Paramount Wealth Perspectives

Navigating 2025: Job Market Trends, Inflation Insights, and Investment Strategies - 3/24/25

• Christopher Coyle

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In this episode of Paramount Wealth Perspectives, host Chris Coyle welcomes Scott Tremlett, Chief Investment Strategist, to answer pressing questions from clients and community members. They discuss key economic trends shaping 2025, including the recent uptick in unemployment, the implications of cooling inflation indicators like CPI and PPI, and what slower retail sales growth could mean for the broader economy. Scott also shares his insights on consumer sentiment, potential Federal Reserve rate cuts, and strategic investment opportunities in a shifting market.

Tune in for actionable insights to help you stay informed, stay ahead, and make smarter financial decisions in 2025.

Chris Coyle:

Intro song

Speaker:

Hello everyone. Welcome to Paramount Wealth Perspectives, your go-to podcast for the latest updates on global markets and current economic events. This is your host, Chris Coyle. I am the marketing director and financial advisor here at Paramount Associates Wealth Management. And today I am joined by Scott Tremlett, chief Investment Strategist here at Paramount Associates Wealth Management. Last week we received some great questions from our clients and community, and today I wanted to ask Scott a couple of those.

Speaker 3:

First off, Scott, we received a question about unemployment. The unemployment rate recently rose to 4.1% from 4%, though job openings increased in the most recent report on March 11th. What do you see happening with the job market in 2025? Thanks, Chris. Game on.

Speaker 4:

Well, looking at the job market in 2025, I would just consider it complex. Like you had said, unemployment rate did edge up to 4.1%. Now let's keep in mind. There were twice as many quits as layoffs within that report. I think that's forgotten about with all the stuff that's going on with the federal workforce reduction. But there's still more than one job available for each unemployed person looking for a job. And there has been some key sectors that have had notable job gains in healthcare, financial activities, transportation and warehousing but. Obviously policy induced uncertainty is there, along with a demographic labor shift where there's 10,000 baby boomers retiring every single day.

Speaker 5:

Certainly with all those factors, there's definitely mixed signals. You know, the job market is expected to experience moderate growth, but there'll be definitely some sector specific variations. You know, healthcare technology may continue to expand while sectors that are sensitive to trade policies and government spending could face big headwinds right now. Overall, the trajectory will depend highly on policy decisions, economic conditions, and business confidence. But with all that being said, the job market and rising wages are one of the reasons that the US economy is doing well, and I don't believe we'll see a recession here in 2025.

Speaker 13:

I appreciate that insight, Scott. And as you pointed out, the strong wage growth and strong job openings should continue to lead to this strong labor market that we're seeing. The next question that came from our community was about PPI and CPI or Producer Price Index and Consumer Price Index. The producer Price Index in its most recent report was flat, and the CPI rose 0.2% in its most recent report. Which was the smallest gain since October after accelerating 0.5% in January. Do you see either of these declining in the near future?

Speaker 5:

Well, thanks Chris. Yeah, I mean the CPI you, like you said, was the smallest gain since October of last year, so that is suggesting that consumer price growth is cooling a bit. And then the PPI Producer Price Index is suggesting that wholesale or input costs for businesses are stabilizing. I. What this means to me. Well, disinflation appears to be on track. After January's hot readings, there were concerns. Inflation might be a reaccelerating, but February's reports show that that may have been a blip. It's been very, volatile when I'm looking at the different numbers on a month to month basis. But this may give the fed some breathing room here because it does support the idea the Fed can afford to wait before raising rates again, if at all, and maybe even start cutting by the summer or fall 2025 depending on the trend. I'm not really one of those that's suggesting that there's gonna be many cuts this year. But all in all, this does give fed some breathing room.

Speaker 7:

There are some risks to watch with oil prices, sticky housing, or rent prices. Strong consumer demand, which could definitely revive CPI and obviously the policy shifts that we had spoken about. But all in all, I think that the CPI is likely to continue slowly moderating, hovering around two to two and a half percent year over year by mid 2025 if energy prices stay stable and shelter inflation cools a little further. PPI could stay subdued or even turn slightly negative year over year in the coming months if supply chains remain healthy and input demand softens.

Speaker 11:

Thanks, Scott. Sounds like some overall positive data in that we're looking at both CPI and PPI, at least remaining somewhat consistent for 2025.

Speaker 8:

I wanted to see with how retail sales would maybe affect that. There was a report that came out last week, which showed a 0.2% increase from last month, but that was far below estimates. What does this mean to you as an investor?

Speaker 7:

Well, I think consumers are pulling back. I would say, quote unquote, cautiously, retail sales are a solid proxy for consumer spending, which continues to make up 70% of the US. GDP in a weaker number definitely suggests that the households may be feeling pressure from higher interest rates. There's also growing fatigue around post pandemic spending, and consumers should be shifting from goods to services. Or simply spending less overall. But big thing, confidence may be slipping slightly. We saw this in the confidence number, but even with inflation still present, even if it's easing in the job market, showing some cracks, it seems people are becoming more cautious about non-essential purchases growth. Could be slowing, but it's not collapsing. I think that growth will slow throughout the year and we'll continue to see this, but I don't see it collapsing. But there are, there are some market and fed implications based on what they're seeing in retail sales, and it's definitely good for the fed's inflation fight if people stop spending. It certainly would support some rate cuts later in 2025, but it definitely could dampen the first quarter. GDPI think that potentially first quarter GDP this year might be zero. We might not even see any growth but all in all stocks, they, they might wobble on this. You know, markets tend to get nervous when the consumer strength falters. It's definitely the backbone of the economy, but the economy is still resilient and the pace is cooling. The Fed is getting closer to rate cuts, and consumers are being just more value conscious right now and selective in their spending. I.

Speaker 8:

And yeah. Scott, in light of those potential rate cuts that you had mentioned and the strong economic data that we have seen, consumer sentiment came out at its two and a half year low in March. What does this mean to you and, and what implications does this have for investment strategies?

Speaker 7:

Well, it's

Speaker 8:

kind

Speaker 7:

of like a double edged sword. Obviously, short term consumer sentiment dropping may not be positive for the markets, but let's look at the grand big picture here. Would I rather buy stock when everybody is exuberant about the markets and everybody is really into buying stock? No. You know there, there's been research out there by Yale that they came out and said that the best time to purchase any type of investment is when it was looked at as the least popular investment on the street. And this is one of the things that I look at with investment management and when do I buy, when do I take risk off the table? And I can even hear it from clients sometimes, you know, clients, you know, get exuberant. You know, markets are at all time highs and all of a sudden they find$10,000 sitting in their. Sitting underneath their mattress and now they wanna invest it in the highest riskiest stuff. To me, that's a signal to sell. And when people are getting freaked out calling, I wanna get out, I wanna get out, that's a point where I wanna buy because I was always told way back when you wanna buy low and sell high versus the other way around.

Speaker 8:

Again, Scott, I appreciate your insights and appreciate your contrarian view. Everyone. I want to thank you for tuning in this week. If you have any questions, please submit them to general@paramountassoc.com.

For now, stay informed. Stay ahead and join us next time for more key updates shaping the global economy.