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Don’t Forget! You Saw it in the
Starting 2025 with Reserved Optimism
By The Lesko Financial Services Team
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Adverti$$er
February 2025 #17307 Page #122
e’re starting 2025 with reserved optimism. Investors, the markets, and the world at large are still reviewing, digesting, and anticipating the implications of the results of last year’s U.S. Presidential and Congressional elections.
One year ago, analysts and economists still voiced lingering recession fears. These faded as the U.S. economy remained resilient with respect to general growth, consumer spending, the financial markets, and inflation-combatting efforts. Over the past few years, the U.S. economy has had the best post-COVID-19 recovery of any major developed country. Some economic headwinds we’ve seen more recently may simply be the result of coming down off the post-pandemic boost for manufacturing, retail, the labor market, and consumer demand. But there’s also been solid progress and reasons for continued optimism. In the 1st Quarter of 2024, inflation remained above 3% and was still growing. By the 4th Quarter, it had remained under 3% for the second half of the year. The lower inflation rate, coupled with a continued strong labor market, allowed the Federal Reserve to begin cutting interest rates after 11 rate hikes. The Fed cut rates three times before the year ended and has indicated there will be more cuts this year, although its target of 2% has proven elusive. The labor market, while beginning to slow toward the end of last year, added jobs in numbers that exceeded forecasts. Business investment also steadily rose through last year. And the stock market has shaken off periods of volatility, with the S&P 500 seeing 23% growth for the year. However, uncertainties remain.
Interest Rates Indications of a cooling labor market seemed to ease pressure on the Fed to act urgently on further rate reduction. Notes from the last FOMC meeting of the year said members are concerned about the incoming administration’s plans for tariffs and other policies that could be inflationary. The fed has penciled in two rate cuts for this year, down from its original four.
Consumer Spending Consumers’ willingness to spend has remained robust and last year helped fuel GDP growth, despite the fact that pandemic cash reserves have been depleted, households still struggle with the higher cost of living, and credit card interest remains high. One fallout from this is the rise of credit card debt to historic levels. Continued next page
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