Fresh data shows that the U.S. economy is quickly slowing down. The Federal Reserve’s latest Beige Book, a periodic summary of economic conditions, reveals slowed activity, hiring freezes, and growing uncertainty across the country. Meanwhile, ADP reports that payrolls added just 37,000 jobs in May—the lowest figure in two years—and the organization for Economic Co-operation and Development (OECD) slashed its U.S. growth forecast from 2.8% to 1.6% this year.
Markets are now bracing for what some fear could be stagflation: sluggish growth and employment paired with stubborn inflation. Morgan Stanley sees the dollar falling another 9% in the next year, while JPMorgan warns that stocks may falter as earnings come under pressure and consumer strength fades. Bond yields could rise again, and tariffs are expected to squeeze profit margins and push prices higher.
With the dollar under pressure and trust in the U.S. economy wavering, gold is back in demand. Central banks are buying gold at a pace of 80 metric tons per month, according to data from the World Gold Council, with the central bank of China leading the charge.
Gold prices have also surged this year—currently holding near $3,400/oz.—and Goldman Sachs sees more room for growth, projecting $3,700/oz. by year’s end.
