The next step a recession?

“Financial crises are rarely caused by unforeseen shocks. They are usually the result of excessive risk-taking fueled by easy money and weak regulation.” — Raghuram Rajan

4/30/20252 min read

End of the Stealth QE Road = Recession?

In 2024, the U.S. quietly ran what many are calling “stealth QE.” Massive short-term Treasury issuance helped flood markets with liquidity—without calling it stimulus.

At the same time, government hiring and spending surged, supporting GDP growth despite high interest rates and sticky inflation.

But this wasn’t organic strength. It was fiscal momentum masking structural fragility leading up to the election.

Now, in 2025, the picture has reversed.

  • Consumer sentiment is down

  • Broad tariffs introduced on imports

  • Layoffs & hiring freezes across federal agencies

  • Aggressive spending cuts in both the public & private sectors

It’s a hard pivot from stimulus to scarcity—and the markets are not ready.

Tariffs will raise input costs. Spending cuts lower demand. Earnings are being revised downwards. And the liquidity that propped everything up in 2024? Gone.

Not to mention the roughly $9 trillion in U.S. debt set to be refinanced in 2025. If the Federal Reserve doesn’t lower rates soon, the added interest burden could cost billions more—on top of a debt service tab that already exceeds the entire U.S. defense budget.

What We're Watching at Iron Valley:

  • Recession risk triggered by fiscal tightening

  • Market volatility as earnings react to rising costs

  • The role of real assets and short-duration holdings in defensive positioning

This isn’t about fear—it’s about adjusting your allocation to match a new macro reality.

If your portfolio is still positioned for 2024’s tailwinds, now is the time to reassess.

This newsletter is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any securities. All investments involve risk, including the possible loss of principal. Past performance is not indicative of future results. Iron Valley Investments is a registered investment adviser in the State of Pennsylvania. Registration does not imply a certain level of skill or training. A copy of Iron Valley Investments current written disclosure statement discussing Iron Valley Investments business operations, services, and fees is available at the SEC’s investment adviser public information website – www.adviserinfo.sec.gov or from Iron Valley Investments upon written request.