In our latest Doxa Takes episode, we explore why 2025's economic story might be more nuanced than the headlines suggest. While the narrative of resilience remains intact - backed by steady consumer spending and moderating inflation - we're seeing signals that warrant a more vigilant approach to risk management in the year ahead.
The foundation looks solid: Consumer balance sheets are healthy, inflation continues its choppy descent, and the job market maintains a delicate balance. Unlike previous years where upside surprises dominated, 2025's plot twists might skew in the other direction. Think of it as a well-running engine that needs more frequent maintenance checks. The historic rate hiking cycle has frozen the housing economy's transactional gears, leaving the market to bounce along the bottom. How this sector responds to lower rates (or remains constrained by persistently higher ones) carries outsized influence on the broader outlook, given it represents over 20% of the US economy. The ripple effects through household wealth, construction activity, and consumer confidence could shape much of the narrative.
The incoming administration brings a distinctly different set of priorities than it did in 2016, making it unwise to simply dust off the old playbook from eight years ago. While markets have defaulted to optimism around deregulation and tax policy, the potential downside from tariffs and immigration changes may outweigh any upside - a nuance that seems underappreciated in current market pricing. A different market starting point + a different set of priorities = a different outcome?
In response to this evolving landscape, we've made some strategic adjustments to our allocation framework. These moves aren't defensive reactions, but rather forward-looking positioning to capitalize on opportunities while building in additional buffers against potential volatility. As always, reach out to anyone at Doxa to discuss markets, get help with financial planning, or set new goals for 2025. Happy New Year to you and your family, and thank you for another successful year!
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