As the old saying goes, it’s difficult to make predictions … especially about the future. It is common for forecasters to have to walk back their predictions. Here are a few recent examples to keep in mind as the financial industry floods your inbox with 2025 forecasts.
Many prominent organizations publicly sounded the alarm for a recession in 2022 and 2023, only to later walk those predictions back. Some pushed their recession prediction to 2024, which did not happen either.
Instead, the S&P 500 Index rose by 23.3% in 2024. Not a single analyst polled at the end of 2023 believed it would grow by its historical average rate of return, 12.3%. The signs of a recession (lower GDP, unemployment, inflation, etc.) may be present to varying degrees, but timing a recession is hard to get right.
In four of the past five years, the S&P 500 has outperformed even the highest analyst estimates. Its actual return has fallen outside the range of analyst predictions in all five years.
Source: Dimensional Fund Advisors