Saving money is one of the most common New Year's resolutions, but how you save can depend on the state of the economy. Denver7 talked to financial advisor Bruce Allen, president of Bruce G. Allen Investments LLC, about what you should look out for in 2025.
Allen said, we're staring 2025 off on a good note because the economy was strong at the end of 2024. Inflation is down and the Federal Reserve has been lowering interest rates. Allen added, unemployment is down and incomes are rising. In Colorado, personal income is up 3.3% according to the Bureau of Economic Analysis. Because of those two factors, Allen said people are spending more.
"All of the spending that the American public does accounts for a little over two thirds of the US economy." Allen said. "And that's why we saw significant growth in the economy this year."
But a new year brings some uncertainty. Allen said, a tighter labor market could hurt the economy. On top of that, President-Elect Donald Trump has proposed significant tariffs on China, Mexico and Canada.
"If tariffs are not enacted carefully and methodically. It might end up meaning that consumers might bear the brunt of higher prices," Allen said. "For example, you might go to an auto dealership, and you might pay more for a car, for example. And that's not a surety, but it's a possibility."
Allen said there are a few things you can look out for that will signal the economy is doing well.
"Lower interest rates, the possibility of lower taxes and the possibility of more deregulation might be might very well help the stock market significantly, especially some of the smaller companies," Allen said.
No matter what happens with the economy in the coming year, Allen said he always recommends talking with a financial advisor or tax professional to make sure your money is protected.