Today, July 2, we officially move into the second half of 2025. Therefore, I thought it would be a good time to perform a “mid-year check” of the predictions I made for the year in this space on December 18, 2024. As a reminder, the title of that column was “2025 Predictions: Trump Policies Edition.” So, in the remainder of this column, I will evaluate each of my predictions based on the promises President Trump made prior to returning to the White House by giving myself a “midterm grade,” a short analysis, and an updated prognosis. Finally, I will add a “bonus prediction” for the remainder of the year.
So, without any further ado, here were my 2025 predictions:
- The 2017 Tax Cuts will be extended, rather than let expire. However, many of the promised enhancements (e.g., eliminating taxes on tips and overtime) will go by the wayside.
- Midterm Grade: B
- Midterm Analysis: While not yet a done deal, most agree that the “Big Beautiful Bill,” which has the 2017 Tax Cuts extension as its centerpiece, will pass both houses of Congress and be signed by President Trump. However, I was partially incorrect on tips and overtime. Taxes on tips and overtime have been eliminated, but only up to capped amounts, and the elimination is only in effect until 2028.
- Prognosis: There is a very small chance that the “Big Beautiful Bill” will not pass, but if that were the case, it would not be because of the extension of the tax cuts. The tax cuts have strong support from a majority of Congress.
- Given the issues with entitlements and how much of the national budget they consume, Trump will choose to initiate major Social Security reform in 2025.
- Midterm Grade: Incomplete
- Midterm Analysis: The Trump administration has been very busy during its first five to six months addressing international trade, inefficient bureaucracy, and foreign policy crises in Ukraine and the Middle East. I am hoping that once the above legislation is passed, the President will consider tackling Social Security.
- Prognosis: I may have been too optimistic on this prediction. However, I am also afraid that if the President does not act this year, he may be deterred by the upcoming 2026 midterm elections. If you read my column last week, you know that I think that would be a mistake.
- President Trump will do some important and needed things on immigration right out of the box. He will secure the southern border and attempt to deport those illegal immigrants who have committed crimes. However, mass deportations are impractical, both economically and logistically.
- Midterm Grade: A
- Midterm Analysis: Things have gone pretty much as predicted so far. Illegal crossings at the southern border are somewhere between a trickle and non-existent, which is something everybody can get behind. In addition, focus on deportations has been on illegals who have committed crimes, despite some protests and media stories indicating the contrary.
- Prognosis: I expect this to continue. As I noted in my original column, we depend on immigration for economic growth, and mass deportations would fly in the face of the needed growth.
- President Trump pledged to impose 20% tariffs on all imports. Like immigration, I predict President Trump will use these tariffs more surgically to cut deals or to address security issues with countries like China.
- Midterm Grade: Incomplete
- Midterm Analysis: Things appear to be trending toward my prediction, but things change so often, it is too early to make a call on this prediction. In another week (July 9), another “tariff pause” is scheduled to end, but the Trump Administration is saying that a number of trade deals with other countries are imminent. If that is the case, this prediction is likely to hit.
- Prognosis: Many have criticized President Trump’s tariff strategy, calling it “TACO” (Trump Always Chickens Out). However, he seems to have brought a lot of countries to the table, and while he may not always get the full deal that he wants, he has typically ended up in a better place than before the tariffs.
- President Trump has charged his Department of Government Efficiency (DOGE) to trim government spending through the elimination of bureaucracy and waste. While victory will be declared, it will be due to a significant reduction in regulation. While much has been made of applying business techniques to solve government inefficiencies and potentially eliminating whole departments (e.g., Education), it will be relief from overregulation that will lead to the most savings and positively impact economic growth.
- Midterm Grade: B+/A-
- Midterm Analysis: While DOGE generated a lot of headlines early in this Administration’s tenure, it ended up not really saving as much as promised. While these limited savings have been touted, it still looks like long-term savings and growth will come from relief from overregulation.
- Prognosis: While DOGE still exists, its profile has been reduced after the exit of Elon Musk. Additional waste and fraud will likely be uncovered, but it still appears that the reduction of regulations is the major key to improving bureaucracy.
- Bonus Prediction: Federal Reserve Rate Cuts
I predict the Federal Reserve will begin cutting rates in the coming months. The Fed has four meetings (July, September, October, December) left this year in which they can cut rates. I do not think the Fed will cut rates in July. Although they may feel better about tariffs after July 9 (the meeting is July 30), I think they will want more data before making a cut. I think they will cut 25 basis points (1/4 percent) in September, although 50 basis points (1/2 percent) is not out of the question. I predict the Fed will cut a total of 100 basis points or 1 percent before 2025 is over. Hopefully, that will primarily be because inflation is under control and not because of higher unemployment and the specter of recession.
Hope you have a happy and blessed 4th!
