Guest Post by Peter Reagan

In a generalized way, a nation’s economy is the single most important thing for its citizens. The global economy matters, too – in a general way. But not as much as our local economy. Think about it. If the economy is strong, more people are more likely to be able to easily feed and house…

In a generalized way, a nation’s economy is the single most important thing for its citizens. The global economy matters, too – in a general way. But not as much as our local economy.

Think about it. If the economy is strong, more people are more likely to be able to easily feed and house their families. A strong economy means it’s easy to find a job, easy to get promoted, easy to start a business – just generally easier to succeed financially.

If the economy is strong, more people can save and plan to retire in comfort.

If the economy is strong, more people can afford to pay for medical care to keep in good health.

A strong economy, in a general sense, is the underlying foundation for what most people consider a good life.

And their voting tendencies reflect exactly that. It’s no coincidence, after all, that Trump’s landslide win last year was on top of an absolutely terrible economy during the previous administration.

So, we all want a strong economy whether we use those specific words or not.

And how is the U.S. economy doing?

The answer to that question, of course, depends on who you’re talking to. Some will say it’s just terrible, because Trump is in the White House.

Many others are happy to crow about the economy doing well because their guy won the election.

Fair enough – but let’s not play partisan politics. We aren’t so interested in what politicians say as we are in what everyday American families are experiencing…

Recently, the U.S. Chamber of Commerce sent a letter to Donald Trump which has some people concerned. Megan Cassella writes:

…the massive business lobbying group asked key Trump trade officials to automatically lift tariffs on all small business importers and on all products that “cannot be produced in the U.S.” or are not domestically available.

Now, if you don’t know the details, you may not understand why the Chamber is requesting those tariff exclusions, but it’s here where the cause for alarm comes from. Again, from Cassella:

The U.S. Chamber of Commerce is urging the Trump administration to immediately implement a “tariff exclusion process” in order to keep the U.S. economy from falling into a recession and inflicting “irreparable harm” on small businesses.

What’s their logic? The letter says, “that, as applied, the tariff imposes significant risks to U.S. employment.”

The Chamber is asking for tariff exclusions because they’re concerned that the tariffs will crush many small businesses, thus causing a spike in unemployment and a possible recession. Small businesses, by the way, are a big deal – firms with fewer than 250 employees are considered “small businesses.” Yet they created 50%-63% of all jobs from 1995-2024.

Even though they’re “small,” they have an outsized impact on the U.S. economy. That makes the Chamber warning scary stuff.

And we could disregard those statements by the Chamber as exaggerations, just another special interest begging Washington for an exception to the rule.

Except they’re not the only ones…

Big concerns about the economy

In fact, there are a number of troubling data points that each could point to economic woes coming our way.

For example, unemployment claims were higher than expected. Jeff Cox writes:

Initial unemployment claims posted an unexpected increase last week in a potential trouble sign for the wobbling U.S. economy.

How bad?

First-time filings for unemployment insurance totaled a seasonally adjusted 241,000 for the week ended April 26, up 18,000 from the prior period and higher than the Dow Jones estimate for 225,000, the Labor Department reported Thursday. This was the highest total since Feb. 22.

Continuing claims, which run a week behind and provide a broader view of layoff trends, rose to 1.92 million, up 83,000 to the highest level since Nov. 13, 2021.

Economic uncertainty (whatever its cause) leads to downsizing in businesses. Fewer new hires, elimination of existing jobs and reduced investment (in raw materials, new facilities, research and development – everything).

We’re still seeing the DOGE job eliminations play out through the economy – and federal employees who still have jobs are probably pulling back on spending, just in case they’re next… And this same effect, playing it safe due to economic uncertainty, is playing out across the entire economy.

There’s an old economics joke – admittedly it’s not very funny, but I think it’s relevant in this conversation:

When your neighbor loses their job, it’s “downsizing.” When you lose your job, it’s “recession.”

Higher jobless claims indicate a slowing of the economy as it implies that there are fewer jobs available for people because the demand in the economy isn’t there to hire those people.

They came for our toys…

Then, there are indications that recreational products may soon start to have slowing sales. Jordan Novet writes:

Microsoft said Thursday that it has increased the recommended retail prices of its Xbox video game consoles and some controllers globally due to “market conditions.”

It’s not just the consoles, though. They said that the price increase “also affects some new first-party games.”

And if you just think that it’s Bill Gates who is increasing the prices, think again.

Nintendo and Sony have also announced plans to charge more in recent weeks.

That’s right, all the major gaming console manufacturers are increasing prices, and that could mean that fewer people will be able to afford the “latest and greatest” console and games.

There’s more news on the difficult economy front, though.

Even McDonald’s is saying that times are tough

McDonald’s. The company that seems to be able to prosper everywhere and all of the time.

Why do they do so well regardless of the area that they’re in? Amelia Lucas gives us that answer:

Compared with its industry peers, McDonald’s has more low- and middle-income diners, executives said.

In other words, McDonald’s, more than other fast food restaurants, has a big part of their market base with low and middle income people.

And McDonald’s announced that they’re seeing challenges, too. Again, from Lucas:

McDonald’s U.S. same-store sales shrank 3.6% as the chain faced bad weather and a more cautious consumer. That drop is the worst in McDonald’s home market since the 8.7% plunge during the second quarter of 2020, when states imposed lockdowns to slow the spread of Covid.

So, here we have signs that low and middle income Americans are eating out less which indicates that they have less disposable income.

And that’s not good for big parts of our economy.

Even the government is admitting that the economy is stumbling. Andrew Moran with The Epoch Times writes,

The economy declined by 0.3 percent in the first quarter, down from the 2.4 percent expansion in the previous quarter, the Bureau of Economic Analysis said in a statement on April 30.

This was the first quarterly contraction since the first quarter of 2022, but it was better than some forecasts signaled.

There’s a reason we’re seeing headlines about consumer confidence falling to five-year lows.

It’s not all bad news, though

For starters, Moran noted that part of the economic decline in the first quarter of this year was due to the decrease in government spending.

Frankly, it could be argued that government spending shouldn’t be included in the gross domestic product because government spending isn’t reflective of market demand. In fact, both Treasury Secretary Bessent and Commerce Secretary Howard Lutnick are strongly in favor of simply eliminating government spending from GDP calculations altogether.

I think they’re right! It’s all too easy for the federal government to spend a few trillion dollars on anything at all, then point to robust GDP figures and call it “growth” and “progress” and “prosperity.” When it’s really just redistributing wealth from citizens, either directly through taxation or indirectly through inflation, into the government’s preferred sector.

Regardless! Government spending is still reported as part of the GDP, so you see any federal belt-tightening as reduced economic growth.

On balance, maybe the economy isn’t slowing down. Not so much. Not at the moment.

Also, it’s worth noting Trump’s perspective on the situation. As he wrote on Truth Social:

This will take a while, has NOTHING TO DO WITH TARIFFS, only that he left us with bad numbers, but when the boom begins, it will be like no other. BE PATIENT!!!

He’s right about one thing – it’s going to take a long time to turn the world’s biggest economy around. Trump’s like the captain of a Nimitz-class aircraft carrier (1,100 feet long, 100,000-ton displacement) steaming along at 30 knots in the wrong direction. You cannot just spin the wheel. There’s a massive amount of inertia built up, and any sailor worth their salt knows that oversteering a ship can result in disaster.

So you take it slow, you take it easy. You pay attention to storms and opposing currents that will affect your course. Any change in direction is bound to be bumpy, so you order your crew to “batten down the hatches” and tie down the cargo. Okay, my maritime metaphor is getting a little strained here, but I hope my point is clear.

1. When you’re headed in the wrong direction, stop 
2. But don’t stop so quickly you cause an accident
3. Adjust course slowly, keeping an eye on all conditions – what’s going on outside, as well as what’s happening onboard the ship

Let’s face facts here. The U.S. economy will have to change radically. After all, we don’t make our own electronics or appliances. We don’t make our own computers. We don’t make our own medications, or furniture, or textiles – the list goes on!

Until the economy adapts and businesses start producing those things, we will pay more for them. And a lot of businesses that relied on cheap overseas parts and labor will probably shut down.

Ultimately, we hope these big changes will be better for all of us. That doesn’t mean these big changes are better for each and every one of us equally.

Some successful entrepreneurs will find their business models just don’t work anymore. I feel for them, I really do! Yet this is the nature of economic change. Some people are already positioned to benefit from these changes. Others will need to move into new sectors, learn new skills and find their own ways to fit into the new economy. That’s a difficult situation to go through. Some families will just have a tougher time than others.

Remember, though – we don’t really need to worry about “the economy.” The only reason I even talk about GDP most of the time is to make fun of it! What matters most is how your family is doing.

How your situation looks today, and how your outlook has changed based on these events. You and I can’t single-handedly change the trajectory of the entire economy! We are the captains of our own little houseboats, though – and we can take steps so that the currents and storms ahead don’t capsize us.

The best way to do that? In my opinion, it’s diversification. Also known as “the only free lunch in investing.” As Bloomberg’s Merryn Webb says:

Gold is the best portfolio insurance there is. You should have it, but also you should hope it doesn’t go up too much. That’s because if it does, it’s mostly because something has gone horribly wrong somewhere. Inflation, geopolitical disaster, currency instability, sovereign debt sustainability worries, trade wars – that kind of thing.

Diversification with physical precious metals can help keep your personal houseboat on course. When I buy gold, I like to think of it as ballast for my savings – most of the time I ignore it. But it’s there when I really need it…

Or you might think of it as an anchor for your savings – you diversify with gold because it’s there to keep you from going in the wrong direction.

Is owning physical gold more like ballast, or more like an anchor? Experienced old salts, weigh in! Everyone else, I encourage you to learn more about the benefits of diversifying your savings with physical precious metals.

As central banks continue unprecedented money creation, protecting your purchasing power becomes critical for retirement security. Physical gold IRAs offer a tax-advantaged solution, allowing you to hold tangible precious metals with intrinsic value independent of currency fluctuations. To learn more about how physical gold could help protect your retirement portfolio, click here to get your FREE info kit on Gold IRAs from Birch Gold Group.