Here's The Latest Outlook From Lacy Hunt, Luke Gromen, Lyn Alden + A Dozen Other Experts

**Adam Taggart** (0:06)
Welcome to Thoughtful Money. I'm its founder and your host, Adam Taggart. Well, Thoughtful Money's spring conference was held online this past weekend, and I'm delighted to say that the event was a real success. This was due primarily to the amazing lineup of speakers who presented and took live audience Q&A throughout the insight packed 10 and a half hour day. Now, for those of you who didn't attend, I thought you'd enjoy hearing some of the conference highlights. The day started with Lacy Hunt, former senior economist to the Federal Reserve, explaining how a perfect storm of five converging trends is hampering economic growth making recession later this year hard to avoid.

**Lacy Hunt** (0:46)
Five pivotal economic considerations, monetary conditions, US fiscal policy, debt overhang, tariffs, and demographics are converging to significantly weaken economic activity this year, and possibly the first half of 2026
Recession risks this year are much greater and are generally recognized. These five divergent factors suggest the economy will weaken first, and the transition to meaningful recovery will not be quick and smooth. Business conditions will be sub-par if not recessionary. While higher tariffs may temporarily raise prices on a micro basis, the unfolding disinflationary trend should continue since monetary conditions are significantly restrictive.

**Adam Taggart** (1:54)
Luke Gromen then explained how America is facing a crossroads, where it either continues the failing status quo and eventually falls in the economic crisis, or must make bold reforms that come with their own set of risks.

**Luke Gromen** (2:07)
So I think there's something much bigger at play here in terms of restructuring the system. Now, doing this with 120% debt to GDP is highly likely to drive a crisis that makes the great financial crisis look like a modest summer storm unless we do something very out of the Overton window of discussion very soon. What I mean by that is they need to revalue the gold by a big number and buy down debt to GDP by a lot, very soon, or else things are going to get very, very sticky, and not only are they going to get sticky, but we're going to have a deflationary recession that sees 10-year treasury yields go up.

**Adam Taggart** (2:53)
Luke was followed up by Michael Howell, who showed how the liquidity that bolstered the impressive GDP growth and market returns of the past two years is now swiftly drying up.

**Michael Howell** (3:04)
Well, I think the fact is we know money moves markets and money has been coming into markets at a pretty neat clip over the last two years, as you cite. It's beginning to hit an air pocket. There are a lot of uncertainties. What we see is liquidity stalling near term. I think there are a number of question marks looking forward. I mean, one of the biggest question marks is really over the Federal Reserve and really what its intentions are. The Federal Reserve claims that it will do everything it can to avoid another 2019 repo-style crisis or sell-off in the US. But they seem to be doing very little as far as we can see in that regard. And there's a big risk on our numbers that, let's say the money runs out sometime about the middle of this year. But I think we'll be getting to see the first signs of that already.

**Adam Taggart** (3:58)
Darius Dale offered additional validation to Michael's outlook, sharing that as bullish as he's been over the past two years, he has recently become, quote, ragingly bearish in the near moderate term. And his allocation model is now positioned extremely defensively.

**Darius Dale** (4:14)
But when you have the kind of historic refinancing demand that we currently have here for 2025, you need a significant acceleration in global liquidity to prevent what we call a global refinancing air pocket. So that was the risk number one. And risk number two, which I think is being sort of, you know, exacerbated by US policy decisions on the trade front and on the fiscal policy front, is the likelihood that we see an acceleration in inflation. And we aren't convinced yet, at least based on the most recent commentary from policymakers, that the Fed understands the role it must play in 2025 We think the Fed has to revise its inflation target higher to accept the fact that we are now in a structurally higher equilibrium inflation world, which will give them the policy flexibility to actually offset any sort of deepening economic slowdown and more importantly, to offset that global refinancing demand at the margins. And so, I don't know if we got enough information from the Fed to suggest that they're going to do that, which is why I think markets have traded in a ragingly bearish manner over the past few weeks. And our clients have been on the right side of that in terms of having raised cash very early on in the stopping prices.