The first 100 days of the second Trump administration upended a lot of things — not least of which was what investors, businesses and consumers thought they knew about the US economy. As a result of President Donald Trump’s punitive tariffs regime, economists across the ideological spectrum say the breadth and scope of the tariffs are likely to throw the US economy into reverse and harm Americans financially. The latest economic data suggests the economy is indeed weakening, though not yet under water. The annualized rate of economic growth took a nosedive in the first quarter, mostly due to a surge in imports ahead of tariffs taking effect. But the so-called “core” growth rate, a gauge of underlying demand in the economy, rose slightly. Consumer spending slowed in the first quarter overall but soared in March as Americans hoped to get ahead of the tariffs. And government spending fell sharply. Meanwhile, first-quarter inflation accelerated, even though it cooled somewhat in the month of March. And private-sector employers added far fewer jobs in April than expected, according to data from payroll processor ADP. Then of course, there were big downward swings in stocks in March and April. The US stock market turned in its worst performance for the first 100 days of any presidential term in more than half a century. So, how can a normal, busy, not-in-charge-of-the-world person financially protect themselves in the midst of all the churn? Here are some top suggestions drawn from several stories we’ve done in recent weeks that may help you feel a little more financially secure in the months ahead — and less at the mercy of the markets, Trump’s policies and geopolitics. Make a backup plan You can’t prevent negative events in life, but you can control how you respond to them (at least somewhat). For instance, you can’t know for sure whether there will be a recession or if you’ll be laid off. But you can make a plan for how to handle such worst-case scenarios, which can reduce your stress if they occur. Consider your income sources. If you’re laid off, will you get severance and unemployment benefits? (To get an idea of how much you’ll receive and when, check your employer’s severance policy and your state’s labor department site.) And do you have a skill or side gig that can earn you money between jobs? If so, what can you do now to make that a realistic possibility should the time come? Arrange for financial backstops. Where can you get cash quickly if you need it? Ideally you’d want an emergency fund with three to six months of living expenses if you’re single, or nine to 12 months if you’re the primary breadwinner for your family or have very high expenses. If you don’t have that much set aside and can’t save more now, you might take out a home-equity line of credit if you own your home, since you could tap that in an emergency. Another lever you can pull is spending. Get a clear sense of how much you spend currently on needs (e.g., housing, food and health insurance) versus wants (e.g., entertainment and other regular discretionary purchases, etc.). Doing so will provide a roadmap of how you can cut back if you must. (More ideas here.) Protect your nest egg from big drops You can’t avoid losses altogether when there are major stock downturns. But you can minimize them by having a diversified portfolio of stocks and bonds, which will be far less volatile and risky than an all-stocks portfolio. But also: Keep perspective: There will be a lot of stock downturns over the course of your life. If you have 20-plus years until you will need money from your portfolio, big drops can be buying opportunities since stocks become cheaper. For any money you will need in less than five years, invest that portion more conservatively — in short-term Treasuries, money market funds or FDIC-insured certificates of deposit. If you’re in or near retirement, have one to two years’ worth of living expenses invested in high-yield savings accounts — or cash-equivalent assets like short-term bonds — so you will never have to make withdrawals from your portfolio when stocks are down. Don’t run to cash: The last thing you want to do in a big downturn is liquidate all your holdings and go to cash. That’s because you will: A) lock in your losses; and B) compromise your nest egg’s chances of growing sufficiently because no one is good at calling the “bottom” of the market, meaning you won’t know when to “get back in.” So chances are you will miss at least part of the recovery when it occurs. Look abroad for a little bump: This year, for the first time in many years, non-US stocks have outperformed US stocks because their valuations are lower and there has been heightened concern about US policies. If you’re in a target date fund, you may already have exposure to world markets. But if you’re not, you may want to consider investing up to a third of your stock allocation in a low-cost world markets ex-US index fund. So if you have a portfolio of 60% stocks and 40% bonds, allocate up to 20% (one third of 60%) in international equities and put the rest in US stocks.
A guide to financial sanity now
TruthLens AI Suggested Headline:
"Economic Strategies for Individuals Amidst Uncertain Financial Landscape"
CNN
6.9
TruthLens AI Summary
The first 100 days of President Donald Trump's second administration have significantly altered the perceptions of investors, businesses, and consumers regarding the U.S. economy. Economists across various viewpoints express concerns that Trump's punitive tariffs could reverse economic progress and adversely affect American financial stability. Recent economic indicators reveal a troubling trend, with the annualized economic growth rate plummeting in the first quarter, primarily due to a surge in imports in anticipation of the tariffs. Although the core growth rate, which reflects underlying demand, showed a slight increase, consumer spending overall exhibited a slowdown, despite a notable uptick in March as Americans rushed to make purchases before the tariffs took effect. Additionally, government spending saw a sharp decline, and inflation rates accelerated, further complicating the economic landscape. The private sector also faced challenges, as job additions in April fell significantly below expectations, contributing to a dismal stock market performance during this presidential term, marking the worst start in over fifty years.
In light of these economic uncertainties, individuals are urged to take proactive measures to secure their financial well-being. One crucial step is to develop a contingency plan for potential negative events, such as job loss or economic downturns. Understanding one's income sources and the availability of severance or unemployment benefits is essential. Establishing an emergency fund to cover living expenses for several months can provide a financial cushion. Additionally, individuals should assess their spending habits to differentiate between essential needs and discretionary wants, which can guide potential cutbacks. To safeguard investments against market volatility, it is advisable to maintain a diversified portfolio that balances stocks and bonds. For those nearing retirement, having cash-equivalent assets available is critical to avoid selling stocks at a loss during downturns. Furthermore, considering international investments may offer additional opportunities for growth, as non-U.S. stocks have recently outperformed domestic equities. By implementing these strategies, individuals can better navigate the financial challenges posed by shifting economic conditions and government policies.
TruthLens AI Analysis
The article provides an overview of the economic turmoil following the first 100 days of Donald Trump's second presidency, highlighting the impact of his tariffs on the U.S. economy. It portrays a narrative of uncertainty and caution for consumers and investors, emphasizing how these changes can affect personal financial stability. This analysis will delve into the motivations behind the article, the perceptions it seeks to create, and its broader implications.
Purpose of the Article
The article aims to inform readers about the economic challenges resulting from the new administration's policies and to offer guidance on how individuals can prepare for financial instability. By discussing the effects of tariffs and the subsequent economic slowdown, it seeks to raise awareness of the precarious financial environment and encourage proactive planning among readers.
Public Perception
The narrative attempts to foster a sense of caution among the public regarding the current economic climate. It portrays a government management style that is unpredictable, creating an impression that financial insecurity is looming. This can lead to increased anxiety among consumers and investors, influencing their spending and investment behaviors.
Potential Omissions
While the article presents a comprehensive view of economic indicators, it may downplay other factors contributing to economic fluctuations, such as global market dynamics or long-term economic policies. This omission could lead readers to focus primarily on Trump's tariffs as the sole cause of economic distress.
Trustworthiness of the Information
The article provides factual data regarding economic performance, such as growth rates, inflation, and job creation, which lends credibility to its claims. However, the selective focus on negative outcomes may skew the reader's perception, leading to a less balanced understanding of the economic situation.
Societal Impact
The article's emphasis on financial preparedness can encourage individuals to adopt more conservative financial practices, which may slow consumer spending further and potentially exacerbate economic challenges. This could create a cycle of caution that hampers economic recovery efforts.
Target Audience
The content appears to resonate with individuals who are concerned about financial security, particularly those directly affected by economic policies or who have investments at stake. It likely appeals to a broad audience, including middle-class consumers, investors, and business owners.
Market Influence
The article has the potential to affect market sentiment, particularly as it discusses stock market performance and economic outlooks. Investors may react to the cautious tone by adjusting their portfolios, leading to volatility in the markets, especially in sectors sensitive to consumer spending and government policy changes.
Geopolitical Context
While the article focuses primarily on domestic economic issues, it indirectly touches upon the geopolitical implications of Trump's policies, especially concerning trade relationships. The tariffs could have far-reaching effects beyond the U.S., impacting global markets and economic alliances.
Role of AI in Writing
There is no clear evidence that AI was used in the writing of this article. However, if AI were involved, it could have shaped the presentation of data and analysis to emphasize certain economic indicators or trends. The language may reflect a structured approach that prioritizes clarity in conveying economic concepts.
Manipulative Elements
The article's framing could be seen as manipulative if it intentionally emphasizes negative aspects to provoke fear or anxiety. The use of specific economic indicators to illustrate a bleak outlook may lead to a biased interpretation of the overall economic health.
The overall reliability of the news piece stems from its use of data and factual reporting. However, the selective emphasis on the negative aspects of the economy raises questions about the balance of the narrative. The article serves as a warning about financial preparedness in turbulent times, but it might also perpetuate a sense of fear that could influence economic behavior detrimentally.