2025 Year End Newsletter
12/16/2025
As we wrap up 2025, we want to wish you the happiest of holidays and thank you for trusting us with your financial lives. While our role is to help manage your wealth and guide your planning, we also feel privileged to share the journey with you as your families grow and pursue new goals and adventures.
How do we sum up 2025? And what might be in store for 2026?
This past year brought stabilization of inflation, steady corporate earnings growth, and a solid stock market that—thankfully—has begun to broaden beyond just technology and “AI.” International markets also delivered stronger performance, and the bond market remained stable and constructive throughout the year.
At the same time, we are monitoring several indicators that could point to a moderation in economic growth. Consumer spending patterns, household debt levels, interest rates, and overall credit conditions all factor into our outlook for the year ahead. While there is still uncertainty around how employment trends will evolve in 2026, broader economic fundamentals remain relatively strong.
Looking ahead, the general outlook for 2026 calls for slower growth in the first half of the year, followed by a pickup as we move toward year-end. Tariffs have continued to filter through the economy and should increasingly fade from the inflation data. We also expect that tax refunds next spring will be meaningfully larger than in recent years, which could provide a modest tailwind for consumer spending. Employment should remain within historically low ranges, although we do anticipate unemployment ticking up. That could lead to negative headline sentiment and short-term market dips, but we do not see cause for alarm—especially when compared to the double-digit unemployment rates of the 1980s.
On a separate but related note, it would be impossible to reflect on 2025 without addressing the most talked-about topic of the year: artificial intelligence. Are we in a bubble? In our view, not yet. After speaking directly with experts and reading research from both sides of the argument, we continue to believe we are in the early stages of a genuine and durable AI-driven transformation, much like the internet revolution of the 1990s and into the new millennium, which created real long-term value for investors.
Could the companies leading in AI experience pullbacks? Absolutely. This is a long-term investment theme, and patience will be important. We have also been diversifying portfolios to ensure exposures are not overly concentrated in tech or AI-related names.
In short, our outlook can best be described as cautiously optimistic. We remain confident in the long-term growth of the U.S. economy and stock market, while also recognizing that even strong bull markets experience periods of volatility and periodic corrections. As a result, we do expect higher volatility ahead compared to the relatively calm environment of the past few years. Notably, many of the warning signs that flashed in recent years—rapid rate hikes, nearly 9% inflation, an inverted yield curve, geopolitical conflicts, and elevated energy prices—did not ultimately lead to a recession or major market correction. That resilience is an important perspective to keep in mind.
There is much more to discuss, and we look forward to continuing these conversations with you as we enter a new year.
Chris Reaney, CFP® | Matthew Marino-Babcock, CFP®, AAMS
Founding Partner, Managing Director, Wealth Manager | Partner, Vice President, Wealth Manager
Highwater Wealth Group of Steward Partners
145 Maplewood Ave, Ste 100, Portsmouth, NH 03801 | 603.427.8859
[email protected] | [email protected]
highwatergroup.stewardpartners.com
The views expressed herein are those of the authors and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. All investing involves risk including possible loss of principal. Past performance is no guarantee of future results.
Diversification does not guarantee a profit or protect against loss in a declining financial market.
Information contained herein has been obtained from sources considered to be reliable, but we do not guarantee their accuracy or completeness.
AdTrax 8667116.1 Exp 12/26
How do we sum up 2025? And what might be in store for 2026?
This past year brought stabilization of inflation, steady corporate earnings growth, and a solid stock market that—thankfully—has begun to broaden beyond just technology and “AI.” International markets also delivered stronger performance, and the bond market remained stable and constructive throughout the year.
At the same time, we are monitoring several indicators that could point to a moderation in economic growth. Consumer spending patterns, household debt levels, interest rates, and overall credit conditions all factor into our outlook for the year ahead. While there is still uncertainty around how employment trends will evolve in 2026, broader economic fundamentals remain relatively strong.
Looking ahead, the general outlook for 2026 calls for slower growth in the first half of the year, followed by a pickup as we move toward year-end. Tariffs have continued to filter through the economy and should increasingly fade from the inflation data. We also expect that tax refunds next spring will be meaningfully larger than in recent years, which could provide a modest tailwind for consumer spending. Employment should remain within historically low ranges, although we do anticipate unemployment ticking up. That could lead to negative headline sentiment and short-term market dips, but we do not see cause for alarm—especially when compared to the double-digit unemployment rates of the 1980s.
On a separate but related note, it would be impossible to reflect on 2025 without addressing the most talked-about topic of the year: artificial intelligence. Are we in a bubble? In our view, not yet. After speaking directly with experts and reading research from both sides of the argument, we continue to believe we are in the early stages of a genuine and durable AI-driven transformation, much like the internet revolution of the 1990s and into the new millennium, which created real long-term value for investors.
Could the companies leading in AI experience pullbacks? Absolutely. This is a long-term investment theme, and patience will be important. We have also been diversifying portfolios to ensure exposures are not overly concentrated in tech or AI-related names.
In short, our outlook can best be described as cautiously optimistic. We remain confident in the long-term growth of the U.S. economy and stock market, while also recognizing that even strong bull markets experience periods of volatility and periodic corrections. As a result, we do expect higher volatility ahead compared to the relatively calm environment of the past few years. Notably, many of the warning signs that flashed in recent years—rapid rate hikes, nearly 9% inflation, an inverted yield curve, geopolitical conflicts, and elevated energy prices—did not ultimately lead to a recession or major market correction. That resilience is an important perspective to keep in mind.
There is much more to discuss, and we look forward to continuing these conversations with you as we enter a new year.
Chris Reaney, CFP® | Matthew Marino-Babcock, CFP®, AAMS
Founding Partner, Managing Director, Wealth Manager | Partner, Vice President, Wealth Manager
Highwater Wealth Group of Steward Partners
145 Maplewood Ave, Ste 100, Portsmouth, NH 03801 | 603.427.8859
[email protected] | [email protected]
highwatergroup.stewardpartners.com
The views expressed herein are those of the authors and do not necessarily reflect the views of Steward Partners or its affiliates. All opinions are subject to change without notice. Neither the information provided, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. All investing involves risk including possible loss of principal. Past performance is no guarantee of future results.
Diversification does not guarantee a profit or protect against loss in a declining financial market.
Information contained herein has been obtained from sources considered to be reliable, but we do not guarantee their accuracy or completeness.
AdTrax 8667116.1 Exp 12/26