In this episode of the Jim Paulsen Show, we discuss why the U.S. economy may be weaker beneath the surface than the headline numbers suggest. We cover inflation, the Fed, oil risk, the Mag 7, AI spending, market concentration, international stocks, bonds, and Jim’s “bust booming” framework for understanding an economy where the new era is booming while much of the old economy is close to stall speed.
Why Jim thinks the U.S. economy is getting closer to stall speed
How the Iran conflict and oil prices could affect inflation, growth and the Fed
Why Jim believes the inflation fears are very different from the 1970s
Why raising rates may not solve a supply-driven oil shock
The case for Fed easing if growth becomes the dominant concern
Why tech and the Mag 7 may underperform even without crashing
How small caps, value stocks, equal weight indexes, international stocks and emerging markets fit into the same broad market bucket
Jim’s “bust booming” framework for the U.S. economy
Why new era investment spending is driving an unusually large share of GDP growth
Why Main Street sentiment may be so weak despite strong stock market headlines
How AI spending compares with the 1990s internet buildout
Why a shift from inflation obsession to growth focus could change the market backdrop
Why Jim thinks investors may want to reconsider long bonds
Timestamps
00:00 Intro and Jim’s current market outlook 04:00 Iran, oil risk and why the conflict may be closer to resolution 08:46 Why slower growth could force the Fed to cut rates 13:44 International stocks, the dollar and broad market leadership 18:05 Why today’s inflation problem is not the 1970s 23:14 Defining the “bust booming” economy 28:17 Why the old era economy is near stall speed 32:25 How policy may be missing almost 90 percent of the economy 37:37 What happens if new era spending slows 41:51 How investors can think about new era exposure 46:36 AI spending, productivity and the 1990s internet comparison 50:17 Why AI disruption could require more policy stimulus 53:00 The major shift from inflation obsession to growth focus
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