Letter to Stakeholders, May 2025

Wednesday, May 7, 2:45 pm EST. You can look at your statements. During our “Spring Check-Ins” many of you mentioned that you weren’t looking at your statements. We understood. And we appreciated the quiet confidence you had in our money management. That said, after all of the historic market declines (and surges) in April, your accounts were generally off by about 1% (or less) from last month. We have made trades on your behalf. We have made new investments. But we have not stepped away from the plans we originally made with you. And your accounts are doing just fine. 

Economic Growth? 

Last month we introduced – to those who may have been avoiding the news – the concept of the“Mar-a-Lago Accord” proffered by former Hudson Bay Capital Strategist Stephen Miran who is now the Chairman of Economic Advisors (CEA) at the White House. If looking at your statements has encouraged you to read more I suggest at least skimming Miran’s 41-page document titled “A User’s Guide to Restructuring the Global Trading System.”  As recently as three days ago, Treasury Secretary Scott Bessent authored a “Three Steps to Economic Growth” opinion piece in the Wall Street Journal (WSJ) to simplify an economic strategy that still seems to be confusing market participants. Secretary Bessent describes three (3) pillars:

1. Tariffs to “strengthen our national security…raise substantial revenue”
2. Tax cuts to “build economic momentum”
3. Deregulation to “raise employment and wages” 

The vast majority of the typically friendly WSJ commenters questioned this framework.

Tariffs

Current tariff policy is already reducing the volume of container ships in the Port of Los Angeles. According to the port’s Executive Director there’s been a nearly a 35% decline in container deliveries. The multiple lawsuits taking aim at the International Economic Emergency Powers Act (IEEPA) that the administration is relying on to impose tariffs are also affecting markets. Later this month cases headed to the United States Supreme Court will determine the legality of current tariff policy while meeting with foreign leaders may determine how long they remain in place. To be certain, tariffs are bringing in revenue but time will determine how “substantial” it becomes.

Tax Cuts

The debate on the extension of the Tax Cut and Jobs Act of 2017 (TCJA) typically begins with taking sides on which group of taxpayers is getting a bigger benefit and whether that group should.  The TCJA lowers taxes for 62% of all earners. 1) There is a greater tax percentage reduction for lower income earners than there is for higher income earners. 2) There is a greater dollar amount reduction for higher income earners than there is for lower income earners. Regardless of who benefits more, the cost of extending the TCJA is estimated at $4 trillion. Add in just the costs of eliminating income taxes on Social Security benefits and that may increase federal debt by another $1.5 trillion over 10 years. Congress is still calculating how these tax cuts will be paid for and the affect running deficits will have on inflation and economic growth is still an open debate. 

Deregulation

Secretary Bessent’s comments on deregulation immediately pivot to the freedom to build homes and factories and manufacture semi-conductors, power plants and data centers. Much of these “freedoms” appear to be exercised with the help of (ironically) regulation like the Congressional Review Act of 1996 (CRA). There is a legal debate over reversing state rules – like California’s EV rules – but the relevant question is whether less regulation will add to “wages” and add workers versus reducing them both. The recent Bureau of Labor Statistics (BLS) reported that nonfarm payrolls increased by 177,000 in April, more than expected. That’s in relative contrast to the recent Bureau of Economic Analysis (BEA) report that showed negative growth in the US economy for the first three months of this year. 

Economic Uncertainty

Economic uncertainty slows down investment and hiring but it does not mitigate our ability to invest prudently on your behalf. We will continue implementing your plan, sharing your long-term projections and staying available should you have questions. 

Jason J. Howell, CFP®, CPWA®, CSRIC® 

President

Jason Howell Company is a family wealth management firm that strengthens the finances of families making the transition from first generation success to family wealth. We envision a world where wealthy families give, grow and govern themselves in ways that enrich their local communities. We do this by reducing the fear, isolation and guilt associated with financial success.

Jason J. Howell, CFP®, CPWA®, CSRIC® and Douglas W. Tees, MBA, CFP® CAP®, CBDA  have spent a lot of time in the Washington, DC area, and are aware that many people who are first generation wealth suffer from a kind of "financial imposter syndrome."  Successful entrepreneurs and family businesses are always looking over their shoulder; government contractors worry about the next contract; former Capitol Hill staffers privately wonder if they should "feel bad" for the money they now make. Imposter syndrome is common among people who work for the many corporate headquarters based in this area as well. These feelings get in the way of properly managing family wealth. We empower them to get organized, build a team of advisors and make decisions.

Our typical "first generation wealth" families include dual income parents who work, save and have just the right amount of fun. For long-time, family owned businesses we focus on much family preservation as we do wealth preservation. 

First generation wealth success stories and family business owners realize that they:

• Need to “do something” with the cash in their checking/savings
• Need to eventually diversify their portfolio away from the family business
• Need an investment strategy for “up” and “down” markets
• Need a plan to mitigate market, credit, inflation, and political risks
• Need to start tax planning instead of just tax paying
• Need to be sure they are choosing the right work benefits
• Need to reduce financial miscommunications between family members
• Need to separate business finances from personal finances
• Need to separate family wealth from individual wealth
• Need a plan to provide space for both family and individual philanthropy
• Need to plan for money while alive and for what happens after death