EXTON, PA — On the heels of the U.S. Presidential Inauguration, the region’s longest-running economic outlook event was presented Wednesday by the Chester County Economic Development Council (CCEDC) before a standing-room only audience of business executives and community leaders at Penn State Great Valley.
“Attendance this year was even higher than normal, no doubt driven by business leaders looking for perspectives on what to expect in the first year of the new administration,” said Mike Grigalonis, CCEDC President and COO. “We were thrilled to have Patti Brennan and Dianne Manges back this year to provide context and insights to pending changes, challenges and opportunities.”
CCEDC’s 21st Annual Economic Outlook featured commentary by nationally renowned wealth advisor and CEO of Key Financial, Inc. Patti Brennan, CFP, who has been a CNBC commentator and was named a Hall of Fame Advisor by Dow Jones & Company’s Barron’s, as well as economic specialist Dianne P. Manges, CFA, Director/Senior Investment Advisor for Truist Foundations & Endowments Specialty Practice. Both experts agreed the economic implications of the change in presidential administration are still unfolding, but there are some common themes.
“We know that markets move based on surprises – on the upside and the downside – and we know to expect surprises in 2025,” said Brennan. “The key drivers this year for both personal and business investing will no doubt be interest rates staying higher for longer than previously anticipated, the expectation of significant tariffs as well as significant cuts in government spending.”
Manges said, “We anticipate steady growth for the U.S. economy, but policy uncertainty remains elevated. This administration is unique in that there are a lot of policies with immediate priority that have major implications if enacted.”
Manges pointed to tariffs, which are expected to be imposed stringently, especially on China. “In 2018 when the Trump administration enacted tariffs, the average was 3% whereas now an increase of 18% is proposed. It’s a very dramatic move from where we are right now.”
Still, Manges says she does not expect an economic downturn. “The expectation is for the U.S. economy to grow 2.5% coming off two above-average years,” Manges said.
Brennan said, “The threat of a recession is very low, but let’s not get too warm and fuzzy. And one thing I am beginning to question is the value of investing globally. The U.S. used to represent 50% of world market capitalization and now we are about 68%. Will there be a point where international stock markets become irrelevant?”
For the first quarter of 2025, Brennan says, “For short-term investing like auto purchases and tuition, that money should stay safe. Bonds should also be pretty decent — not double-digit returns but they could be a good intermediate investment with a 5-year hold. For longer term investments like retirement accounts, don’t get too cute. Invest it, set and forget it. Put it in growth and let it soar as long as you’re at least 5-10 years away from retirement.”
Manges was particularly interested in consumer spending, noting that it remains pivotal to U.S. expansion, aided by real wage growth and the still solid – but cooling – labor market. “The consumer is always pivotal to the U.S. economy and now even more so. Therefore, I’m really looking at what impacts the consumer, and it all goes back to what unfolds with the new administration’s proposed policies and how that might ultimately impact the consumer,” Manges said.
As for Artificial Intelligence, Brennan urges investors to manage their expectations. “Right now we are at the peak of hype regarding AI, and in 2025 we will see a lull in economic implications as the companies that have invested so much in this technology begin to consolidate their presence, make performance improvements and cost reductions,” Brennan said.
CCEDC continues its 2025 programming with the 13th Annual SEI Energy Briefing on February 11, 2025 presented by CCEDC’s Smart Energy Initiative of Southeastern Pennsylvania. More information is at www.ccedcpa.com. You can also view CCEDC’s interactive Annual Report at https://annual.ccedcpa.com/
For the latest news on everything happening in Chester County and the surrounding area, be sure to follow MyChesCo on Google News and MSN.