2025 Year in Review – Better Than Forecasted—By a Wide Margin
Entering 2025, markets were clouded by volatility and pessimism. Trade policy uncertainty, high interest rates, inflation fears, and global conflicts dominated headlines. Many forecasts expected trouble.
We took a more balanced view. Ongoing conversations with leading Wall Street firms and respected market strategists acknowledged risks—but not a collapse. That perspective proved right.
For the third straight year, markets delivered exceptional results. A brief April pullback tied to tariff concerns was a short-lived overreaction within an otherwise strong economy and ongoing bull market. Bull markets don’t end simply because they’re “old”—they end when disrupted by sharp rate hikes, energy shocks, major conflicts, or punitive tax increases. None occurred.
What Drove the Stronger-Than-Expected Results?
Tariffs: Initial announcements proved to be negotiating positions. Final outcomes were far less disruptive than feared.
Interest Rates: After years at restrictive levels, rates declined and are expected to ease further—supporting growth & investment.
Tax Policy: 2 notable elements:
1) Eliminating taxes on tips and overtime boosted take-home pay for millions of workers. Tax returns are expected to be larger in April due to this.
2) Newly added tax policy for immediate expensing/tax deduction of capital equipment accelerated investment across construction, manufacturing, trucking, and automotive industries—creating jobs and lifting wages.
Corporate Profits: S&P 500 earnings rose 10–13% so far this year. Well above early forecasts. Strong profit growth remains the primary driver of market gains and the outlook for 2026 remains favorable.
Economic Growth: GDP is tracking near 3%, far exceeding early-year expectations despite trade concerns.
Wages: Wage growth continued to surprise on the upside.
Energy Prices: Oil fell from roughly $80 to near $60 per barrel, easing inflation pressures and benefiting households and businesses alike.
Infrastructure Investment: Traditional projects—roads, bridges, airports—continue to drive long-term job growth. Also, Technology infrastructure, especially AI-related data centers, is fueling nationwide construction and manufacturing demand.
Global Markets: European equities are near record highs, supported by a weaker dollar and increased defense spending by Germany—benefiting both European and U.S. manufacturers.
Deregulation: A shift toward a more business-friendly regulatory environment is lowering costs and encouraging investment.
The Bottom Line: Political noise never stops, but markets respond to fundamentals: profits, interest rates, energy costs, and economic growth. All moved in a favorable direction in 2025.
Some on Wall Street are now calling this a “Goldilocks” economy—not perfect, but close. Labels aside, the foundation behind today’s growth is real, broad-based, and far stronger than most expected at the start of the year.
We look forward to meeting or speaking with you at anytime regarding your personal investment plan. Please give us a call with any questions you may have. Our office number is 860-623-0104. We wish you and your families all the best and look forward to a bright 2026!!!
Warmest Regards,
Brian, Arnie, Dan, JT and Tom K.
As usual this commentary is based solely the opinions of Brian Cassidy, Arnie Magid, Daniel Kelly, JT Galloway and Tom Kanyok.
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