2025 U.S. Economic and Stock Market Outlook

1. Key Issues in the U.S. Economy

1) Slowdown in the Employment Market

The growth rate of new employment in the U.S. is likely to slow down.
The past monthly average of new employment was 200,000, but it recently increased to 350,000 before dropping to around 250,000.
The main reason is the increase in mass immigration during the Biden administration.
There were many illegal immigrants, and the Trump administration is expected to implement strong regulations on this.
The decrease in illegal immigrants will reduce the number of workers, which is expected to negatively affect consumption and employment indicators in the U.S. economy.

2) Tariff Increases and Consumption Decline

With the Trump administration taking office, there is a possibility of raising tariffs on China and universal tariffs.
According to his pledges, universal tariffs could be imposed at 10-20%, and tariffs on Chinese products could be as high as 60%.
The U.S. imports $3 trillion worth of goods annually, and the imposition of tariffs is expected to increase costs by more than $630 billion annually.
Consumption is expected to slow down due to the increased burden on consumers.
There may be negotiations for price reductions on Chinese products, but it is unlikely to be completely resolved.

3) Government Financial Problems and Liquidity Reduction

During the Biden administration, government debt increased from $22.7 trillion to $35 trillion (a 50% increase).
Government spending continued even after COVID-19, especially with an additional $5 trillion spent in the last two years.
The Trump administration plans to restore financial soundness through budget cuts and defense spending cuts.
Specifically, it will attempt to save more than $1 trillion annually through measures such as reducing the number of public officials and cutting defense spending.
However, government spending cuts could be a factor in slowing economic growth.

4) Liquidity Issues and Easing of Lending Regulations

As the liquidity supplied by the Federal Reserve decreases, economic liquidity is likely to slow down.
However, the Trump administration is expected to ease bank lending regulations and supply liquidity through the expansion of corporate lending.
The possibility of the U.S. Federal Reserve cutting interest rates in the second half of the year is increasing.
The Fed may implement 2-3 interest rate cuts, more than the current market expectations.

2. U.S. Stock Market Outlook

1) Possibility of a "High in the First Half, Low in the Second Half" Market in 2025

The upward trend will continue in the first half (possible increase of more than 15%).
Adjustments are possible in the second half due to factors such as tariffs, employment slowdown, and liquidity reduction.
An increase of approximately 5-10% is expected by the end of the year.

2) Market Influencing Factors

Whether interest rate cuts are implemented (the Fed may change its policy multiple times due to pressure from Trump).
Increased stock market volatility due to the U.S. economic slowdown.
Continued market leadership by AI and tech companies.

3. Korean Market Outlook

1) Possibility of Valuation Recovery

Currently, the Korean stock market is trading at a PER (Price-to-Earnings Ratio) of less than 9, historically showing a pattern of rebounding within 4 months.
Foreign investment inflows are possible if the U.S. economic slowdown and the strengthening of the dollar ease.

2) Changes in Foreign Supply and Demand

Currently, net foreign buying is sluggish, but it may improve in conjunction with U.S. interest rate cuts.
If the strengthening of the dollar eases, funds may move to emerging markets, including Korea.

4. AI and Semiconductor Market

1) Emergence and Changes of DiP Seek

Existing AI models use a single-brain learning method such as GPT and Gemini.
DiP Seek reduces costs and increases efficiency by using a learning method based on groups of experts.
China's AI innovation is a shift in thinking that arose due to U.S. GPU sanctions.
With the development of DiP Seek, the AI market may shift from a hardware-centric to a software-centric approach.

< Summary >

The U.S. economy in 2025 is likely to slow down in the second half due to the impact of employment slowdown, consumption decline, and government financial problems.
The Trump administration is expected to pursue tariff policies and financial austerity policies.
The U.S. market may experience a strong first half followed by adjustments in the second half, with the Fed's interest rate cut being a critical factor.
The Korean market is currently undervalued, and foreign capital inflows are possible if the strengthening of the dollar eases.
In the AI market, China's new approach (DiP Seek model) has the potential to change the existing AI ecosystem.

[More…]

2025 U.S. Economic Outlook: https://nextgeninsight.net/?s=%EB%AF%B8%EA%B5%AD%EA%B2%BD%EC%A0%9C
AI Innovation and DiP Seek: https://nextgeninsight.net/?s=AI

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The Relationship Between the U.S.-China Trade War and Rising Gold Prices

The Start of the U.S.-China Trade War and Tariff Policies

The U.S. has strengthened its tariff policies on major exporting countries (Canada, Mexico), including China.
It is using tariff measures as a means in the economic hegemony battle, especially with China.
A 10% additional tariff was imposed, and in response, China also imposed retaliatory tariffs of up to 15% on U.S. products.

Objectives of the Tariff War

Resolving the U.S. Trade Deficit
- To reduce trade deficits with China and other countries.
- A strategy to attract foreign factories to the U.S. through tariffs.
Revival of U.S.-Centric Manufacturing
- Blocking exports through China and detour countries (Mexico, Canada).
- Stimulating manufacturing in the U.S. and inducing job creation.

Prolongation of the U.S.-China Trade War and Non-Tariff Barriers

Expansion from a simple tariff war to non-tariff barriers (restrictions on raw material exports).
China has hinted at the possibility of restricting exports of key minerals such as rare earths.
The U.S. is also considering additional measures such as financial and economic sanctions.

Increased Uncertainty and Impact on the Global Economy

Increased possibility of a global economic recession due to trade conflicts.
Emphasis on domestic demand-oriented growth strategies in each country.
Economic growth rate is expected to decline due to the slowdown in global trade.

Preference for Safe Assets and Rising Gold Prices

As economic uncertainty increases, demand for safe assets such as gold increases.
Central banks in each country are also expanding gold purchases with their foreign exchange reserves.
Increased gold ETF and private investor gold purchases.

Impact on the Korean Economy

A significant blow is expected to Korea's exports to China and the U.S.
Need to adjust trade dependence as intermediate goods (parts) exported by Korea decrease.
Need to secure new trading partners and diversify exports.

As the trade war between the U.S. and China intensifies, not only tariffs but also non-tariff barriers (restrictions on raw material exports) have emerged. Uncertainty is increasing due to the slowdown in global trade, leading to a surge in demand for safe assets such as gold. Gold prices are breaking record highs, and central banks and individuals are focusing on buying gold. Korea is likely to face a deteriorating external trade environment due to the U.S.-China trade dispute, necessitating diversification of its export structure.