Tariff negotiations, Fed policy decisions, geopolitical turmoil, and a lengthy government shutdown were just a few of the defining themes of 2025. In November, Regions Private Wealth Management and Commercial Banking leaders in South Florida gathered with clients, community, and other key stakeholders to look at the impact of market and economic events while turning an eye to the year ahead.
The panel of speakers included Richard Moody, Regions Chief Economist, Alan McKnight, Regions Chief Investment Officer and Jason Isbell, senior vice president of State Government Affairs and Economic Development at Regions.
Economics: The Labor Story Continues
One of the bigger economic stories that has been ongoing since the Pandemic is the volatility of the labor market. Moody pointed out that while it is clear that there has been a marked slowdown in the pace of job growth over the past several months, what is less clear is why that has been the case.
According to Moody, the slowing pace of job growth has been primarily a labor supply issue as opposed to a labor demand issue.
“We think it is very much a labor supply story,” said Moody. “Since the start of the year, the size of the foreign-born labor force has declined by more than a million persons, and you can’t make up for that overnight.”
“There are some things weighing on labor demand, such as uncertainty about the growth outlook and also corporations looking to maximize operating efficiency,” said Moody. At the same time, however current immigration policies and actions across the country are also weighing on the labor market by acting as a meaningful drag on growth in labor supply. That, in turn, is contributing to the slower pace of job growth.
Economics: Inflation, Trade Policy and Tariffs
The U.S. inflation rate was 3% for the 12 months ending in September 2025, as measured by the Consumer Price Index (CPI), up from 2.9% in August.
“With tariffs and trade policy volatility in 2025, we’ve yet to see a significant impact on price pass through to consumers,” said Moody. “We had always taken the view that tariff pass through would be more of a slow build than a sudden storm.”
Moody noted that once the holiday shopping season concludes and we enter the new year, companies may get more aggressive in passing tariffs costs onto consumers.
Economics: The Road Ahead
Taking everything into consideration in the current economic environment Moody believes that real GDP growth will be about 2% this year.
“We would not at all be at all surprised to see growth start to pick up early next year,” said Moody. “The tax bill that passed this summer is already freeing up cash for corporations and in the first quarter of next year, there’s going to be a substantial boost to consumers’ after-tax income thanks to lower withholding rates taking effect January 1st and also bigger rebounds from retroactive changes in the tax code this year.”
Moody believes that on an annualized basis there will be a boost of over $150 billion to after-tax income in the first quarter of 2026. “Combine that with already healthy household balance sheets and what is a high degree of liquidity in the corporate sector. If we get some stability on trade policy along with what is a more friendly regulatory environment, it won’t surprise us at all to see the pace of economic growth picking up next year.”
Markets: Outlook Remains Optimistic
Turning the conversation over to McKnight, a regular contributor on the markets in national media, he shared an optimistic look at the year ahead as he reflected on the 2025 landscape.
“We have remained constructive on the U.S. economy which was not an easy position to take at the beginning of 2025,” said McKnight. “When you consider that we had the S&P 500 up in 2023 and 2024, and now on the back of that in 2025. Across the landscape of the economy, things are still relatively good. There was a lot of gnashing of teeth over the challenges of Liberation Day and the government shutdown. But through it all, things have gone relatively well.”
The only thing we would like to see in 2026 is that smaller and mid-cap companies get a bit more of a tailwind. Alan McKnight, Regions Chief Investment Officer
From a market perspective, McKnight sees consumer spending continuing which bodes well for businesses in 2026.
McKnight noted that as long as we see consumer spending and margins hold up, we think the US markets and international markets can do well.
“The only thing we would like to see in 2026 is that smaller and mid-cap companies get a bit more of a tailwind. The big companies that everyone hears about, i.e. the Magnificent 7, have been on a tear over the last couple of years,” said McKnight. “We’d like to see smaller companies do well and receive a little bit more of that benefit as well. We think it will happen, but we haven’t seen it as of yet.”
While we don’t have a crystal ball that can tell us what the future holds, there is cautious optimism going into 2026. Regions will continue to host Economic Summits in markets across the Bank’s footprint with a continued finger on the pulse of what is impacting investors, business owners and leaders, and consumers alike.
More Investor Resources and Commentary
Access the most recent Regions Weekly Market Update call for Regions Wealth Management. You can find additional economic commentary and resources on Regions.com.
The next Weekly Market Update will be presented live on Friday, Dec. 12 at 11 a.m. CT / 12 p.m. ET as part of an ongoing weekly series hosted by Regions to share the latest insights on the markets. Participants may send questions in advance of the call to [email protected] so the panelists can address these questions during the live call. Participants are encouraged to dial in or join via WebEx 10-15 minutes in advance of the start time.
In addition, McKnight regularly speaks with national media to share his views on market activity, the economic impact and Regions’ outlook moving forward. Upcoming interviews include:
- Dec. 10: Fox Business – The Claman Countdown – 3 p.m. ET/2 p.m. CT
- Dec. 16: CNBC – Worldwide Exchange – 5 a.m. ET/4 a.m. CT
- Dec. 22: Sirius XM’s The Business Briefing – Channel 132 – 9:45a.m. ET/8:45 a.m. CT
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