1) Inflation: Will remain above 2.5%. The Fed will start warning about the potential for another rate increase by the 4th quarter. Long-term rates will be on a roller coaster like they were in 2024 - and end up close to where they started, if not slightly above. Mortgage rates will not improve. Wage gains will come to equal inflation (hourly wage annual increase % will be within 1% of Core PCE) in our service-driven economy, and this will reduce margin growth.
2) Stocks: S&P500 total return of 9-15%. A correction of at least 15% will occur at some point in the year, so better buying opportunities are probably ahead.
3) Unemployment: Will rise to 4.5% by July, then hit 4.75% by December.
4) Technology: Competition between patented brands will bring down the cost of most semaglutide formulations to $500/month, further normalizing the drugs. Elon Musk will predict FSD by the end of the year. Apple will surprise everyone and release a new iPhone with modest improvements over the last ones /s. Reddit (RDDT) and BlueSky will gain market share from X and Meta. EV adoption will remain a mostly Chinese, and to a lesser extent, European story, while the U.S. doubles down on fossil fuel dependency. As part of "government efficiency" cutbacks, many government functions will be moved to smartphone apps. This will allow the government to more effectively spy on its citizens, similar to China's surveillance state. Bitcoin will rise in the anticipation of a possible "strategic reserve" or IRS payment mechanism.
5) Culture: Cultural innovation will continue to stagnate. Most movies, music, and art will continue to be derivatives of older works. Fashion will remain unchanged, comparable to the last 20 years of not really changing, compared to previous eras. Consumerism will continue to perpetuate ideals of lifestyle homogeneity, as we all end up driving teardrop shaped compact SUV's in black, white, or gray, pretty trucks in black, white, or gray, wearing a uniform of jeans, a sweatshirt, and athleisure shoes, and living in snout houses. X becomes social media for Republicans and BlueSky becomes social media for Democrats, further reducing whatever shared culture or imagined objectivity the internet was supposed to bring us. Kansas City will win the Super Bowl again.
6) Politics: The Trump administration will keep us peasants entertained with a constant stream of new things to talk about, which is all most of us really want. Democrats will argue on the internet about why they cannot win elections anymore, and eventually conclude they need to run the same media strategies, keep the same message, and run the same sort of candidates as they've run over the past decade, because those are the only answers their echo chamber can produce. The ruling party will tighten its grip with more judicial appointment, more election engineering, more targeted investigations, and laws to disadvantage competitors. They will also pass symbolic/cultural legislation as a way to maintain unity (and as packages to move pork), such as laws targeting LGBTQ people, laws enabling employment and customer discrimination, forced prayer in public schools, and enhanced penalties for illegal aliens convicted of crimes. Faultlines between the billionaire leaders and their blue collar MAGA voters will not be consequential. Trump will fire a lot of people.
7) Tariffs: Trump will keep his "day one" promise to impose tariffs sometime in the first two weeks, but the initial tariffs announced will be limited to some categories of things from China. Additional tariff announcements will trickle in throughout the year, leading to market anxiety and stock volatility. We will hear about deal making negotiations from the administration, and some of these deals will require foreign leaders to praise Trump. Trump will allow expansion of the trans-Atlantic LNG trade, creating pressures for Europeans not to reciprocate on tariffs.
8) International: Trump will cut off the U.S. portion of aid to Ukraine, and threaten to reduce U.S. military forces in Europe. China will successfully pursue ex-US trade blocs and free trade deals in Latin America, Africa, Asia, and perhaps Australia. There will be significant unrest in Brazil and Argentina. The Houthis will successfully hit an American warship or down an American crewed aircraft, but the incident will lead to nothing. Ukraine will have to abandon Kursk and will lose ground on the Eastern front. Right-wing parties will continue to gain ground in Europe.
9) Real Estate: Housing prices will flatline (defined as +/- 1%), as upward wage pressure offsets reduced expectations around rate cuts, and affordability will improve slightly. CRE will continue the orderly deflation and refinancing cycle that was occurring in 2024.
