Tariff uncertainty: Just when it seemed the Supreme Court’s decision to strike down the administration’s “reciprocal” tariffs might offer a path toward clarity, the White House responded by announcing a new 15% global tariff over the weekend. Markets reacted swiftly and negatively, and gold surged as investors once again sought safety amid the uncertainty. European officials pushed back, warning that the new levies could jeopardize trade agreements negotiated over the past year.
Our view on tariffs has not changed: tariffs are taxes. They raise costs for importers, who pass those costs along to businesses and ultimately to consumers. For households already stretched by years of elevated prices and higher borrowing costs, this amounts to another squeeze on purchasing power. Additionally, tariffs feed into inflation at a time when the Fed is still working to bring prices back to target. The persistent stop-and-start nature of trade policy makes it incredibly difficult for companies to plan, invest, and hire with confidence, and that uncertainty alone acts as a drag on growth.
Economic growth stumbled into year-end: Fourth-quarter GDP came in at just 1.4% annualized growth, a sharp deceleration from the 4.4% pace recorded in Q3 and well below the 2.5% that economists had expected. The 43-day government shutdown that stretched from October into mid-November was a significant contributor, with the Congressional Budget Office estimating that it alone shaved roughly 1.5 percentage points offer Q4 growth. Meanwhile, consumer spending, while still positive at 2.4%, slowed meaningfully from the 3.5% rate in the prior quarter. Households have been leaning on savings and credit to maintain spending, a pattern that is difficult to sustain indefinitely.
Overall, GDP grew 2.2% in 2025, down from 2.8% in 2024. While still a respectable number, the trajectory is concerning. Job creation slowed to fewer than 200,000 positions for the year, the lowest since the pandemic, and consumer confidence has remained shaky. The Fed’s preferred inflation gauge also showed prices accelerating in December, making near-term rate cuts less likely. The combination of cooling growth and sticky inflation is an uncomfortable one, and it underscores why we continue to advocate for a balanced, diversified approach that does not rely on any single economic outcome.
International stocks outperform: International equities have been outperforming relative to U.S. markets so far in 2026. In 2025, developed international stocks returned over 35% while emerging markets gained roughly 26%, both handily beating the S&P 500’s 17.7% return. That trend has continued into the new year, with international developed market ETFs up nearly 9% year to date while the S&P 500 remains essentially flat. According to Goldman Sachs, U.S. stocks are off to their worst start relative to global markets since 1995.
The reasons are straightforward. U.S. stocks, particularly the mega-cap technology names that carried markets higher over the past several years, are expensive. Estimates suggest U.S. equities trade at a roughly 40% premium to international stocks on a price-to-earnings basis. Meanwhile, the U.S. dollar has continued to weaken, providing a tailwind for international holdings. Periods of U.S. market dominance do not last forever, and having exposure to international markets helps smooth the inevitable bumps, which is why we emphasize the importance of diversification across geographies. This environment reinforces why a balanced global allocation remains a core part of a well-constructed investment portfolio.
Disclaimer: The information above is for general educational purposes only and should not be considered financial, tax, or legal advice. Always consult with a qualified professional regarding your specific situation. You should consult with your CPA and/or attorney before implementing any estate planning, gifting, or tax-related strategy.