Stock Market Forecast for the Next 5 Years
Last week saw big funds, banks and billionaires move their money out of the US to tax havens and Europe and it had a material effect on stock prices.
Recent market volatility won’t hamper the US’s economic recovery over the next 5 years. Investors may find some great stocks to invest in next week in investible sectors with a good outlook. Smart investors are focused on the 1 year to 5 year outlook. The pain of the Trump tariffs (for US stock investors, and consumers) will end in 2026. From 2026 to 2029, US stocks will soar, and likely in 2026, we’ll get the long-promised rotation into small stocks. Last week, the Russell 2000 did well.
This 2025 or one year short-term downturn offers the extra value of reducing inflation, lowering interest rates, ending government waste which it couldn’t afford, reducing energy costs, flushing out low-performing businesses, and reminding Americans that their lives haven’t been all that great. Recessions always precede the next bull stock market run and a great economic reawakening.
In this report, we focus on the longer term outlook with some predictions. It’s all post tariff adjustments where deregulation is successful. Deregulation is grossly understated in its power to unsuppress America’s productive power. It’ about much more than “drill baby drill” to free US companies and allow them to fully invested in. This is where the innovation curve steepens (e.g., AI, military, manufacturing) and the US begins to leave the world in the dust. If you’re an investor wanting to grow your 401K, this lifting of harmful regulations will really give the US a lift. Unfortunately for the Democrats, Americans will get to see how negative their government was. US productivity will undergo a massive thrust in the next 5 years.
For retailer investors, a great opportunity to buy stocks on the dip soon, and then reap the rewards over the next year to 5 year window. Once the US regains its productivity legs, the economic performance will be record-breaking. President Trump on Wednesday laid out a clear explanation of what’s happened to the once great United States. Americans elected him to turn it around, and he noted there will be a transition period, which he should have covered at some point to reassure Americans that they’ll get through it. His lack in this area is now giving the Democrats a chance to win some political points.
American Confidence Still Low
The 30-year loss of industry and the pandemic have sapped American’s spirit and strength. A flood of illegal immigrants, drug cartels and violence amidst massive debt ridden states and cities, provides a dour sense about life in America. The private sector has produced very few jobs for 5 years and now government jobs are being forcibly reduced. ADP’s recent employment report showed a slight turnaround with the first sign of private sector job growth. This should continue.
Just a note on progress, with the tariff announcement, companies will now move their companies and money into the US more quickly. The factories will be built quickly because they have to. Those who divested and moved their money to Europe, Tax havens or Japan, will be forced to pay higher prices for stocks when they return. You can can profit off of that incoming cash when it happens. You’ll need to listen to the Forex people and their forecasts and news.
Unfortunately, American resilience is in question, so this period makes those without faith doubt their own competitiveness and value. New companies in all industries of all sizes across the US will soon flourish. Trump’s economic plan is solid even if it doesn’t generate millions of jobs this year.
As you know, few stock market experts offer forecasts for the 5 to 10 year period, because it requires a lot of thought. They’ve consistently got it wrong on the stock market and economic outlooks, because they’re so politically bent. Even with the massive data market experts have at their disposal, few of them predicted the current situation or got their 2024 forecasts right. Currently, they’re constantly revising their forecasts downward as the US tariff drama plays out. Shouldn’t they have predicted the Tariff turmoil?
If we start with the all-important macroeconomic forces, past 5-year performance, social and economic pain Americans feel, and the political will of the people to overcome the past 30 years of low performance and debt, we get a clear picture of the future.
Currently, the Democrats are trying to use courts (illegally) to overturn President Trump’s tariffs. It’s unlikely that will work, but if they did it, it would send the US into a deep recession. Because the US has a $36.6 Trillion deficit, $1.2 trillion trade deficit, and a $1 trillion/year interest due on the debt, $37 trillion in debt to be refinanced this year and there are insufficient taxes to run a bloated government spending spree.
So debt and weak economic outlook are pushing the US to the brink of insolvency. If Trump fails this mission, positive outlooks don’t seem likely at all.
Forecaster’s predictions are skewed by politics, and while political battles are still to be waged, the Republicans have control of the government and they’ll be able to pass helpful, cost-saving legislation, and force the flow of money out of the public sector and back into the private sector. This transition of American wealth will launch a golden era for the United States.
Why is the Market Outlook so Rosy beyond 2025?
The transition period is painful, and President Trump hasn’t assuaged the challenge to help everyone navigate 2025’s downturn. Employment is up and foreign direct investment is flooding into the US. Oil prices and commodity prices are plummeting which is very good for dropping the painful inflation everyone said was the only issue.
$ Trump tax cuts
$ reduction of wasteful government spending for more efficient government
$ tariffs to reduce unfair trade practices
$ tariffs may cover lower income tax and ease income tax rates
$ lower inflation due to less government spending
$ lower energy costs which affect all industries
$ lower interest rates to aid small business, housing market and consumers
$ 6 trillion in money markets could move to the stock market for higher returns
$ technology gains in microchips, robotics and AI
No one cares about small business in government, however, the downturn of international monopolies and their negative effect on the economy is a major point going forward. Their usual game is being upended with tariffs and countertariffs. They won’t have the leverage or other assets to bury SME’s that are trying to start or progress.
Readers want to know the 5 year outlook for inflation, stock price growth, real estate 5 year forecast, and whether they can pull their money out of the money markets and move into these US stocks with so much upside. Political upheavals aside, the US is the golden goose.
Small business will see a veritable “release from jail” period where interest rates fall, inflation falls, and they have a certain market to sell in — their own market! This optimism and freedom will launch new businesses in manufacturing, technology, AI, and more. Lower interest rates can’t be understated for SMBs as a major boost for jobs, earnings, job security, quality jobs, and strong consumer spending.
With all the money staying within the US for the tariff period, US companies of all sizes have a fantastic outlook.
Some analysts such as BMO’s Brian Belski believe this bull market will take a rest in 2025 as they need to rest. But the economic stimulants are much too strong. And far from raising prices, any tariffs on imports will help to ease demand and inflation. The defeat of the Dem FED and other regulatory agencies is no small factor either. Regulations are one of the top investor risks, and with them out of the way, more investors will be willing to jump on the Pro-American economic plan.
Many of the economists and analysts have not let go of the Democrat philosophy, but their presence in the media will begin to fade strongly.
You can see more on the stock market update post. and learn more about the Trump economic boost, launched a strong Santa Claus rally.
Given predictions are trending to the upside, investors are trending toward growth stocks. There is still euphoria and greed driving these markets, so value stocks still aren’t on buyer’s menu.
US News offers up its top large cap growth stock picks for 2025:
| Stock | Sector |
| Apple Inc. (ticker: AAPL) | Technology |
| Costco Wholesale Corp. (COST) |
Consumer staples
|
| DaVita Inc. (DVA) | Health care |
| MercadoLibre Inc. (MELI) |
Consumer discretionary
|
| Microsoft Corp. (MSFT) | Technology |
| Netflix Inc. (NFLX) |
Consumer discretionary
|
| Palo Alto Networks Inc. (PANW) | Technology |
| SoFi Technologies Inc. (SOFI) | Financial |
| Tesla Inc. (TSLA) |
Consumer discretionary
|
And Forbes predicts its best small cap growth stocks:
| Stock (ticker) | Average Yearly Expected EPS Growth (5-Year Avg.) |
| ACM Research (ACMR) | 42.70% |
| Titan Machinery (TITN) | 25.00% |
| Stride (LRN) | 20.00% |
| Digi International (DGII) | 17.00% |
| The Bancorp (TBBK) | 12.00% |
| Hess Midstream (HESM) | 11.10% |
| Sterling Infrastructure (STRL) | 11.00% |
| First Financial Bancorp (FFBC) | 10.00% |
| OFG Bancorp (OFG) | 8.00% |
| NMI Holdings (NMIH) | 6.90% |
So it’s a great time to pick the best stocks to buy in the best sectors while you wait for lower interest rates to kick in, and President Trumps actual implementation of lower taxes, higher tariffs, lower regulations, and a pro-US-business agenda. The FED dropped the key lending rate by 25 points today and economists are expecting a 50 basis point cut in December.
With the loss, the Democrats will be unable to introduce new spending bills and this signals lower inflation. Volatility in the markets are down, and there aren’t many negative catalysts to be found. Sure, the media will try to create negative new stories to throw a monkey wrench in, but overall they seem to shifting to the Trump trade grudgingly as American investors wake up to a broadening of the market as the economy picks up speed.
One day, that makes so much difference to the 5 year period ahead.
Goldman Sachs actually put out a pessimistic view of stock performance for the 5 year to 10 year outlook. They believed the S&P 500 will fade off to a low 3% growth for the next 10 years. They’ve changed their minds recently with their new forecast. Ed Yardeni commented on that dour forecast by suggesting that Goldman was missing the productive effect of technology (i.e, AI) to boost returns of all companies.
David Mericle, chief US economist in Goldman Sachs Research said “The US economy is in a good place. Recession fears have diminished, inflation is trending back toward 2%, and the labor market has rebalanced but remains strong.” Goldman Sachs Research predicts US GDP will grow 2.5% on a full-year basis vs a 1.9% consensus forecast of economists surveyed by Bloomberg.
Ed Yardeni’s Forecast
Ed Yardeni of Yardeni Research anticipates the S&P 500 will reach 6,100 by the end of 2024, with additional gains to 7,000 by end of 2025 to reach 8,000 by 2026 and 10,000 by 2030. He believes these targets are achievable in the current environment, bolstered by solid performances from tech giants and the reinvigoration of investor “animal spirits.”
The possibility of a recession and stock market crash are very low now. Strong consumer spending, business confidence, and receding interest rates tell us 2025 will be a great year. Schwab sees returns lower than the historic average and that International companies will fare better than US large and small caps. That’s likely not a good bet as the Trump tariffs hit nations who have been unfair with the US.
Yes, opinions on how the 5-year forecast period will shape up vary. First of all, rate cuts thought to be already be priced in, are actually not (according to Tom Lee in an interview on CNBC).
In your analysis, take a closer look at:
- GDP forecasts (Statista’s charts show a continuous strong climb through 2028
- interest rate and mortgage rate forecasts
- inflation rate projections
- oil price predictions
- consumer spending projections
- corporate earnings outlooks
- p/e valuations
- wars and trade conflicts
- manufacturing repatriation
- investor confidence reports
- bond and money market yields low making equities more tantalizing
- housing market forecasts
- large GenZ and Millennial demand for products
Some believe 2025 won’t be great given waning consumer spending and interest rates that are still too high. It might take a while before the lagging effects disappear, and a short recession eases off. For investors however, stock prices are evaluations of future value. US GDP growth was 3% last month so the economy is in a good position to grow and prosper.
We can explore all the factors you should be aware of in this 5-year outlook. With all the above economic-boosting indicators above, it’s fascinating to see such gloomy predictions by some forecasters. And if the US government is forced to cut its spending amidst outrageous debt payments, it still wouldn’t destroy the burgeoning private sector, which looks to be headed for cheaper credit, and a monied consumer eager to buy a US home.
Tom Lee Market Forecasts
And Tom Lee’s market forecasts always get a broad audience online and on television, and he predicts the S&P 500 could nearly triple by 2030 to reach 15,000. He’s making bold calls about 2024 too and given the election is very soon, he believes we could see a big jump in the next two months. I suggested a 6000 level for the S&P by year-end, and we’re almost there now. As Tom said in his interview today, this investor ebullience is a strong indicator of things to come. He always mentions the $6 Trillion in cash sitting on the sidelines waiting. Add that to foreign investment money that will flood in, and you can see the macro view is really good.
December and the Santa Claus Year-End Rally
December could be the scorching hot month that makes his call correct. He did the same thing last year and hit his S&P forecast dead on courtesy of the Santa Claus rally. He seems to have a handle on the fundamental parts of the growth equation. Learn more about Tom Lee and Fundstrat’s investment services.
He points out that Millennials and a global labor shortage are the two thematic drivers behind his projection. He said the two previous instances of global labor shortages resulted in a parabolic move in technology stocks. “It’s roughly a 20% annual price appreciation. Earnings growth would be 12% to 15% of that total, so then you have 5% a year PE expansion.”
Morgan Stanley Economists see global economic growth of 3.1% in 2024 and 2025 which means external support for US exports and increased global trade. The US GDP was 3.1% in both the last two quarters so with tariffs, US industrial output could grow strongly, bolstered by lower energy prices and lower taxes and regulations. We should being thinking about 4% growth in 2025 (IMHO).
The Conference Board projects GDP growth will pick up later in 2024 as inflation subsides and the Fed first signals and then actually cuts interest rates. In 2025, they believe a 2% inflation rate and somewhat lower interest rates will lift real GDP growth to its potential near 2%. Other forecasts call for a 2.1% growth rate next year, down from 2.5% in 2024.
The Congressional Budget Office sees GDP rising by 1.5% in 2024 and then by 2.4% in 2025. It’s going well beyond 1.5% so they missed that by quite a bit. They may feel there is a lot of product oversupply and that the FED rate won’t fall quickly in 2025. What would stop Trump’s economic miracle isn’t stated. Perhaps they’re refusing to acknowledge the possibility of a Trump win.
Long Forecast Offers their month by month Projections of the S&P 500 for 2025, 2026, 2027. They see recovery within one year.
If the economy does slow in the next 6 months, it eases inflation, drives down employment and wages. This will set up a much better outlook for US businesses to operate efficiently in over the next 5 years.
Yardeni Research Sees no quit in the revenue forecast for S&P 500 stocks.
16 Key Reasons Why the 5-Year Forecast be So Good
The positive outlook is driven by:
- easing inflation makes the cost of living more affordable
- a lower FED interest rate eases US debt and enables borrowing for small businesses
- a strengthening economy with rising GDP
- a falling US dollar
- easing restrictions on US businesses and improved supply chains
- cheaper energy supply (oil supply to rise, reducing oil price)
- tariffs on China imports
- revised trade deals with China, Mexico and other nations
- infrastructure spending continues in 2025
- a pro-US President Trump
- reduced taxes on Americans and US businesses
- movement of $6 Trillion from money markets to equities
- investors turn away from bonds and treasuries to the equities market
- consumers see an increase in disposable income, and wages rise as debt payments decrease
- AI causes a redevelopment of American products, services and business infrastructure
- AI decreases business costs
Of course, the outlook depends on a Republican win in the Senate, House of Representatives and Presidential elections. Currently, it looks like a Republican sweep in all 3.
However, there is still 3 months to Nov 8th. It’s not signed, sealed and delivered. The assassination attempt, Democrat media interference, DOJ harassment on Trump, and Democrat billionaire efforts, and voting rights for 10 million illegal migrants are serious threats to the Republicans.
Given many stock market analysts and forecasters are influenced by their own business and profit ambitions, along with their political allegiances and beliefs, it’s hard to get a clear resonating view of the next 5 years.
We know the FED will drop rates in the next two years. Despite the drag on the US economy (same for other countries), it will quell inflation. And when rates decline, the housing market will thrive again. That activity should have a boosting effect on a long-suppressed economy.
If President Trump succeeds in lowering the US dollar, decreasing gasoline prices, easing consumer prices, lowering mortgage costs, and lowering taxes, the collective effort should create an economic boom. And we know he would love that.
Against the American economic resurgence, countries such as China and Russia will lag. Trump may also push for economic sanctions against India, China, and Iran, a move that would reduce money inflows to those countries. China’s competitiveness would be reduced as the US gains ground as a contender.
But What About the 5 to 10 Year Period?
The CBO has put out its consumer price and GDP economic projections and basically says they will return to long-term norms and continue that way. They’re a little dour on the US economy, based too much on past performance and the belief there hasn’t been any political or cultural change. For them, it’s same old, same old. It will take time to be ex-China and to build belief in America again.
CBO sees consumer prices moving back to historic norms.
CBO’s opinion is the GDP will stagnate until 2033.
CBO sees gross domestic income on a strong upward trajectory, which fuels domestic goods and services purchases.
Which Sectors will Produce the Best ROI to 2029?
Popular investment sites are pushing their products and picks, usually involving large caps, but the real potential is in small caps. The Russell 2000 has been doing well and it might be the only index that has big upside potential.
It’s very tough to pick small cap winners, which is likely what you’re wanting. You might have the best luck to review the latest stock market forecast to help find the best stocks to buy for 2024 and the 5 year outlook. Have a peak at the 10 year view and keep investigation because historical performance data could help give a clear view of what might be best.
Of hand, you would be wise to buy a basket of AI microchip stocks. It’s a certainty that AI and GPU processors will be a big part of the long-term economic output, innovation and growth. As well, the housing sector desperately needs new home construction so companies such as DR Horton look to be good bets. In a cramped, bored world, travel will always be in demand as well. Check out the best travel sector stocks such as Marriott hotels.
Many stocks are laggards and will continue throughout 2024, so sound investors like Warren Buffet will be looking at a longer-term horizon, with dips into short-term investing to boost Berkshire Hathaway’s total returns.
They were hampered by high rates whereas mega caps have so much cash they don’t need to borrow. And the monopolies don’t seem to be in much danger as no anti-monopoly penalties/actions have been taken since the Microsoft era 30 years ago.
That’s why conservative investors will likely move their money from lower-performing bonds to large-cap equities. But a basket of top Russell 2000 stocks might be the better choice for wealth gain.
Best Stocks for 5 Year Period
Investor Place just released its picks. I don’t know if I would agree with (APPL), but here are their favorite picks. I would counter that any China-dependent stocks are going to decline in price (.eg., NVDA, APPL, Intel (INTC), Ford (F), Tesla (TSLA), Starbucks (SBUX), and Nike (NKE). NVDA, for example, a great stock to buy will likely have its $5 billion order from China canceled. Seekingalpha says it doesn’t matter and that NVDA is still the stock to buy.
NVDA has advantages with its advanced GPU processor where growing markets in gaming and laptop computers are making investors excited. It will be difficult for competitors to surmount Nvidia’s advantage
The safe bets are stocks that will gain from the reshoring of manufacturing back to the US.
If you’re into safety, then GOOG, NVDA, MSFT, AMZN and META might be your goto choices for the next 5 years.
Here are Investor’s Place Top Picks for Next 5 Years
- Alphabet (GOOG)
- Microsoft (MSFT)
- Apple (APPL)
- Adobe (ADBE)
- Luminar (LAZR)
- Ouster (OUST)
- Netflix (NFLX)
- Unity (U)
- Tencent (TCEHY)
- Upstart (UPST)
- PayPal (PYPL)
- Block (SQ)
- Roku (ROKU)
- Nike (NKE)
- Crocs (CROX)
- Amazon (AMZN),
- Shopify (SHOP)
- Sea (SE)
- Spotify (SPOT)
- HubSpot (HUBS),
- The Trade Desk (TTD)
- Teladoc (TDOC)
- Enphase Energy (ENPH)
- ChargePoint (CHPT)
- EVgo (EVGO)
Small Caps
Small cap stocks will benefit from falling interest rates, a rising economy, strong dollar, and lower unemployment rate. The higher FED rate really is targeting small caps who need credit to operate. The key to this is that small caps were crushed in the last year so they’re ready for a bigger rebound.
Ex China is a Big Opportunity
There is huge resistance in the US to economic improvement and the abandonment of dependency on China, but the China US rift is certain now. Out of necessity, it couldn’t continue. With reshoring and AI-based dominance, the US is positioned for substantial growth. If a new President is elected in 12 months, it would likely lead to a massive lift for the US economy.
The reduction of regulations, pro-American policies, reduced taxes, investment incentives, and cheaper energy if they happen, make the 5-year forecast fantastic.
Investigate the small caps on the Russell 2000 and Russell 3000 indexes. This is where the big money will be made. If your payoff period is long and you’re not just doing volatility trading for quick profit, then the greatest gains will be found in the best small caps.
Best Stocks for 5-Year Market Outlook
A Yahoo Finance report offered up its best US sectors for the long term:
It’s nice to know the S&P, NASDAQ and Dow will all jump in the coming years. But which sectors will you find the very best performing stocks.
Yahoo Finance offers its list of best sectors for the next five years:
- 5G Services (predicted growth rate: 59.45)
- Space Tourism (predicted growth rate: 49.9%)
- Robotic Process Automation (predicted growth rate: 39.9%)
- Augmented Reality (predicted growth rate: 39.8%)
- Artificial Intelligence (predicted growth rate: 37.2%)
- Data Science (predicted growth rate: 29%)
- Digital Education (predicted growth rate: 25.8%)
- Virtualization Software (predicted growth rate: 25.4%)
- Healthcare Predictive Analysis (predicted growth rate: 24.4%)
- Cannabis Edibles (predicated growth rate: 22.1%)
- Video Streaming (predicted growth rate: 21.5%)
- Digital Marketing Software (predicted growth rate: 19.4%)
- E-commerce Logistics (predicted growth rate: 18.4%)
- Telemedicine (predicted growth rate: 17.2%)
- Renewable Energy (predicted growth rate: 17.2%)
- Fintech as a Service (predicted growth rate: 16.9%)
- Biotechnology (predicted growth rate: 13.9%)
- Smart Agriculture (predicted growth rate: 13.7%)
- Cyber Security (predicted growth rate: 12.3%)
- Food Service (predicted growth rate: 10.8%)
In the 5-year window, energy is expected to reign. A growing economy, unrestrained from crippling regulations, high interest rates, restrictive lending, reduced money supply, and high taxes will spawn demand for electricity, natural gas, and oil.
As forecasted, the price of oil has risen strongly. While Biden can release millions of barrels of oil now to control gasoline and oil price rises, the loss of the SPR means the reserves will have to be repurchased and refilled, thus driving prices up from 2024 to 2030. With a new US President, the suppression of that industry will end allowing a full production mode of cheap energy giving businesses and American consumers a big boost in their finances.
Cheap oil and nat gas would also weigh heavily on EV sales. I would avoid ESG stocks including EVGO and Tesla (institutional investors have shorted TSLA heavily).
Lower mortgage rates and new housing construction initiatives will also spawn economic growth — resulting in growth in spending in furniture, appliances, and new local infrastructure spending, which right now is not flowing. The housing market will be the major catalyst for economic growth in the coming five-year forecast period.
Give the oil stocks and natural gas stocks a close look right now, because their outlook is positive, prices low and their P/E ratios are the best available.
Key Factors To Watch as Clues to Long Term Performance
The 5 year to 10 year period are more influenced by politics and macroeconomic forces and swings. If you’ve never thought about macroeconomics, then it’s wise to do a crash course so you don’t allow tomorrow’s, this months, and 3 month and 6 month views to cloud your judgment.
I said previously that the US’s new competitiveness with China will support growth in the tech sector thus taking the NASDAQ up from its recent doldrums. It’s up 17%. Yet, at this point with the Dow Industrials so sluggish, that they represent a better buying opportunity.
Experts are Increasingly Positive on the Market Outlook
Retail investors know the 3 month, 6 month and 2024 forecasts are just a recording of volatility and temporary sentiment. Retail and institutional investors are looking forward through the 5 year time frame, because they might believe growth is slow until then. This flattening of the outlook allows everyone to project further ahead and keep their focus on long term growth. Getting rich quick seems unlikely, and picking individual stocks is a tough prospect. Be cautious and do your research!
5 Year MacroEconomic Factors and Signals
5 Year US GDP Outlook
The first macroeconomic signal to look to is estimates of US GDP. While the current crisis with the US government is real, their is reason to be optimistic. GDP is still positive despite the draconian increase in interest rates. There is huge money in US savings accounts and it could be unleashed into the stock market as the US economy recovers.
Retail Sales Forecast
Trading Economics will only project out a couple of quarters where they view it strong until Q2 of 2025.
US Manufacturing Forecast
Trading Economics views manufacturing ending strong in 2024 and then tailing off in 2025.
5 Year Study Protects your 401k or other Investments
Fund managers and institutional investors also see the 5 year and 10 year models as more informative. Of course they have some insightful forecasting tools including technical charts, GDP forecasts, commodity prices, demographic demand projections, and more data to make better predictions.
Start 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, FTX). 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.
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 which machines can’t understand as yet.
More Market Forecasts
See more forecasts on the real estate housing market, and the latest home prices and sales trends for numerous major metros in California including San Diego, Los Angeles, San Francisco, and Sacramento.
