2025 and Your Savings: Are You Prepared for the Next Economic Shock?

Will 2025 bring us new economic opportunities or will it be the same old song and dance? When we look back at the last few weeks of 2024, congressional actions, federal reserve statements, what Janet Yellen is leaving behind, we might just find some clues on what to expect. Before we begin, remember to like this video and subscribe for more economic updates. Throughout the last four years, Congress has had to vote many times about spending plans to keep the government open, often with a lot of drama and an impasse because some members of Congress wanted to actually see spending cuts before they approve any additional spending. In the end, no significant budget cuts were ever passed but yet we always approved a continuing resolution to fund the government. This increased our debt every single time. And the question is, is this a sustainable practice going forward? And according to the Congressional Budget Office or CBO, our current fiscal path is unsustainable. Just last month, the government again almost came to a shutdown when part of the agreement was stalled by the incoming administration wanting the addition of no budget cap for the next two years. Now let me ask you a question. If you're planning to cut spending and balance the budget like the new presidential administration is promising, why would you want to get rid of budget caps, the very tool to control discretionary spending? This seems counterintuitive. Looking at history, the national debt increased substantially during Trump's first term as the gross national debt rose by approximately 7.8 trillion dollars between 2017 and 2020. Asking for no budget cap could be broadcasting a message that there really isn't a plan to cut spending. 2025 and beyond could be more the same, where no one wants to take responsibility, which would put continued pressure on inflation. Adding to the economic uncertainty, the Federal Reserve recently lowered interest rates by a quarter point, which you would think is positive news. However, Chairman Powell's accompanying statements painted a cautious picture. He expressed concerns about persistent inflation, scaled back expectations for future rate cuts in 2025, and acknowledged increased economic volatility. The market's negative reaction to the rate cut reflected in the surge of the VIX volatility index underscores investors' anxieties. The Fed's cautious stance raises concerns about inflation and the value of the U.S. dollar. Adding to these concerns is de-dollarization as countries move away from their reliance on the U.S. dollar as the reserve currency. Remember, inflation reduces buying power. Buying power is what keeps retirement going. A recent Time magazine article featuring the former president highlighted his view that significant price decreases are unlikely. So as we celebrate the holidays and go into the new year, it's often like being with family. All the drama is there amongst all the cheer. Government is going to be government. The debt is not going to disappear. Santa Claus did not come down the chimney and wipe all the old problems away. And what government does is what they're going to do going forward. So the only thing you can do is you better watch out.