October 2025

Issue #8

So much for a global recession (for now)!

THE BIG 3

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Inflation, still

Hot, cold, seasonal

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Credit’s Comeback

More credit availability and lower household leverage

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Global Winners and Losers

The world is playing musical chairs.

Inflation, still…

It’s not over until the base effects sing.

Inflation continues to do its thing: just when it seems to be cooling, something — tariffs, labor tightness, or seasonal math — heats it back up. Recent data shows core inflation is still pushing at the high end of historical ranges, and upcoming seasonal shifts may make things look even warmer in the months ahead.

That said, this isn’t a recessionary environment. Consumer strength is still visible — retail sales are up 5% year-over-year — and while hiring has slowed, core labor indicators remain solid. Layoffs are slowing in most sectors, unless AI took your job.

The Fed may keep preaching 2% inflation targets, but the real-world experience tells a different story. Dollars have lost nearly 3% of purchasing power over the past year. Still, this isn’t panic mode — just an environment where selectivity and diversification matter.  And yes, gold somehow still looks good, until it doesn’t.

Credit’s Comeback

We’re finally seeing signs of life in credit markets. Rate volatility is down, spreads have narrowed, and issuance has climbed — a clear sign that confidence is returning. Liquidity is flowing again.

What we are seeing:

• Households have deleveraged
• Credit is easier to get
• Americans are starting to buy things they can’t afford again.

Markets are trying to digest a combo of inflation, growth, and softening sentiment. The result is more liquidity and fewer people tapping into it.

Global Winners and Losers

Across the globe, economies are responding to inflation and trade stress in very different ways. Some are benefitting from commodity tailwinds, export strength, and fiscal flexibility. Others are grappling with weakening consumer demand, stubborn inflation, or policy fatigue. One thing is clear: inflation is accelerating in most economies, particularly across the G20 and more advanced emerging markets. Money supply growth — both in the U.S. and abroad — is picking up, and price pressures are reasserting themselves. The lag between liquidity and inflation hasn’t disappeared. It’s just playing catch-up.

Back home, tariff-related price adjustments are still working their way through the system. Durable goods, electricity, and construction costs remain sticky. Labor supply remains tight, particularly in trades, even as headline unemployment ticks up. That’s what a 95% reduction in illegal immigration does for you.

The Bottom Line

Across the globe, economies are responding to inflation and trade tensions in very different ways. We expect the last of the “trade wars” to work themselves out by the end of the year. With the Fed expected to continue cutting rates, this should give way to a brief period of inflation easing and growth accelerating. As it stands, we don’t expect this to be the case a year from now; alas, sometimes you just have to make hay while the sun is shining.