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As 2025 draws near, businesses are ready for change. And while big businesses and the stock market are upbeat about what is to come next year, small and midmarket companies aren’t quite as sanguine.
While the overall economic picture is starting to look better, stubborn inflation and the prospect of new tariffs when President-elect Donald Trump takes office seem to give mid-market leaders pause. A new report from financial consulting firm Moss Adams shows that 96% of mid-market business leaders are preparing for a recession. Of those preparing for a recession, 64% believe one is imminent. And as inflation increased to 2.7% last month, 28% of mid-market business leaders said inflation is their biggest challenge in the next year. Interest rates—widely expected to be cut again when the Federal Reserve’s Open Market Committee meets this week—are the top concern for 24% of mid-market businesses, while a quarter is worried about tax and regulatory changes.
A survey of business owners from wealth management and banking firm Northern Trust showed less confidence in the economy going forward. Only 8% have an optimistic economic outlook. More than half said their feelings stem from the current political environment. Potential changes to tax policy worry 42%, while a third are wary of the impact of ongoing global conflicts.
One thing that is clear: 2025 will bring many changes for businesses. And despite their lack of confidence in the economy, businesses are ready for it. The Moss Adams report found that 93% of businesses are confident in their company’s ability to weather whatever is to come. The last five years of a pandemic, inflation, supply chain turmoil and widespread conflicts impacting key global suppliers and trade routes have been valuable exercises in training and preparation for whatever comes next.
Germany-based Siemens is one of the world’s largest conglomerates in industrial automation, electrification and transportation. In the U.S., the company has been working toward new solutions across industries. I talked to Siemens USA CEO Barbara Humpton about what to expect from the company in 2025. An excerpt from our conversation is later in this newsletter.
Forbes CEO will be taking time off for the holiday season. This will be our last newsletter of 2024. We’ll be back in your inbox on Monday, January 6. Happy holidays!
ECONOMIC INDICATORS
In the run-up to the last Federal Reserve Open Market Committee meeting of the year on Tuesday and Wednesday, indicators have been mixed. Inflation remains sticky, with last month’s consumer prices 2.7% above where they were in November 2023, according to data from the Bureau of Labor Statistics last month. Core inflation—excluding food and energy costs—was 3.3% higher than a year ago. The CPI met analysts’ expectations, though it’s a tenth of a percentage point higher than October’s 2.6% inflation rate—but both are above the 2% Federal Reserve target.
These figures show a high likelihood that the Fed will cut its target interest rate this week for the third straight time since September. According to CME FedWatch, 97% of economists predict a quarter percentage point cut, down to 4.25%. While the rate cut trend has continued, Forbes senior contributor Simon Moore writes that in 2025, the trend may slow down, especially if inflation doesn’t start coming down more. Inflation is only one piece of the puzzle—job growth and the overall economy are also taken into account—but persistent inflation was what held interest rates at the two-decade high of 5.25% for more than a year.
The stock market had a big week as well, with the Nasdaq composite exceeding 20,000 for the first time ever on Wednesday. The inflation report, as well as big tech stocks and AI confidence, buoyed the market rally. As the week went on, the markets fell back from their record highs to near-breakeven territory, but the Nasdaq Composite is still up nearly 35% in 2024.
BIG MOVES
The $25 billion merger of grocery giants Kroger and Albertsons will not happen. Last week, a federal judge blocked the proposed deal, ruling that the merger would make Kroger, which already has 2,750 stores under various banners—including Harris Teeter, Mariano’s and Ralphs—too dominant in the business. Albertsons has more than 2,200 stores in the U.S.—including Safeway, Acme and Vons.
While many analysts believe the coming Trump administration will be more welcoming to mergers, this one appears dead. The day after the deal was struck down, Albertsons sued Kroger in Delaware Chancery Court, accusing Kroger of failing to exercise its best efforts to take any and all actions to secure regulatory approval for the merger. Kroger denied wrongdoing in a statement to Forbes, “especially in light of Albertsons’ repeated intentional material breaches and interference throughout the merger process, which we will prove in court.”
NOTABLE NEWS
One of the upshots of Trump’s coming return to the White House is that business leaders are familiar with his governing style. And it’s clear that money talks. In the last week, three big tech CEOs looking to curry favor with the incoming administration donated $1 million apiece to Trump’s inaugural fund. The first to confirm its donation was Meta, which told media outlets about it on Wednesday. The parent company of Facebook, Instagram and WhatsApp did not previously contribute to Trump’s 2017 or Biden’s 2021 inaugural funds. The company did not give a reason for its contribution, but CEO Mark Zuckerberg reportedly told Trump about the coming donation when he met with the president-elect at his Mar-a-Lago residence a few weeks ago, trying to mend a long-strained relationship.
On Thursday, Amazon founder Jeff Bezos directed the company to also make a $1 million donation to Trump’s inaugural fund, a significant increase over the $58,000 Amazon gave in cash and in-kind donations to Trump’s 2017 inaugural fund. Then on Friday, OpenAI CEO Sam Altman announced a $1 million donation to the fund. In a statement to Fox Business on Friday, Altman said Trump “will lead our country into the age of AI, and I am eager to support his efforts to ensure America stays ahead.”
While there have been no direct responses to the tech leaders donating to Trump, the president-elect has expressed that investment in the right places is important to him. Last week, he said in a post on his Truth Social network that people or companies making investments in the U.S. of $1 billion or more “will receive fully expedited approvals and permits, including, but in no way limited to, all Environmental approvals. GET READY TO ROCK!!!” Trump did not expand upon how that could happen, though the federal government has a detailed approval process for planned projects to ensure they will not harm the environment.
TOMORROW’S TRENDS
How Siemens USA’s CEO Meets The Moment With Technology And People
Siemens is a global conglomerate that connects technology and energy for industrial automation, resilient buildings and power systems and sustainable transportation. Globally, the Germany-based company has seen its orders and revenue growing, with a record high €9 billion ($9.45 billion) in net income in fiscal year 2024. I talked to Siemens USA CEO Barbara Humpton about the company’s recent moves and plans.
This conversation has been edited for length, clarity and continuity. A longer version is available here.
Siemens has a sprawling footprint and is involved in a vast array of industries. As U.S. CEO, how do you keep tabs on it all?
Humpton: Let me explain how Siemens has set its strategy overall. In 2010, the company looked at global megatrends and focused on climate change, urbanization—75% of people will live in cities by the year 2050. The aging demographics—by 2050, people will live to be 120. The globalization that was going on in 2010, now we talk about it in terms of “glocalization,” with global innovation, but more local production and the digitalization of everything. Against that backdrop, the Siemens Corporation set its business strategy to apply our core skills to these global megatrends. The real trick has been finding the right people. We’ve got experts in fields ranging from emerging digitalization techniques like AI to critical infrastructure and the guts of manufacturing. Anywhere that the real world has the potential to meet the digital world and perform better, that’s where Siemens has been focused.
How do I, as a CEO, stay abreast of all that? First, I’m a person with a lot of natural curiosity, and I love learning. I love being challenged by new and different domains. We’ve got a fantastic team with deep expertise in all these areas. When you think about having the right technology, strategy and people to meet a moment, what’s important is setting the table so that the leaders across the business come together and work together. That’s been the most fun thing about Siemens over the last six years that I’ve been the CEO of Siemens USA.
You’ve been with Siemens for a total of about 13 years. When you first joined the company, did you have your eyes on climbing the ladder and eventually becoming USA CEO?
Not at all. I was asked to join because of my background in the world of government contracting. I’ve been at IBM, Lockheed Martin and Booz Allen Hamilton, always serving the needs of the U.S. federal government by doing things like the global positioning system, the software for the ground control segment, working on biometrics with the FBI, or border security with Customs and Border Protection.
When a former boss called and said, “Hey, I’ve just joined Siemens, and I think you would fit in well here,” I had to go to the library and get the annual report to see what this company does. That’s when I was introduced to this business strategy built around global megatrends. I had been focused on U.S. national security, but here was an opportunity to actually work with a company that’s a national asset. Siemens is in the backbone of the economy of the U.S. A chance to work in a way that impacts global security is what attracted me to this company.
What is the uptake like for some of these new technologies? Some of the industries that you work in are traditionally slow to update.
It’s so interesting to watch how change happens because the first thing to realize is that our success is probably the biggest roadblock to change. When you find organizations that are wildly successful, the big question is: We’ve invested all this in what we already do; why would we change?
I love the way one of our leaders in digital industries talks about it. He says our job is to help customers change at the speed of relevance. It turns out that there are a lot of fields that are becoming very competitive. Think about the auto industry. When electric vehicles were introduced, suddenly all auto manufacturers had to ask the question: Wait, am I in? And if so, what am I doing with my operations? That impacts the entire supply chain. The whole supply chain finds that they can change more rapidly if they’re using digital twins, if they’re communicating with one another in connected environments. We’re finding that the market forces are a pull, as much as we as innovators are a push into the market.
Certain fields are changing rapidly, things like the battery manufacturing sector. Anywhere where we’re starting with some new greenfields, you’ll see people plant the flag with the new technologies. Look also to aerospace and defense, where there’s a huge need to speed cycle times and to be more efficient. You’ll see Siemens being used everywhere as aerospace manufacturers’ OEMs, as well as their supply chain, are building out the digitalization of their processes. It’s that pull from the customer that’s making change happen.
When we think about the impact of this new tech sector on something like the field of manufacturing, we’re at a moment when we are doing a lot of investment in the U.S. in manufacturing. We are big believers that the tools we have today can empower small and medium enterprises.
Imagine a future state where we move data, not stuff. Today, we’re shipping things around the world, looking for the low labor source. In the future, using tools like the ones that we’re bringing to market, we have the ability to share designs and to have manufacturers on a much more local basis produce not only using a bill of materials, but also a bill of process. A connected automated manufacturing site can securely build to print, if you will, for a creator who may be located somewhere else in the world. Look for a more distributed, more connected network of manufacturers in the future.
You see that same effect happening in infrastructure. Where does the grid and a building begin? It turns out the grid edge is getting much more fluid. At the grid edge, we get more of the two-way flow of electricity. We get electric vehicles on the grid. We get buildings with their own power sources feeding electricity back. All of that gets controlled by data: the digital twin, the software that enables the hardware to seamlessly connect. The same thing is happening in transportation.
It’s these kinds of developments all across the built world that are proof points that combining the real and the digital is incredibly powerful, and it’s going to fuel the economy moving forward.
FACTS + COMMENTS
After police arrested Luigi Mangione last week and charged him with murder for the death of UnitedHealthcare CEO Brian Thompson, social media accounts praising the suspect and fake “Wanted” posters targeting other corporate executives have popped up.
11%: Proportion of social media posts with the words “kill” and “healthcare CEOs” that were found to be written by fake profiles, according to an analysis by Cyabra
129,000+: Number of laughing reactions to a post on United Healthcare Group’s Facebook page expressing shock and sadness at Thompson’s death
‘It just mires our society in more conflict and paralysis’: What Kathryn Wylde, president and CEO of business advocacy group Partnership for New York City, told NBC was the impact of violent behavior and threats
STRATEGIES + ADVICE
It’s important for businesses to participate in holiday giving, but there are needs all year long. Here are three ways to extend that charitable spirit across the calendar.
One thing is certain: President-elect Trump will shake up the status quo. Here are some ways you can prepare your business for changes that may be coming.
VIDEO
QUIZ
Elon Musk has been the world’s wealthiest person for a while, but his net worth crossed a new record last week. What is the most recent benchmark his wealth exceeded?
A. $350 billion
B. $375 billion
C. $400 billion
D. $475 billion
See if you got the answer right here.