2027 Economic Outlook: What You Need To Know Now

Bo (0:01)

All right, Mr. Zuber, what do you think the economy is going to do in 2027?

Michael Zuber (0:07)

It's funny you bring this up, because I've been thinking about this for about a month. And, you know, if you watch some of my videos, even from just last week, I didn't know, I didn't know where we were going.

But we've gotten some clear signs of what's coming. I mean, just this morning, we got an inflation reading, which was worse than expected, both on headline and core, core being more of an issue. We are starting to see reputable firms forecast 2027, and it's not good. For example, Fannie Mae just forecast that mortgage rates for home buyers will average 7.5% next year. And Fannie Mae is, you know, traditionally the glass half full, right? They've been always forecasting low. So, you know, if they're forecasting 7.5, does that mean we see 7.7, 7.8, 8%? I don't know. That's what history says. Mortgage Bankers Association are saying that loan originations for mortgages will be down 30%.

Basically, because refis turn off, right? Very few people will refi as rates are increasing and at year highs. We've got delistings, we've got cancellations at record highs, 14.5%. We've got layoffs picking up. Netflix just laid off, folks. We have rising unemployment went from 41 to 42 So, none of these things are terrible individually, but they paint a picture that's at least very concerning. And then you add in two things that I think both happen. One, I unfortunately believe that the war with Iran is going to get worse before it gets better.

There's talk of strikes after the midterm, and who knows? Again, I think it gets worse before it gets better. Bad, that's a negative. And then I think this AI bubble is starting to unravel. I've been calling it for a while. I think OpenAI is a, you know, they're gonna be the company that burns the most money. I think the fact that CoreWeave's bonds are now paying 15% is a sign, and it's not a good one. So, I see a lot of negative headlines for 2027 And where I really came to the fruition of this is listening to Paul Tudor Jones yesterday.

Again, Paul Tudor Jones, look him up, you don't know who he is, but he's one of the best investors of my generation. And he basically said he's gonna be short all of 2027 because he sees pain coming. So, and you know, not that that's all horrible, but even if most of those things just happen, I think the wealth effect unravels. And if you wanna talk about why 2026 has been better than we expected, it's the wealth effect. It's the top end of the K. It's stocks at record highs in real estate. All these things are doing well. So the top of the K keeps spending. You know, if we have a 20% crash again, if 20% crash in the stock market, the real estate industry sucks even more than it already sucks, we've gotta enter a recession. So, dude, I don't, the first half of 2027 is, I think it's gonna suck. I just, I don't feel good about it. And I'm, again, I have eight years of recording. I don't think I've ever sounded like this.

It's just, we gotta pay the piper, it's gonna get ugly, man.

Bo (3:28)

I have to kinda go back and listen to this again, because there was a lot of negativity. And first of all, guys, the camera's making me look red, I don't have a suntan, but I'm not a lobster today. But anyways, I'll just tell you, I got back from Mexico, and I was on the beach all weekend on the lobster. But so anyway, you were going on about all this news that is important, but then I was thinking in my head that, wouldn't it be nice not to worry about what the economy does, because you got a financial moat. One of my friends calls it an FU wall around you. That's what my thinking is, is that, look, if you've been around, we know there's ups and downs, and sometimes there's really bad downs, and sometimes there's really big ups.

I think the people that realize they can play the ups and downs and stay alive versus being those people that don't have a foundation built. We're looking at them like, oh, we're so jealous, and then they're out of water. They're done.

Michael Zuber (4:27)

Yeah, Warren Buffett says, when the tide goes out, you see who's swimming naked. Right? And we're going to see a lot of naked people in the next nine months.

So I'm glad you went there, because I want people to understand. You know, I have been studying the economy. I consider myself an economist for 30 years. For whatever reason, the US economy is fun for me to put the puzzle together. But I want to be clear, I made most of my wealth in a recession because buyers disappear, sellers get motivated. You'll be able to get deals at price points you think are absurd. And even better, you'll be able to negotiate terms that you think are illegal, right? I bought a house for 0% interest during COVID because everybody was afraid.