In today’s Steady Investor, we break down the forces shaping markets at the start of the year, and the risks investors should be paying attention to now, including:
Consumers May Be Disgruntled, But They’re Still Spending Strongly – According to the U.S. Bureau of Economic Analysis, real gross domestic product (GDP) rose at a 4.3% annualized rate in Q3 2025, the strongest growth rate in roughly two years. Consumer spending was the primary driver, though government spending and falling imports also played key roles. Household spending increased at a 3.5% annualized pace, with spending on services remaining particularly firm even as consumers feel pretty grim about the economy and the jobs market overall. Business investment also contributed to headline growth, though at a much slower pace than earlier in the year. Overall investment growth cooled notably from the second quarter, suggesting some hesitation among firms to invest in new projects and bring on more workers. This will be a component to watch closely in the coming quarters, in our view. Another way to look at GDP growth in the U.S. is to focus on underlying domestic demand, which means focusing on consumer spending, business investment, and residential real estate. By this measure, the U.S. economy posted 2.9% GDP growth in Q3 compared to 2.8% in Q2, a smaller acceleration than the headline number implies. The difference in total GDP growth reported comes from government spending and trade. Exports increased while imports declined, which mechanically boosts GDP even if it doesn’t fully reflect stronger domestic activity. Much of that trade effect likely traces back to earlier inventory behavior, as companies adjusted supply chains and stockpiled goods ahead of tariff changes earlier in the year. As inventories have since been drawn down, however, trade flows have swung in the opposite direction, lifting reported GDP growth.1
Key Market Shifts Are Coming Into Focus. Stay Ahead of What’s Next.
As the new year begins, markets are being shaped by fast-moving economic data and evolving policy decisions that demand attention. For investors, the challenge is separating short-term noise from meaningful signals and positioning portfolios with clarity as 2026 gets underway.
Our complimentary Zacks Market Strategy Report2 breaks down the most important market and economic themes investors should be watching, including:
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Gold and Silver Post a Banner Year. Can the Rally Last? Precious metals had a banner year in 2025, with gold and silver in particular posting strong gains. The moves have attracted attention largely because they contrast with a period of moderating inflation and continued economic growth, which are conditions that don’t always coincide with strong precious-metal performance.
Several forces appear to be converging. Ongoing geopolitical tensions, persistent policy uncertainty, and concerns around fiscal deficits have encouraged some investors to seek diversification outside traditional financial assets. At the same time, expectations for lower interest rates have reduced the appeal of yield-based alternatives, indirectly supporting assets that do not generate income. Central bank activity has also played a role. Over the past few years, official institutions, and specifically China, have increased gold holdings as part of broader reserve-management strategies. According to data from the World Gold Council, central banks have been purchasing gold at a pace well above historical norms—a trend often linked to efforts to diversify away from currency concentration rather than short-term price expectations. But while gold is often described as a hedge against inflation or crisis, history shows its performance has been inconsistent across economic environments. Gold does not generate income, and its price is largely influenced by investor behavior, policy expectations, and supply-demand dynamics rather than underlying cash flows. That can make returns episodic rather than dependable. Put another way, strong short-term performance does not necessarily translate into long-term reliability, particularly for assets whose value depends primarily on what other buyers are willing to pay.3
Why Electricity Bills May Be Moving Higher in 2026 – Electricity costs have been climbing for many U.S. households, and current projections suggest that trend may extend into the new year.According to the U.S. Department of Energy, the average residential electricity rate is expected to rise about 4% in 2026, following an increase of nearly 5% in 2025. Electricity bills reflect not just generation costs, but also transmission, distribution, and infrastructure maintenance. Aging equipment, storm damage, grid hardening, and system upgrades have all contributed to higher costs in recent years.Weather has also played a role. Hurricanes, winter storms, wildfires, and heat waves have strained regional grids and required costly repairs. In some areas, those costs are spread across ratepayers over time. Meanwhile, colder-than-normal winter forecasts and higher fuel prices are expected to push home-heating costs higher this season.Looking ahead, utilities are planning significant capital investment. The Edison Electric Institute estimates investor-owned utilities will spend more than $1 trillion on generation, transmission, and distribution infrastructure between 2025 and 2029. These investments are intended to improve reliability and resilience, but they are typically recovered through customer rates over time.For households and businesses, that could ultimately mean a gradual shift toward higher baseline costs driven by infrastructure needs, weather-related disruptions, and evolving demand.4
Shifting Market Signals—How Should Investors Start the Year? Markets are entering the new year with mixed signals, and the path forward remains uncertain. For investors, the focus is less about reacting to headlines and more about understanding which shifts matter, and how to respond with discipline as 2026 unfolds.
Our complimentary Zacks Market Strategy Report⁵ breaks down the latest developments and what they could mean for your portfolio, including:
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