Displaying items by tag: Growth

Donald Trump has promised to accelerate U.S. economic growth, but the economy already surged through 2024, likely ending the year with a 3% annualized GDP gain in the fourth quarter, according to the Atlanta Fed’s GDPNow. If accurate, annual growth for 2024 would range from 2.4% to 2.7%, a rate comparable to pre-pandemic levels but unexpected in the post-pandemic era. 

This surprising strength is credited to two main drivers: an expanding population fueled by increased immigration and a notable boost in productivity, partially attributed to advancements in technology like AI. Yet, challenges remain, including persistent inflation, elevated interest rates that have slowed home and vehicle sales, and a weaker hiring environment despite low unemployment. 

Businesses are optimistic about Trump’s plans to cut taxes, streamline regulations, and reduce energy costs, though his proposals for higher tariffs and mass deportations raise fears of higher material and labor costs. 

Finsum: The outlook is upbeat, with early indicators of 2025 showing confidence, underscoring the nation’s resurgence as a global economic leader.

The wealth management industry is at a critical juncture, as the retirement of over 109,000 financial advisors in the next decade coincides with the Great Wealth Transfer, presenting a unique opportunity for firms to secure trillions in assets. 

High-net-worth clients, a key growth segment, are raising the bar with their expectations for personalized, holistic financial solutions that address complex needs like estate planning, tax optimization, and ESG-aligned investments. To stand out, advisors must deepen client relationships, focusing on understanding values, family dynamics, and long-term goals to foster trust and loyalty. 

Expanding service offerings such as direct indexing, alternative investments, and foreign currency management allows advisors to cater to sophisticated client demands while optimizing for customization and after-tax returns. 

Finsum: By aligning advanced solutions with client preferences, advisors can not only retain existing clients but also attract new ones, solidifying their competitive edge.

The US economy surprised expectations in 2024 by maintaining steady growth despite elevated interest rates, a cooling labor market, and political uncertainty tied to the presidential election. It outpaced other Group of Seven nations, with household spending driving much of this resilience. 

Wage growth outstripped inflation, and record household wealth bolstered consumer confidence, even as Americans depleted pandemic-era savings. 

However, challenges loomed: inflation proved stubborn, borrowing costs strained housing and manufacturing, and delinquencies rose among credit-dependent consumers. Labor market signals also hinted at strain, with hiring slowing, job openings shrinking, and unemployment rates ticking up. 

Finsum: While the Federal Reserve began easing rates later in the year, its cautious stance underscores the delicate balance needed to sustain growth amid persistent inflationary pressures.

Blackstone Inc. predicts the private credit market could expand to $30 trillion, driven by infrastructure financing and pensions. Currently, private debt stands at $1.7 trillion, primarily funding private equity, but Rob Horn, global head of infrastructure and asset-based credit at Blackstone, views this as just a fraction of the opportunity. 

Private lenders are expected to take market share from banks, which now dominate the asset-based credit sector, with Blackstone focusing on areas like energy transition, digital infrastructure, and real estate. 

Pension and sovereign wealth funds are also taking notice, potentially increasing their private debt allocations. Blackstone expects significant future growth in sectors like data centers, where investments could top $1 trillion over five years. 

Finsum: While private equity has struggled to secure its footing in the same way private debt has, this expansion looks very stable. 

Private equity giants are increasingly turning to hands-on management of the companies they own as financial strategies alone are no longer sufficient. With rising interest rates and a slowdown in the deals market, firms like Goldman Sachs and Blackstone are bringing in seasoned industry veterans to boost operational performance. 

This shift focuses on enhancing profitability through measures like improving margins and increasing cash flow, rather than relying on the traditional method of multiple expansion. 

Private equity firms are also extending the holding periods of their investments, driven by the need to deliver returns to investors amidst a tougher economic climate. Companies are placing a stronger emphasis on building long-term strategic growth plans. 

Finsum: As interest rates and inflation rise, private equity is evolving to emphasize deeper involvement in company operations rather than relying solely on financial solutions.