Financial Decoder

(Bonus) From On Investing: 2025 Market Outlook, Part 1

8 snips
Dec 16, 2024
Kevin Gordon, a research associate at Schwab, shares his insights on the economy and market outlook. He highlights potential volatility in 2025 due to trade dynamics and labor market conditions. Discussions include the impact of tariffs and immigration policies on economic growth. Gordon also notes the promising prospects for international stocks despite uncertainties. He emphasizes understanding political influences on the market as crucial to navigating potential risks and opportunities ahead.
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INSIGHT

2025 Market Uncertainty

  • The 2025 market outlook starts with a unique level of uncertainty due to proposed policy changes by the incoming Trump administration.
  • These policies present cross-currents, with pro-growth tax and regulatory policies potentially offset by weaker growth and higher inflation from tariffs and immigration policies.
INSIGHT

Tariffs and Immigration Impact

  • US tariffs are paid by the importing company, not the exporting country.
  • Restrictive immigration policies could negatively impact GDP growth due to reduced labor supply, especially in sectors like construction.
INSIGHT

Labor Market and Policy

  • The labor market is tighter now than during Trump's first term, leaving less room for aggressive tariff or immigration policies.
  • Potential impacts on business capital spending and housing depend on the Fed's monetary policy response to inflation volatility.
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