What businesses can expect from the economy in 2025

So, news story out today, uh, they did a survey of CEOs after the election. The survey says that CEOs big and small are ready to bet big on the economy in 2025. In other words, they're very optimistic. And the numbers were that, uh, 51% of those CEOs, uh, thought that the economy would be significantly better for their business in 2025. And then also interesting, uh, 80% of those CEOs thought that there would be more M&A activity, so more buying and selling of businesses, and that would uptick in 2025, which is pretty darn good if you're a seller. So if you're mindful of the American sentiment and American business sentiment, is that in— we've gone from late 2024 where by and large people were paralyzed with fear waiting for the election to finish up and figure out who was going to be our next president, who was going to control all the legislatures, to totally ready to rock and roll going into 2025. So the obvious question, if you're a business owner or an employee at a business, is are are they right? And should we be putting our foot on the gas? Or are we just headed to destruction together by getting overly optimistic about stuff that's not going to happen? And look, here's the deal. Like, economists are people who go through school loving to play with numbers and spreadsheets, right? And so they try to explain what's happening in the economy by numbers, by things that are happening in the data, and they want to predict all that kind of stuff. But kind of the problem that it forgets is people are fundamentally irrational creatures. We do all all kinds of crazy stuff. We have all kinds of weird biases in how we think about things. We have all kinds of mistakes that we make. And heck, like, a lot of times our hormones are just out there driving us to start wars or try to find the next prettiest mate that we can. And, uh, you know what? Economies are made up of people, and we are irrational herd animals that do crazy stuff because our DNA kind of pushes us to do them. And a lot of times the psychologists will call these things we do cognitive biases or cognitive fallacies. Which is basically the idea that there are common ways that all of our brains are kind of broken and people tend to follow those things repeatedly because we're all broken that way. And if you think about it, if an entire population of people has the same kind of broken thinking, well, sometimes that can lead to an economy where things fundamentally are just, well, broken because it's run by a broken herd of people all making the same mistake. And one of my favorite mistakes is the wisdom of crowds, right? You see people using systems to try to take advantage of, well, okay, if a lot of people believe a thing, oftentimes that thing tends to be very true. But there's another cognitive bias where we all tend to have it, which is socially, a lot of us love to follow leaders, right? It's why most people are employees and not CEOs, right? Because being a leader is not for everybody. Trust me, it's a lot of work. But anyway, let's say your leader has the bad idea and leads everybody down a primrose path and And that could all end up very bad, especially if that leader leads the entire group of animals or humans off the side of a cliff. And it could go very wrong. You just gotta ask the lemmings. So one thing I forgot to mention about this study that came out is they mostly interviewed big company CEOs, not little company CEOs. And one of the important things to remember about the economy is the majority of jobs don't actually come from big companies. They actually come from small companies. And small companies are folks like you and me who employ 25, 30, 50, 100 people. And if you want to look at which way the economy is going to go, to some extent, it's important to look at what those people think. What do the CEOs of small businesses think? Well, if you look at the studies of small company sentiment right now, so what do small company CEOs think? It turns out they're even more bullish than the big company CEOs. It's kind of crazy when you think about it, right? And you ask yourself, well, what are the reasons why small company CEOs are so bullish? Well, number one, a lot of them are very bullish about the future of the Trump changes that are coming in, things around the tariffs and whatnot. Potentially, those have a big ability to benefit small businesses, or at least to tell small business CEOs that they will benefit them. And here's an interesting data point: 80% of recently surveyed small business CEOs thought that the Trump tariffs would help their business, while only 25% of the big company CEOs felt the same. And I know you're like, oh, well, the situation is these small company CEOs are just idiots. That's got to be it, right? That's why their company is small. But the reality is that tariffs tend to help small businesses a lot. And it's very easy for a small business person to see why in the short term a president coming in and knocking out a lot of their competition is really going to help them. And imagine a situation, for example, you have a small business and you have a lot of inventory and you import that inventory from overseas and Trump comes in and puts 100% import duty, in other words, a tax on all of those products coming in from here on out. Well, suddenly what happens in the short term? Well, your inventory, if a competitor wants to buy exactly that stuff and compete with you, your inventory is suddenly worth a lot more money than it was before the tariffs. And that's just instant profit for you in the short term as a small business owner. But here's the trick. Big company CEOs, they tend to have a bigger version and a view of stuff, right? Their companies are exposed to more of the broader economy. I mean, imagine you run a 10 or 15,000-person company, you might be thinking about how are you going to hire 1,000 people next year. If things happen to the broader economy, that tends to affect your entire business, and it could be a make or break for you in terms of being profitable or unprofitable. And let's be real, like a lot of small company CEOs, they don't have any business training and they didn't sure as shit take a microeconomics course. So the difference between big company CEOs with MBAs understanding how the economy truly works versus the small company CEOs, well, there tends to be a delta there. And what big company CEOs know about tariff policies and stuff like that is that you're in a situation where they could be helpful to individual businesses and individual industries, but in general, they're not good for broader economies, right? It makes your economy less efficient, and less efficient economies over time tend to, well, underperform. And so, you know, the whole phrase of a rising tide raises all boats, well, Tariffs tend to do things to help the tide go out, and then that lowers all boats over time. So while tariffs and stuff like that can and will help businesses in the short term, and to some extent part of that is also that small business CEOs don't understand kind of how it all works, and it makes them optimistic that things— good times are coming with a change in the administration. But in the end, let's be real. The country is currently run by people in their late 70s. Who are straight-up baby boomers, and we're about to elect— we're about to bring on the oldest president, I think, in history, if my math is still correct. And the baby boomers, by and large, are not the generation that has been thinking ahead over the time of history. And to some extent, when your country is run by old folks who are of a certain generation, well, you shouldn't be surprised when they just start to think in the short term. And the good news is for you, me, small business owners, and people working at businesses. Short-term thinking can provide short-term economic benefit, get everybody hyped up about what's going on, and then we can benefit a lot in 2025. So right now I think it'll be a good year, and the only reason is because it seems like everybody else thinks it'll be a good year. Oh, and if you like these videos, I'm having fun with them, subscribe to my newsletter, link in bio. See you, bye.