Shawn F. Matian and David Park Provide Economic Forecast & Business Predictions for 2025

This ‘Conversation with the Experts’ section is produced by the LA Times Studios team in conjunction with Axos Bank and The United Firm | La Liga Defensora APC.

The business landscape last year continued to be punctuated by complex challenges. Conflicts overseas and economic uncertainties continued to force companies to recalculate and in many cases make permanent changes to their playbooks and how they approach relationships with customers, clients and employees.

This LA Times Studios discussion is designed to provide unique perspectives and insights into forward-looking business strategies for 2025. What new best practices should business leaders be aware of this year? How is 2025 shaping up for international business? What supply chain management trends can we expect? How will the remote work trends continue to alter business norms? For the answers, we turned to two of the region’s leading experts and thought leaders, who graciously weighed in for a discussion, shared predictions and forecasted what to expect.

Note: This discussion was held prior to the devastating Los Angeles wildfires.

Q: What advice would you give your clients for the coming year?

David Park, EVP, Head of Commercial Banking and Treasury Management, Axos Bank: It’s important to remain realistic about interest rate trends. While the market may forecast multiple rate cuts, clients should plan for rates to stay high for the foreseeable future. Making financial decisions with the expectation of significant rate reductions over the next year could be a risky strategy. Instead, focus on strengthening your balance sheets, evaluating financing needs carefully, and building operational flexibility to navigate through a variety of potential interest rate environments. Preparedness and strategic planning will position businesses to thrive, regardless of rate fluctuations.

Q: From your perspective, how will the incoming new administration affect the economy’s business landscape?

Shawn F. Matian, CEO, The United Firm | La Liga Defensora APC: Under the new administration, you can rest assured that there will be blanket deregulation. This will likely stimulate American oil, energy and banking sectors. The new administration also has a pro-M&A and pro-cryptocurrency sentiment, which will help tech companies and the crypto landscape at large. It is also likely the incoming administration will lower corporate taxes and give incentives to foreign companies to bring their money and business to the United States, which could provide a huge boost to the overall business sector.

Q: What types of businesses will thrive in 2025?

Park: I think leveraging technology will continue to be a key factor to success. Businesses that integrate technology into their operations will have a clear advantage, particularly in service industries. Those that heavily depend on human capital may face challenges due to rising labor costs and limited scalability. Companies that effectively utilize technology to streamline processes, enhance customer experiences or create innovative solutions will likely excel. Matian: With deregulation surely to happen overall, the American energy sector will see a bump in business, including fossil fuel, oil, natural gas and coal.

Q: What are the current factors driving the M&A market?

Park: M&A is gaining momentum as financing conditions stabilize after a challenging period. Stability in interest rates and more clarity in the political environment have provided more confidence to prospective buyers and sellers. More realistic valuations and improved alignment on deal terms are spurring activity. Additionally, there is significant undeployed capital, or “dry powder,” which is likely to flow into the market in the coming year. These factors create a favorable environment for strategic acquisitions and consolidations.

Q: In a nutshell, what advice would you offer a brand-new startup launching in 2025?

Matian: I launched my company in 2015, and I’d give the same advice to someone starting in 2025 that I followed. A combination of hard work, problem-solving and innovative thinking are always necessary requirements. There are no shortcuts. Also, find your niche and expand from there. You can’t be everything to everyone.

Park: Startups must prioritize capital efficiency and liquidity. The era of unchecked growth fueled by abundant capital is behind us. Investors are prioritizing sustainable growth and prudent capital use. New businesses should plan to do more with less, ensuring every dollar of funding is strategically allocated to drive returns. Building a strong financial foundation and demonstrating capital discipline will not only sustain operations but also attract long-term investors who value fiscal responsibility.

Q: What role will technological advancements (e.g., AI, automation) play in shaping business profitability in 2025?

Matian: The question isn’t whether or not artificial intelligence will affect the business landscape of the United States. The question is how much it will affect your business. Artificial intelligence isn’t a thing of the future. It’s a thing of now, and all CEOs and C-suite executives need to get with the times or they will be blown out of the picture. No matter what sector of business you’re in, artificial intelligence will help you streamline your business at a much lower cost, thus creating greater profits for your company. The question for C suites is how best to use artificial intelligence, not whether or not to use it.

Park: AI will become a core driver of business efficiency and scalability. AI was mostly a theoretical application in the past, but we have seen significant progress in practical AI application in many more business processes that will allow companies to reduce their operating costs, enhance decision-making and manage their risks more effectively. I know there is a lot of discussion around AI replacing employees, but we are seeing that rather than replacing employees, AI amplifies productivity by automating repetitive tasks and enabling people to focus on high-value activities. Organizations that deploy AI will find it easier to scale operations and improve profitability by maximizing the potential of their workforce and technological investments.

Q: How can small and medium enterprises (SMEs) position themselves for success in the 2025 economic landscape?

Matian: Embrace artificial intelligence and technology to help create a more efficient company and take you to the next level. Successful companies are measured by growth and the ability to scale and to do that you must wrap your arms and wholeheartedly embrace technology. Normally you don’t think of technology aligning with a law firm. But it has allowed my firm to grow exponentially over the last decade. We are efficient, we are able to find and serve our clientele better and we streamline processes.

Park: SMEs should leverage technology to enhance efficiency, from better sales management tools to operational improvements. Understanding the right technological solutions can be complex, so seeking expert advice may be necessary. Equally important is securing diverse and reliable funding sources to maintain financial stability. A well-rounded strategy that combines innovation with strong financial management will help SMEs remain competitive and adaptable in a dynamic business environment. A more business-friendly regulatory environment that reduces the time and costs to operate a business will also be incrementally positive for SMEs.

Q: What trends do you see emerging in the labor market, such as the shifting status of remote work or demand for specific skills?

Matian: As the CEO of a law firm that has just about 700 employees in the U.S. and additional abroad, this is a very interesting question. We provide opportunities on-site, remote and hybrid, and I think that will continue to evolve. Additionally, artificial intelligence and new technological tools will flood the marketplace and force change in the business world, including the labor market. The labor market is still very hot and although the federal government is trying hard to cool the market by increasing rates and steadily holding them at their current positions, there is very little indication that the labor markets will suffer, although AI and tech overall are a threat to the labor market. I don’t think we will see a staggering effect in 2025.

Q: How do you anticipate consumer spending habits will change in 2025?

Park: Consumers are likely to continue to shift spending priorities toward necessities as economic pressures persist. Discretionary spending on items like travel and entertainment, which surged in recent years, will likely normalize. Rising costs for essential goods and services are straining household budgets, forcing consumers to make more deliberate choices. Businesses must adapt by aligning their offerings with these changing preferences, emphasizing value and practicality to meet consumers where they are.

Q: What technological innovations are most likely to disrupt industries or create new market opportunities?

Park: AI stands out as the most transformative innovation, fundamentally altering workflows and business models. It offers opportunities to streamline operations, enhance customer engagement, and unlock new revenue streams. Companies that proactively integrate AI into their strategies will gain a competitive edge, while those that fail to adapt risk obsolescence. AI’s ability to disrupt traditional industries and foster innovation makes it a critical consideration for any forward-thinking business leader.

Q: What is the most important element or decision in scaling a business?

Matian: The most important aspect of scaling a business is making sure that what you are selling to the consumer is scalable. A lot of CEOs have extremely creative marketing ideas and make wonderful products but sometimes they forget that they have to not only create a product that’s capable but also create a company that has the tools, the vision and the plan to scale effectively and efficiently.

Q: What would you say are the three most critical factors for achieving economic stability in 2025?

Park: One factor is the political and regulatory environment. Stability and clarity in economic policy and regulations are essential for building confidence and fostering investment. A second factor is normalizing the yield curve. The current inverted yield curve will normalize, creating healthier capital markets and supporting long-term financial planning. The third factor is global stability. Avoiding extended geopolitical conflicts and ensuring global cooperation is crucial for fostering an environment conducive to sustained economic growth. A more stable geopolitical environment supports higher confidence among consumers and businesses, which are the foundations for sustained economic progress.