2025 First Quarter Review and Outlook
April 16, 2025
Dear Clients,
In our numerous meetings and conversations with clients this year, we have heard repeated concerns about the Trump Administration’s handling of the economy, disruptive policy actions, attacks on American norms and institutions, and harm to people and communities.
For investors, the past weeks have been one of the most confounding periods in memory. President Trump’s unveiling of disproportionately punitive tariffs on over 60 of the nation’s trading partners precipitated gyrations in financial markets reminiscent of the early days of the Covid pandemic.[1] The consensus forecast for moderating US growth and declining inflation and interest rates was tossed out overnight, and a generally benign economic outlook gave way to warnings of plunging growth and higher inflation caused by a self-inflicted policy blunder of epic proportions.[2]
Even with the Administration’s abrupt reversal last week, the outlook for the global economy remains fluid. Trade negotiations over the coming months will offer more clarity, though an erosion of confidence in US leadership will almost certainly have unintended consequences.
Looking ahead
It seems probable that some level of tariffs is here to stay, even assuming successful negotiations with our trading partners. Tariffs are a direct tax that is likely to impact consumer spending–the primary engine of the US economy.[3] Additionally, counter-tariffs from other countries will make US exports less competitive, affecting a wide range of industries. Companies are struggling to make plans in the face of uncertainty and are delaying new hiring and investment. Even if trade agreements are reached, it’s likely that the US economy will slow more than forecast, increasing the risk of recession.
By raising prices on a host of consumer goods, the imposition of tariffs could also put an end to the steady drop in inflation from over 9% to under 3% over the past two years.[4] Higher prices also hamper the Federal Reserve’s ability to cut interest rates, for fear of fueling inflation. Fed chairman Jerome Powell has made clear that further drops in the Federal Funds Rate are on hold for now.
To offset these negative effects, the Republican-controlled Congress is likely to enact broader tax cuts than anticipated. These cuts, which will lower government revenues at a time of ballooning deficits, would in theory be balanced by spending cuts and the collection of billions of dollars in import duties.[5]
A new equilibrium
The 2024 election removed any doubt that we are in a period of political, economic, and social change, expressed almost daily by the breakneck decisions of the Trump Administration. Rising income inequality, culture wars, and failing confidence in institutions, have stoked pressure along fault lines waiting to erupt. The discord in the US has analogs in many other countries, reflecting broader anxieties about globalization, immigration, climate change, and innovations in technology.[6]
Our experience suggests that, as in previous tectonic shifts, it will take time for a new equilibrium to emerge. But as in past times of change, economies will adapt.
What’s an investor to do?
Though the word “unprecedented” is ubiquitous in media assessments of Trump’s executive actions, this is not the first time we have faced unfamiliar dangers. The bursting of the dot-com bubble and 9/11 terrorist attacks in 2001, the mortgage crisis of 2008, and the pandemic of 2020, all presented investors with challenges unlike any seen in generations. While we don’t pretend to have a crystal ball, we have learned a few things from weathering those past convulsions.
The first is that crises are inevitably followed by resolution, and market crashes are followed by recovery.[7] The second is that making dramatic changes to one’s investments to get ahead of a panic usually leads to underperformance. Even if you are lucky enough to exit the market at an opportune moment, knowing when to re-enter is dicey.[8] The third is that well balanced portfolios have enabled investors to safely survive such storms.[9] Finally, market downturns offer opportunities, especially for investors with diversified holdings and the ability to rebalance, to profit from lower prices.
We’ve also learned that when everything around us seems out of control, it’s more important than ever to fortify our own perspective and resolve. We each have our ways, whether it’s going for a walk, spending time in community, or taking a moment to breathe and reflect. Doing so can help us avoid impulsive investment decisions we may later regret.
There are also simple but fundamental things we can control under almost any circumstances. Choosing to temporarily reduce discretionary spending or delay major purchases can help buttress finances during times of turbulence. Revisiting the asset allocation of your portfolio to make sure it reflects your current needs is a worthwhile exercise in which your LongView team can help. The relatively high yields currently offered in the bond market make conservative investments more compelling than they have been in years.
When things feel most uncertain, we are forced to rely more than ever on discipline and patience. The long-term investment principles outlined here have served investors through innumerable market downturns, recessions, wars, and geopolitical reconfigurations over the past 85 years. We are also aware that some situations truly are exceptional and demand an adaptive approach. We’re watching closely and are available to discuss your concerns. Please don’t hesitate to call Ernestina Savage to schedule an appointment if you would like to meet with us.
To end on an upbeat note, we are very excited to welcome Jasmine Thompson to the LongView team as an assistant advisor. Jasmine graduated from Penn State University with a degree in personal finance. She’s a Navy veteran, a retirement planning counsellor, and for many years volunteered as a court appointed advocate for abused children. We look forward to introducing you to her.
With thanks for your trust as always,
The LongView Team
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Photo by Raychel Sanner on Unsplash.
[1] https://finance.yahoo.com/news/markets-react-trumps-liberation-day-005850233.html
[2] https://www.reuters.com/markets/jpmorgan-lifts-global-recession-odds-60-us-tariffs-stoke-fears-2025-04-04/
[3] https://www.epi.org/publication/tariffs-everything-you-need-to-know-but-were-afraid-to-ask/
[4] https://usafacts.org/articles/why-might-prices-feel-high-if-inflation-is-slowing/
[5] https://taxfoundation.org/blog/trump-tariffs-tax-cuts/
[6] https://journals.sagepub.com/doi/full/10.1177/02685809241297547
[7] https://meetings.capitalgroup.com/advisor/insights/articles/guide-market-recoveries.html
[8] https://advisor.visualcapitalist.com/cost-of-trying-to-time-the-market/
[9] https://awealthofcommonsense.com/2025/05/60-40-portfolio-corrections-bear-markets-and-recoveries/