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Secular Trends Drive Growth in a Slowing Economy
Equities

Secular Trends Drive Growth in a Slowing EconomySecularTrendsDriveGrowthinaSlowingEconomy

Jun 16, 2025

Jennison Associates’ Mark Baribeau shares why companies rooted in durable trends are well-positioned to thrive through ongoing uncertainty.

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Equity markets faced a rocky start to 2025, weighed down by fading AI enthusiasm and new U.S. tariffs. However, recent trade negotiations and strong earnings from AI-related companies hit hardest during the sell-off are helping restore confidence. Despite this rebound, significant uncertainty and the potential for escalating geopolitical tensions suggest markets could see more turbulence ahead.  

That said, we remain optimistic about companies driven by durable secular trends. Those with strong pricing power, resilience to tariffs, and competitive advantages are better positioned to navigate volatility. Businesses demonstrating above-average growth in this environment are likely to stand out and maintain their edge. 

A SLOWING GROWTH ENVIRONMENT  

Recent volatility has sparked a shift to quality, but the number of companies capable of withstanding significant macro uncertainty is limited. As the economy slows, growth becomes scarce, making companies with durable earnings growth more appealing. Historically, growth stocks outperform value stocks during periods of below-average GDP growth. With U.S. GDP projected at 1.3% in 2025 and potential Fed rate cuts later in the year, growth stocks could gain strength. Finding standout companies requires  looking for opportunities with unique return drivers less affected by macroeconomic trends. 

GROWTH BEATS VALUE IN LOW GDP GROWTH ENVIRONMENTS 

Sources: FRED, Morningstar Direct. Average return using data from 1/1/1979 to 12/31/2024. 2025 GDP estimate from Bloomberg as of 5/31/2025. Growth epresented by Russell 1000 Growth Index and Value represented by Russell 1000 Value Index. Past performance does not guarantee future results. 

UNLOCK NEW AI OPPORTUNITIES 

AI is advancing at an unprecedented pace, ushering in the fourth era of computing. As we move beyond hardware, the focus shifts to applications driving the next stage of AI monetization.  

Generative AI: AI agents are emerging as a transformative force, likely to shape the next wave of innovation.  

Transformational technologies: While early AI investments focused on infrastructure and computing power, the next phase will see applications revolutionizing industries. Companies are leveraging AI to accelerate product development, enhance customer service, and unlock deeper insights from data. 

DIVERSIFY WITH RESILIENT SECULAR TRENDS 

Amid evolving tariff developments and related macroeconomic uncertainty, it’s crucial to focus on sectors less sensitive to these dynamics. 

Consumer brands: While softening in price-sensitive consumer segments is pressuring aggregate demand, powerful consumer brands in key luxury segments continue to see strong pricing power and demand growth. 

Technology enablers: Advances in technology-enabled manufacturing and automation continue to drive productivity, while electrification trends stand to benefit from new global policies. For instance, Chinese electric vehicles experiencing strong demand are immune to tariff impacts and a slowing U.S. economy. 

Fintech platforms: Emerging markets are fueling demand for innovative, affordable, and accessible financial services that are less affected by tariff pressures than tangible goods. 

Health care innovation: Advances in drug development, personalized treatments, and data-driven insights are unlocking significant opportunities in the healthcare sector. 

Mark Baribeau, CFA

Head of Global Equities Jennison Associates

We remain optimistic about companies driven by durable secular trends. Those with strong pricing power, resilience to tariffs, and competitive advantages are better positioned to navigate volatility.
Mark Baribeau, CFAHead of Global EquitiesJennison Associates

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The views expressed herein are those of Jennison Associates investment professionals at the time the comments were made and may not be reflective of their current opinions and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute an offer to sell or a solicitation to buy any security.  

Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information, nor do we make any express or implied warranties or representations as to the completeness or accuracy. Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated, based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.  

This material is being provided for informational or educational purposes only and does not take into account the investment objectives or financial situation of any client or prospective clients. The information is not intended as investment advice and is not a recommendation. Clients seeking information regarding their particular investment needs should contact their financial professional.

Prudential Investment Management Services LLC is a Prudential Financial company and FINRA member firm. PGIM Investments is a registered investment advisor and investment manager to PGIM registered investment companies. PGIM Quantitative Solutions is the primary business name of PGIM Quantitative Solutions LLC, a registered investment advisor.  All are Prudential Financial affiliates. © 2025 Prudential Financial, Inc. and its related entities. PGIM, PGIM Investments, PGIM Quantitative Solutions and the PGIM logo are service marks of Prudential Financial, Inc. and its related entities, registered in many jurisdictions worldwide.

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