What's Up With the Economy? January Edition

Hey guys, it is time for an update on the economy. It has been a weird year. Asset prices are booming, numbers are looking great on paper, but a lot of people are struggling with prices and not doing very well, and in this video, I want to catch you up on all the numbers, what's going on in the U.S. economy, and also what I'll term the Great Disconnect of 2025. So if you want to stay informed about what's going on and make more informed financial decisions in your own life, then this video is for you, and that's what we're going As said, wherever you are in the world, I hope you are having an amazing day, so sit down, grab yourself some caffeine, and let's go. So first, where is the American economy generally at right now if we just look at these statistics or the numbers? So the last GDP growth number we had came out to 4.4% annualized growth, and that's good. That's not just good, that is great. Okay, now before we continue, I want to talk a little bit about something that's been a game-changer for how I personally think about AI tools, and it's the difference between AI that helps you work versus AI that actually does the finished work for you. So most of us are using Chakrapity and Plot and maybe Ninja for images, and we're getting text responses and draft ideas and bullet points, but then we're still doing the heavy lifting like formatting documents, building websites manually, stitching together code, and editing images in separate apps. So the AI is helping you, sure, it's giving you the starting point, but you are still doing 50% or more of the work. And so that's fine for some things, but what if you need an actual deliverable? Like a client-ready research report, or a working mobile app, or a full set of branded marketing materials? Well, that's where Manus comes in with the new Manus 1.6 update. And if you aren't familiar, Manus is what they call a general AI agent, meaning it doesn't just chat with you, it actually understands your goal, it plans out the steps, uses tools, and delivers actual finished work, not drafts, actual finished work. And so there were three major updates in the Manus 1.6 update that I quickly want to share with y'all. Number one is Manus 1.6 Max, and this is their new flagship architecture that is built for deep work that actually finishes autonomously. And so we're talking 30% more persistence in research, dramatically higher task success rates, and then smarter tool use. And so if you have used AI for research before, and you had it give up halfway, or lose context, 1.6 Max solves that. It's like the old high effort mode coming back, but just much more capable. Now number two is mobile app development. And most AI coding tools only support websites, but Manus 1.6 now supports native iOS and Android app development. So you describe what you want, and it will build the app using React Native and Expo, and then you can preview the working app on your actual phone immediately using Expo Go. And then for Android, you can just download the APK and see that immediately as well. Now for iOS to actually publish out of the app store, you have to submit it through the Apple developer process. But the point is, you can actually now develop these mobile working apps without being a developer. So those are the first two. The big third upgrade is design view, and this is a visual canvas for image editing. So instead of just prompting and hoping that the AI gets your edits or your image right, design view gives you points and click controllers. So you can edit specific parts of images, change text inside images, combine multiple images, and do one-click upscaling and background removal. It's like having Photoshop level control, but just powered by AI and natural language prompts. And so let's just tie these together into one workflow. Let's say you're launching a new business or a project. You could use 1.6 Max to do deep market research where it autonomously collects data and analyzes competitors and creates a structured report to share all of that with you. And then you can use the mobile development with the new 1.6 update to build your core product app. So you just describe the features Max is going to give you a blueprint, and then it will build a working iOS and Android mobile app that you can test through Expo Go. And then finally, you use design view to design all of your marketing materials. So you can generate the initial designs with prompts and then just edit them on that canvas. And that's all without leaving Manus or requiring design software. A few other things as well. SEO is now fully built in. You can purchase domains within Manus. You can directly deploy things like websites and blueprints have been improved as well. So you can see exactly what is going to be built before it actually is. And so if you're trying to build something real, Manus can actually deliver end-to-end work for you. And they can do that in one platform without requiring stitching all these different tools together. So something like ChatGPT or Cloud is great as a conversational partner, but not something that can actually ship finished commercial grade work for you. And again, that is the big point of the Manus 1.6 Max update. And I don't know what greater proof there is than the quality and execution by this agent than the recent billion-dollar acquisition of Manus by Meta. And that in mind, if you want to try Manus 1.6 and see what I'm talking about, I'll have the link in the description. And they do have a free tier so you can try it out. No risk, completely for free. And then paid tiers give you access to 1.6 Max to mobile app development and all of the upgraded features. So whether you're building your own business or doing client work or just want AI that actually finishes projects instead of giving you more work to do, Manus 1.6 is 1000% worth checking out. Again, you can try it completely for free and that's at the link in the description. So thanks to Manus for sponsoring this video. And that said, let's get back to it. See the US is a very developed economy and the more developed your economy is typically the slower it's going to grow. Not only that, but we had an insane volume of tariffs this year. Inflation is still running hot and we're coming off of COVID in a sense globally as well. But despite all of that and not even that far into the rate cut cycle where the feds were lowering interest rates, which increases economic activity. We still got a pretty hot GDP print. We got 4.5% and that compares to a sub 2% annualized growth rate throughout the 2010s. And then the 2020s have been weird because you had this contraction in COVID and then this runoff and then a little bit down. But generally if we look at the last 15 years, something like 4.5% again is great. But GDP is just one side of it. If we look at unemployment, it's historically low. It is under 4.5% and we're coming off of years of record low unemployment. And then the stock market, all assets pretty much are at an all-time or near all-time high. The stock market is booming. Gold and minerals are doing incredible. Real estate nearly everywhere in the country is still trending upward. Anyone who owns assets is doing really well right now. They're probably employed. The whole economy is growing and all of their assets are increasing in value. So that's just the surface level update on the economy. And we shouldn't discount that. There are a lot of very powerful forces, things like AI and the Fed rate cut cycle, that are driving a lot of good numbers and trends that we really want to see. Obviously not seeing those numbers, seeing worse inflation and unemployment and GDP growth is not what we want to see. But if you go a level deeper, for example, let's say we went out onto the streets of Boston or New York or LA and we asked a hundred people, do you think that we're in a recession? Just take a moment and think in your head. How many people out of those hundred do you think would say? Yeah, I believe based on what I'm experiencing that we're in a recession. Well right now if you want to did that based on existing surveys 60% of people or 60 out of a hundred would say I believe we're in a recession. So we have these incredible numbers on one hand and we have people saying hey, I'm not doing well and the world that I see and the people that I know are not doing very well. So that is the multi-polar economy that we're in right now. And so I want to dive a little deeper into that dichotomy and why we're living in again what I'll term the great disconnect. Now the first point there I think is inflation and that inflation is down to 3% or so, but inflation's growth decreasing does not at all mean that things are getting cheaper. It means that they're getting expensive less fast. It's like you're driving a car and you slow down a little bit, but you don't go in reverse. You're just slowing down. And so since 2020 cumulative cost of living has risen 22% car insurance is up 40% and groceries are up over 25% and rent is up about 30%. So for anyone who has not experienced more than a 25% increase in wages since 2020 is doing worse unless all of their assets have also increased in value. But the thing is only about 60% of Americans invest in stocks and also about 60% own their homes. So that 60% is probably doing pretty well and that also skews toward an older demographic that's been around for a while that have cash and savings and a home. But that 40% right there's some subset there that has not increased their real wages by 25% and even if you own a home, but you are spending a lot more money than you used to where you feel very cash poor or maybe you're struggling to sell your home. That's also a substantial subset of people that may feel similarly to people who don't own any assets and also are struggling with cost of living. So I think that is point number one on this disconnect between some of these economic numbers and the grander economic reality on the ground. And I think point number two is the job market. You're seeing this really interesting white collar and blue collar shift where a lot of the safe havens right like computer science are not just safe havens, but frying pans right about now for a lot of people. You can see for example the number of new tech jobs or salaries that are stagnated or the number of entry-level workers in a lot of your white collar companies where those jobs or those salaries or that growth just isn't there like it used to be. But what is there and what is doing really well is blue collar. Your trades, right? Your electricians, your plumbers, your engineers on the ground who are building data centers, who are building things are doing pretty well and making very good money right about now. But that means you have this entire generation of people who were brought up with the Silicon Valley ideal in mind of hey, go learn to code and you're going to be set, right? Go get a analyst position, go work at a bank, whatever it may be that is that white collar good job, right? And a lot of those people similarly are part of that group that is not experiencing real wage growth or is dealing with something more structural like unemployment. And on top of that there is that whole debate around AI and entry-level jobs where a lot of young people on the ground, people from my generation are saying hey, the job market really really sucks right now and you ask different people and you get different answers around this. One interesting take that I've heard is employers saying hey, after 2020 the quality of the people, the entry-level workers I could hire out there so the college grads just nosedive. And so I would hire them. They're just not that good and other people go and they'll just say hey, look at the number of employees at large tech companies. It has stagnated. Those large tech companies are just not hiring people. Why are they not doing that? Automation and AI. And so I think there is a confluence of factors here, right? It's not just any one thing but that there's just like in maybe the asset versus the cash rich groups of people and my pick on this is less so that entry-level jobs are just disappearing but rather that just maybe like the whole economy. We're seeing this the split where it's kind of the middle tier of entry-level jobs that are going away. All the top tier talent and the top tier positions are still there, right? SpaceX wants the best engineers and Goldman Sachs wants the best finance nerds and also generally unemployment is low. You can find a job an entry-level job if you want to but there's the middle tier of maybe those white-collar positions where if you went and got $100,000 of debt for college and you can't get one of those but you're not good enough to get say the top 1% positions, then you end up in a position which just did not justify the cost of college and then that is an extremely difficult position to be in if you're 26, you're making 65 grand a year when you thought you would be making 95 and things are really expensive and your real wage growth is not increasing. And so now you're just stuck paying off this debt with no kind of way out of that hole, right? Home prices are increasing. It's not like you can afford a home and you don't see your career as something you can really progress in feasibly. I think that's a lot of people and that leads us to the third point maybe on why this disconnect is here, which is hey, okay, consumer spending actually is really good. If consumers are not doing that good, even if it's not that many people and a lot of people own homes or own stocks, we have to step back and ask the question, okay, well, how are consumers paying for things? How are all of us spending money in the economy? And the answer is more so than any year since 2008, credit. And so credit card delinquencies have hit their highest rate since 2008. Auto loan delinquencies are even worse. Don't get me started on Klarna and total American credit card debt is up something like 30 plus percent around that mark in just the last five or so years. And so if you look at 2021 through the third quarter of 2025, you see a 50% increase in the total outstanding credit card balances of Americans. And so you see things like record spending on Black Friday, but then you have to ask yourself if people are spending as much money as they can or more money than previously on the best discount day you can get, what does that actually say about that spending? At first glance, oh, people are spending more money on Black Friday. That's awesome. But in your day-to-day life, if you have to go shop at the discount store instead of Whole Foods, that's a bad analogy, but you get the idea, then maybe that's not so good. And so just to summarize, right, we have that disconnect, we have on paper the economy booming, and then as reasons for that disconnect, I've given you three, right? We have unemployment, we have debt, and then inflation. And this all exists right now in the grander context of a rate cut cycle by the Federal Bank where over time they should decrease rates. And if you decrease interest rates, you make it cheaper to borrow money, and that means there's going to be more economic activity. But the thing is, they're still pretty high compared to the 10 years that we had roughly of extremely low rates. So you have all the people, for example, who owns their homes, who have 2% interest rates, or who fully paid off their loans, who are never going to sell those. And you have this other group of people who are staring down the barrel of 6.5% mortgage rates. So overall, as these rates get lower, that should be much better for the economy. That also is a upward force on inflation. And then again, as that ties back to the housing market, as those rates decrease, that should start to help get some flexibility back in things like home prices and the home market. And so when I say we're in an interesting economic place right now, that's what I mean. And so if you look toward the future, I think what's interesting is there's this very wide variance of expected outcomes. A lot of people think, especially due to AI, we're going to enter this super cycle of growth at the same time as this rate cut cycle, and we're going to be printing 6% GDP, 7% who knows GDP growth next year. A lot of other people are extremely pessimistic about the US economy, and that's for any number of reasons, but they think, hey, a recession is incoming, something on the consumer side is going to snap, and we're going to be right back in a true recession. And so my personal take, and of course you can form your own opinions going off the data we presented in this video, is generally bullish on the US economy as a whole. There is still no better place to do business and to build a company. But the flip side of that, and that's why, hey, there's an entire catalog of videos here, a lot of which are focused on personal finance, is while the expected outcome is good, it's probably going to be okay. I think there also is more structural risk in the system. And so how do people hedge against future economic risk? Well, you take action now to try and put yourself in a better financial position to save more, to invest more. And so even though it's probably all going to work out great, now is also a pretty good time to figure out some set of financial hedges against a poor outcome. That, in sum, is where the economy is at going into 2026. Today, more than ever, certainly is a ride. And that said, I appreciate y'all being here, and I'll see you in the next one. Cheers.