Midway through 2025, outcomes for the economy and the financial markets for the year remain somewhat murky, Crossmark Global Investments CEO Bob Doll suggested Monday.
Even though the U.S. stock market recently climbed 20% in six weeks from a bear market to a year-to-date gain, various political and economic forces should signal caution for investors, Doll said in his quarterly investment commentary.
Doll, who also serves as chief investment officer, cited higher tariffs, government spending cuts and sharply falling immigration as likely drags on economic growth.
“Also, while hard economic data look acceptable for now, some of this may just reflect lagged effects, maintaining the prospect of slower growth and higher inflation in the months to come,” he wrote.
And President Donald Trump’s tax and spending bill, which he signed Friday, “cannot provide fiscal stimulus to a soggy economy without further worsening an already alarming deficit trajectory.”
Crossmark expects to see real GDP rise by 1% annualized over the first three quarters, representing very slow growth but not recession, while inflation likely will accelerate, Doll wrote.
“Corporate profit growth should continue to slow but remain positive,” he predicted.
“Elevated valuation could limit market upside, but it is rarely a sell catalyst on its own, especially if the U.S. continues to deliver strong growth and the AI story remains intact. Rich equity valuation will remain a psychological hurdle for some investors, in particular, foreign investors who tend to have a greater value bias,” he wrote.
Doll also expects uncertainty in the global economy to persist in the second half. “Valuations have rebounded to near all-time highs, while profit growth is slowing, margins are weakening, and tariffs are higher than they were at the start of the year.”
Check out the gallery for Doll’s midyear report card on his 10 predictions for 2025.
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