2025 Market Outlook: The Name of the Game

The expectations of an economic soft landing and favorable equity market in both 2023 and 2024 were possible due to the positive underpinnings of a healthy labor market, falling inflation, and a Fed pivot to rate cutting. In 2025, however, expectations are higher, policy shifts are underway, and several new factors that include tariffs, trade wars, budget deficits, long-term interest rates, and stock market valuation are primed to collide. As we evaluate the mix of likely crosscurrents in 2025, the dominant force driving the economy and markets—the name of the game—is productivity.