Despite the Federal Reserve keeping interest rates on pause in May 2025, economic warning signs are flashing. While announcing that the federal funds rate would remain unchanged—resting at 4.25% to 4.50%—the Fed’s official policy statement points to an uncertain economy facing the prospect of resurging inflation and problems in the labor market. In a press conference following the Fed’s decision, Chairman Jerome Powell also cautioned about the effects tariffs may have on unemployment and inflation.
Consumers appear to share in this sense of caution. According to the Federal Reserve Bank of New York’s April 2025 Survey of Consumer Expectations, median inflation expectations for the next three years rose to 3.2%, the highest since July 2022—while households’ expected income growth decreased to 2.6%, the lowest level since April 2021.
Amid these economic warning signs, hedge fund manager Paul Tudor Jones warns of potential market downturns, suggesting that U.S. stocks could reach new lows by the end of 2025 even if trade tensions with China ease. Jones attributes this outlook to the combined pressures of sustained tariffs and the Federal Reserve’s cautious stance on rate adjustments.
In response to such uncertainties, consumers are increasingly turning to gold as a hedge. This surge has been driven by growing demand for safe-haven assets as people look for protection against stubborn inflation, economic turmoil, and rising geopolitical tensions.
