial instability. With major corporations investing heavily in research and development, the sector remains a focal point for those seeking strong returns. However, analysts caution that market conditions remain fluid, and investors should stay informed about economic trends and policy decisions.