A special thank you to all Steady Investor readers. We look forward to delivering weekly insights on the latest news and market-moving stories in 2025. For our last Steady Investor of the year, we bring you four macroeconomic themes to watch closely in 2025.
With a new administration set to take power in January, a higher degree of policy uncertainty has entered the markets. While President-elect Trump has clearly telegraphed plans to raise tariffs, deport unauthorized migrants, lower taxes, and loosen regulations, the actual policies that come into force remain unknown. Regardless, meaningful shifts in trade, immigration, and regulatory policies are anticipated, with potential implications for corporate strategy, labor markets, and consumer sentiment. Proposed changes in trade tariffs and deportation policies are key areas to watch, in our view. If implemented fully, these policies could tighten the labor market, disrupt supply chains, and increase production costs for U.S. companies. Investors should stay informed of policy announcements and legislative actions, as these developments could have immediate and far-reaching effects on asset prices and economic growth.
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Inflationary pressures have been a dominant theme in recent years, and 2025 is expected to continue this trend. While inflation eased in certain sectors in 2024, the ongoing influence of trade policy and labor constraints could reignite price increases. The Federal Reserve’s response to inflation will be crucial. If inflation remains sticky, the Fed may choose to pause rate cuts, which may or may not be a welcomed move by markets. Conversely, signs of moderating inflation might prompt the Fed to ease its stance, creating a more favorable environment for equities. As has been the case for the past couple of years, investors should keep a close eye on monthly consumer price index (CPI) and personal consumption expenditures (PCE) price index reading for clues about the direction of monetary policy.
We firmly believe that corporate earnings are a fundamental driver of stock market performance. As 2025 unfolds, investors will be closely monitoring earnings reports to gauge the financial health of key sectors and companies. Valuations for equities, particularly in high-growth and technology sectors, remain a concern. If corporate earnings do not meet expectations, market corrections could follow. Historical trends suggest that years of substantial stock gains, like those experienced in 2024, often give way to more modest returns—especially if earnings do not compellingly surprise to the upside. Valuation multiples are already elevated, which we think means expectations are already high. This could make the stock market more vulnerable to even the slightest earnings disappointments and any negative shift in investor sentiment.
The U.S. labor market is undergoing significant changes that could have long-term implications for economic growth and consumer demand. Proposed policies on immigration and deportation are expected to impact labor supply, particularly in sectors that rely heavily on immigrant workers. Labor force participation rates and wage growth will be important indicators to watch. If deportations occur at a large scale, labor shortages may drive up wages, increasing operating costs for businesses. This scenario could further fuel inflationary pressures. On the flip side, slower labor force growth might reduce overall economic output and limit GDP growth. The construction, agriculture, and hospitality sectors are particularly vulnerable to labor disruptions. Investors should monitor employment data, wage growth statistics, and policy updates related to immigration to understand how labor market shifts will influence corporate profitability and broader economic activity.
This time of year, taxes are top of mind for many investors. To make navigating tax season easier, we’re offering our free 2025 Tax Reference Guide2—a trusted resource designed to answer your most pressing questions and help you plan with confidence.
Inside, you’ll find:
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free copy:
Disclosure