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January 16, 2025 3:00 am
If you’re wondering what the economy will do in 2025, you don’t want to miss this program.
Few major league hitters can bat .300 in a given season. Imagine hitting .700! That’s what Bob Doll does every year: forecasting economic trends. He joins us today with his ten predictions for 2025.
Bob Doll is the CEO and CIO of Crossmark Global Investments. He regularly contributes to Faith and Finance and other media outlets like Bloomberg TV, Fox Business, and CNBC.Â
Key Economic Predictions: Fewer Tailwinds, More Tail RisksThe theme of Doll’s predictions signals a shift:
Doll shares insights on everything from inflation to sector performance. Let’s dive into his top predictions for the year ahead.
1. Slower Economic Growth and Rising UnemploymentDoll predicts economic growth will slow as unemployment rises past 4.5%. While this signals a cooling job market, he emphasizes that a 4.5% unemployment rate is historically low and not cause for alarm.
2. Sticky Inflation and Limited Rate CutsInflation is expected to remain stubbornly above the Federal Reserve’s 2% target. This will likely limit the Fed’s ability to reduce interest rates, continuing the challenges seen in 2024.
3. Treasury Yields and Credit SpreadsTreasury yields are forecasted to trade between 3.75% and 4.75%, with credit spreads widening slightly as the economy slows. While this doesn’t point to a recession, it reflects tighter financial conditions.
4. Slower Earnings GrowthDoll anticipates earnings growth will fall short of the optimistic 14% consensus, noting that such high growth is rare without a post-recession recovery.
5. Increased VolatilityAfter a period of low volatility, Doll predicts the VIX (Volatility Index) will approach 20, reflecting greater market uncertainty. He advises investors to remain disciplined and avoid emotional reactions to market swings.
6. A 10% Market CorrectionDoll foresees a 10% correction in 2025, emphasizing that such corrections are normal and should be viewed as buying opportunities for long-term investors.
7. Equal-Weighted Portfolios Outperform Cap-Weighted PortfoliosDoll expects equal-weighted portfolios to outperform cap-weighted ones as the dominance of mega-cap stocks like the “Magnificent Seven†wanes.
8. Value Outperforms GrowthAfter years of underperformance, value stocks are projected to outshine growth stocks, driven by cheaper valuations.
9. Top Performing SectorsDoll predicts financials, energy, and utilities will outperform sectors like healthcare, technology, and industrials. While technology remains essential, high valuations could temper its returns.
10. Tax Cuts and Reduced RegulationWith the Trump tax cuts set to expire in late 2025, Doll anticipates extensions alongside reduced regulations. However, divisive policies like tariffs and deportation may have limited economic impact.
11. Budgetary ChallengesEfforts to address government spending will face significant hurdles, with key programs like Social Security, Medicare, and defense spending off the table. Progress will likely fall short of ambitious deficit reduction targets.
Preparing for 2025Doll acknowledges that predicting the future is inherently uncertain, but his insights provide valuable context for navigating the year ahead. He advises investors to stay diversified, remain disciplined, and prepare for volatility.
As we embrace 2025, let’s remember that while economic trends may fluctuate, wise stewardship and long-term planning remain steadfast principles for financial success.
On Today’s Program, Rob Answers Listener Questions:Remember, you can call in to ask your questions most days at (800) 525-7000. Faith & Finance is also available on the Moody Radio Network and American Family Radio. Visit our website at FaithFi.com where you can join the FaithFi Community and give as we expand our outreach.