Nicole Vullo
on
Written by Axel Jean-Francois
Let’s cut to the chase: Ignoring the Fed right now is like pretending it’s still 2019—and that’s a fast track to trouble. Interest rates are higher than they’ve been in 23 years, inflation is cooling off slower than we’d like, and your staff could bail for better hours at Amazon if you blink wrong. Sound dramatic? Maybe. But for funeral home owners, it’s the new normal.
A Quick Reality Check: Ryan’s Dilemma
Take Ryan in Louisiana. Back when COVID-19 cases were sky-high and interest rates were rock-bottom, he invested in a beautiful new facility to better serve his community. Fast-forward to 2025: calls have dropped from the pandemic levels, and his adjustable loan rate keeps inching up. Now that once-profitable expansion is weighing him down—monthly payments ballooned, and Ryan’s scraping for every dollar just to break even. That’s exactly why ignoring Fed policy can sink you faster than you might imagine.
Bottom line: If you want to navigate 2025 without wrecking your bottom line, you need to understand how these economic dominos fall—and what you can do before they slam you with higher bills.
What This Means for You
- Expansions or Renovations: Buckle up. Higher loan costs mean you might swallow some painful monthly payments if you push ahead.
- Families Tightening Budgets: Rising credit card APRs often mean more direct cremations, and fewer elective services or optional merchandise.
- Hiring Stays Tough: It’s not just about other funeral homes. Some folks would rather sling burgers at In-N-Out for $23/hour than be on-call at odd hours for less pay.
- Staying Profitable: Grasp the economic forces now, or risk blindsiding yourself with ballooning costs and shrinking margins.
The good news? Once you know what’s coming, you can pivot—and pivot fast.
The Federal Reserve & The Domino Effect of Interest Rates
Who Controls Interest Rates?
The FOMC (Federal Open Market Committee) calls the shots on whether borrowing stays cheap or gets pricier. Right now, they’re at “pricier” to tame inflation—which means everyone’s loan costs go up: businesses, consumers, funeral homes, you name it.
How It Works
- Banks must keep enough cash on hand.
- If they’re short, they borrow from other banks.
- The Federal Funds Rate is what banks charge each other for short-term loans.
- When that rate rises, all borrowing (including yours) gets more expensive.
How This Impacts Funeral Homes
- Need a loan? Prepare for a higher monthly rate—no quick rate cuts on the horizon.
- Families financing funerals via credit cards could cut corners if their APRs look scary.
- 2025 Rate-Cut Predictions keep getting pushed out, so don’t hold your breath.
A Real-World Example
Let’s say you want a $1 million loan to renovate. A few years ago, at 4%, you might’ve owed around $10,120/month, with roughly $214,000 in total interest over 10 years. Today—at 7%—that jumps closer to $11,610/month, and $392,000 in interest total. That’s an extra $178,000 you could’ve put into marketing, staffing, or local community outreach.
What to Do Now
- Reassess big purchases—if the interest hit is crushing, pump the brakes.
- Look for alternative financing—better bank terms or leasing could ease the blow.
- Stay alert—when rates dip, refinance without hesitation.
Inflation: Still in the Picture
Yes, inflation’s down near 3%, but the Fed wants 2%. That’s like wanting your electric bill at $50 but it’s still $65—close, but not enough to cheer about. So, the Fed keeps rates high until they’re sure inflation is done haunting us.
How Funeral Home Owners Can Stay Ahead
- If inflation falls further, we might see rate cuts late in 2025—great for financing.
- If inflation stays stubborn, the Fed keeps rates high, making loans pricey.
- Lock in supplier deals now before vendors hike prices again.
What to Do Now
- Budget for stable-to-high costs—don’t expect a price dive.
- Preorder supplies if you can. No one likes paying next year’s markup.
- Watch inflation reports—they’re your best hint on when rates could soften.
The Labor Market: Strength = Hiring Struggles
You hear “strong labor market” and think, “Great for workers.” True. But if you’re the one doing the hiring, it’s more “ouch” than “yay.”
Amelia’s Hiring Nightmare
Ask Amelia from Southern California. She’s desperate for reliable on-call help—because the funeral home business never sleeps, right? But with California regulations and a booming job market, a lot of potential hires bail once they see they can earn $23/hour at In-N-Out without handling midnight calls or weekend shifts. Amelia’s left juggling limited staff and big labor costs—two things that don’t make for an easy ride.
What This Means for Funeral Homes
- Fewer licensed directors and fierce competition across industries mean higher wages.
- You battle not only other funeral homes but also retailers, restaurants—anyone offering decent pay and humane hours.
- If you don’t offer something competitive, you’ll be stuck short-staffed.
What to Do Now
- Retain, Retain, Retain: Up pay, benefits, or perks. It’s cheaper than replacing folks.
- Use tech: Online arrangements, CRMs—fewer repetitive tasks free up your staff to do more impactful work.
Fiscal Policy: How Government Decisions Shape Spending
It’s not just the Fed. Government taxes, tariffs, and stimulus also shape how families spend money on funeral services. And if the current administration follows through on announcing new tariffs—especially on goods from overseas—any funeral home that sources caskets or merchandise from, say, China could see prices jump overnight.
Why This Matters
- Overseas Merchandise: If you’re importing items from abroad, tariffs can spike your supply costs.
- Consumer Spending: Higher tariffs often mean higher retail prices across various goods, which can squeeze families’ disposable income. In tight times, they might scale back on funeral services.
- Flexibility is Key: Just like interest rates, tariffs are out of your control. But how you plan for them can make or break your bottom line.
The Fed Doesn’t Run Your Business (But Don’t Ignore Them)
Rates up, rates down—the Fed deals the cards, but you still decide how to play the hand. Think of it like poker. Sure, a nasty river card can tank your strategy, but a skilled player can still make a profit from a shaky hand. If you’re nimble, you can outmaneuver the high-rate environment.
What to Do Now
- Manage your cash flow: Keep reserves so you’re not forced to borrow big at sky-high rates.
- Expand wisely: Only if demand is actually there, not just because you “planned it two years ago.”
- Stay agile: If the Fed flips policy next month, be ready to pivot.
(That’s how you outsmart the table—even if the final card doesn’t go your way.)
Reading Economic News Without Losing Your Mind
On my first day of advanced macroeconomics, the professor told us to call him Mike—not “Professor.” His reasoning? Nobody truly masters macroeconomics. Everybody just sees trends, does some math, and prays they got the cause-and-effect right. Markets? They’re just billions of people doing billions of things—impossible to predict perfectly.
How to Filter the Noise
- Don’t get trapped by dramatic headlines—check the real data behind them.
- Compare sources—some say “boom,” others say “doom.” The truth’s usually in between.
- Focus on cost structures—yours and your families’. All else is background static.
Adapting for 2025
Consider a funeral home in Tennessee. Last year, rates were sky-high, and calls were down. So, they made a tough decision: raise prices for the first time in years. Sure, they lost a few families who shopped around—but most stayed. Even better, they ended the year more profitable than ever, proving that sometimes the bold move pays off if it’s well-timed and well-managed. Now they’re restructuring internally, committed to delivering top-notch service for their community, despite the economy’s ups and downs.
This is the lesson: Even in a high-rate, high-cost world, you can adapt—and thrive. Is it easy? No. Is it doable? Absolutely, if you stay informed, keep your fundamentals tight, and don’t let fear paralyze your decisions. Because in this poker hand the Fed’s dealing, the best players still find a way to win—even if the cards aren’t ideal.