Letter From The Editor, John Norris
At the end of 2024, my economic forecast for 2025 was similar to what it had been for the previous year. The year would start off a little slower than anyone would like, and would accelerate as the year progressed.
Talk about nailing a prediction.
For the first quarter of 2025, the Bureau of Economic Analysis (BEA) estimates the U.S. economy grew at an annualized rate of (0.3%), which isn’t actually growth. However, during the second and third Quarters, Gross Domestic Product (GDP) surged, at the time of this writing, 3.8% and 4.3% respectively.
Wild swings in the trade deficit throughout the year greatly skewed the official GDP data. If you were to strip out all of the noise from international trade, you could conclude that the economy grew at a reasonable, but not-quite-feverish pace.
But why was it so difficult to predict trading patterns in 2025?
On April 2, 2025, President Trump announced a so-called ‘Liberation Day’ of economic independence by placing some form of tariff on nearly all countries in the world, some of these quite substantial. Fearing this, and the worst, the data suggests American businesses frontloaded their international purchases for the year.
As a result, our trade deficit mushroomed during the first quarter, and shrank for much of the remainder of the year.
Voilà. That is how 2025 started off slower than anyone would like, and then growth accelerated as the year progressed.
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First Quarter Predictions, 2026
Given the political theater, Federal Reserve crosscurrents, market fundamentals, AI enthusiasm, geopolitical tensions, and housing market realities, these are our Investment Committee’s predictions for the beginning of 2026 — with a few twists.
Fourth Quarter Equities
Predicting the end of a market run can be inherently difficult, but that doesn’t mean fundamentals can be ignored. Corporate earnings trends and Federal Reserve policy will be key factors shaping market conditions as we move into 2026.
Key Takeaways from Q4
Despite a temporary federal government shutdown during the fourth quarter of 2025, markets held firm. Economic confidence lagged, hiring slowed, prices rose in certain categories, and investors showed continued interest in artificial intelligence (AI), precious metals, and stability over fear.
Fourth Quarter Asset Allocation
The fourth quarter didn’t bring fireworks, but it did reveal a quieter, healthier shift beneath the surface—broader participation, steady international strength, and fixed income doing its job.
Special Report: The Global Shift in 2025
Dollar weakness, fiscal shifts and geopolitics: why international markets outperformed in 2025 and what it may mean for U.S. leadership.
Special Report: When the Wagon Gets Ahead of the Horse
How markets may be front-running policy as expectations build into 2026.
