Gary Black Warns of Economic Slowdown as Spending Cuts Loom

Gary Black, the managing partner at the Future Fund LLC, has issued a stark warning about the impending economic slowdown. As the earnings season approaches, Black anticipates that both consumers and businesses will curtail their spending, leading to what he describes as "lasting damage to the economy." This cautionary note comes amidst recent bond market volatility and proposed tariff increases, despite a temporary 90-day pause announced by the Trump administration.

Black's concerns are rooted in the significant tightening of financial conditions resulting from the proposed tariff increases. He draws parallels between the current bond market chaos and the initial stages of the 2020 pandemic, emphasizing the potential for a prolonged period of economic uncertainty. "CEOs are about to tell us as earnings begin there is now likely lasting damage to the economy (C+I+G+X-M) as consumers and businesses cut back on spending," Black said in a recent post. This anticipated reduction in consumption, investment, government spending, and net exports could have far-reaching implications for various sectors of the economy.



The impact of these spending cuts is already evident in the market. The Nasdaq 100 index has fallen 17.46% from its previous high, while the S&P 500 index is down 14.31% from its record. The Dow Jones has also declined 12.16% from its 52-week high. These declines reflect the growing uncertainty and caution among investors, who are bracing for a potential slowdown in economic growth.

Black's warning is particularly relevant for sectors that rely heavily on discretionary spending. Retail, travel, and entertainment are likely to be the most affected, as consumers prioritize essential purchases over non-essential items. The automotive industry, which saw significant growth in the first half of 2025, could also face challenges as consumers tighten their budgets. The real estate sector, already struggling with a 37% decline in residential property transactions, could see further slowdowns as business investment wanes.

The proposed tariff increases, despite the temporary pause, could lead to a sustained pullback in economic activity. This uncertainty has already triggered a pullback in economic activity, as businesses and consumers adopt a wait-and-see approach. The bond market chaos, which Black compares to the initial stages of the 2020 pandemic, could lead to sustained market volatility, making it difficult for businesses to plan for the future.

In summary, Gary Black's warning about the impending economic slowdown is a call to action for investors and businesses alike. As the earnings season approaches, it is crucial to stay vigilant and adapt to the changing market conditions. While the proposed tariff increases have been paused, the uncertainty they have created could have long-lasting effects on the economy. Investors should consider diversifying their portfolios and focusing on defensive sectors, while businesses should be prepared to adjust their spending and investment strategies in response to the anticipated slowdown.