Let’s break down the economic trends and the smart strategies that can help you build wealth through the noise.

1. The Tentative Trade Deal with China: Hope with a Side of Uncertainty

Wall Street may be breathing easier after a preliminary trade agreement with China, but don’t break out the champagne just yet. While it reduces the likelihood of a 2025 recession, much remains unclear especially with the current tariff pause set to end after July 8th.

Tariffs could still return in full force. If they do, businesses will either absorb the rising costs (squeezing their margins) or pass them on to consumers triggering inflation.

Bottom line: This deal is good news, but we’re not out of the woods.

2. Recession Risks: History Offers Perspective

Yes, the U.S. economy contracted in the first quarter of 2025. But don’t panic. Recession technically requires two back-to-back quarters of decline, and unemployment remains low.

Since 1925, America has weathered 16 recessions more than one per decade. Each time, long-term investors came out stronger. If you’re playing the long game, history suggests staying the course through downturns is often the best move.

3. Tariffs and Inflation: A Dangerous Duo

Tariffs aren’t just a geopolitical bargaining chip they’re a direct contributor to inflation. Walmart recently confirmed it will raise prices due to import costs, and other retailers are likely to follow.

Although official reports claim inflation is “under control,” many fear that tariffs could reignite the fire, making everything from groceries to electronics more expensive.

If tariffs do push inflation higher, the Federal Reserve may hold off on rate cuts, even if the economy cools.

4. Interest Rates: Tug-of-War at the Fed

President Trump is pushing for interest rate cuts to spur the economy, but the Federal Reserve is cautious. Inflation concerns and the Moody’s downgrade of the U.S. credit rating from AAA to AA1 are reasons for pause.

Higher debt means more interest payments and investors now see U.S. debt as riskier. This could drive interest rates even higher, impacting everything from mortgage costs to business lending.

5. Investor Sentiment: More Powerful Than Policy

Here’s the wild card: emotion.

Investor sentiment has become a critical driver of market dynamics. Moody’s downgrade and uncertainty around tariffs have shaken confidence, but sentiment can shift quickly. A positive tariff resolution or rate cut could turn fear into FOMO (fear of missing out).

Smart investors stay grounded, not reactive.

6. The Debt Picture and Political Maneuvering

Consumer debt is ballooning. Americans are relying on credit to maintain lifestyles, while businesses wait for clarity before making major investments.

President Trump has floated major tax cuts and incentives for foreign investment, hoping to stimulate growth. But whether these policies materialize and whether they’re effective is still unknown.

For now, the best move is caution and strategy.

7. Long-Term Investment Strategies: ABB (Always Be Buying)

During uncertain times, the smartest strategy is often the simplest: Always Be Buying.

Whether you’re passive or active, here’s what works:

• Passive investors: Keep dollar-cost averaging into diversified funds like the S&P 500. Markets dip, you buy more shares. It’s that simple.
• Active investors: Look for businesses poised to benefit from tariff changes (e.g., domestic manufacturers), but know this carries more risk and requires research.

Remember: recessions create opportunities. Staying financially educated and invested during downturns often leads to long-term wealth.

Jaspreet Singh is not a licensed financial advisor. He is a licensed attorney, but he is not providing you with legal advice in this article. This article, the topics discussed, and ideas presented are Jaspreet’s opinions and presented for entertainment purposes only. The information presented should not be construed as financial or legal advice. Always do your own due diligence.

The post Wall Street Says the 2025 Recession is Cancelled appeared first on ROI TV.