BY JOHN ELLIS, FINANCIAL ADVISOR
The economy feels like a whirlwind lately, tariffs, inflation, and wild GDP numbers dominating headlines leaving many of us dizzy. From Trump’s trade threats to Ireland’s to good to be true economic statistics, it’s hard to know what to believe and there is a sense of powerlessness in the way many people discuss issues. So lets look at what we can actually control and what really matters: our job, our bills, and our future.
Lets start with inflation. In Europe, the rate is inching closer toward the European Central Bank’s 2% target, leading to the eighth interest rate cut since the current downward cycle began a year ago, or the ninth if you count what the ECB called a “technical adjustment” last September. But ECB President Christine Lagarde warns” it’s not tamed yet” with the general consensus suggesting rates will hover at around 2 per cent in the medium term.
Yet energy costs are pushing prices up and inflation could climb through 2025. For us this means grocery and utility bills could stay high. But Lagarde sees no recession on the horizon with consumer spending expected to drive growth.
Check your budget: if your wages are keeping pace with prices, you’re not falling behind. Focus there, not on “scary forecasts”.
What about tariff chaos. Donald Trump’s talk of 50% tariffs on EU imports sent shockwaves worldwide though he backtracked after talks with EU leaders. The US courts have been back and forth regarding his authority to raise tariff at all, leaving businesses and consumers confused. Tariffs could raise prices for everything from cars to clothes but markets and even US consumers seem to bet on Trump backtracking with the S&P 500 steadying and consumer confidence rebounding.
Don’t panic. Keep an eye on shopping prices and consider where possible buying local to dodge potential import hikes.
Our economy adds another layer of confusion. First-quarter GDP soared 22% year-on-year, but it’s not what it seems. Big pharma companies rushing to export drugs to the US to beat possible tariffs inflated the numbers. This “leprechaun economics” (a term coined by economist Paul Krugman to describe the 26.3 per cent rise in Irish economy in 2015) doesn’t reflect the real situation.
Real consumer spending grew a solid 2.5%, but businesses are holding off on investments amid global uncertainty. Jobs are still strong, with unemployment at 4%, yet a 30% drop in May’s corporate tax receipts linked to US multinationals shows Ireland’s reliance on a few tech and pharma giants. If Trump’s policies shift their profits or production Ireland could suffer.
Remember “uncertainty is the only certainty”. Trump’s tariff threats, from 60 different announcements creates confusion for businesses. In Ireland corporate tax swings highlight our exposure to global giants. Across the Eurozone economic growth beat expectations at 0.4% last quarter, but ECB officials are divided on how fast to cut rates to keep it going.
So, stay grounded and don’t let headlines dictate your decisions. Review your savings maybe skip that extra night out or streaming service and consider “upskilling for in-demand fields like healthcare or green energy”.
To see through the clutter, focus on what you can control. Track your expenses, lean on local news over global pundits and visit reliable online sources for job data and inflation trends. The “economy is noisy but your financial peace doesn’t have to be”. Stay steady, remember previous times and you’ll weather the storm.
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