Investing.com — In a note to clients on Monday, Wells Fargo (NYSE: ) has released ten market predictions for 2025, covering macroeconomic trends, market movements, technological advances and geopolitical developments. These insights reflect the bank’s expectations of economic performance, industry changes and investor sentiment for the new year.
1) Wells Fargo analysts believe that investors will prioritize organic growth over pricing strategies, as seen in Q3 24 earnings. In response, companies will cut back on price increases, a subtle but positive development to control inflation.
2) The bank expects consensus projections for US GDP growth in 2025 to be in the mid-2% range by spring, mirroring the pre-2024 trend.
“That could help the stock rally in the first half of ’25, but sets up a ‘normal’ correction in the summer,” Wells Fargo analysts Christopher Harvey and Gary Liebowitz said in a note.
3) Breakthroughs in artificial intelligence are expected with xAI’s Grok 3 and Meta (NASDAQ: ) Llama 4, using record-breaking GPU clusters three times larger than standard setups. According to analysts, this advance could reignite the AI trade and intensify competition among tech giants for larger-scale innovation.
4) Wells Fargo predicts Coinbase (NASDAQ: ) will join in the first quarter of 2025, reflecting investors’ increasing tolerance for risk and strengthening momentum-driven strategies. This milestone would highlight the increasing adoption of digital assets in major markets.
5) The US budget deficit forecast for 2025, which now stands at $1.89 trillion, is expected to narrow as stronger capital gains income provides an unexpected boost. That would provide a “decent tailwind for treasuries,” analysts said.
6) Wells Fargo expects the US to impose additional tariffs on Chinese imports, prompting retaliatory measures from China. While these tensions may initially slow progress, China’s accommodation policies may ultimately strengthen its economy.
“They ultimately help the commodity complex by causing a sharp reversal in the wealth of basic materials, which gets worse before it gets better,” the analysts noted.
7) Large-cap portfolio managers are projected to outperform in 2025 as regulatory adjustments lead to a more balanced market, boosting returns for those underweight in mega-cap stocks.
8) The housing market could recover in the second half of the year, supported by a drop in 30-year mortgage rates to 5.5%. Lower rate volatility and clearer Fed guidance are expected to bolster investor confidence.
9) Core inflation is expected to ease from the current 3.3% as consumer demand eases in the second half of 2025. Concerns about inflationary pressures from tariffs are expected to fade.
10) Finally, Wells Fargo analysts believe the momentum in Republican voter registration is likely to improve the party’s chances of retaining control of Congress in 2026. Notably, active voter registration in Nevada is expected to shift in favor of Republicans for the first time since 2007.
