Billionaire hedge fund manager and New York Mets owner Steve Cohen sounded the alarm on the US economy, warning that growth is set to slow in the second half of the year due to tariff concerns, stricter immigration policies and government spending cuts led by Elon Musk.
The Point72 Asset Management founder cautioned that persistent inflation, sluggish growth and a brewing trade war could leave the US economy striking out in the months ahead.
“I’m actually pretty negative for the first time in a while,” Cohen said Friday at the Future Investment Initiative Institute’s summit in Miami Beach.
“It may only last a year or so, but it’s definitely a period where I think the best gains have been had and wouldn’t surprise me to see a significant correction.”
Cohen, whose net worth is valued by Bloomberg Billionaires Index at $14.8 billion as of Monday, also took a swing at Elon Musk-led Department of Government Efficiency (DOGE), calling it an austerity initiative that could drag down momentum.
But tariffs, in particular, had Cohen playing defense.
He warned that escalating trade measures could lead to a retaliatory game of hardball with major trading partners.
“Tariffs cannot be positive. It’s a tax,” Cohen said.
“And you can imagine tit-for-tat if the US implements a tax on somebody, they’re going to perhaps raise the stakes and raise their tax back.”
The White House has framed tariffs as a strategy to balance trade and strengthen America’s negotiating position, but the latest economic scorecard isn’t promising.
US business activity expanded this month at its slowest pace since September 2023, with the service sector — America’s cleanup hitter — struggling to drive in growth.
As the economy faces an uncertain stretch, Cohen’s warning suggests investors should brace for a potential slump.
The US economy grew at a 2.3% annual rate in the last three months of 2024, slowing down from the 3.1% growth seen in the previous quarter.
This dip was largely due to businesses cutting back on investments and an increase in the trade deficit, which means the country imported more than it exported.
However, one bright spot was consumer spending, which jumped by 4.2% — the biggest increase since early 2023.
This suggests that Americans continued to spend money despite economic uncertainties. For the full year of 2024, the economy expanded by 2.8%, slightly less than the 2.9% growth recorded in 2023.
Inflation, or the rise in prices, also picked up toward the end of the year.
The Federal Reserve’s preferred measure of inflation increased to 2.3% annually in the fourth quarter, up from 1.5% in the previous quarter.
This has raised questions about whether the Fed might adjust interest rates in the near future to keep inflation under control.
Looking ahead, experts predict economic growth may slow further, possibly dipping below 2% in early 2025.
Factors contributing to this uncertainty include ongoing trade disputes, shifting government policies, and global economic challenges.
Many analysts say that keeping an eye on consumer spending and business investment will be key to understanding where the economy is headed next.
The Post has sought comment from the White House.
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