Savvy Trades and Investments

[maxluke1]

Consumer spending is the key in my mind. Tariff policy is subject to whims, but I wonder if the genie was unintentionally let out of the bottle here and you can't easily put it back in due to people slowing down their spending.

In addition to uncertainty causing people to potentially slow spending, I’ve been wondering about:
-Biden voters/Democrat voters are generally higher income than they’ve been in the past and I wonder about their effect. Out of frustration/partisanship are they going to slow spending? A similar thing happens with Republicans when they say the economy sucks until a Republican is in office. But Republicans have less disposable income now that lower class voters are a higher proportion of their base.
Some data: https://www.ft.com/content/6de668c7-64e9-4196-b2c5-9ceca966fe3f

-Wealth effect, which is discussed often, where the stock market going down affects upper class spending. This group has really kept consumer spending up in recent years. https://www.bloomberg.com/news/articles/2024-10-11/us-consumer-spending-is-increasingly-driven-by-richer-households

-Consumer confidence numbers have been garbage last couple of months

-A smaller effect but I’m fairly confident that international tourism to the US is going to be way down.

Overall, my opinion (to be taken with a grain of salt and could be total garbage) is that a year out I'd be on deflation being more likely than inflation at this point due to consumer spending effects, etc., even with tariffs in place, which would mean we end up potentially back at ZIRP and BTFD once that starts.