Ep. 299 – 2025 Considerations About the Economy
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In this Episode of the Secure Your Retirement Podcast, Radon Stancil and Murs Tariq discuss:
The current state of the economy as we move into 2025. Joined by Tom Siomades, a chief marketing economist, they analyze how the election results, policy changes, and global events are influencing the stock market trends and broader economic outlook. Tom’s straight-talking insights provide valuable perspectives on inflation vs. interest rates, long-term investment planning, and small business growth.
Listen in to learn about:
The challenges and opportunities shaping the 2025 economic outlook. Tom highlights key market trends, including the resilience of the stock market, the impact of energy policies, and the potential for economic growth amidst regulatory and political shifts. Whether you’re focused on retirement planning or seeking financial planning tips, this episode delivers actionable insights to secure your retirement.
In this episode, find out:
· How 2024’s lessons of patience in investing are shaping strategies for 2025.
· The effects of the new administration’s policies on the U.S. economy and stock market.
· Why inflation and energy costs remain central to the economic forecast for 2025.
· Opportunities for small business growth through deregulation.
· Long-term investment planning strategies for navigating a shifting market landscape.
Tweetable Quotes:
· “2024 reminded us of the value of patience in long-term investing—missing one market rally could mean missing the next 56.” – Tom Siomades
· “Energy costs and deregulation are the twin keys to unlocking sustainable economic growth.” – Murs Tariq
Resources:
If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!
To access the course, simply visit POMWealth.net/podcast.
Here’s the full transcript:
Radon Stancil:
How did 2024 end up? What’s going to happen in 2025 when it comes to the economy and the stock market? Well, we don’t really have a way of knowing exactly, but today we have a very special guest, Tom Siomades who is a Chief Market Economist, and he is going to go through all the details. Enjoy this episode. We hope you’ve been enjoying all the episodes from Secure Your Retirement. If you’d like to keep learning and receiving these episodes, hit the subscribe button and the bell so you receive alerts when they come out. We’ve helped thousands of listeners get on the path to securing their retirement. Now it’s your turn. Let’s dive in.
Welcome, everyone, to the Secure Your Retirement podcast. We are excited today. This is a really special episode for us. We’ve got a special guest with us, Tom Siomades. He came all the way here to work with us. He actually works with us on a little bit more of our research back office associated with AE Wealth, and so we thought we’d have him come on. He’s a Chief Marketing Economist. So thank you very much, first of all, Tom, for coming on and chatting with us.
Oh, glad to be here. Thanks for having me.
Radon Stancil:
So I think we just want to get started. Anytime we can talk to somebody who’s an economist and looks at the big picture more than just saying an individual investment is, if you look back at 2024, how would you sum up 2024?
So the way I look at 2024 is it was a year for patience, right? I mean, there was a lot of stuff going into 2024 that just didn’t happen, and there were a lot of opportunities for people to just kind of go sideways or throw in the towel, right? Maybe we went into 2024 thinking we were going to get seven interest rate cuts. Then all of a sudden, that became three. Then all of a sudden, it became none. Then all of a sudden, you know, it ended up being somewhere in the middle. There was also concern about the economy falling off a cliff and us getting into a recession. There was stubbornness with respect to inflation. You had a huge overhang with the election coming—were we going to tack one way or another when it comes to policy direction or economic direction? But yet, through it all, the markets seemed to be very resilient, right? Every time we seemed to get bad news, the market just shrugged it off and ignored it. We had incredibly low volatility for most of the year, and there were ample opportunities where people could have said, You know what? The news is just so bad out there that I need to get out. If you did that, you made a super bad mistake at that point, right? Because we had the best two years since 1998, back to back. We had 57 record closes on the S&P 500, and if you got out after the first one, you missed 56 record closings and everything in between. So to me, last year epitomized the whole point of being a patient, long-term, plan-oriented investor.
Yeah, I mean, I would second that. Last year, in our podcast and the communications with clients, it was, There’s going to be a lot of things going on. We don’t know how this year is going to end up. And it ended up being a pretty dang good year with even all the stuff ahead of us.
Radon Stancil:
And so, Tom, now we sit here in 2025. The election has happened. Inauguration is on its way. We’ve got a clean slate on the Republican side for policy. So let’s just start there, because that’s what’s on everyone’s mind. With a full Republican-based policy, what are things that you think are going to come down the line? What are things you may be worried about from an economic perspective? And just tell us what’s going on in your head and what you’re paying attention to as far as what’s going on in DC.
Sure. So I think anytime you have such an abrupt change and such a large shift to one side or the other, there’s always going to be some apprehension, but there’s also a lot of excitement in the first year, right? There’s all the possibilities that can happen. I think one of the big knocks we had with the prior administration was there was a feeling of over-regulation and hostility toward business. That seems to have changed. Now, what’s interesting is it’s not as one-sided as we’d like to think because the margins in the House are super thin, and trying to corral those cats is a very difficult process. But I think there’s enthusiasm because we potentially have a more business-friendly climate. Look at what happened when Trump got elected. All of a sudden, the market rocketed up. You’ve got a situation now where a lot needs to get done—and not in four years, but in two—because as a nation, we have such a short attention span. The midterms may seem a million miles away, but if things don’t get done, there’s a very real chance of losing momentum.
Look at what happened to both prior administrations: Trump lost the midterms, and all of a sudden, it was impeachment and investigations. The same thing happened to Biden—Republicans won back a narrow majority, and then the focus shifted to investigations again. So I’m excited, for the most part, that we may have a less regulatory environment and a more business-friendly one, which should help the broader market—not just the technology sector that’s been leading the way.
Radon Stancil:
Yeah, and I think that’s what people are hoping for: tangible progress. The question becomes whether the momentum continues or whether gridlock sets in. What else are you paying attention to, Tom?
The other thing I’m excited about—though this may be a bit controversial—is the Department of Governmental Efficiency (DOGE). We’ve had commissions in the past that spend years investigating government excesses, only to produce massive reports that sit in filing cabinets. This time, with social media and real-time exposure, I think it’s different. When waste or inefficiencies are found, they’ll go viral almost instantly. For example, if there’s spending on something ridiculous—like giving squirrels cocaine for TikTok experiments—people are going to demand immediate action.
I’m optimistic that this real-time accountability will create a shift. Couple that with the focus on reducing excess spending and encouraging economic growth through lower regulation and increased energy exploration, and we might see meaningful changes. But again, this is all early days. It’s like going on your third date with someone—it all seems great, but we’ll see how it unfolds over time.
That’s an interesting take. For our listeners who may not be familiar with DOGE, could you explain a bit more about what it is and why it’s being highlighted now?
Sure. The Department of Governmental Efficiency is a new initiative aimed at reducing waste and improving the efficiency of government spending. For years, people have said we need a businessperson in government to bring financial discipline. Well, now we have successful business leaders like Elon Musk and venture capitalist Ramaswamy involved. They’re looking at spending through a business lens—examining profits and losses, questioning inefficiencies, and demanding accountability.
Murs Tariq:
Now, is it perfect? No. People might question whether these business leaders have their own agendas. But at least they’re not career politicians perpetuating the status quo. They’ve already made their money. Elon Musk doesn’t need more wealth; he’s more interested in addressing systemic inefficiencies. We hope their approach can help steer government spending in a sustainable direction.
Okay, that’s helpful to understand. So now, we operate in our firm pretty much as a politically agnostic firm. From an investment perspective, we try to stay in the middle. But we hear things from clients all the time. For example, just last week, I had a client come in who was scared to death, convinced that everything is about to fall apart because of the incoming administration. The next day, another client came in who was thrilled and thought the new administration is going to take the market to new heights. What would you say to those two individuals? How do you see 2025 playing out economically?
I would say to both of them that the reality is going to be somewhere in the middle. You’re right to operate in the middle because extreme views rarely pan out as expected. I think the beginning of 2025 will likely be optimistic because of the excitement of change and the possibilities of new policies. But if things don’t materialize—if there’s gridlock or if the entrenched status quo prevents progress—it could lead to challenges, especially as we move further into the year.
For the first half of the year, I think the markets will do well. We’ll likely see a 10% gain, pushing the S&P to around 6600. But as we move into 2026, if those policy promises don’t translate into tangible results, we could face headwinds. Historically, the second year of an administration tends to be the most challenging because that’s when the initial optimism fades, and the reality of governing sets in. So while 2025 may start strong, it’s not without risks.
Got it. And another topic we’ve been hearing a lot about is this idea of market broadening. You mentioned earlier that last year’s growth was heavily reliant on a handful of companies—tech giants like Nvidia, fueled by AI advancements. Can you explain what market broadening means and why it’s important for the overall health of the economy?
Absolutely. Market broadening refers to growth being driven by a wider range of industries and companies, rather than just a few. Last year, much of the market’s gains came from seven or eight tech giants, which isn’t sustainable in the long term. For a healthy, resilient market, we need other sectors to contribute.
What excites me about 2025 is the potential for that broadening. If regulatory burdens are reduced, small and medium-sized businesses could thrive, which would spread growth more evenly across the market. For example, in housing, a significant portion of the cost of building a home—about 24%—comes from regulation. Reducing that burden would free up capital for expansion and hiring, which could ripple through the economy.
I don’t think tech companies will lose their dominance entirely—they’re still critical drivers of innovation. But I see the rest of the market rising to meet them, rather than the tech sector carrying all the weight.
Radon Stancil:
That makes sense. And you mentioned energy earlier. Can you expand on why energy policy is so crucial and how it might impact inflation and overall economic growth?
Energy is foundational to everything—manufacturing, transportation, housing, you name it. If energy prices are high or unpredictable, they act as a tax on the entire economy. That’s why I’m optimistic about the potential for new energy policies that focus on affordable and reliable energy production. If we can reduce energy costs, it would lower expenses across the board, from transportation to production, which could help bring down inflation.
Inflation is a tricky thing. Even though the official numbers may show it decreasing, people still feel the pinch because core expenses like housing, food, and gas remain high. To truly address inflation, we need to tackle these fundamental costs. Lowering energy costs would be a significant step in the right direction.
That’s a great point. So as we wrap up, let’s talk about inflation and interest rates. Last year, there were fewer rate cuts than expected. This year, people are expecting two or three more. Are we on the right path to hitting that 2% inflation target, or do you think we’ll face obstacles along the way?
I think the Fed has put itself in a tough spot. They’ve started cutting rates even though we’re nowhere near the 2% inflation target. That sends mixed signals to the market. Long-term rates, like the 10-year treasury, suggest the market doesn’t believe inflation is under control. To get inflation down to 2%, rates likely needed to stay higher for longer.
The problem is that some of the biggest contributors to inflation—like energy and housing—aren’t coming down significantly. Until we see real progress in those areas, hitting 2% inflation will be a challenge. That’s why deregulation and energy policy are so critical. If we can make progress there, it would help bring inflation down and stabilize the economy. Otherwise, we’ll be stuck in a cycle of temporary fixes without addressing the root causes.
Radon Stancil:
That’s insightful, Tom. Thank you for sharing your perspective. We really appreciate you taking the time to join us today. For our listeners, we’ve asked Tom to come back quarterly to give us a big-picture look at the economy, and we’re excited to have him as a recurring guest.
Happy to do it. Thanks for having me.
Thanks again, Tom. And for our listeners, if you’ve enjoyed this episode of Secure Your Retirement, be sure to check out our free online course, Three Keys to Secure Your Retirement. It walks you through the steps to plan for and live out your retirement. You can find it on our website, pomwealth.net. Don’t forget to subscribe to our podcast and YouTube channel for more retirement tips. Thanks for tuning in!