Welcome to the first of our 2025 Marketplace Podcast.
I'm your host Maria Urtubey,
member of the Equifax Advisory team. As a group,
we identify economic considerations and leverage data and analytics to
translate into industry insights.
This helps us make recommendations to support our customers during economic
uncertainty and to uncover growth opportunities in the consumer
credit risk space. I am pleased to welcome our panel of experts, Emmaline
Aliff, Dave Sojka, Tom O'Neill,
and Jesse Hardin. Welcome back.
Hey, Maria. Thanks, Maria. Glad. Hey there, Maria. Welcome to 2025.
Following the December, looking back at our 2024 predictions podcast.
In this episode, we get a chance to redeem ourselves,
or at least start on a clean slate two weeks into the new year or so.
Before we dive into the conversation,
though economists Justin Begley from Moody's Analytics is here to
share the current macroeconomic overview.
The US labor market continues to run full steam ahead. In December,
firms added 256,000 new payrolls, the strongest monthly gain since March.
And Besting most forecasts, once again,
the mix of industries adding jobs was unsurprising.
Healthcare and leisure and hospitality remained the primary drivers of new jobs.
While manufacturing slide continued, December's upside to prize,
closed the books on yet another strong year for the labor market.
Payrolls ended 2024 with 2.23 million more jobs than in 2023.
And while this marks a slowdown from 2020 threes, 3 million job gain,
it aligns with the average annual pace in the three years proceeding,
the pandemic recession,
suggesting that the labor market remains on solid footing,
the labor market will be starting 2025 in greater balance.
The excess demand for labor that characterize the post pandemic economy has
largely abated declining job openings,
coupled with robust labor force gains from the recent surge in immigration,
worked to loosen the labor market through 2024.
As firms that were previously starving for workers were able to fill many open
positions. As a result,
there were just more than one job opening for every unemployed person in
November, down from more than two vacancies for every unemployed person.
At its peak in March, 2022,
the economy is generally in a good place and small businesses,
which account for about half of all jobs, are finally feeling it.
Small business confidence has come back with a fury since the November election
in December.
The NFIB Small Business Optimism Index jumped to its highest in six years.
Main street's outlook for the economy over the next six months surged to more
than to a more than two decade high leading December's headline gain
boosting their confidence that the economy will improve.
Near term is the expectation that deregulation and lower taxes will help boost
economic growth in the next presidential administration. However,
uncertainty on Main Street remains above average as small firms around the edge
of their seats awaiting more clarity about the scope and scale of Trump's
promised tariffs and deportations,
which could result in higher input and labor costs.
Thank you, Justin.
The US economy has been navigating a complex mix of challenges and
course correction over the last year.
And its not surprising to hear 25 is envisioned as a
year of adjustment and of measured adaptation.
Particularly with the upcoming change in administration.
Inflation is expected to stabilize bringing further relief to consumers,
but prices for some goods may continue and upward trend,
particularly those affected by tariffs, the housing market is cooling,
but the affordability crisis continues with mortgage interest rates
roaming 7% on already high housing crisis.
There are a few sticky economic themes from 2024 we identified affecting
the Yes consumer this year and our predictions for 2025.
So let's dive in, Emmaline,
one of these being tariffs and prices addressed by Dr. Rob
Wescott during Market Pulse.
Would you share your thoughts with the larger audience on this topic?
Yeah, definitely. Thank you for thank you for the opportunity. I love I love,
you know, chatting with everyone. So as you know, as you know,
we talked with many economists around this topic as well as our own perspective
on understanding what are some of the biggest impacts potentially to inflation
in the coming year. One of those will be tariffs. And, you know,
if we think about, you know, tariffs,
you know president-elect Trump described tariff as one of the most beautiful
words in the dictionary, but what does that really mean? And, you know,
the standpoints of you know, a tariff is, you know, the taxation of you know,
goods coming in from an import based status that you know,
that companies can leverage to, you know, to build whatever their you know,
creating.
And so there's different impacts that it can have downstream depending on you
know, how those are applied and how the, how that's you know, occurs,
especially depending on where the source of that those things are coming in
from. And so there, you know,
depending on where things land from a tariff standpoint it's either could be you
know, a negative GDP impact or inflation of some kind.
And so if we think about the various ways that, that, that could occur in,
in discussions with with Keybridge, you know,
they describe three different levels of,
of that potentially occurring as posturing, light implementation,
or heavy implementation. And if we consider a posturing perspective,
it's like threatening the tariffs you know,
with implemented implementation being slightly low with a little bit more
targeted perspective towards China.
And then a light implementation would be a 10% across the board and 60% against
China. And a heavy implementation would be 20% across the board and, you know,
upwards 600 to 200% against against China. Mm-Hmm .
Now there's different impacts that can have, you know you know, for example, if,
if it's just posturing,
it does create a perspective that there needs to be you know,
less adherence to certain supply chains from, you know,
depending on where those tariffs could potentially go.
And potentially even building out some things you know, more so in the,
in the United States there, there, but you know,
that that's a longer term perspective. So there likely would be, if,
if it moves towards a more heavy implementation negative GDP impacts
that could be, you know,
fairly significant and resulting in some form of a recessionary period.
And then also in addition to that in, you know,
the inflation that could occur if if there's not any change to to address the
increases in prices that the consumer would bear.
Yeah, Emmaline and I, I,
I think it's interesting that e even e even in your description of say
the, the light implementation I,
I think it's interesting to look at how that impact would be felt.
It's not that we'd see, you know, homogenous, you know,
increases in prices across the board.
A lot of people might not feel any change depending upon what's,
what's being tariffed and, and what is, you know, what,
what those consumers are are looking to buy,
where others may feel a deep gouge, you know, so, so it's,
it'll be interesting to see how the implementation of it comes out.
And that's just in terms of sheer volume and and size of the tariffs,
but where those tariffs are. Yeah. And not just by country, but you know,
by industry, by sector, by consumer goods or industrial goods and whatnot.
I, yeah, I hear, I hear both of what you're saying.
I think the most interesting thing though,
to me is there there was talk last week of now having an an
external revenue service.
So Internal Revenue Service collects for internal you know, internal taxes,
external revenue services is gonna collect these tariffs. And just maybe wonder,
so does, does do we implement the external revenue service?
Then Doge turns right around and cuts it. That, that's,
that's what's interesting to me.
, well I'll pull on your Doge thread. Will,
will the text form be simpler for the external revenue services as opposed to
the internal one?
Yeah, that's the question.
All.
Great. And,
and we're not even touching on the retaliation or the effects on foreign policy,
right. Since we're keeping it domestic. Absolutely. But yeah. Yeah.
Very good point, Maria.
Yep. Yeah, sorry. And relating to foreign policy,
I know Dave you've been sharing with US immigration reform
expectations, key focus for incoming President Trump. What,
what are you expecting on this front in 2025?
Yeah, thanks, Maria. So, you know,
there's that initial reaction to President's Trump statement around mass
deportation, and I'll go back to what Emily just talked about, posturing.
So is it posturing? So are,
are we really gonna see mass deportation or is there a more nuanced approach
where border security is addressed,
but there's still that welcoming of high highly skilled workers that
allow the US economy to thrive?
I recently read a paper,
I think it was a couple days ago from the Economic Innovation group and it
really went into kind of the nuance around the highly skilled worker and the
benefits to the US economy in terms of even seeing faster
and higher wage growth for native born CI citizens and actually improving the
deficit. You know,
we're not gonna belabor whether that's an accurate statement or not.
I know I've seen Liz Lindsay sorry.
There was an article in the journal from one of our, our,
our sitting senators around immigration and you know,
addressing some of the negatives,
but the positive was around the H one B visa program and how important
that is. And so, and,
and actually kind of extolling an expansion a
streamlining,
if you will to increase the amount of visas that we
currently accept.
Dave, the, the thing that strikes me about this whole topic in, in general, I,
I, I like the, that you, you mentioned sort of the, the positive, you know the,
the H one level, you know, visa.
But I think on the other end of the spectrum, you have, you know,
the consequences of, of, of the impacts on, on labor essentially. And,
and you know, Maria, you mentioned the, the stickiness of the affordability,
you know, theme that we've been struggling with for a couple years now, and,
you know, continue to struggle well in, you know, into 2025
deportations on any scale are going to, you know, just exasperate that,
you know, if you think about, you know, the, the costs of a lot of what,
you know, people are complaining about the price of eggs now,
that's not gonna help. Yep.
Yeah. Your culture services.
Mm-Hmm . Yeah.
That's, that's one of my biggest concerns is around the, the, the farming side.
You know, if we're, you know, 'cause the,
the price of eggs has been such a heavy topic with the heavy percent of,
was it you know, 40 something,
50 something percent of farm workers are you know,
believe to have some form of un undocumented nature. So it's,
it just becomes a little tricky.
And absolutely immigration reform is something that's that does need to occur.
Yeah.
It's also when you look too at the Emily, the, the,
the format that you kind of put on on tariffs. I mean, we, we,
we do think about the, the notion that there is a lot of posturing here as well.
The, you know, the question is is there,
is there strength in posturing above and beyond then the capability of actually
implementing what we've, what we've heard the administration say?
So it will be interesting to see how, how closely you know, the,
the threat follows to the action.
Yeah.
So to kind of take these points and kind of to bring it home is really I'll
address kind of where I think the, you know, the impact might be felt on the,
on the US average US citizen side or the consumer as we try to avoid
to classify all all Americans.
So is there confidence you know, people will be, are wondering,
you know, can I stay in this country? Businesses,
, as you just talked about you know,
agriculture even on the housing side,
a lot of the work that's done in those industries is really on the
you know, the potentially Imma, you know, illegal immigrant population.
So we have a housing shortage. We have, we need more houses built,
and yet we potentially have a, a, a a damage or,
or a a shock to the workers that that would facilitate building more houses.
And so you know, there's a lot to,
to really think about with that with that impact
on, you know, on consumers as well as businesses. So, you know,
where we go remains to be seen.
Thank you, Dave. And maybe bringing it back to the domestic scenario, Jesse,
you highlighted rate cuts in your predictions last year.
What are you expecting for this year?
Yeah, thanks, Maria. I probably should say that I'm expecting, you know,
something just to, to leave it really vague, but way to go.
Out on a limb there, Justin. That's right.
Right. Yeah.
It will either change or not. Yeah.
Yeah. They, they will, they will, they will change.
There is a glass.
No, I think, you know.
.
2025, you know, I personally, I feel like it's gonna be a good year.
Certainly, I think we're still seeing growth in the economy. You know,
we're seeing job creation, good wage gains, low unemployment,
falling prices. So that's, that's all the good stuff.
I think what that's what's gonna happen is when you think of Fed policy,
the fed monetary policy is really gonna follow what those numbers say.
But then we also have kind of an unexpected component,
and those are really obviously hard to hard to forecast.
Those are gonna be things like a hot read on an economic print that comes
through.
Think of what we saw last week with the job growth numbers coming in higher.
I think we also would expect to see some economic challenge from the,
the things we just talked about. Also things like fire,
think about the fires in, in the west and the, you know, the,
the fallout from that cyber attacks on our banking systems, et cetera. So,
you know, we can't, we can't really forecast or predict what,
what those unexpected events will do to policy decisions from the Fed.
Having said that, though, I think that, you know, we saw in 2024,
there were significant policy cut rate cuts via policy
and, and maybe more than what some thoughts.
So I think as I think to this year,
I think we're gonna see that at least what my baseline case would be is that
we're not gonna see any rate cuts. Or if we do we'll,
we'll see definitely rate cuts in, in the longer term, you know,
probably not any rate cuts in the near term.
And I think that's just based on the,
the Fed needing to see kind of more data to really get a better sense of,
of true direction.
Hey, Jesse,
with the recent jobs and the was it the producer
price index that came out that was, yeah, PPI slightly high, but not,
but lower than expected, you know, does that change, you know,
your thoughts on that in terms of, has the Fed actually reached its target yet?
Yeah, I mean, I think, you know,
I think with and we saw the CPI number come out as well yesterday,
I think with the you know,
you can always kind of dissect the report to figure out, you know,
based on your predictions, what data's gonna support you. I think overall,
we're still seeing that prices are moving in the right direction.
But I think the Fed's gonna be more cautious this year. And, and I,
and I think as a result of that, I just, I don't think we're gonna see,
you know,
broad scale cuts because the hardest thing to do would then to be turn around
and see inflation start to increase again,
maybe through these policies that we're talking about.
And then the Fed has to react with rate hikes. You know, I, I mean,
with the Biden administration, I can't imagine what the hikes would be,
let alone with now the Trump administration, you know, thinking about just the,
the interplay between between the Fed and, and the executive branch.
So I think that could, you know, that could also weigh in as well.
I think they're gonna wanna stay more cautious especially if they wanna keep
their job.
Yeah. The the couple things that Dave and I just talked about, you know,
with respect to price increases,
price increases and inflation is what drives you know,
changes in rates to go higher. And,
and so it really depends on what's gonna happen downstream with the other
peripheral aspects that would have an impact on prices. And,
and it could impact things from a positive standpoint or negative standpoint
with respect to those prices. And I think where you, I,
I really liked how you frame that, Jesse,
around the a little more cautious because anytime there is uncertainty,
there's less action and, and less action. It's there, there. And,
and by some regards, like if we think about these things as being posturing,
light,
imitation or heavy there might even be some form of forced uncertainty to be
able to like, to test the waters to see what,
what would be the best pathway forward.
Yeah. And I might close out just by saying,
I think in terms of what I'm looking for, then you know,
I'm gonna look for things like wage increases. Where,
where are wages this year coming up? You know,
is there more pressure because workers are making more money and they have more
options and job switching? I'm also gonna look at, you know,
what's happening with the credit perspective in the economy with delinquency,
you know, so are consumers strong? Are they you know,
are we seeing a higher delinquency that could, you know,
potentially ripple through the economy? So,
so kind of also looking at those more consumer impacts and you know, and,
and understanding where the fed,
because the fed's gonna be looking at all that as well.
So kind of understanding where their, their thinking would be.
Thank you, Jesse.
Lemme ask, let me ask you another aspect of that,
and maybe this even applies to what Dave and,
and Emily and also spoke about, but what,
what are your expectations around the impacts on consumer confidence, you know,
for any, any change in,
in rates or lack thereof? Would that be a, a downward pressure?
Do you feel that there's,
there's a maybe a sense on the consumer sentiment side that,
that we're in a good place and, and, you know, holding still as,
as you were mentioning, or or being more cautious wouldn't necessarily be,
you know, a disappointment.
And I guess the same would hold true for either of the other topics that were,
you know, that Emily talking about tariffs and, and Dave on,
on immigration. If, if these things hit, you know,
is that an area where we could see a, a pretty sizable change?
Well, I mean, I would say you, you started out saying consumer confidence,
and I would say, you know, I certainly use that as a directional indicator.
I don't think though,
that we would see the Fed using something like consumer confidence as a
barometer for making a move. And it's simply because there's,
there is noise in that data, right? You know, you can,
you can actually look at that data and if you graft it over the last, you know,
20 to 30 years, you can actually see when elections happen because, you know,
there's a you know, there's a bias towards who's, you know,
whose party's in power. I do think, though, I mean,
overall consumer confidence does indicate kind of the direction that the
economy is going. And so, you know,
as consumers feel more burdened with things like service level inflation
those, those numbers just not coming down, I,
I think that's where you're gonna see, you know, the Fed taking those,
those types of movements into consideration. You know,
are we seeing wage growth that's you know,
that's maybe beyond what was expected, in which case you're, you know,
you're seeing more pressure on on those inflation numbers. And same with what,
what Emily said with tariffs and Dave, you know, said with immigration.
I mean,
those are gonna be obviously factors that play into overall confidence and,
and, you know, and, and then you know, driving the, the,
the policy that the Fed is is gonna put forward.
Thank you, Jesse. And I know we have so, so much time to,
to address, we still have a, a hot topic,
which is housing Tom with us mortgage debt at almost 13 trillion,
almost 74% of the total consumer debt as of November of last year.
What are you expecting specific to, to housing in 2025?
Yeah, it's, it, it,
it's probably appropriate that we have this one following all of the other
topics because all of the other topics impact, yeah. What the,
the housing market's gonna be. And and, and as the,
the father of, of a, you know,
child who is looking to make his first housing purchase in the,
the coming months, unfortunately, I can't say that it's a great environment for,
for him to do so. We're,
we're still slogging along in, in the housing department, and,
and it's probably going to continue the, the same set of culprits, you know,
high housing prices driven predominantly by, you know, short inventories
you know, high, you know mortgage rates, you know, you know,
making it even more difficult. It's, it's something that's impacting any
consumer that's, that's in the home buying market,
but particularly the, the younger generations. Yeah. For obvious reasons.
A lot of the older generations, such as myself, we've, we've been in our homes,
you know, we've built up equity in there. We, you know, even if we are in the,
the market for a new house,
we could use that equity and our savings and the stuff that we've built up over
time to help offset some of the,
those higher costs and the,
the overall affordability of going into the housing market.
The younger generations don't have that. They, and,
and they're still wanting to, to, you know,
to make that first housing purchase. And we've seen in the,
the data that the average mortgage balance for,
for those younger generations is rising at a much higher rate than any other
generations. You know, simply because, you know,
they're entering the market at a, at a pretty nasty time to be doing. So.
I was hearing yesterday,
even on the positive side this is driving alternatives and innovation
on the rent to own and the shared housing market. Mm-Hmm . So some,
you know, variation of those struggles, right?
What are other alternatives might surface, right, right. As a result.
Yeah, you certainly see, see the innovation, you know,
as people look for alternatives. And, and,
and I'd love to say that it's a temporary you know, fix until the,
the, the conditions improve. But as we've been talking about
here, there's, there,
there are completely negative, you know, there are some things that might,
you know, drive the, the housing conditions in a, in a better way, you know,
as including stuff that the incoming administration has has,
you know, mentioned is a, is a priority, tax cuts, you know,
easing of regulatory, you know, conditions. Those may, you know, be a,
a positive boost for builders to, you know, to go out there and, and, you know,
take the risk of, of building more. But on the flip side,
it could just as easily have the negative impacts of some of the policies being
discussed, you know, some of which we've been talking about here. You know,
if we've got, you know, a ding to the, the, the labor, you know, availability,
that's not gonna help, you know, ease the inventory.
If we increase, you know, tariffs, you know,
you might not associate that directly, but if, you know,
increased tariffs have an impact on the materials that go into building,
you know and, and maintenance of, of housing, that's gonna be felt as well.
So it's, it's definitely I I do think that,
that there will be some breaking up of the, the log jam, but it's,
it's still gonna be slow.
Yeah. I, I think, Tom, one of the things I was actually thinking about as a,
as a now home purchaser in in this en environment,
I'm actually going through that process as well, selling and buying you know,
obviously rates are, I, I'm,
I'm kind of blown away working with mortgage lenders right now,
just seeing where the rates are, you know,
'cause my frame of reference was refinancing in the, the boom Yeah.
The refinanced boom after.
We were spoiled, weren't we?
Yeah, yeah. You know, I mean, I I, I dare to say like,
I have a one in front of my my rate right now, but
I think one of the things that I, you know, I kind of think about is the,
right now the, you know, the, the Fed as we just,
or as I talked about the Fed had cut rates last year,
but we really didn't see any of that translate into movement on rates.
And that's has a lot to do with the, the 10 year treasuries and the premiums,
right. You know, associated with those. I do hope, you know, as,
as the new administration comes in and maybe things settle a little bit,
we'll see that that premium, that yield premium, you know, starts to, to fall.
And maybe we do see you know,
we see a reduction in mortgage rates just kind of naturally as the as the
unknown of the new administration starts to work itself out, you know, so that,
you know, that could help as well as, as we think of, you know, direction,
even if we don't see large scale rate decreases from the Fed in, you know,
in 2025, that yield spread being a little bit smaller might help.
Thank you for all sharing all those thoughts. Before we close out,
I do want to recap such,
so similar to the lighting round that Jesse went through with our prediction
leveling set for 24,
if you could in a summary summarized version
share your predictions for 25. Let's get started with you, Tom.
I'll go first. Yeah. Do you want Tom.
Tom to go first? Yeah, sure. I'll, I'll go first. Yeah, because I,
I just sort of,
I kind of obliquely re referred to it is that my safe
prediction is that the, the,
the mortgage market will continue to be the housing market and mortgage market
will, will both be con continuing to just sort of slog through 2025.
My, my little more daring prediction will be that
Gen Z will,
will continue to have an even bigger mark on its head from the other
generations that,
that they'll be painted as lazy and not moving out of their parents' ba
basements when in reality it's because they just can't afford to.
Wow. I, I have a different take similar to yours.
Affordability for sure will be limited,
and I don't see the housing market
or, or the help as you said,
towards younger generations going anywhere until prices.
It's not so much the interest rate, but prices decrease.
And I'm positive or or optimistic on the Gen ZI think they will teach us a
lesson. They're, they're way more focused than we, than we envision.
And they, they will surprise us. I think that that.
Will, I, I share that opinion. Maria, I am optimistic about the generation,
regardless of, you know, their attitude towards avocado toast, ,
look at two.
Glass half full peoples. I love it.
Emmaline.
I personally like avocado toast too, so I take offense to that.
.
But the, I I do think very.
California.
Yeah. I,
I do think that affordability will likely be one of the higher challenges.
'cause We, you know, of all the things we talked about, price increases,
were likely going to be, you know,
some of the impact that we could potentially see even with those uncertainties.
Like whatever un uncertainty could happen, I, but with the affordability,
I do think it's gonna have some level of nuance associated with it,
specifically that nuance will likely have a further you know,
spreading out of the KS shaped economy we've been talking about,
because we know that delinquencies have been on the rise and, you know, auto,
for example, are,
is higher at a delinquency level than it was during the during the great
Recession, right? You know, however, auto delinquencies,
when we look at payment hierarchy it is still at a highest,
one of the highest likelihood of getting paid. So if someone is,
is moving at a place where they're delinquent on their auto and it's higher than
the great recession, that means they haven't paid their other debts first.
So there's like, there's, there's gonna be continued separation.
So those people who have been able to invest in the stock market,
who have you know, who have like a, a home, who have all those things,
who have the financial literacy will continue to, to thrive,
where those consumers who have been struggling may struggle more.
Thank you. Dave or Jesse?
I, I, okay, go ahead, Dave. I'll, I'm close this up.
Because unlike, yeah,
because unlike you there's a glass I'm gonna make a bold prediction.
So we're recapping on the immigration job side,
my bold prediction. There will be a bipartisan bill passed
this year that secures the border,
while at the same time a lot expanding the H one B visa program.
That is bold.
Yeah. Yeah. It's, it's bold.
It's bold to say bold and bipartisan in the same statement. I.
Bought it. .
. All right, I'll close this out. So yeah,
I know you know, I, I kind of, I kind of hit on it when I, when I spoke before,
but I think what we're, what,
what my baseline would be from a rate standpoint is that we're gonna see
maybe one cut as a, as a baseline.
And then my bold prediction would be that there,
there could be rumblings of rate hike at at least a rate hike,
and it's going to, it's gonna cause chaos. Having said that, though,
I do wanna review that.
There were two things that I think came to mind as I was just listening to
everybody talk about their, their different subjects. You know,
I spoke of unexpected impacts to monetary, fiscal,
monetary policy. One that I,
that I do wanna shine light on when we think of federal student loans. So we,
we do know that delinquencies are gonna be reported now on those student loans.
They're, you know, they're coming through the you know, sometime in the,
the late early February to, to mid-February timeframe. And you know,
as I said before,
that's what I think we can't predict necessarily in terms of
building that through to, to what happens with rates.
But something like you know, a higher level of student loans and the,
and the turmoil that that causes, like that, that's I think where you know,
the Fed may have to pivot from that, you know, from that one cut that I,
that I mentioned. The other thing I would mention, I,
we've all kind of talked about affordability, but you know,
one that comes to mind is insurance right now, you know,
certainly housing insurance on housing, it's it's, it's,
it was already challenged let alone now what happens with some of the, the,
you know, tragedy we've seen on the West coast. So, you know, just,
just kind of throw that out as when we think of unexpected events, they're,
they're gonna come up. We know they are. And and, and, you know,
we just have to kind of size 'em, see what the impact is, and,
and then figure out how that impacts both the consumer and you know,
and the economy.
Thank you, Jesse.
You wrapped us up very nicely with other key topics to keep in mind.
Thank you again, Jesse Davely and of course, Tom for joining me today.
To our listeners, I hope you enjoyed today's topic.
How do these predictions align with your expectations for the year and what are
your predictions for 2025? If, if you would like to share these with us,
with us, or have questions or suggestions for future podcasts,
please reach out to us at risk
advisors@equifax.com. We would love to hear from you.