5 year stock market forecast

5 Year Stock Market Prediction

5 Year Stock Market Forecast

Today, we pull out the Crystal Ball and summon our predictive powers to see what’s beyond Covid 19, 2 major US elections, and a recovering global economy.

We’ve got forecasts for today, 2022, this week, next 3 months, next 6 months, 3 year and now the 5 year long term view.

The stock market bubble as many are saying we’re in is expected to burst at some point. However, trillions in stimulus spending alters that expectation and keeps the economy running hot. Without Fed stimulus, corporate earnings would taper off and begin to plummet.

When Will You Begin Investing for the 5 to 10 Year Period?

Investigating the 5 year or 10 year outlook is a sure sign you’re a wise investor. After all, if you don’t know what’s ahead for US business, then all of your investing is basically gambling (i.e., Bitcoin). You have to know which stocks are long term investments and be certain about when you’ll need to dump some of the speculative stocks you have now.

There aren’t many 5 year forecasts published. It seems no one wants to stick their neck out. That tells you a lot about whether economists and experts have clarity. Some cite technicals and go into great detail, but technicals are dependent on other driving factors such as political discontent, media propaganda, bad political decisions, political fighting, and fiscal cliffs that get closer. Technicals are symptoms, not the cause.

Would you rely on an AI stock prediction service for your 5 year outlook? Of course not, because the driving factors are human and emotional.

My 5 year market forecast is for continued growth and I believe the US government will tackle the China problem, because they have to. The issue of competing with China and the trade deficit will have to be dealt with.  Continued spending and import deficits will make Federal and consumer bank accounts dry up eventually.  Consumer’s bank accounts are fat and could drive spending for many years.  However, America’s competitiveness will fall, and the stress from that will make politicians finally do something to bring fairness.

Trillions in Stimulus Floats all Boats

Most 5 year or 10 year forecasts revolve around a single financial event — US Federal infrastructure stimulus. We can all agree that big stimulus to modernize the US is needed. Unfortunately, that infrastructure has been neglected for decades.
Big multinational corporations have been feeding at the Free Trade trough for 3 decades and they don’t care about the domestic economies of the nations they sell in. They only want profit. The US will need border protection to stay competitive against slave economies in Asia.

The current US government administration is set to tax the big companies and billionaires which is wise. They’re spending trillions and then taxing it back. The economic spinoff of infrastructure spending will be exceptional, however since the US imports like crazy, so most of the benefit will leave the country and not return (including technology).

China is financially airtight and the communists are more interested in their internal development and global exports. China will grow strongly but investing in China is like booking at the Hotel California. You’ll never get your money back out.

The US Outlook is Positive

The US stock market has outperformed most of the experts predictions for 2021. Their guesses at the S&P index were all under where it is now. Any stimulus that’s added to the recovery will make it a strong outlook. But there are plenty of dangers. We look for stock market crash signals, and we find them in politics.

Everyone wonders what will cause the next stock market crash because there are so many working parts. The biggest danger is political tactics made because they have to do it (e.g., global interest rates head upward, dragging the US with it, while raising interest rates is needed to pay down massive US debt).

The Bureau of Economic Analysis forecast rising real GDP until about 2027, when it begins to tail off.

CBO offer’s their projections for the 5 to 10 year period ahead.

Long Term Economic Projections. Screenshot courtesy of CBO.

The 5 Year Predictions are Still Positive

The outlook for the 5 year stock market forecast in the US is positive. Despite the crushing debt, the US is on course to grow strongly. The Covid 19 pandemic (China) has caused this growth period to be slower with less inflation which actually aids the long upward, and safe progress.

US Trade Deficit Hit $75 Billion in June and $70 Billion in July

The economy needs less friction and it needs funds distributed to people and businesses which they haven’t been. States and cities are hanging onto whatever they receive and use Fed funding to pay down their debts. That’s not infrastructure.

We’ve discussed the stock market predictions for 2022/2023 and within that upward trend comes some big corrections. Perhaps in October, we might see the first. The big event comes in December of 2022 when the Republicans retake the senate. Even with a 2023 stock market crash, the markets will recover in time. By 2026, global demand will still be rolling along and the US will benefit.

The US is battling China, because China is positioning to take all the global trade marbles for themselves and leave the US and Europe out in the cold.

During the summer of 2021, we’ve seen the current US administration juggling endless tactics that are too far ahead of themselves (green energy, crushing US energy production, raising taxes on the wealthy). Some of these initiatives are good (supporting the burgeoning poor, infrastructure, new technology) but where is help for housing which is actually supporting the economy?)  Earnings this year have been great, but that picture will darken by 2023 when interest rates have to rise.

At that point, the reality of the new economy will come into focus. We don’t have clarity right now, which is why speculation and big Gov spending are letting investors ride high above the clouds. When the Republicans begin blocking Democrat initiatives, the Democrat house of cards will topple. It’s already toppling, and Joe Biden’s health concerns will make that picture worse.

With the Democrats not having anyone suitable to run against the Republicans, it’s easy to pick the Republicans to win in the 2022 mid terms and then in 2024 for the Presidency.

With them back in office, they will return to a pro-US business outlook with less free money for the poor. I can’t say that either party will help small business at all. In this era, it’s all big business, they take the cake and eat it too.

We should see some good periods for the Russell 2000 and S&P small caps, but it’s a tough life for small business. The government simply isn’t intelligent enough to know how to grow small business without alienating big business and causing stock equities to suffer. Between a rock and a hard place. Yet small business drives employment. With AI, big business drives unemployment. Of course, AI does whatever you ask it to.

Add on how difficult Facebook and Google have made it for small business to market themselves, and how high tax is for SMBs, and the picture gets dark for small US companies exposed to cheap foreign competition.

For big business and equities and the stock market, the 5 year outlook is good, but with some major corrections, crashes and recovery periods.

Enjoy the rocky road ahead. See more on the stock market forecast, stock market today, and what drives the S&P, Dow Jones, NASDAQ and Russell indexes. The broader you’re knowledge and the more diverse your perspective, the more likely you are to avoid picking stocks you should sell, and find the best stocks to buy for the next 5 years.

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