Social Security and Medicare cuts are coming because the bond market will eventually bring Congress to its knees, economist says
Oxford Economics warns that the U.S. is heading toward a fiscal reckoning as Social Security and Medicare march toward insolvency by the 2030s. Lawmakers may try to delay action, but the bond market—the “bond vigilantes”—will ultimately force their hand, triggering deep and unavoidable cuts. Without reform, retirees could suddenly face a draconian 19% across-the-board reduction in benefits, while rising interest rates from a bond market revolt could set off a broader financial crisis. Unlike past belt-tightening, this round will fall hardest on ordinary Americans who depend on federal transfer programs, meaning the pain will be sharper and more personal than any previous fiscal squeeze.
Economy ‘On the Brink’ of Recession by End of Year, Moody’s Economist Warns
Moody’s chief economist Mark Zandi warns the U.S. economy is on the brink of recession, citing a “virtual standstill” in job growth as the reddest warning light while low layoffs are the current firewall against an official downturn. He argues tariffs and restrictive immigration policy are pushing prices higher and squeezing labor supply, with inflation likely to rise above 3% and potentially near 4% next year, risking a vicious cycle of weaker spending and layoffs. Zandi says recession odds are roughly coin-flip, with California and New York—together over a fifth of GDP—likely to decide the national outcome. Despite structural headwinds (debt, housing softness, expected slowdown in homebuilding), he sees long-run strengths in AI and tech, but stresses that current policy choices are the primary near-term drag.
Americans kept spending last month despite elevated inflation
In July, U.S. consumer spending rose 0.5%, supported by wage gains and strong demand for durable goods like cars and appliances, even as inflation stayed elevated. The Fed’s preferred inflation gauge, the core PCE index, climbed 0.3% month-over-month and 2.9% annually, keeping price pressures above target. While income also grew, spending outpaced it for the first time since March, signaling resilience but also growing strain, with consumers pulling back on discretionary items. Economists warn that tariffs are slowly feeding into higher costs, raising the risk that the U.S. could be entering a “stagflation-lite” period of sluggish growth, persistent inflation, and rising unemployment.
De-Dollarization Is Accelerating
The U.S. dollar’s dominance is eroding as central banks, led by nations like China and India, rapidly diversify into gold and other hard assets while BRICS pushes for alternative currencies. This trend, fueled by years of U.S. money printing, sanctions, and tariffs, threatens demand for Treasuries and could spark inflation and higher interest rates. For investors, the shift underscores the growing risk of dollar-denominated assets and the importance of moving into inflation-resistant hard assets such as gold, silver, real estate, and infrastructure.
JPMorgan Chase CEO prepping for ‘World War III’ – How to protect yourself in 2025
At a Washington, DC event, JPMorgan Chase CEO Jamie Dimon warned that “World War III has already begun,” citing rising tensions with China, Russia, Iran, and North Korea as greater risks than market instability. His stark remarks coincided with the conclusion of the BRICS Summit, where major emerging economies met to deepen cooperation, and came amid speculation about his political interests. Dimon’s warning underscores the need for investors to prepare for heightened global instability, echoing Warren Buffett’s view that holding cash during wartime is risky as inflation and currency devaluation erode value. Instead, experts recommend turning to productive assets such as farms, real estate, or securities, with new investment platforms now offering easier access to commercial property, home equity, and rental markets for both accredited and everyday investors.
