Ed Yardeni, a senior market strategist, predicts a robust recovery for the U.S. market throughout the 2020s.
In April 2025, senior market strategist Ed Yardeni pointed out that despite trade tensions and policy uncertainties, the U.S. market might experience a strong recovery reminiscent of the "Roaring Twenties" of the 1920s. This perspective is based on recent stock market gains, a more moderate policy tone, and the resilience of economic fundamentals. If the policy environment stabilizes, the market is expected to get back on its post-pandemic growth path. The U.S. unemployment rate is low, consumer confidence is stable, and the shift in policy tone has also prompted a market rebound. The Federal Reserve might lower interest rates to counter the economic slowdown, and UBS recommends reallocating assets towards the euro, yen, and gold to manage volatility.
Key Updates
04/25 18:32
Ed Yardeni, a senior market strategist, predicts a robust recovery for the U.S. market throughout the 2020s.
In April 2025, senior market strategist Ed Yardeni pointed out that despite trade tensions and policy uncertainties, the U.S. market might experience a strong recovery reminiscent of the "Roaring Twenties" of the 1920s. This perspective is based on recent stock market gains, a more moderate policy tone, and the resilience of economic fundamentals. If the policy environment stabilizes, the market is expected to get back on its post-pandemic growth path. The U.S. unemployment rate is low, consumer confidence is stable, and the shift in policy tone has also prompted a market rebound. The Federal Reserve might lower interest rates to counter the economic slowdown, and UBS recommends reallocating assets towards the euro, yen, and gold to manage volatility.
Reimagining the "Roaring 2020s" Narrative
Ed Yardeni, a veteran market observer on Wall Street, noted in a report from April 2025 that despite ongoing trade tensions and policy uncertainties, the market has shown signs of stabilizing. He stated, "If trade tensions ease and macro policies become supportive, the U.S. market could regain a growth trajectory similar to the post-pandemic period." Yardeni's "Roaring 2020s" narrative originates from the post-pandemic economic rebound, when corporate investment, innovation, and productivity improvements collectively drove capital expenditures and stock market gains.
He emphasized that the core of this narrative lies in the resilience of economic fundamentals, especially when policy uncertainties are reduced. He pointed out, "The market is extremely sensitive to policy tone and execution paths. If disciplined policy execution is maintained and progress is made in global trade negotiations, the market still has a chance to return to a strong growth track."
Support from the Labor Market and Consumer Confidence
According to data from the U.S. Bureau of Labor Statistics (BLS), as of March 2025, the U.S. unemployment rate was approximately 4.2%, at a historically low level. Although job growth has slowed compared to the post-pandemic peak of 2021–2022, most industries continue to hire, and layoff rates remain low. This employment environment supports consumer confidence, thereby stabilizing the housing market and consumer spending.
A report from Home Stratosphere indicated that although the housing market has cooled from the 2021 boom, a robust job market continues to support home-buying demand. Early 2025 housing market activity shows that potential buyers remain confident in future income, consistent with the historical pattern of "low unemployment driving housing market activity" in past economic cycles.
Policy Tone Shifts and Market Reactions
Yardeni's views also align with recent shifts in policy tone. President Trump has recently softened his stance on the Federal Reserve (Fed) and tariff policies, resulting in reduced market volatility. According to Yahoo Finance, the S&P 500 index fell over 12% in early April due to a new round of tariff policies, but the market quickly rebounded after Trump announced a pause in implementing new tariffs.
In an interview with CNBC, Yardeni stated, "We see extreme pessimism in market sentiment, which may have influenced decision-making at the White House. The stock and bond market reactions have made the government realize that if policies are too harsh, the market will push back."
Historical Comparisons and Economic Data Support
Yardeni's "Roaring 2020s" narrative is not a new concept. As early as the post-pandemic period of 2021–2022, he used this term to describe the economic recovery at that time. The narrative emphasizes growth driven by innovation, expansion of corporate capital expenditures, and productivity improvements. Now, he believes that if policy stability can be rebuilt, this growth model could reappear.
However, challenges remain for the market. According to the U.S. Composite Purchasing Managers' Index (PMI) released by S&P Global in April, the index fell from 53.5 in March to 51.2, a 16-month low. The services PMI also dropped from 54.4 to 51.4, indicating concerns among businesses about future demand and cost pressures. Chris Williamson, Chief Business Economist at S&P Global, noted that this reflects the U.S. economy growing at a slow pace of about 1% annually.
The Role of the Federal Reserve and Monetary Policy
The direction of Federal Reserve policy is also a focal point for the market. Several officials have recently stated that despite ongoing inflationary pressures, they would consider accelerating rate cuts if the labor market deteriorates. Neel Kashkari, President of the Minneapolis Federal Reserve Bank, noted that continued trade policy uncertainty could trigger a wave of corporate layoffs, further dragging down the economy.
Federal Reserve Governor Christopher Waller stated that if high tariffs lead to rising unemployment, he would support further rate cuts. He emphasized, "The impact of tariffs on the economy may be minimal before July 1, but it will become more apparent in the second half of the year."
International Factors and Asset Allocation Recommendations
UBS Wealth Management also pointed out that if U.S. economic growth slows, the Federal Reserve may continue to cut rates throughout 2025, with a total reduction of 75–100 basis points. The institution predicts that the dollar will remain under pressure and suggests that investors consider selling during dollar rebounds and shifting to assets like the euro and yen.
Additionally, UBS is optimistic about gold, high-quality bonds, and thematic investments in AI and energy as strategies to cope with volatility. These recommendations reflect the market's high sensitivity to policy and economic outlooks and indicate that asset allocation strategies are gradually adjusting to potential recovery opportunities.
