Chips Ahoy!
It is still incredible to think that many of us work through May or June to pay our taxes. Even so, there were times in U.S. history where we paid much more. During the administration of President Dwight D. Eisenhower, from 1953 to 1961, the top income tax bracket in the United States climbed to a marginal rate of 91%! What is also incredible about our tax system is that it often takes more brain power to figure out our taxes than to make the money upon which we pay the taxes.
The fires in California are bringing some important points to the fore. Consumers often bought homes in precarious areas and, in many cases, took their personal safety for granted. Having lost my childhood home to a fire, I have always been particularly sensitive to the risks of fire and have found that most people are not. Please make sure you have done a serious risk assessment of your home. “An ounce of prevention is worth a pound of cure.”
There is hardly a person who is not aware of the advent of Artificial Intelligence (AI). The advances in technology, AI and computer chips are astounding. The speed at which change is occurring is both invigorating and frightening. It is especially important that each of us embrace the recent technologies so that no matter our age we learn how technology can help us.
Global strife is at a very heightened level. The US dollar has been incredibly strong. US businesses have outperformed those of China and the European Union. Europe has struggled with heightened regulation. China has struggled with a weak consumer and an aging population which has led to poor growth.
Russia, feared as a military power, is more significant as a geopolitical force then an economic one. Indeed, Russia’s GDP in 2024 was $2 trillion. US GDP was approximately $29 trillion. Russia’s economy is expected to grow slowly in 2025 and, if oil prices decline, it will hurt Russia financially and potentially hurt its ability to fund the Ukraine war.
As we know, markets can fluctuate, but the US stock market has been experiencing significant growth. Recent policies have contributed to higher market valuations, which may lead to larger declines when disappointments occur. Nonetheless, the cash flow from major technology companies is currently at unprecedented levels.
In these unpredictable times, staying informed and flexible is crucial. Success involves understanding global economics, technology, and environmental issues. We must adapt to changing markets, AI, and responsible governance. Grasping consumer desires and handling geopolitical uncertainties will require intelligence and creativity for a sustainable future.
Additionally, the AI revolution may produce unprecedented advances in science giving the planet the tools to improve living conditions across the globe in ways we could have never imagined. All this promise is exciting, but as in every situation, the outcome depends on the execution. Can government and industry work together to deliver results?
Younger people are spending money at a very fast clip. Generation Z, those Americans born during 1997 through 2012, account for approximately 5% of spending in the US. This is expected to grow to 17% by 2030. At this point Gen Z’s spending will exceed the spending of the baby boomers, whose birth dates were from 1946 to 1964.
There is no shortage of problems in this world. Solving them takes deep insights and thought. In fact, Albert Einstein, my favorite hero, said “If I had one hour to solve a problem, I’d spend 55 minutes thinking about the problem and 5 minutes thinking of the solutions.”
I think Einstein was right.
Let us all be more thoughtful in 2025.
As always,
Seymour W. Zises
