In 2025, business owners can look forward to a decline in both interest rates and
inflation—two bugbears that have drained profits in recent times.
Reports from the field confirm the economists’ optimistic view. “Our members are looking forward to a growth year in 2025, largely from expectations that interest rates will decline,” said Tom Palisin, Executive Director of Te Manufacturers' Association, a York, PA,-based consortium with nearly 500 member companies (
mascpa.org). Te change in fortunes can’t come soon enough, he added. “High interest rates have been putting constraints on many of our members who have been trying to maintain their financial margins, so relief in this area will be helpful.”
Healthy Employment
Te economy does better when people are optimistic, since consumer spending accounts for a large portion of the nation’s business activity. While consumers remain troubled by the residual effects of inflation in the form of high prices for gas and groceries, they remain in a fairly good mood. “We look for consumer confidence to move slightly higher in 2025,” said Scott Hoyt, Senior Director of Consumer Economics for Moody’s Analytics (
economy.com).
Why the optimism? Healthy employment levels. “We look for the unemployment rate to end 2025 at 4.2 percent and 2026 at 4.2 percent,” said Yaros. Tis is roughly in line with the 4.1 percent reported toward the end of 2024. (Many economists peg an unemployment rate of 3.5 percent to 4.5 percent as the “sweet spot” that balances the dual risks of inflationary wage escalation and economic recession.)
If favorable unemployment figures will encourage consumer spending, employers should also enjoy relief from the deleterious effects of the past year’s tight labor conditions. Indeed, a slowdown in the rate of hiring has already helped loosen the employment market. “Labor shortages are a thing of the past in most regions,” said Bill Conerly, Principal of his own consulting firm in Lake Oswego, Oregon (
conerlyconsulting.com). “When companies want to hire, they're able to find the people they want, unless they're looking for something really unusual or if they're not willing to pay the required salary.” Editor’s note: Or, in the case of natural grass sod producers, the work will require some physical effort in an outdoor environment.
TPI Turf News January/February 2025 57
And speaking of salary: Softening employment growth has given workers less bargaining power, so employers are experiencing some much-needed relief from the rising trendline of worker wages. Entry-level hourly wage increases came to 3.7 percent in 2024 at Palisin’s member companies, markedly lower than the vigorous 8 percent to 10 percent levels clocked for each of the previous two years. (Historically, such increases have tended to settle in the 2.5 percent to 3.0 percent range).
National figures concur. “Te Employment Cost Index (ECI) is slowing,” said Hoyt, referring to a common measure of average worker wages. “We are forecasting 2.8 percent growth in 2025, compared to 3.9 percent in 2024 and 4.5 percent in 2023.”
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