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The founder of Bridgewater Associates, one of the world’s largest hedge funds, has voiced concern that President Donald Trump’s economic agenda could lead to “something worse than a recession.”
“Right now, we are at a decision-making point and very close to a recession,” billionaire investor Ray Dalio told NBC’s Meet the Press. “And I’m worried about something worse than a recession if this isn’t handled well.”
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A recession is typically defined as two consecutive quarters of negative GDP growth. A much more “profound” change would be a breakdown of the current monetary order (it’s worth pointing out that Dalio correctly predicted the 2008 financial crisis).
What’s worse than a recession?
Trump has triggered global economic chaos with his on-again, off-again tariffs, with steel and aluminum tariffs on imports from China and the EU now at 50%, and the president’s 90-day pause on reciprocal tariffs to reach expiration in mid-July.
With markets in turmoil and consumer confidence plummeting, more economists believe a recession is likely.
But Dalio believes Americans could be facing more than a recession. Tariffs, combined with a high level of debt and a rising superpower challenging the existing superpower, could lead to “profound changes” in the world order.
“Such times are very much like the 1930s,” he told NBC.
The end of the Second World War ushered in a new monetary and geopolitical world order. But history tends to repeat itself.
“These go in cycles that can be measured, and I worry about the breakdown of that kind of order, particularly since it doesn’t need to happen,” he told NBC, adding that there are better ways to restructure debt.
Whether tariffs are implemented in a “stable” way or a “chaotic and disruptive way” can make “all the difference in the world,” he said. But so far, the tariffs have been akin to “throwing rocks into the production system.” In other words, highly disruptive.
“Right now we’re at a juncture,” he told NBC. He believes Congress needs to get the budget deficit down to 3% of GDP while managing trade deficits “in the right way.” If not, there will be a supply-demand issue for debt and “the results of that will be worse than a normal recession.”
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
How can you prepare your finances?
If you’re an average American, how can you heed Dalio’s warning? Start by establishing an emergency fund (if you don’t already have one) that will cover at least three to six months of expenses — perhaps more, if you’re in a job that could be impacted by tariffs and trade wars.
Pay down high-interest debt (like credit cards) and avoid building up more debt if possible. If you have a great deal of high-interest debt to get rid of, consider tapping into your home’s equity through a Home Equity Line of Credit (HELOC).
A HELOC is a secured line of credit that leverages your home as collateral. Depending on the value of your home and the remaining balance on your mortgage, you may be able to borrow funds at a lower interest rate from a lender as a form of revolving credit.
Rather than juggling multiple bills with varying due dates and interest rates, you can consolidate them into one easy-to-manage payment. The results? Less stress, generally reduced fees, and the potential for significant savings over time.
LendingTree’s marketplace connects you with top lenders offering competitive HELOC rates. Instead of going through the hassle of shopping for loans at individual banks or credit unions, LendingTree lets you compare multiple offers in one place. This helps you find the best HELOC for your situation.
After you’ve taken care of your emergency fund and high-interest debt, you can prioritize saving for retirement and other long-term goals. If your budget is tight, you can still find a way to invest in your future through Acorns.
Acorns is an automated investing and saving platform that simplifies the process of setting aside extra funds.
When you sign up and link your bank account, Acorns automatically rounds up the price of each of your purchases to the nearest dollar. The difference goes into a smart investment portfolio, allowing you to grow your wealth without even thinking about it.
Plus, you can get a $20 bonus investment when you sign up for Acorns with a recurring deposit.
It may also be a good time to diversify your investments across different asset classes to mitigate risk. That might mean adjusting your mix of stocks, bonds and other assets.
If you’re close to retirement, you might want to shift to lower-risk assets, like dividend-paying stocks. Alternative investments, such as gold and real estate, are often considered a hedge against inflation and recession.
Priority Gold is an industry leader in precious metals, offering physical delivery of gold and silver. Plus, they have an A+ rating from the Better Business Bureau and a 5-star rating from Trust Link.
If you’d like to convert an existing IRA into a gold IRA, Priority Gold offers 100% free rollover, as well as free shipping, and free storage for up to five years. Qualifying purchases will also receive up to $10,000 in free silver.
To learn more about how Priority Gold can help you reduce the tariff impact on your nest egg, download their free 2025 gold investor bundle.
If you’re an accredited investor, Homeshares allows you to gain direct exposure to hundreds of owner-occupied homes in top U.S. cities through their U.S. Home Equity Fund — without the headaches of buying, owning, or managing property.
The fund focuses on homes with substantial equity, utilizing Home Equity Agreements (HEAs) to help homeowners access liquidity without incurring debt or additional interest payments.
This approach provides an effective, hands-off way to invest in high-quality residential properties, plus the added benefit of diversification across various regional markets — with a minimum investment of $25,000.
With risk-adjusted target returns ranging from 12% to 18%, Homeshares could unlock lucrative real estate opportunities, offering accredited investors a low-maintenance alternative to traditional property ownership.
If you’re new to hedging — a risk management strategy that can help offset losses by purchasing investments in an opposite position to an existing investment — you may want to consult with a financial advisor to see how this could help mitigate risk in your portfolio.
Advisor.com can help you find someone that’s right for you.
Advisor.com is an online platform that connects you with vetted financial advisors. Just answer a few quick questions about yourself and your finances and the platform will match you with experienced financial professionals best suited to help you develop a plan to achieve your homeownership or retirement goals.
You can view the advisors’ profiles, read past client reviews, and schedule an initial consultation for free with no obligation to hire.
Depending on whether you’re close to retirement or not, you may want to adjust your retirement strategy — and adjust your risk tolerance to match that strategy. If you’re a young investor, you still have time for the market to recover, so avoid panic selling.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
