I hope your new year is off to a fantastic start! I’m excited to make 2025 our best year yet — full of growth, success, good health, and, of course, prosperous investing. I wish the same and more for each of you. As we dive into this new year, here are some key stories I’m keeping an eye on as we head into 2025:
Economy: Resilience in the Face of Uncertainty
Overall, the economy remains resilient. Unemployment is expected to stay low, and consumer spending continues to hold steady. Inflation has moderated from its peak, though risks of a recession still loom. While a downturn could materialize at any time, no major indicators are pointing to an immediate slowdown.
Trump 2.0: Policy Shifts Ahead
Several potential policy changes under a second Trump administration could impact the economy. Key areas to watch include corporate tax cuts, tariffs, immigration reform, and government spending cuts. President Trump has already signaled that some of these policies could cause short-term pain, but are expected to deliver long-term benefits.
Construction: Labor Challenges Loom
Even before the recent fires in Los Angeles, there were concerns about how large-scale deportations of undocumented migrants could impact the construction industry. It’s estimated that 12% to 15% of the construction workforce is undocumented, including nearly 40% of specialists in areas like stucco, drywall, roofing, and painting. As reconstruction efforts ramp up in California, questions remain about where the labor force will come from — and how Arizona could feel the ripple effects as labor supply tightens.
Insurance: Rising Costs and Industry Shifts
The pattern over the past few years is unmistakable: insurance rates continue to rise, while insurers are finding ways to cover less. In many regions, insurers are pulling out entirely. The big question is how this trend will impact the real estate industry, and whether — or when — the government will step in with regulatory changes in the coming months.
Global Impact: Uncertainty Abound
The global landscape is fraught with challenges. Ongoing conflicts in Ukraine, Iran, and the Middle East, as well as tensions with China, continue to create instability. Closer to home, Mexico’s economy is expected to slow significantly due to higher tariffs that are set to be proposed in the coming weeks. We’ll need to watch these developments closely as they could have far-reaching implications.
AI: A Game Changer (For Better or Worse?)
I’ll be upfront: this newsletter was written without the help of artificial intelligence. But who knows? By the end of 2025, my writing, insights, and strategies could very well be enhanced by AI tools. The pace of technological change is accelerating, and while AI raises many concerns, it also holds the potential for historic advancements that could benefit humanity in remarkable ways. The next few years are sure to be a thrilling — and sometimes unsettling — ride.
Looking Ahead
2025 is here, and with it, new opportunities and challenges. If you have any questions about your business or commercial investment goals and how these factors could influence your position, I’d be happy to meet and help you build a strategy for long-term success.
Wishing you a year of growth and prosperity!
Hani Aldulaimi, CCIM
Managing Director