Economic Outlook
By: Russ Colbert
Winter 2026 (Vol. 43, No. 4)
The year ended on a positive note with a gain of over 16%. We continue to expect a positive year for 2026 going forward. We also expect new technologies to roll out for many of the technology companies. We have always believed that it is innovation that leads to higher standards of living. We also support deregulation and fewer bureaucrats, policing crime, and fighting fraud, stopping illegal immigration, keeping tax rates low, using tariffs to reduce other countries trade barriers and unfair trade practices against the U.S., as well as cutting excess government waste and overspending where possible.
We did not worry last year about the tariffs causing inflation or a collapse in global trade. We also disagreed with the fear of the end of American Exceptionalism.
The two biggest worries of last year were one being the Covid stimulus going from easy money to irresponsible deficit spending as it was winding down. We were surprised that by locking down the economy we escaped a recession. So far, the price to be paid was higher inflation and more inequality and that price has been paid by those with lower incomes. The overall economy has continued to grow, but as the stimulus faded we expected things to slow more than they have. Also, the stock market was overvalued for many company stocks last year signaling to many economists and talking heads about the possibility of a significant pullback or a correction in the stock market. It rarely happened and the pullbacks never seemed to last very long.
So, what do we see on the horizon for 2026? Well, no one really knows what is going to exactly happen. We just give our best estimate based on the information we have at hand though out the year. To begin with we recently saw the unexpected arrest of the self-appointed President of Venezuela, Nicolas Maduro. We understand the arguments many have made on the constitutionality of the arrest and won’t debate them other than to mention that Congress takes their time and dithers around while Russia, China, and Nicolas Maduro, a criminal, thumb their noses at the U.S. It was all being done in our hemisphere with little pushback until now. It was a bit of a surprise and most likely will have a negative effect on China, Russia, and Cuba oil markets and their global politics. We will see how that situation develops and the effects on the U.S. economy throughout the year. So far, it looks like it should bring down the price of oil causing a positive effect on the gas prices and the U.S. economy. Later this year in November the U.S will elect a new Congress that will have a significant impact on our fiscal policy for future years to come. The Federal Reserve will most likely lower interest rates at least two or three times this year for three quarters of a percentage point or possibly even more than that.
Deregulation is also having a positive effect on productivity. The shrinking of the bureaucracy (January to November Federal Employment was down 271,000) and hundreds of billions of dollars in cuts to climate-related subsidies are removing wasteful spending and obstacles to productivity growth. At least for now, these should have a positive effect on the U.S economy. Freedom will always reduce the power of authoritarians and dictators.
If you have any questions or need a free portfolio review to keep you on track with your investments or retirement plan, please call me.
Russ Colbert
Senior Portfolio Manager
1-888-878-0001
Advisory services offered through Royal Palm Investment Advisors, Inc., a Registered Investment Advisor.