An Economic Forecast for 2025, Ep #65

Today’s guest is economist Lyn Alden, an independent analyst and founder of Lyn Alden-Investment Strategy, where she publishes monthly research reports for both retail and institutional investors.

With a background in electrical engineering and a master’s in engineering management specializing in financial modeling, Lyn excels at breaking down complex economic trends into plain English.

She is also a general partner at Ego Death Capital and the author of the 2023 bestseller “Broken Money,” which examines the evolution of money through the lens of technology. In this episode, Lyn offers her perspective on the macroeconomic factors shaping 2025, including political uncertainty, fiscal dominance, and more.

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LISTEN IF YOU ARE INTERESTED IN…

[1:50] How Lyn got into investment research

[8:00] The 2024 election’s influence on the economy

[16:25] What happens with the debt ceiling?

[22:09] What Lyn likes better than the dollar and why

[22:45] Lyn’s view on BRICS plans

[28:40] Expiring tax cuts and bank lending

[33:55] Lyn’s experience with Bitcoin

[41:40] Lyn’s advice to avoid complacency

From Engineer to Economist
Lyn Alden’s career reflects a dual-path journey blending engineering and investment research. Her interest in investing began early, leading her to start a blog in 2010 focused on personal finance and equities while working in engineering.

By 2016, she launched LynAlden.com to expand into macroeconomics and broader investment topics. The site’s success eventually led her to transition fully from engineering management to investment analysis.

Lyn also notes how newsletters, once considered sensationalist, have become serious analytical tools, making specialized research more accessible to both smaller institutions and individual investors. She emphasizes delivering institutional-level insights in clear, understandable language.

How Political Uncertainty Affect Market Predictions
Lyn notes that while politics are often overestimated as a market driver, the 2024 election introduces unusual uncertainty. Unlike past elections with clearer outcomes, this one involves non-traditional political figures and policies—such as tariffs and immigration changes—that could significantly impact sectors like healthcare and food industries.

She also highlights fiscal policy uncertainties, including government spending, Social Security, and Medicare, as the political landscape shifts. For instance, Republicans now oppose cuts to these programs, a reversal from previous positions. Additionally, Lyn points to potential liquidity challenges from a debt ceiling crisis.

Reflecting on prior elections, she notes that Trump’s victory increased the likelihood of tax cut renewals, particularly in top tax brackets, with significant implications for the deficit and lending policies.

Fiscal Dominance, the Recession Patch

Lyn highlights concerns about tightening bank credit, noting that when over 40% of banks report such tightening, it often signals a recession. Despite warning signs like tight credit, low inflation, and a contracting PMI, no official recession has been declared. She attributes this to "fiscal dominance," where robust fiscal policy has offset economic downturns.

Key drivers include an aging population straining entitlement programs like Social Security and Medicare and the long-term shift from falling interest rates to rising ones, which has made deficits more inflationary. Lyn expects fiscal dominance to persist for 5–10 years, fueling higher inflation and economic imbalances.

She also points to the effects of slowing globalization on inflation and warns that the U.S. could resemble emerging markets with rising inflation and deficits. However, a strong capital base and global demand for dollars offer some resilience, even as monetary expansion continues to pressure the economy.

Lyn Alden is not affiliated with or endorsed by LPL Financial or Capital Investment Advisers.

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

The financial professionals associated with LPL Financial may discuss and/or transact business only with residents of the states in which they are properly registered or licensed. No offers may be made or accepted from any resident of any other state.

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RESOURCES MENTIONED

Broken Money: https://www.amazon.com/Broken-Money-Financial-System-Failing/dp/B0CG8985FR

Ego Death Capital: https://egodeath.capital/

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CONNECT WITH LYN ALDEN

Lyn Alden: https://www.lynalden.com/

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Website: www.CIAdvisers.com