Prepare for a Volatile Summer
The expression used to be, when it came to stocks and the summer, “Sell in May and go away.” But if you do that now, you might not like what you come back to in the fall. Despite the recent highs in the stock market and strong headline employment numbers, a series of looming risks point to potential turmoil ahead.
Between President Donald Trump’s aggressive tariff agenda, a fragile ceasefire in the Middle East, debt ceiling brinkmanship in Washington, and rising inflation, the U.S. economy appears to be standing on a fault line. The pressure is building, and it may not hold much longer.
Tariff Deadline Approaches
On April 2, President Trump dubbed the day “Liberation Day” and launched sweeping new tariffs on America’s biggest trading partners. These sudden hikes spooked investors and triggered a market plunge. Although a 90-day pause on those tariffs led to a temporary rebound, that pause ends July 9, and the uncertainty is only growing.
Treasury Secretary Scott Bessent hinted that countries “negotiating in good faith” might get an extension. But President Trump made it clear that higher tariffs are coming: “Some [countries] will be disappointed because they’re going to have to pay tariffs.”1
Expect the U.S. to notify other nations of their final tariff obligations by mid-July. Commerce Secretary Howard Lutnick even raised the possibility of regional tariff strategies, meaning countries like Vietnam and Malaysia could face dramatically different terms, even if they’re neighbors. That unpredictability is making some businesses think twice about their investment and hiring plans.
The Hidden Inflation Danger
Renewed tariffs could also hit American consumers directly. According to Olu Sonola, head of U.S. economic research at Fitch Ratings, “We expect Consumer Price Index inflation to trend higher towards 4% at the end of the year.” The most recent CPI data shows inflation at 2.4%, but with tariff costs trickling into retail prices, that figure could climb fast.2
Ryan Sweet, chief U.S. economist at Oxford Economics, explained: “We know it’s coming. There’s a lag between changes in tariffs and when they show up in prices you and I are paying.”3
If President Trump allows the “Liberation Day” tariffs to fully resume on July 9, expect the inflation outlook to worsen. This puts the Federal Reserve in a bind. The Fed cannot lower interest rates to stimulate the economy while inflation is still running hot.
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Torsten Sløk is the chief economist at Apollo Global Management. He warns that the U.S. is entering a dangerous phase of stagflation. A period when inflation stays high while economic growth stalls. “Tariff hikes are typically stagflationary shocks,” Sløk warned. “They simultaneously increase the probability of an economic slowdown while putting upward pressure on prices.”5
Apollo now forecasts GDP growth to slow to 1.2% in 2025, compared to 3.1% in Q3 of last year. Meanwhile, inflation expectations have climbed from 2.4% to 3%, and unemployment, still low at 4.2%, is projected to rise above 5% by 2026.
Most concerning: Apollo now places the probability of a U.S. recession in the next 12 months at 25%. Sløk is cautioning that tariffs could push the economy into a “voluntary trade reset recession” by this summer.
Middle East Tensions Add Fuel to the Fire
Further adding to the summer of discontent is the unstable ceasefire in the Middle East. After U.S. airstrikes on Iranian nuclear facilities on June 21, tensions between Israel and Iran escalated dramatically. President Trump later announced a ceasefire on June 23, which calmed oil markets, but the situation remains fragile.
Any renewed conflict could send oil prices soaring. Historically, spikes in oil prices, like during the 1990 Gulf War, have triggered recessions. With the global economy already expected to slow to 2.8% growth this year, a surge in energy prices could tip the world into a recession.
Analysts warn that the possibility of a double shock—a combination of tariffs and war—increases the likelihood of a global recession. They’re describing it as “as close to a smoking gun as you can get” in forecasting circles.6
Debt Ceiling Showdown Looms
As if tariffs and geopolitical tension weren’t enough, Washington is facing another self-inflicted crisis. The U.S. could default on its debt as early as August, according to Treasury Secretary Bessent. Trump has pressured Congress to raise the borrowing limit as part of his “One Big, Beautiful Bill” by July 4, but political gridlock remains.
Conclusion
The stock market may still be posting record highs, but economists are increasingly sounding the alarm. Tariffs are poised to return with full force. Inflation is rising. Global conflict threatens to spike energy prices. And Washington is heading for another fiscal cliff.
From stagflation to a potential recession, the summer ahead may prove one of the most volatile in recent memory. The convergence of so many economic flashpoints at once means there is little room for error and even less room for safety. Holding physical precious metals in a Gold IRA can protect your retirement savings from volatility. Before your funds feel the heat, contact American Hartford Gold at 800-462-0071 to learn more.
