People have asked me why mountaineers don’t climb Alaska’s Mount Denali in the more hospitable summer months to mitigate the risk of cold injuries, not realizing higher temperatures destabilize the snow and ice, increasing the incalculable risks of slip and falls, crevasse falls, and avalanches. Just as the climber’s survival hinges on a wise discernment of mountain conditions affected by the weather, an investor’s durability sometimes rests on an accurate assessment of the economic engine which drives corporate earnings, interest rates, employment, and other market-impacting dynamics. Since early recognition of “economic turns” can both profit and protect the astute investor, let’s consider today’s economic trends.
· While 2024 saw fairly robust GDP growth, 2025 has brought increasing signs of deceleration. Recent data — such as the latest ISM Services Index and JOLTS reports — indicate hiring slowdowns or outright freezes in major service industries, and many businesses are scaling back investment and hiring as cost pressures mount. That slowdown is feeding broader concerns about a possible recession or at least a prolonged period of sluggish growth. Several widely followed economic forecasts now assign a meaningful probability to a downturn in the next 12 to 18 months.
· For years, a strong labor market helped underpin consumer spending and supported economic resilience. But in 2025 the hiring tone has shifted. Growth in job creation appears to be slowing, and some indicators suggest unemployment risk may be inching higher. This softening in employment presents a key risk: weaker incomes may feed into weaker spending, creating a downward spiral. Moreover, many businesses now face increased uncertainty — from demand weakness, rising input costs, and unclear policy and trade conditions — which may prompt further hiring freezes or cutbacks.
· Economic risks are being amplified by uncertainty on several fronts. Trade policy remains a wildcard, and many analysts note that tariffs and shifting global trade dynamics may be straining supply chains, raising business costs, and contributing to inflation pressures. At the same time, the central bank faces a difficult balancing act. On one hand, higher interest rates are helping combat inflation; on the other, they make borrowing more expensive — exacerbating pressure on businesses and households. Economists point out that lowering rates too soon could reignite inflation, while waiting too long could deepen a slowdown. The backdrop of economic fragility, consumer stress, and policy uncertainty creates important implications for investors and wealth management portfolios. Markets are trying to price in both possible rate cuts and an economic slowdown.
While persistent inflation coupled with a weakening economy befuddle policymakers, stock valuations remain near historically elevated levels, which raises the question: what could go wrong? The famous 1996 Mt. Everest storm, which claimed the lives of eight unwary mountaineers, revealed the serious threat that deteriorating conditions present to climbers caught high on the mountain. Might it be a wise time – for some investors, depending on their personal financial plan and risk tolerance-to review stop-loss orders, consider taking profits, raise cash, reduce outstanding debt, or trim discretionary spending?
Think about it, Shaun.
“Rule #1: Never lose money. Rule #2: Never forget Rule #1.” ~Warren Buffett
“The prudent sees danger and hides himself, but the simple go on and suffer for it.” ~Proverbs 22:3
Disclosures
Old Forge Wealth Management, LLC is a registered investment advisor.
This commentary is provided for informational purposes only and should not be construed as personalized investment advice.
Any investment strategies or considerations discussed should be evaluated in light of an individual’s own objectives, financial situation, and risk tolerance.
The economic views expressed reflect conditions at the time of writing and are subject to change without notice. Forecasts or forward-looking statements are inherently uncertain and actual outcomes may differ materially.
Information referenced is derived from sources believed to be reliable; however, accuracy or completeness cannot be guaranteed.
This material does not constitute an offer to buy or sell any security or to adopt any particular investment strategy.
Past performance is not indicative of future results.