In this week’s newsletter, we’re spotlighting key highlights from LPL, which provides an in-depth look at what next year’s economic and market environment might hold.

SETTING THE STAGE: THE ECONOMIC LANDSCAPE. As we enter 2025, several economic trends are expected to shape the year ahead:

• Slower Growth, Not Recession: While consumer spending may cool, increased demand for capital investment could help sustain economic momentum.
• A Cooling Labor Market: Signs of downshifting in the labor market—such as less job-switching and reduced hours—point to easing demand for workers. Unemployment is expected to inch higher, contributing to a modest economic slowdown.
• Easing Inflation, But Challenges Remain: Inflation has moderated but remains elevated by historical standards. Policymakers face the delicate challenge of addressing uneven pressures across different groups.
• A Measured Pace for Rate Cuts: Lingering inflationary pressures could temper the Federal Reserve’s ability to cut rates aggressively.

Overall, this environment could prove favorable for equities, with steady economic growth and moderating inflation supporting corporate profits. However, risks like a reacceleration in inflation or shifts in tax and regulatory policies will require careful attention.

WHAT TO EXPECT FROM EQUITY MARKETS IN 2025. Against this economic backdrop, the stock market is poised for another year of potential gains. Here’s what LPL anticipates:

• Bull Market Durability: Historically, bull markets that make it to year three, as this one has, and avoid recession often extend into a fourth year.
• Strong Fundamentals: Stable interest rates and solid earnings growth are expected to keep valuations elevated, though further expansion may be limited.
• Opportunities for Growth: Factors like lower interest rates, productivity improvements, and policy shifts from the new administration could provide a boost, turning a good year into a great one.
• Risks on the Horizon: A sharper economic slowdown, rising inflation, interest rate volatility, or geopolitical tensions could weigh on markets.

While a pullback is overdue and part of normal market behavior, such moments could present valuable buying opportunities. Staying disciplined and focusing on the long term will be essential for navigating the year ahead.

Though 2025’s gains may not match the exceptional performance of 2024, the year holds promise for investors. With the right perspective and strategy, opportunities abound to grow and strengthen your financial foundation.

Thank you to everyone who donated items for our food drive supporting the Food Bank of Northern Nevada. This year, we collected a record number of donations, and we are truly overwhelmed by the generosity of our community.

No matter which holiday you celebrate, we wish you a joyful holiday season and a prosperous New Year. From our Legacy Wealth Planning family to yours, may this season bring you happiness and success in the year ahead.

– Mark and Elise

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. All information is believed to be from reliable sources; however, LPL makes no representation as to its completeness or accuracy. This research material has been prepared by LPL Financial LLC. Tracking #672785 (expires 12/25).