Invest Effectively

New Years Predictions Assessed

Wednesday is the last day of 2025, so I thought it was a perfect time to assess the “expert” predictions from New Year’s Eve last year. I looked up a bunch of predictions at the time, and at the end of the year, only 6 of the 14 have been resolved positively. 8 of the predictions were worse that expected.

  • ECONOMIC INDICATORS:
    • 🟢 +11.5% – S&P 500 Growth (7-14%)
    • 🟢 +2.5% – USA GDP Growth
    • 🔴 +2.4% – Inflation (CPI)
    • 🔴 < 4% – Unemployment Rate
    • 🟢 50bps – Two Fed Rate Cuts of 25bps
  • POLITICAL CHANGES:
    • 🟢 Extension of TCJA / “Trump Tax Cuts”
    • 🟢 Increased SALT Deduction (from $10K to $20K)
    • 🟢 No Federal Tax on Social Security Income
    • 🔴 Higher Tariffs 20%: China, Mexico, Canada
    • 🔴 DOGE Target $500B in spending cuts in Year 1
  • HEALTHCARE
    • 🔴 8% Medical Cost Inflation
    • 🔴 +7% Health Insurance Increase
    • 🔴 AI Analysis of almost all health profiles
    • 🟢 No significant changes to Medicare

The immediate economy looks like it’s been pretty strong. The S&P 500 is finishing at about +15% growth for the year – slightly above the 7-14% range of expected growth, and a full 450 basis points above the Wall Street analyst midpoint prediction. GDP also looks pretty good. I gave it a “green light”, even though we don’t have the Q4 numbers for another 90 days. Through Q3, it is on-track with +2.5% growth YTD and it’s gotten stronger each quarter. The Fed delivered what was expected with two 1/4 point interest rate reductions.

Unfortunately, most Americans say their personal finances continue to get worse in the latest Harvard-Harris Poll and we see worse than expected results income of these predictions.

Inflation is higher than expected and so is the unemployment rate. In addition, people say they are feeling the pinch from the Trump Tariffs which were enacted at higher than expected rates against China, Mexico, and Canada – the country’s 3 biggest trading partners. In addition, government efficiency efforts “DOGE” finished with a dud. Even their optimistic reporting of $214B in savings fell far short of expectations and overall government spending continued to balloon in the most recent federal budget reconciliation.

The Trump / GOP “One Big Beautiful Bill” did get passed with an extension of the earlier (temporary) TCJA tax cuts and the SALT Deduction was lifted from $10K to a higher than expected $40K. Those are perhaps good news for the longer term, but without keeping government spending in check, will likely lead to much more debt-induced inflation, which offsets their usefulness.

While there were no major changes to Medicare in the OBBB legislation, medical cost inflation / extension of ACA subsidies continue to be debated and led to the country’s longest ever government shutdown. Both medical costs and insurance costs rose at 2x the inflation rate in the meanwhile.

So overall the 2025 results are pretty mixed, compared with in-going expectations. I will note that personally, when all is added up, I don’t think this basket of 2025 financial outcomes has had any material impact on our lifestyle or financial position. You win on some, lose on others. I’m glad for the relative “boringness” that we are left with.

How much of an impact have the 2025 outcomes had on your life? What financial predictions would be good to assess for 2026?

Image: Pixabay

15 thoughts on “New Years Predictions Assessed”

  2. My gain in market value for the past year was around 8.5% net after withdrawing living expenses. Another number that I track is the increase in my dividends driven annual income and it is at around 9.5%, so I am staying ahead of inflation.

    Here is what I think is going on when you read about people being concerned. The Social Security COLA increase for 2026 is 2.8%. The increase in the Medicare Premium was around 9%. The numbers are probably similar for salaries and health insurance. Some of the biggest drivers of household expenses are health insurance, education, housing and taxes, and they are higher than the inflation numbers that are used to adjust Social Security, salaries, and tax brackets.

    I was surprised that the S&P 500 Market Cap Weighted Index Return this year at around 17.82%. Most of the performance was driven by seven AI related stocks that seem to be over hyped.

    Maybe this will correct and the S&P 500 Equal Weighted Index will outperform next year? The S&P Equal Weighted Index was up around 10.55% for 2025, which is close to the historical market return for the overall market.

    Here is my biggest prediction for 2026. 2026 will be all about tackling Fraud.

    This 43-minute video expose made by Nick Shirley an Independent YouTube journalist is rubbing everyone’s nose in the massive fraud that is occurring in the Minneapolis MN Somali Community. Nick spent one afternoon traveling around various Minneapolis government funded childcare, autism support services and Medicaid providers and did not see one child or patient in any of the facilities. The windows were covered with black paper. He tallied up $110 Million of fraud in one afternoon.

    I got a sense that the Somali ‘proprietors’ that Nick encountered at these businesses lacked the language skills to fill out the paperwork and obtain licenses. Childcare agencies are licensed. Where are the spot checks asking, “Where are the children the state is paying over a million per year to take care of.” The criminals Nick encountered are getting help from Minnesota State Government and NGOs seem to be following a Cloward and Piven strategy to break the US bank so that the US becomes Marxist.

    https://www.youtube.com/watch?v=r8AulCA1aOQ

    Tucker Carlson had another story on this that featured investigative journalists in Maine and Minneapolis describing the large-scale Somali fraud that is occurring in these two states. His interviews do a good job of explaining how the fraud obviously benefits the fraudsters but is also being used to power Demonrat Political machines.

    https://tuckercarlson.com/live-show-december-17

    The latest estimate for fraud in Minnesota is at least $9 billion. Maine and Ohio are in the billions as well. The cost for provided Medicaid to illegals in California is $9 Billion, which ironically is very close to current budget deficit. Adding up other areas of fraud in California and the number exceeds $230 Billion. Add this up across all 50 states and certainly it involves those outside the Somali Community.

    I have not heard a tally for the fraud countrywide but tackling it would dramatically improve government spending. In the end, the Tucker interviews are great for those who are willing to listen and process the information. Nick Shirley’s video is raw and conks you over the head because it showed how easy the fraud is to discern and how poorly it is being hidden. Nick’s video landed over the weekend, and there are already announcements that the Trump Administration directed Federal Agencies are coming to Minneapolis.

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    1. Sorry that you had to post this twice today. I manually had to “approve” this one, but want people to see the links.

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  3. I think the reason people are worried is that inflation does not include several big cost drivers of middle-class life including healthcare, electricity, education, housing and taxes. The 2026 Social Security COLA increase is 2.8%, while the Medicare Premium Increase is 9%. I imagine the numbers look about the same for someone drawing a salary.

    2026 might be the year that the S&P 500 Equal Weighted Index outperforms the S&P 500 Market Cap Weighted Index where seven AI related stocks drove most of the Market Cap Weighted indexes performance in 2024 and 2025.

    My final prediction for 2026, is that the Trump Administration will be aggressively policing welfare services fraud. Nick Shirley, a 23-year-old YouTube independent journalist released a 43-minute video over the weekend where he spent one afternoon traveling to government funded Somali childcare. autism and Medicaid ‘service providers’. His videos showed there were absolutely no children or patients in any of the facilities. There were no attempts to cover up the fraud. These are licensed facilities, so where were the spot checks asking the simple question, “Where are the children and patients?” He tallied up $110 million in fraud in just a single afternoon. The total estimate for Minnesota is now at $9 billion. This video makes understanding the fraud easy and conks them over the head.

    I also got a sense that the Somali ‘proprietors’ lacked the skills to fill out the applications and obtain licenses. They had to be getting help from social workers and NGOs who were following a Cloward and Piven strategy to bankrupt the US government with welfare services, so that the US has to become Marxist.

    Tucker Carlson had an interview with investigative journalists in Maine and Minneapolis, and they outline how the fraud obviously helps the Somali community, but it also provides financial support for Demonrat Political Machines. The same sort of fraud is going on in California to the tune of $230 Billion. Adding up the cost across all 50 states and across all communities and the total size of the problem is probably around half a trillion.

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    1. I will jump right in on your comments about MN. welfare fraud, since I’m right here in MN and have been watching this first-hand for years. There’s unfortunately nothing new about Nick Shirley’s revelations. There is a local non-profit, Center for the American Experiment, that has been tracking this fraud for years. Billions of dollars. Most of it tied to folks in the Somalian immigrant community.

      I’m not sure who Shirley’s local research partner “David” is, but I’m glad that they hooked up. He’s the real hero here, as Shirley is from Texas and this David guy got him all of his material. I will say that Shirley did a terrific job getting his phone out in front of these non-profit fraudsters and explaining the situation simply for the American public. My understanding is that his tweet with the video is among the top ten tweets in the history of Twitter / X.

      The question is will it result in any change? The MN GOP, Fox News, Trump, etc could have promoted this story themselves if they had wanted to … for years. Most of it was out in the open even as our Governor was the Democrat VP candidate in 2024. The same goes for the fraud in California. Why is everyone pretending that it is new now? Why didn’t welfare fraud get attention when Elon Musk was talking about it earlier this year with the DOGE efforts?

      My skeptical guess is that by next week they will move on to the next shiny object and Tim Walz will be elected to his third term as MN Governor in November. The Trump administration doesn’t seem to put a disciplined, multi-year investigation into anything, do they? I think they would rather pivot the story to Newson & California, since he is a bigger threat to the GOP than Walz.

      Glad the fraud is getting some attention. Hope to be pleasantly surprised if anything happens as a result.

      I’m sorry, but I will be very surprised if this goes anywhere. Politicians promote corruption when it benefits them, but it very rarely seems to lead to anyone actually being punished … or budgets being reduced once the fraud has been rooted out.

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      1. I think Nick and David’s video will be a difference maker because the video bludgeon’s one with what is happening. We all have joked about how welfare is costing taxpayers to much money and I think the fraud was allowed for continue for years. Note how the fraud started off in the millions, but has been allowed to grow into a hundreds of billions problem.

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      2. I hope you are right. Our local newscast have been showing these stories for the last six or seven years. The only traction that has happened has been through US District attorney for Minnesota Joe Thompson. He was an Obama and Biden appointee and a native Minnesota. He has successfully charged and convicted over 75 fraudsters. Beyond his work, all I see is hot air.

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  4. I still have to watch Nick’s video but the abject failure of government to monitor and investigate fraud is perhaps the most pressing issue after getting our nose out of foreign entanglements.

    We had a good year at a 14.8% return and my consulting doubling what I expected to earn and sadly ? that will mean my wife’s social security will continue to be taxed.

    One of my children’s partners family is impacted due to increases in healthcare for poor people. That again is a fraud issue. Today’s WSJ I think article about how much ObamaCare now costs due to the providers siphoning off money including cost of drugs.

    I hate big government but our healthcare system is out of control, but then again how much of the cost is for those who are undocumented.

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    1. I have not been reading or watching much on such fraud topics lately as I am gearing up to testify as an expert witness for an issue involving schools and funding and management of funds. What I see is that it isn’t fraud, but mismanagement and ignoring issues hoping they will go away or Sacramento will jump in and help

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      1. Good that you are trying to do some good and play a positive role!

        I don’t recall – in my lifetime (honestly) – any significant reform ever enacted to combat fraud or mismanagement in any form of education or welfare. Federal or the states I’ve lived in. Despite rampant evidence at all levels.

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    2. Oh, I saw the video! He did a good job with the David fellow. Our local ABC, NBC, and Fox affiliates have been doing the same kinds of reports. The first was in 2018, when our Fox KMSP reported that over $100 million dollars was tracked at our MSP airport leaving the country in suitcases. Cash! It was all headed for East Africa & the Middle East. Everyone documented taking the $$$ out of the country ran Somalian day care centers – that had no kids! This was 7 years ago! A whistleblower reported that 80% of the money going through the program was fraud. Check out the date … https://www.twincities.com/2018/05/15/child-daycare-fraud-cash-going-to-terrorists-lets-unpack-this/

      Also, yes – MN has free healthcare for illegals, free college for illegals, and free drivers licenses for illegals. Probably a lot of other things I’m unaware of, too.

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    3. I saw Steve Hilton, the former Fox News Host on OAN. He is running as a Republican for Governor of California. He pegged the cost for providing ‘free’ healthcare to the undocumented at $9 billion for 2025. Next year the cost is forecasted to be $12 billion.

      You are correct with the assertion that the US healthcare system is rampant with fraud. My wife worked as an RN for around 40, years and she would come home and tell me about the fraud she was observing. One of the worst examples she told me about was a Chinese Doctor who was giving colonoscopies to patients who were in a late-stage terminal dementia care unit. The patients were all Do Not Resuscitate status. They were not able to give consent. But the doctor kept giving them colonoscopies at around $3,000 each.

      The US has 5% of the world’s population and yet pays 55% of the world’s prescription drug cost. There is a whole lot of over prescribing and overbilling. This has been allowed to happen because Big Pharma is the largest donor / briber of Congress. Most favored nation pricing should make a big impact.

      You mentioned the abject failure of government to discern and address fraud. I suggest you Google search “Cloward and Piven Strategy”. Richard Cloward and Francis Piven were Sociology professors at Columbia University who taught students to hand out welfare to the point that he breaks the country financially. The goal is to force the US to switch to Marxism.

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      1. The reason big pharma contributes so much to politicians is that the government controls the market. The reform I would like to see isn’t price controls (most favored nations), it’s putting in place the consumer model we have for life insurance, car insurance, homeowners insurance, renter’s insurance, dental insurance, optical insurance, and pet insurance.

        Then insurance companies will have to spend those same $$$ on product & service innovation. Folks that can’t afford insurance (Medicaid) can be given $$$ directly to spend on their own behalf. (After all, the Cloward & Piven strategy only works if you give the government more power – which has been the unfortunate trend.)

        In addition to super-charging the responsiveness of the demand side of healthcare with a price signal, healthcare stocks would now become attractive investable assets, which would also drive the marketplace feedback loop.

        (BTW … I’m not sure, but I would guess UNIONS, not big pharma, are actually the biggest contributors to politicians. They give immense time, talent, and treasure to ensure they get the best contracts).

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  5. The answer for public schools is always more money. Not prioritizing how the funds are being spent and what the results of the spending are. California and many public schools pull the wool over the public’s eyes that they are underfunded, because the miseducators would be forced to look at themselves and conclude that their schools are mismanaged. This is happening at the university level as well, because they have been cranking up the costs for tuition and room and board faster than inflation for the last five decades.

    Most people do not budget for themselves and their eyes gloss over during financial discussions.

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