From the Desk of Rick Dennen: Economic Forecasts and Business Strategies for 2025

December 18, 2024 — Today, the Federal Reserve lowered the Federal Funds rate by 25 basis points, setting the target range at 4.25 - 4.50%. This comes as little surprise as the September Summary of Economic Projections predicted this cut was likely. Economists expect the Fed will slow the rate of cuts in 2025, due to not previously anticipated stronger economic growth and firmer inflation than originally expected. Inflation rates are meeting projected expectations, but remain slightly higher than the Fed’s 2% goal. The newly released Summary of Economic Projections expects two rate cuts in 2025. These anticipated cuts, along with a strong economy and labor market, suggest a strong business outlook.

Of course, 2025 will bring political changes as the Republican party takes control. President-elect Trump and Vice President-elect Vance have stated they will push for a less strenuous regulatory environment. This will likely result in a more active environment for M&A activity in the RIA, CPA, and insurance industries. The Tax Cuts and Jobs Act of 2017 (TCJA), which Trump signed during his first term, will likely have portions extended beyond its December 31, 2025, sunset date. If the TCJA provisions were to expire, most notably, the act’s 20% deduction for qualified pass-through income and estate tax exemption maximum would expire. This means qualified pass-through owners would no longer be able to deduct up to 20% of net business income from their income taxes.

We can make reasonable inferences about the decisions the new government will likely make based on historical data and trends, but much of the future is unknown. Keep in mind that some risks cannot be managed, but there are some that can be mitigated with proper planning. For example, succession planning is a risk that can be managed while a geopolitical crisis may not. Think about the risks you can manage and take steps to prepare for those.

One key to maximizing business growth in 2025 is to focus on adding value for your clients. Know what you do better than the competition and focus on that. Prioritize specialization and surround yourself with experts in the areas you aren’t specialized in. Build strong relationships with experts to stay informed while you focus on your business.

The beginning of a new year is a great time to pursue growth with working capital or debt consolidation financing. Leveraging debt financing for growth initiatives, such as market expansion, cash flow improvement, or technology upgrades, can provide a competitive edge. As we look ahead to 2025, a combination of economic factors and political shifts present new opportunities. By proactively managing risks and focusing on value-added services, leaders can position their businesses for continued success.

About Oak Street Funding
Indianapolis-based Oak Street Funding, a First Financial Bank company, provides customized financial solutions for businesses in various industry sectors and third-party loan servicing for financial institutions. Oak Street Funding incorporates industry knowledge, easy-to-use technology and exceptional employees to deliver top-quality service and capital products to niche businesses nationwide. With in-house sales, underwriting, and servicing teams, and direct access to the CEO and executive team, Oak Street Funding is well-positioned to meet lending needs of borrowers in all stages of the business life cycle.

Media Contact:
Rae Hostetler
Hostetler Public Relations
Representing Oak Street Funding
317-733-8700
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