Why Are Stocks Going Up When The Economy Is At Risk Of A Recession? Economic Update 17 May 2025

About this Video

• Video Title: Why Are Stocks Going Up When The Economy Is At Risk Of A Recession? Economic Update 17 May 2025
• Channel: Financial Freedom 101
• Speakers: One speaker (name not provided in transcript)
• Duration: 00:14:54

Introduction

This video provides an economic update for May 17th, 2025, analyzing various economic indicators and their impact on the stock market. The speaker discusses the relationship between unemployment, inflation, interest rates, tariffs, and consumer sentiment, explaining why stocks might be rising despite recessionary risks.

Key Takeaways

• Unemployment remains low (around 4.2%), but long-term unemployment is increasing. This creates a risk of higher unemployment in the near future.
• The Fed is holding interest rates steady due to the conflicting risks of inflation and unemployment. This indicates a cautious approach by the central bank.
• Inflation (CPI) is slowing but remains elevated. Core inflation (excluding food and energy) is at 2.8%, while overall CPI is at 2.3%.
• Tariff negotiations between the US and China resulted in a 90-day pause on tariff increases. While this temporarily boosts stocks, it might contribute to inflation later.
• Despite economic uncertainty, stocks (e.g., S&P 500) are climbing due to strong first-quarter earnings and the tariff pause. However, the speaker emphasizes that the economy and the stock market are not directly correlated.