Forecasts vs. Reality for 2025—What Actually Happened
At the start of 2025, the consensus looked pretty straightforward. Most forecasters predicted moderate growth, stable inflation, and a gentle landing for the economy. A few outliers suggested otherwise, but the mainstream view was relatively calm. The catch was that 2025 actually happened! By the end of the year, the gap between what the experts predicted and what actually occurred had widely diverged. Some forecasts were partially right. Others completely missed the mark. What's striking is how obvious many of these surprises seem in retrospect.
A few patterns stand out when the Forecasts Break Down
Underestimating volatility: Most forecasts assumed a fairly linear path through the year. Instead, markets experienced sharp swings with periods of strength followed by sudden weakness, over and over again. It turns out that volatility is hard to predict.
Missing the unexpected: Every year brings at least one development nobody saw coming—or that everyone anticipated but misjudged significantly. That's what makes these moments so difficult to forecast.
Anchoring to recent history: Forecasters tend to extrapolate from what just happened, assuming yesterday's patterns will persist. Markets don't work that way. What looked solid last year can shift dramatically the next.
Why Forecasting Persists
Despite this track record, forecasting isn't going away anytime soon. We need some framework for thinking about the future, even if that framework is imperfect.
Instead of acting on forecasts and fears though, treat them as a starting point for thinking through your own goals and plans. Ask yourself: What if I'm wrong? When you build that possibility into your plans you, and your finances, become more resilient to any changes that may come your way.
This is why goals-based investing works. You don't need the forecast to be right. You need your portfolio to be resilient enough to handle the inevitable surprises life brings.
What This Means for You
If you've been paying close attention to market forecasts this year, now is a good time to step back and refocus. A financial plan that is built entirely on analyst predictions is a plan built on uncertainty. A better approach is one grounded in your actual goals and circumstances and guided by someone who understands both your situation and how markets behave over time.
Your portfolio should reflect what matters to you—your timeline, your needs, your values—not whether this year's forecasts proved accurate. If you'd like to review your strategy with that focus, we're here to talk