Q1 2026 Q&A
Please see below a few questions received by DWM over the course of the last several weeks. Perhaps you've wondered about these issues as well.
- The U.S. has $40 trillion of debt? Is the economy going to collapse? Are we going to end up like Greece, Turkey or Argentina?
Well, in some ways we're already heading in the direction of those countries in terms of debt to GDP. The difference with the United States is that our currency is still respected and that solves a lot of problems. Additionally, many other countries are in the same dilemma so in some ways, United States is in relatively strong standing.
Still, there is going to be a consequence for high debt. Growth will be slower and we are seeing it already. Seniors won't get the benefit of living off 7% CD rates like they had intended. Instead, they suffer through 4% CDs. Infrastructure spending is down because the U.S. government spends more money on debt repayment rather than building infrastructure, which is a negative for the economy.
It's not a pretty sight. But I don't think the US is headed towards some cataclysmic collapse. I think instead it's going to be a slow overhang that will impact the economy for a generation.
2. Why are oil prices falling and how does that impact the economy?
The United States is pumping more oil than it ever has with once protected areas now being opened up for new drilling. Offshore, Alaska, and shale oil fields are all operating at maximum output. Despite the tensions in Iran, which could theoretically disrupt oil supplies, Venezuela has now supplanted oil supplies.
Lower energy prices are a positive for the economy as this results in lower input energy costs.
3. I see all these payments to a variety of groups, soldiers and veterans, families, etc. Where is this money coming from?
It's pretty simple. The government has a printing press working overtime and simply manufacturing money in order to make these payments. The hope is that these payments will help stimulate the economy and provide a trickle-down positive effect. We shall see.
4. Are we concerned about volatility in the markets? Why or why not?
Very concerned. Markets are at all-time highs with the Dow recently hitting 50,000. With the speculation of a new Federal Reserve Chairman coming in and massively cutting interest rate rates, it's entirely possible that could have a significant disruptive effect on the economy and the markets.
This may work out to be something very positive for equity markets as lower interest rates tend to stimulate the economy. The concern is if there's too much increase in economic activity that this may trigger inflation.
We're assuming greater volatility in 2026. The world is a crazy place right now and you can expect the markets to react accordingly.
We continue to look at these and other questions. If you have something specific if you would like to ask, simply drop me an email at this email address and I'm happy to personally respond.
