This is a brief overview of Cumberland Advisors’ thoughts on financial markets as we head into 2025. It is a particularly important outlook given the fact that we have just gone through a presidential election and have the return of Donald Trump, who is repeating the performance of Glover Cleveland over 100 years ago with two nonconsecutive terms. We are coming off a 2024 that was good for equity markets and good for bond markets up until the fourth quarter of the year, when there was a rise in inflation expectations. One of our basic investment tenets is that markets revert to the mean over periods of time, and that is reflected in our outlook here as well.
Tax-Free Municipal Bonds – John Mousseau, Vice Chairman & Chief Investment Officer
The tax-free bond market was not immune from the rise in Treasury yields witnessed in the last quarter of 2024. Tax-free yields started to rise late in the third quarter – a lot of the move based on the rise in Treasury yields associated with the Trump election betting odds.
The chart below shows the change in both Treasury bonds and AAA muni bond scales for the four quarters of last year. The third quarter reflects the drop in yields associated with a tighter presidential race once President Biden left the ticket, and the fourth quarter reflects the increase of yield levels consistent with the Trump rise in the polls and presidential betting pools. There was also some increase in yields after the election. The relatively strong performance of muni yields versus Treasuries during the fourth quarter stems in large part from many municipal issuers moving up their issuance slated for the last two months of the year to late September and early October. Hence, while yields were rising late in the year, there was relatively little muni supply – along with some heightened demand from December and January rollover periods.
There is no question that the Fed rate cut in early December of 25 basis points confused the markets, because the cut was accompanied by Fed comments about the outlook for increased inflation and growth. When a bond market is confused, it usually votes with its feet and treats uncertainty with a higher yield buffer, and this last month of the year was no exception. There have been many cross-currents in economic data and there has been a strong-economy narrative in the last couple of months, though there are still signs of a possible slowdown – lower manufacturing and service indices, falling credit card debt, and a drop in durable goods orders.
As we move into 2025, there are reasons to be cautious. Most are related to the new administration. It is presumed that President Trump will try to retain the tax rates from the 2017 tax bill. They would revert to older, higher rates without Congressional action; and we think this will be one of Trump’s first orders of business. Tax rates reduced from current levels could hurt tax-free bonds at the margin. Also, any drop in corporate tax rate could also hurt tax-free demand from corporations and insurance companies at the margin.
Certainly, the fallout from the hurricanes in Florida and the devastating fires in Los Angeles is raising concern about climate impacts on financial markets in general and municipal finance in particular. The benefits of diversification in muni portfolios are also reinforced by these impacts. At this juncture we have not seen a major upswing in muni yield levels. If tax-free bonds cheapen to Treasuries markedly, we would look at that as an opportunity to capture some higher yields and extend maturities.
Economic Outlook – David Berson, Chief US Economist
Economic Review and Outlook: 2024Q4
The key points you should know:
The economy grew at a solid pace to end the year, with no signs of significant slowing in the near term.
The job market gyrated in response to extreme weather events in the fourth quarter but ended the year on a high note.
Inflation appears to have stabilized at around 3.0 percent, and while this is significantly below the peak rates of a couple of years ago, it remains above the Fed’s longer-term goal.
The Federal Reserve dropped the federal funds rate by 100 basis points (bps) from September through year-end, but much less additional easing is expected in 2025.
Looking ahead, there is much policy uncertainty with respect to trade (tariffs), immigration, taxes, and regulation. Will actual policy changes be reflationary or disinflationary, and will they boost or slow growth?
A look back at the fourth quarter – still a solid showing
Real GDP growth is estimated by the Atlanta Fed to have slowed a tad to an annualized pace of 2.7 percent in the fourth quarter. If this is accurate, growth for the year would be a solid 2.6 percent. Most analysts view the long-term trend rate of growth for the economy at around 2.0 percent (if not a bit below), so 2024’s growth rate (for both the year and the fourth quarter) remained above trend. Moreover, the best measure of core economic growth (real final sales to private domestic purchasers) grew even faster through the third quarter from a year earlier, at 3.1 percent. While the Atlanta Fed’s GDPNow does not have a fourth-quarter estimate for this measure, it is likely that core growth for the year will turn out to be faster than overall real GDP growth.
Housing remains the weakest sector of the economy. The large number of homeowners with low mortgage rates from the period after the Covid recession, when the Fed brought short-term interest rates to zero percent and purchased significant amounts of mortgage-backed securities, has resulted in a severe shortage of existing homes for sale. Who wants to give up a 3.0 percent mortgage for today’s 7.0 percent rate? Additionally, record-high house prices in most parts of the country have hit housing affordability and lowered demand. The sharp rise in mortgage rates over the past two years has also reduced the demand for new homes, resulting in a decline in housing starts. Housing starts have fallen for three consecutive months (data through November) and are now close to the lowest levels since the post-Covid rebound. New home sales have held up well given the rise in mortgage rates, but they too were down in the first two months of the fourth quarter. Surprisingly, existing home sales picked up a bit in October and November despite the lack of inventory and high mortgage rates; however, they remain at low levels historically.
Fortunately, consumer spending has buoyed the economy. As consumer spending is roughly two-thirds of all spending in the US economy, this is especially important. While varying sharply from month to month, annualized growth of real personal consumption expenditures (PCE) has averaged 2.98 percent, helping to boost overall economic growth. October’s growth was held down by the hurricanes/floods, while November saw a rebound in the recovery from the storms. Over the most recent two months for which data is available, real growth averaged 2.4 percent. December data was not available as this was written, but light vehicle sales (an important component of consumer spending) jumped to an annualized pace of 16.5 million units in that month – suggesting that consumer spending probably rallied further. And retail sales, a smaller component of consumer spending than overall PCE, climbed by 0.4 percent for December (not annualized), also indicating that PCE growth would be solid to end the year, with real PCE growth for the quarter close to the average over the past year. There is no sign of a meaningful slowdown in the consumer spending data. Personal income growth also remained solid, especially over the first two months of the fourth quarter, helping to bolster spending.
Underpinning consumer spending – and overall economic growth – has been above-trend job growth. Nonfarm payroll gains, which had dipped to only 43,000 in October (probably weather related) rebounded to 212,000 in November and 256,000 for December (both helped by a rebound from the October weather). The 170,000 average increase for the quarter shows that the job market continues to be solid and consistent with above-trend economic growth. The U-3 unemployment rate edged lower in December to 4.1 percent. This is a low level, even if a bit higher than the historically low levels of 2022–23, and a smidge above the 4.0 percent average for the year. Other labor market indicators tell a similar story to the monthly employment report and show no signs of significant weakening.
Business survey results were somewhat stronger, suggesting no slowdown in overall economic growth. The ISM manufacturing survey rose in December to 49.3 percent. While an improvement, this is yet another reading below the break-even level of 50, as has been the case for most of 2024. The ISM services survey edged higher in December to 54.1 percent. Taken together, the ISM survey measures imply modest overall growth in the economy. Even more optimistically, the NFIB Small Business Optimism Index rose in December to 105.1 – the second consecutive month above the 51-year average of 98 and the highest level since October 2018.
Inflation has ratcheted downward significantly over the past two years, but the improvement has stalled in recent months – leaving inflation measures above the Fed’s long-term goal of 2.0 percent. The Fed’s preferred inflation measures are the very broad PCE price indices. Through November, the overall PCE price index was up by 2.4 percent from a year earlier, after having dropped to 2.1 percent in September. The 12-month trend core PCE price index (excluding the volatile food and energy components) was up by 2.8 percent in November. The more narrowly based consumer price index (CPI) has data through December and gives a strong indication of what the December PCE price data will look like. The 12-month trend rate for the overall CPI edged higher to 2.9 percent, while the core CPI slipped a tad to 3.2 percent. We continue to view measures of central tendency (median or trimmed-mean) for inflation as better indicators of underlying inflation movements. The Cleveland Fed’s median CPI continues to trend lower, but in December the 12-month trend rate was still 3.8 percent. The 16-percent trimmed mean inflation measure came in at 3.2 percent. Overall, the data suggest that inflation declines have stabilized at around 3.0 percent – still meaningfully above the Fed’s goal.
At the December FOMC meeting, the Fed reacted to inflation remaining above goal and the job market’s remaining above trend by reducing its projection of rate cuts in 2025 to 50 basis points. This came after 100 basis points of easing starting in September (finishing with a 25-basis-point cut in December). Market expectations of Fed easing have changed significantly as the Fed’s own forecasts have changed and as new data on the job market and inflation have been released. According to data from the CME Group, financial markets expect no easing at the January FOMC meeting, and either one or two easing moves by the end of 2025. Our view is that unless the economy slows or inflation resumes its downward trajectory, one easing move is the most we should expect for 2025.
After bottoming at 3.63 percent on September 16 (two days before the Fed surprised markets with a 50-basis-point cut in rates), the yield on the 10-year Treasury note rose to 4.58 percent at year-end (and jumped further to 4.79 percent in early 2025). Why the sharp rise in rates? There are two likely explanations, and they are not mutually exclusive. First, inflation expectations may have increased with the Fed easing as the economy remained solid and inflation plateaued; plus, the Fed reduced its projections of easing in 2025. Second, large current and even larger prospective federal budget deficits may have brought the bond market vigilantes back (as last seen in the 1990s). Moreover, concerns about President-elect Trump’s trade and fiscal policies (and their impacts on inflation and the budget deficit) may have increased after his reelection and the Republican sweep in Congress. We note the uncertainties about this in the next section.
Despite higher longer-term interest rates, the solid economy and continued strong corporate earnings boosted equity markets. The S&P 500 Index, for example, climbed to a record closing level of 6090 on December 6, before slipping to 5882 at year end. Even with the decline toward the end of 2024, the index was up by 24 percent over the course of the year.
The outlook for 2025 is more uncertain than usual, with potential policy changes and their impacts still up in the air.
In normal circumstances, the solid trend in economic activity at the end of 2024, the end of tighter monetary policy, and the general lack of imbalances would result in a forecast of continued above-trend economic growth for 2025 (albeit somewhat less than last year). Inflation should move lower, although it is likely to remain above the Fed’s goal – leading perhaps to one additional Fed easing and probably to somewhat lower longer-term interest rates.
But these are not normal circumstances, and forecast uncertainties are significantly greater than usual. Not only are specific policy proposals yet to come (although general directions are known), but what the president and Congress will eventually pass is uncertain. There are four areas of policy that are both important and very uncertain.
Tariffs: Will the president actually impose significant tariffs on most of our trading partners – or only modest increases for most, but big tariffs on some (and perhaps on targeted industries)? While there may be some geopolitical justification for certain tariffs, the larger they are and the more broadly they are imposed, the bigger the economic impacts will be. Directionally, tariffs should raise inflation and slow growth.
Immigration: Will the president actually attempt to round up and deport the roughly 10–15 million illegal immigrants in the US? And what will this do to the industries and localities that they are concentrated in? Directionally, this action should also slow growth and raise inflation. But some of these negative economic impacts may be offset with expansion and rationalization of legal immigration rules.
Fiscal policy: What portions of the 2017 Tax Cut and Jobs Act will be extended? Will there be additional tax cuts (e.g., tip income, state/local taxes, Social Security, etc.)? Will the Department of Government Efficiency be able to cut federal government spending significantly? Will defense spending increase to meet a more volatile world? What happens to the federal budget deficit? Lots of questions with few answers at this point, but most of the expected fiscal policy changes would result in stronger growth and higher inflation.
Regulation: What would a (presumably) far different regulatory environment under a Trump administration look like? In general, less regulation should mean faster growth and lower inflation, but the magnitudes are very uncertain.
The Fed – Bob Eisenbeis, Former Vice Chairman & Chief Monetary Economist
At least for the first half of the year 2025, the watchword for the economy and financial markets is uncertainty. The Fed cut rates at its last three meetings of 2024, and its Summary of Economic Projections (SEPs) for the coming year show slight increases in inflation, unemployment, and GDP growth. In the face of that evidence, the Committee reduced its projected interest rate cuts for 2025 from four to two in its December SEP. Is the slight increase in overall inflation we have seen just another bump in the road on the Committee’s journey to its 2% PCE inflation goal, or is it a sign that that policy has been too easy and the FOMC has reevaluated the path for policy?
Complicating the Fed’s decision process is considerable uncertainty across a number of important policy areas that can significantly impact the economy. First, Congress has set us up for another round of “discussions” of the budget and a possible shutdown if the debt ceiling isn’t extended in March. Indeed, Treasury Secretary Yellen has stated that the debt ceiling could be reached as soon as mid to late January 2025. There will be debates on the size of the budget, what cuts are to be made, and whether the debt ceiling should be increased and by how much to avoid a US default and all that goes with it. What happens on the debt ceiling will have important implications for Fed policy, since increased issuance of government debt or a potential default will have critical impacts upon interest rates.
The incoming administration is considering a number of other policies that could impact the inflation outlook. For example, there are discussions about the possible removal of tax credits for electric vehicles, an outcome that would drive distributional price increases. In addition, there is a lot of talk about increasing tariffs on US imports, which, economists agree, would significantly raise prices since tariffs are paid by the importers and not the exporters to the US. Principal sectors that might be impacted by such moves in addition to autos are electronics, agricultural goods, medical supplies, textiles, cosmetics, communications technology, wood products, and oil. For example, increases in tariffs on Mexican, Canadian, and Chinese imports will clearly increase prices and can also significantly impact the viability of many small businesses, which are the main source of job creation. Approximately 75% of small businesses depend upon imports, either for product or inputs. Thus, any cost increases would have ripple effects through the real economy if cost increases impact competitiveness and viability. A significant number of the cars costing under $30,000, for example, depend upon cross-border transfers of parts and vehicles among the US, Canada, and Mexico; and the prices of those cars could increase as a result of new tariffs. Chair Powell was asked at his post-meeting press conference about possible tariff increases, and he indicated that the Fed was looking into tariffs in general; but he said that without specifics there was little for the Fed to try to consider in its projections.
The incoming administration is also reportedly considering removing subsidies for alternative energy sources and encouraging increased production of fossil fuels. It may also propose increases in the export of liquid natural gas and related fuels. These changes could significantly alter existing relative energy costs for those depending upon alternative energy sources for power.
Turning to the real economy, we have started to experience a number of economically important labor strikes. Fortunately, the Boeing strike was settled quickly, but significant protests and walkouts have occurred at Amazon and Starbucks. With wage increases lagging growth and inflation, it is logical that workers are starting to increase bargaining activities and to resort to strikes to grow their wages. We don’t know if more strikes are on the horizon or not. Also, the incoming administration seeks to restrict the flow of immigrant workers into the country, especially those who enter the country illegally. The immigration issue has already led to a schism among the new administration’s policy elite, some of whom favor increasing the flow of high-skilled workers into the country while others favor total bans or significant reductions.
Another source of uncertainty is the very real possibility that the economy may soon face another pandemic. H5N1 bird flu is spreading among domestic poultry flocks, and it has also infected 915 herds of dairy cows in some 16 states as of January 3. California, with 699 herds infected, has already declared a state of emergency because of the outbreak of this flu. In addition, a new virus is filling hospitals in China, which gave us COVID. We know from recent experience how devastating the economic impact of a pandemic can be and what it means for growth, employment, and inflation.
We are also well aware of the increase in flooding caused by hurricanes and tornadoes that have decimated large parts of the country that had not experienced such climate-related incidents in the past. Most of the people in those areas, like Western North Carolina, don’t have flood insurance, the cost of which is sharply increasing across the nation. This is but another example of how unlikely events can have significant economic consequences.
Complicating the policy process are numerous global political issues whose outcomes are uncertain. The incoming administration appears to be poking at our allies, with talks of withdrawal from international agreements involving bodies such as the World Health Organization (WHO), along with ideas of annexing Canada, purchasing Greenland, reclaiming the Panama Canal, and cutting back on US support to Ukraine. Then there is the turmoil in the Pacific, as both China and North Korea seem to be trying to expand influence in that sphere, with the threat of possible military action, in an attempt to see how far the US can be pushed. The Middle East is in turmoil with the war in Gaza and what appears to be the threat of escalation into other countries as Israel seeks to dismantle the terrorist groups that have been attacking it for decades. And finally, there is the collapse of the Syrian regime and what it means for the stability of the entire area.
We don’t know what these uncertain events may mean for trade, for energy costs, for the prospects of war, or what they may mean for Fed policy. In economics and policy-making, risk and uncertainty mean two different things. When one speaks of risk, it is assumed that the probabilities of possible outcomes are known; hence a known range of outcomes can be incorporated into forecasts. Uncertainty, however, applies to outcomes where there is no idea of the probabilities that they may occur even if the possible outcomes have been correctly identified. Uncertainty accurately characterizes the situation the Fed now finds itself in when it comes to attempting to formulate appropriate policies to achieve its goals of full employment and price stability. In this situation, when the Fed doesn’t know the range of outcomes, the best thing it can do, as it has tried to articulate in its policy statements, is wait to see events unfold before it tries to determine whether its policies are on track or need to be changed. Given the lag between when a policy is changed and when it has an impact, the Fed’s job is indeed difficult; and going into 2025, the only option is to wait and see what happens and then react.
Equity Markets – Matt McAleer, President & Director of Private Wealth
The encouraging inflation news coupled with growing earnings estimates should provide a stable environment for equities into 1H2025. After extreme performance dispersion between cap sizes during Q2 2024, the rally has broadened to include mid-caps. Likewise, value has had a mild bounce vs. growth on the back of strong Financials. We are currently in a blend of growth and value ETFs along with individual equities and are comfortable with that allocation. While diversification has been a drag on recent performance, cycles ebb and flow, and markets tend to reward strategies that remain flexible over longer time horizons. Currently, we are interested in adding to our growth sleeve into pullbacks, as we have done throughout the past 12 months.
From a domestic sector and industry standpoint, the portfolios remain overweight Industrials (XLI, AIRR, XAR), with recently increased tech exposure through both broad (QQQ, SPYG, VUG) and focused securities (SKYY). It is always a risk to forecast continued strong sector growth, but the relative strength exhibited by these indices and sectors keeps us long.
International equity markets sputtered back and forth throughout 2024 and have recently begun to trade with more strength. We are allocated 65%/35% developed vs. emerging and will continue to watch the $USD for clues on allocations. We are trying to overcome the persistent international technology index underweight by leveraging capital to ETFs with large tech representation. The primary exposure to this strategy is through Taiwan (EWT), Netherlands (EWN) and So. Korea (EWY). We are encouraged by the Q4 addition of Argentina (ARGT) to the portfolio and hope the broader Latin American market will view the positive market reaction to political reform favorably.Total Return Gov/Credit – Dan Himelberger, Portfolio Manager & Fixed-Income Analyst
Treasury Movements
In 2024, the Treasury market witnessed significant volatility as investors sought to understand the implications of the election cycle and the influence of economic data on Federal Reserve policy. The yield on the 10-year Treasury reached a high of 4.075% on April 25, 2024, before declining to 3.619% on September 16, 2024, ultimately finishing the year at 4.664%. This volatility resulted in increased yields and a steeper curve compared to the beginning of the year. Specifically, the 10-year and 30-year Treasuries concluded the year with increases of 69.2 basis points and 75.4 basis points, respectively. A detailed account of the Treasury yield curve movements for the year is provided below.
Source: Bloomberg
Spread Movements
Investment-grade corporate and taxable municipal bond spreads experienced continued tightening throughout the year, reaching multi-year lows for both categories. The spread on the Bloomberg US Corporate Bond Index decreased by 21 basis points, concluding the year at +78. Similarly, the spread on the Bloomberg Taxable Muni US AGG Index fell by 18 basis points, finishing the year at +74. As highlighted in our earlier reports, we believe that the potential for further gains in these spread products has largely been realized. Consequently, we started to reduce our overweight position in these securities while increasing our allocation to Treasuries over the course of the year. We anticipate that these spreads will eventually widen from their current low levels, creating an opportunity to reinvest in these spread securities later in the year.
Outlook
Going into 2025, we will diligently observe economic indicators, placing particular emphasis on inflation and the policies of the forthcoming Trump administration. Our current forecast suggests that the 10-year Treasury will fluctuate within a range of 4.25% to 4.75%, with a potential risk of reaching 5.00%. The broad range reflects the uncertainty surrounding future policies and the heightened volatility that the market has been experiencing. Our objective will be to sustain elevated liquidity levels, which will afford us greater flexibility in making strategic adjustments moving forward. While we will adopt a conservative stance on credit, we will also remain vigilant in identifying and seizing attractive investment opportunities as they arise.
Municipal Credit Outlook – Patricia Healy, Senior Vice President of Research & Portfolio Manager
We expect the credit quality of municipal bonds to be stable as we head into 2025. The economy continues to perform well, and we now have a more normal yield curve. The Fed paused its easing of rate cuts so as not to overheat the economy. And, to some extent people, businesses and municipalities are accustomed to higher rates.
Our stable outlook is based on the high level of reserves at most municipalities, continued good budget management practices and improving pension funding levels. Stresses, such as higher wages and costs, difficulty hiring, budgeting without pandemic aid and increasing debt levels may challenge some municipalities.
The surge in muni bond issuance that we saw in the fourth quarter is expected to continue in 2025. Additional debt means leverage will increase and some operating and coverage ratios will decline. However, reinvestment in infrastructure is important to maintain the services, livability and resiliency of communities.
The LA fires, which affected and are still affecting a densely populated area, brought to the forefront the need for more resiliency in urban areas. S&P noted the need for increased insurance coverage and reserves in its multi-notch downgrade of the Los Angeles Department of Water and Power, based on the fact that it could be held liable for the fires and how utilities were managed ahead of and during the fires. Fitch put LADWP on ratings watch negative and Moody’s assigned a negative outlook. Municipalities’ preparedness for increasing climate event risks will be more of a focus going forward – which may lead to downgrades as the emphasis of the analysis changes. Increasing insurance coverage and reserves could also lead to more bonding.
In addition to the LA fires, devastating hurricanes and storms in densely populated areas with lots of intensely developed real estate, as well as in smaller, less developed areas such as Western North Carolina, will result in more bonding, too, to address recovery and rebuilding. Although disaster aid helps with rebuilding, the initial outlay of funds is borne by the municipality. Increased bond issuance is also expected for compliance with stricter water quality regulations.
The specter of taxation on municipal bonds, which has been put on a list for examination, has also led to the rush to market. We think the risk of taxation is low, as it is a relatively small revenue generator and a bipartisan issue. The status quo keeps municipal debt funding costs low and local taxes and fees lower than if muni interest income were taxable.
The new administration’s executive orders and efficiency recommendations by DOGE may also have an effect on municipal bond issuance. The timing and effect of the many potential changes could increase or decrease costs and debt issuance decisions.
There are some pockets of weakness.
Healthcare and higher education continue to be under pressure, given the demographics of an aging population and wage pressures.
Water and sewer’s accelerated capital spending to address aging infrastructure, asset hardening, investing in new sources of supply, and complying with increasingly stringent regulations could further pressure margins
Public K-12 is experiencing declining enrollment because of demographics and increased competition from charter schools as well as rising costs of wages and benefits, changing state funding, and the runoff of federal pandemic aid.
Former CIO Thoughts – David Kotok, Strategic Advisor
We enter 2025 with huge unknowns in the healthcare sector. Note that this sector represents about 18% of US GDP. It employs millions of people at all levels, from janitors to nurses to neurosurgeons. The sector provides worldwide applications in healthcare, impacting billions of people in various jurisdictions across our interconnected and interdependent planet. And now the US healthcare sector faces possible disruption and a possible isolationist reorganization in ways yet to be fully mapped. Substantial change in any system will always have ripple effects worth understanding and anticipating insofar as we can foresee them. I’m hopeful that the incoming president will be the deciding person and will listen to various viewpoints when he makes these important decisions regarding the healthcare sector.
Below is a list of relevant readings to consider. There is a brief characterization of the unknowns and a reader’s link or two. In my opinion, the changes are likely to inject unpredictability to outcomes in all aspects of healthcare. I have no clue as to precisely where this all leads, but we do have history to guide us. My new book, The Fed and The Flu: Parsing Pandemic Economic Shocks (https://www.thefedandtheflu.com/) has examined changes in governance and healthcare from ancient times to now, five years since the Covid pandemic erupted. That history provides perspective on what may be coming and how to prepare for it.
Here's a partial list. It is a starting point only.
- A US withdrawal from the 194-member World Health Organization would have implications for global disease surveillance and response, since the US is the largest source of the organization’s funding by far, at 16% of the total. Would China, as the second-largest contributor, then step forward to fill the leadership void left by the US? Please remember that the transition team doesn’t decide; the chief executive decides. In my lifetime I have served on two governmental transition teams. That experience taught me that there is a huge difference between what transition teams say and what the executive eventually does, having assumed power.
“Donald Trump’s transition team seeks to pull US out of WHO ‘on day one,’” https://www.ft.com/content/e6061ed5-2703-4b8a-9948-a557aaaf52c2
- Federal and state policies reflecting vaccine skepticism will result in changing vaccination rates. Exactly how will policies change? That is an unknown. The impact of falling vaccination rates on the burden of infectious disease on the population is predictable. So is the impact on a still-strained healthcare system.
“Watch how the measles outbreak spreads when kids get vaccinated — and when they don't,” https://www.theguardian.com/society/ng-interactive/2015/feb/05/-sp-watch-how-measles-outbreak-spreads-when-kids-get-vaccinated
“Polio Vaccination Rates in Some Areas of the US Hover Dangerously Close to the Threshold Required for Herd Immunity – Here’s Why that Matters,” https://today.uconn.edu/2022/09/polio-vaccination-rates-in-some-areas-of-the-us-hover-dangerously-close-to-the-threshold-required-for-herd-immunity-heres-why-that-matters-2/
- Medicaid and Medicare policy changes stand to alter access to care, the financial burdens Americans must shoulder for medical care or go without, US life expectancies, the productivity of the population, and costs of care for the uninsured who also lack means to pay. We cannot know today how this will play out.
“How Trump’s win could change your health care,” https://www.cnbc.com/2024/11/18/how-trumps-win-could-change-your-health-care.html
“Sources of Payment for Uncompensated Care for the Uninsured,” https://www.kff.org/uninsured/issue-brief/sources-of-payment-for-uncompensated-care-for-the-uninsured/
- The specifics of a new administration’s policy regarding immigrants and how those policies play out have significant implications for the healthcare system. Immigrants make up 18% of a short-handed US healthcare workforce. Their immigration status varies. (Some are naturalized citizens.) A change in policy regarding H-1B visas is currently being vigorously debated. Change could impact foreign-born doctors, nurses, pharmacists, dentists, and other healthcare professionals and the patients they serve. It could also exert upward wage pressures in healthcare. Likewise, a more inviting policy could add to the healthcare professional services labor cohort.
“Immigrant Health-Care Workers in the United States,” https://www.migrationpolicy.org/article/immigrant-health-care-workers-united-states-2021
“Undocumented Immigrants in Health Care Roles and Settings” (as of 2021), https://www.americanprogress.org/wp-content/uploads/sites/2/2021/02/EW-Health-factsheet.pdf
At the beginning or 2025, we have more questions than answers when it comes to the largest economic sector in the US. Financial markets will be responsive to the changes, IMO.
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