The events in our world are determined by the actions of billions of human beings. Therefore, it is impossible to predict the future with any great degree of certainty.
Still, predictions are useful in analyzing where we are and where we are likely to go. We should also explore what’s possible just so that we can be prepared in case certain things happen.
Economic Recession
I was wrong about this in 2023, or at least my timing was wrong. I thought that a recession would start before the November 2024 election. If it has already started, it isn’t evident yet.
We had an inverted yield curve in all of 2023 and most of 2024. It is now normalizing. This is the common occurrence before a recession begins. Many people say this time is different. They point to different factors. I don’t believe this to be the case.
2025 may be the year that we hit a deep recession. It will be thrown in Trump’s lap, just as price inflation was thrown in Biden’s lap.
Trump is partially to blame for the next recession. He was part of the problem in 2017 to the end of 2020. He was especially bad in 2020 when the establishment suckered him in on the virus hysteria. Trump promoted all of the massive spending and bailouts, which accompanied the massive monetary inflation from the Fed.
This held off the recession in 2020, but just made the misallocations that much more severe. Now we will pay the price.
It won’t be a good look for Trump if he hikes tariffs and then we are hit with a deep recession. Tariffs are bad for the economy, but the economy is already set up for a recession without higher tariffs.
Government Spending
The federal government is running deficits that are beyond imaginable. It is hard enough to grasp how much a billion dollars is. Now just consider that the government is running a deficit of over $5 billion per day.
I believe Elon Musk and Vivek Ramaswamy are serious about cutting spending. The problem is that it is ultimately Congress and the president that determine the spending. The only way Elon and Vivek will be somewhat successful is if they get public opinion on their side and Americans pressure their “representative” to actually make cuts.
My guess is that the whole DOGE thing will be a mixed bag. I think we will see some success in cutting around the margins. We aren’t going to see a trillion dollars cut from the budget.
About 80% of the federal budget is military, Social Security, Medicare, Medicaid, and interest on the debt. Unless there are going to be massive cuts (hundreds of billions of dollars per year) to the military, then we aren’t going to see anything significant.
If DOGE can somehow get rid of the Department of Education, this would be a big win, at least symbolically. I think they should put some focus there. Most government education spending is done at the state and local level anyway.
Foreign Policy
Trump has been a disaster since getting elected in November, at least with his rhetoric. He jokes about Canada becoming our 51st state. He says “we” should take back the Panama Canal. He also says we should take over Greenland. Where does he even get that from?
Trump may be better on foreign policy issues than the average establishment political figure, but why is he making these reckless statements? Just like talking about tariffs, he thinks it is a way to bring people to the negotiating table. But what if someone calls his bluff?
Is Trump going to go to war over the Panama Canal? Will he send the army in to take over Greenland? If he does anything close to this, he is going to lose a lot of support from his base. And where is he getting the money for these new adventures?
Trump’s nominees for his cabinet are mostly a disaster on the foreign policy front. They are not “America First”. They are “Israel First”. This spells trouble ahead. Even some of the people he is nominating are not great on Ukraine.
I think the war in Ukraine will start to wind down, but it is because Russia has the greater military might than Ukraine, even when Ukraine is funded and armed by the U.S. I hope Trump is right that he will end the conflict right away, but I can’t be so sure.
The only way Trump is going to get Putin to agree is by giving some kind of assurance that the U.S. will not admit Ukraine into NATO.
I don’t think there will be a clean peace agreement right away when Trump takes office, but I do have hope that the conflict will slowly come to a close.
There is reason to hope that there will be less foreign conflict under Trump, but Trump needs to tone down the rhetoric. He needs to stop making threats. He is probably not prepared to back up his threats with action, which is what we should hope is the case.
Other Items
I believe that RFK Jr. will be approved as the next Secretary of Health and Human Services. I don’t think we will see Fauci go to prison. I don’t think there will be really major changes, but there could be some positive changes. I believe they will recommend that fluoride not be added to our tap water, and I believe that many local governments will follow the recommendation.
The best thing about Kennedy is that he is bringing awareness to the issue of health. This is where real change is made. There are more people today than a year ago who are conscious of what they are eating and putting in their bodies.
There is a decent chance that Tulsi Gabbard will get confirmed as director of national intelligence. I think she will help put an end to the political lawfare we have seen over the last few years. The problem is that I don’t know if she will be able to make permanent changes that will prevent another corrupt administration from returning to the policies of 2021 to now.
It will be the same with the FBI and CIA. Trump seems to be doing a little better with not appointing people who hate his guts. We should expect improvement with the intelligence agencies with the recognition that there will still be major abuses.
I believe Trump will commute the sentence of Ross Ulbricht as he promised to the Libertarian Party. If he doesn’t, then libertarians who have been somewhat sympathetic to Trump are going to turn on him hardcore, just as they should.
Trump will probably pardon the J6ers, but I don’t know if he will pardon everyone. We hear reference to the non-violent J6ers as deserving a pardon, but I haven’t seen evidence of violence on J6 except for the Capitol police. There were some windows that were broken, but even here I don’t know that it wasn’t undercover federal agents. Unless there is hard proof that someone committed initiatory violence, they should be pardoned. And even if there is evidence that someone shoved a police officer for no reason (or something like that) or broke a window, how many years in prison should they get? There are very violent criminals who get less time.
And finally, we have the establishment media. They were the big losers of 2024. I expect they will not make major changes. Some media pundits will pretend to be sympathetic to Trump at times just because they know how much public opinion has turned against them. We can also expect that there will be budget cuts for some of the networks. They will not get the surge in popularity that they got with the first Trump term. There aren’t a lot of people (although there are some) who want to hear about the next Russia collusion story.
Conclusion
We have no idea what will happen in 2025. In July 2024, a bullet one inch over would have drastically changed everything. These are the highly unpredictable events.
I am being realistic, but I do have cautious optimism for a little more peace in 2025. On the economic front, watch out, and don’t be heavy in stocks.