Gold doesn't Carry the Same Tariff Risks during Trade Conflicts.
The U.S. economy is currently navigating through a complex web of challenges, with ongoing trade policy uncertainties and tariff disputes sending ripples through various sectors. These tensions are creating a climate of hesitancy that could potentially lead to a period of subdued economic growth and tepid job creation.
The impact of trade disputes is far-reaching, affecting business investment, consumer spending, job creation, and financial markets. Companies are increasingly reluctant to expand operations or hire new workers due to the unclear future of tariff policies. Industries deeply integrated into global supply chains, such as manufacturing and retail, are particularly vulnerable to this uncertainty. As a result, long-term investments in equipment, infrastructure, and technology are being deferred, potentially stunting economic expansion.
Consumers are also feeling the pinch as tariffs often translate to higher prices, reducing purchasing power and weakening demand for non-essential goods.
This economic uncertainty is prompting many to be more conservative with their expenditures, further slowing growth in critical industries. Meanwhile, U.S. exporters face additional challenges as major trading partners like China implement retaliatory tariffs. This is especially impacting sectors such as agriculture, manufacturing, and technology. There's also a risk that prolonged disputes could erode international business relationships, limiting opportunities for globally-oriented companies.
Adding another layer of complexity to the economic landscape is the changing role of government employment. After being a key source of job growth in recent years, federal hiring is now decelerating. This shift could push overall employment growth below trend levels in the coming months. The impact may be particularly pronounced in regions with high concentrations of federal jobs, such as Washington D.C., Virginia, and Maryland. Furthermore, private companies reliant on government contracts may face challenges as federal spending tightens.
Given these economic headwinds, the Federal Reserve is likely to adjust its monetary policy. If economic growth continues to weaken due to trade disputes, wildfire-related disruptions, and reduced government hiring, the Fed may contemplate lowering interest rates. Such actions would aim to encourage borrowing and investment, potentially offsetting some of the negative impacts of the current uncertainties.
Can’t we just deliver Pizza’s to each other to stimulate economic growth?
Nope
Temporary jobs in the US have been declining significantly since their peak in April 2022. The sector has lost 515,000 positions, or 16% of the total, over the past two years. In January 2025 alone, temporary jobs decreased by 12,400. The temp penetration rate, which measures temp jobs as a percentage of total employment, fell to 1.59% in January 2025 from 1.60% in December 2024.
This decline in temporary employment serves as a bellwether for a slowing economy due to several factors:
Temporary workers are often the first to be let go when companies anticipate economic challenges. Their flexibility allows businesses to quickly adjust their workforce without the costs associated with laying off permanent employees2.
A decrease in temporary jobs in the manufacturing sector can indicate slowing orders for US factories. As production needs decrease, companies reduce their temporary workforce first.
In the retail sector, fewer temporary positions may suggest reduced consumer spending. When people have less disposable income, retail businesses scale back their workforce, starting with temporary staff.
This trend in temporary employment reflects businesses' cautious approach to hiring and their anticipation of potential economic headwinds, making it a reliable early indicator of broader economic slowdown
Unlike industrial commodities, gold doesn't carry the same tariff risks during trade conflicts.
In recent months, gold prices have surged to near-record highs, reaching $2,938.57 an ounce. This rally comes amid a perfect storm of economic factors that have created what analysts call a "disruptive path" scenario. President Donald Trump's aggressive tariff strategies, including a 10% levy on Chinese imports and 25% on steel and aluminum, have ratcheted up trade tensions and stoked inflation fears.
The Federal Reserve's recent decision to keep interest rates steady at 4.25%-4.50%, coupled with market expectations of potential rate cuts, has further fueled concerns about rising inflation. These factors, combined with a weakening dollar and expanding budget deficits, have created an environment ripe for gold investment.
But it's not just individual investors flocking to Gold. Central banks, particularly in emerging markets, have been significant buyers of gold as they diversify reserves away from paper currencies. This trend underscores a growing distrust in traditional fiat currencies, which are increasingly seen as vulnerable to manipulation and devaluation.
The appeal of gold in this climate is multifaceted. Unlike industrial commodities, gold doesn't carry the same tariff risks during trade conflicts. This unique position makes it an attractive option for investors seeking to hedge against inflation with real assets.
I have gold hitting $3,100 per ounce by April 2025, driven by increased global demand for gold reserves
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