I hope all of you have enjoyed the holidays. For those of you in the Los Angeles area, you are in my thoughts and prayers. It’s excruciating to see what’s going on out there, and I can’t imagine living through all of this. Stay safe and know that you will get through this. I encourage all to consider donating to the various relief funds for people going through this.
Congratulations to all of the Presidents Club members in 2025, and good luck to those looking to make a run at the high bar that the Presidents Club sets year after year. We are thankful that everyone registered with us puts their trust in us as a broker-dealer, and we are fortunate to have you all as registered representatives.
With another solid year in the books, we look forward to the obstacles and opportunities in 2025. While inflation and monetary policy have been the big focus as far as economic themes in the last few years, I expect a shift as we go into 2025 for the focus to look more toward fiscal policy, growth, and the future impacts of AI in the economy but also our industry.
In 2025, I expect a shift from the focus being primarily on Jerome Powell and the expectations of the Federal Reserve and the anticipated interest rate path. That said, it is still going to remain important to keep an eye on employment and inflation, as those dictate interest rate decisions with the Fed’s dual mandate of full employment and price stability. In a way, the Fed achieved a soft landing. GDP growth and employment stayed relatively steady over the past few years of higher rates, while the Fed was able to raise rates to tame – albeit not extinguish – higher than desired inflation. As of December 2024, the job market was still strong, adding 256,000 jobs while unemployment was at 4.1%.[1]
I believe in 2025 we’ll see more focus on the potential extension of the Tax Cuts and Jobs Act, increased tariffs, and immigration policy. We live in a world of uncertainty. To carry forward the soft-landing metaphor, the plane is never really on the ground. Political power is changing in much of the world. As I write this on a flight on January 8, Justin Trudeau, Prime Minister of Canada has just announced his resignation. Focus is starting to shift to what is going to happen in a second Trump administration. Once again, trade is back in the spotlight with many discussions of tariffs and how they may affect inflation, supply chains, and corporate profitability.[2] In addition, when anybody takes office after a year’s worth of campaign rhetoric, it is unclear as to what policies will be pursued versus what is realistic to get done once formal plans start to get enacted.
Geopolitics are also important and prone to having massive shockwaves to populations across the globe. Economies are made up of people, so this will affect economies and markets as well. I’m unsure how to back it up with data, but the general feeling I get is there is more conflict and potential for escalation than what I would typically expect going into a year. This ACLED conflict index for December shows a rough picture of what current global conflict looks like graphically https://acleddata.com/conflict-index/.[3]
Key Points:
The American Economy is complicated, and many things seem to be in flux right now. Key things to look at in 2025 are:
Thanks for taking the time to read my early look at 2025. I hope you have a great year, and for those in LA, I wish the best for you and hope you get through this healthy and safe.
[1] Kiernan, P. (2025, January 10). Hiring Blew Past Expectations With 256,000 Jobs Added in December. The Wall Street Journal. https://www.wsj.com/economy/jobs/jobs-report-december-2024-unemployment-economy-c8031ef9?mod=economy_trendingnow_article_pos2
[2] Atkinson, H. (2024, December 31). Threatened U.S. Tariffs Could Wipe Out Company Profits: PwC. Supply Chain Brain. https://www.supplychainbrain.com/articles/40910-threatened-us-tariffs-could-wipe-out-company-profits-pwc
[3] (2024, December). Conflict Index: December 2024: Global conflicts double over the past five years. ACLED. https://acleddata.com/conflict-index/
