Congratulations--you've made it through 2025!  Your reward is ICBW's annual predictions post.  First, we'll review our predictions for the past year:

• The economy will be strong through the first half of 2025, then weaken considerably, led by an asset bubble collapse some time during the year (the timing of such crashes is of course impossible to predict with any confidence).  A recession will be avoided, but the slowdown will result in asset markets being net negative by the end of the year.

This was exactly correct--except for the order of the halves.  The S&P 500 dropped about 20% in April, following a negative-growth first quarter, but then rebounded with strong second and third quarters, both in terms of GDP and asset values.

• The incoming Trump administration will, similarly, enjoy a honeymoon for the first half of the year, as it focuses on low-hanging fruit like immigration enforcement, anti-crime measures, and elimination of various "woke" programs initiated by the previous administration.  However, the popularity surge will gradually dissipate over the second half, as infighting among Republicans resurfaces--along with Trump's trademark verbal intemperance--and Democrats identify a few attack lines to focus on.  Trump's approval rating will thus be net negative by the end of the year.

Politics is always easier to predict than economics, and this prediction looks more like an end-of-year summary of the Trump administration's first year in office than a prognostication at the beginning.

• The war in Gaza will wrap up this year and proceed to the predicted next phase--reconstitution of a new government and reconstruction.  However, there will be no hostage deal, and absent rescue operations, no hostages will be released alive.  In Lebanon, Israel will resume hostilities after the ceasefire, and continue creating a Hezbollah-free buffer zone south of the Litani river.  However, Hezbollah, while weakened, will remain dominant in the rest of Lebanon, and a ceasefire deal will eventually be reached that nominally concedes the buffer zone that (both sides recognize) Hezbollah will spend the next few years gradually re-infiltrating.

This prediction was incorrect about Gaza in an interesting way:  Israel decided to forgo the predicted wrap-up of fighting in return for the release of the remaining hostages, with the result that Hamas remains in control of about half of Gaza and almost all Gazans, under a "ceasefire" which amounts to a continuation of the low-intensity conflict that prevailed during much of the war.  The situation is thus similar to the one correctly predicted for Lebanon:  a "ceasefire" that stipulates the dismantling of Israel's primary terrorist enemy there (Hezbollah), but in fact allows it to survive and strive to regain its previous level of political control and military/terrorist capability.

• Elsewhere in the Middle East, Syria's new regime will increasingly show itself to be a radical Islamist stronghold under Turkey's protection; the US and Israel will cooperate in suppressing the Houthis' offensive capacity, thus reopening the Red Sea-Suez Canal route to regular shipping; and Ayatollah Khamenei's son Mojtaba will consolidate his position as heir to the weakened-but-surviving Iranian regime.  In Israel, the wind-down of the war will refocus the public on domestic concerns, and Bibi's popularity will decline accordingly.  However, his coalition will manage to hold together and retain power through the year.

The prediction about Syria is largely accurate--although many appear to continue to be seduced by the Syrian leader's charm offensive into mistakenly believing that he's not an Islamist satrap of Turkey.  (The Israeli security establishment, however, is clearly not among them.)  The prediction about the Houthis was, in retrospect, reckless--it will take much more time and effort to extirpate them than a single year's worth.  In Iran, Khamenei fils may not be in as dominant a postition at the end of 2025 as he was a year ago, and in Israel, Bibi seems not yet to have entirely run out of his legendary nine political lives, thanks to his having extracted the final live hostages from Gaza, with the help of the Trump administration.

• Despite the Trump administration's efforts, there will be no ceasefire deal in the Ukraine.  Ukraine's military position will continue to deteriorate, prompting significant European efforts to rescue it from defeat despite relative American indifference.  Those efforts will increase direct confrontations between Russia and Europe, leading to an expansion of direct Russian attacks on Europe along the lines of Russia's recent destruction of European undersea cables.

This is another prediction that looks more like an end-of-year summary, given the frequent Russian drone incursions into European territory over the past several months.

• Justin Trudeau will resign as prime minister of Canada, handing the reins over to a new Liberal Party leader who will govern briefly before being utterly demolished by Pierre Poilievre's Conservative Party in a fall election.

This prediction, as well, is incorrect in an interesting way:  by calling an early election and capitalizing on Trump's unpopularity in Canada, the new Liberal Party leader, Mark Carney, was able not only to avoid impending electoral disaster but to vault to a near-majority re-election, cannibalizing small-party votes into near-elimination.  Moreover, by adopting some moderate stances, Carney has been able to continue his lead in the polls over his first year, eliminating the motivation for the smaller parties to join the Conservatives in toppling the government.

• The decline of the dine-in restaurant business, driven by the COVID-inspired trend towards take-out, will spawn a new popular mode of dining out:  couples, groups or families ordering take-out meals--possibly from multiple outlets--to eat at a separate location outside the home.  Eventually, some imaginative entrepreneur will establish "dine-in only" establishments, which provide pleasant environments and amenities for take-out diners--but no actual food.

As usual, my "cultural" prediction is intended as a longer-term one...

And now for my predictions for 2026:

• Juiced by continued low interest rates, the economy will continue to grow strongly through 2026, at the cost of continued elevated inflation (3% or greater year-on-year).  Asset prices will likewise be prevented from correcting, though their gains will be limited.
• The Democrats will capture a majority in the House of Representatives, and make gains in the Senate (without gaining control).  Trump's popularity will bounce along in the low 40s through most of the year, buoyed only by the Democrats' own set of political albatrosses.  (The Minnesota welfare fraud scandal, for example, will have counterparts in multiple Democratic party-controlled states across the country, and the Mamdani administration in New York City will generate embarrassing headlines at a steady clip.)  The Republican "woke right", on the other hand--and particularly the extremist social media personalities that garner the most attention--will fade in prominence over the course of the year, as more mainstream Republican politicians begin to find their footing in the Trump-era environment. 
• There will be no multinational force in Gaza, nor will there be a full Israeli invasion of Hamas-held territory.  Instead, there will be a slow build-up of Hamas alternative militias in Israeli-controlled areas, into which a trickle of Gazan civilians will gradually move.  Meanwhile, Israel will continue to interdict Hezbollah's reconstruction of its infrastructure in Lebanon, which will be hindered but not halted.  A similar dynamic will persist in Syria, where Israel will periodically intervene to protect its Druze-controlled buffer zone in the south. 
• Canadian prime minister Mark Carney will survive the year as prime minister. Israeli PM Binyamin Netanyahu, on the other hand, will be replaced by Naftali Bennett by the end of the year.
• The war in Ukraine will drag on for another year, despite the Trump administrations efforts at brokering a settlement, and with little movement in either direction.  European frontline states will increase their assistance to Ukraine, and their conflicts with Russia will thus escalate, although not to the point of actual ground skirmishes.
• Following 2024's "skibbety toilet" and 2025's "six-seven", a new stupid, meaningless phrase will arise among children and spread to society-at-large, killing brain cells at a staggering clip as it grows in popularity.

Readers are invited to add their own predictions in the comments--we'll evaluate them along with our own at the end of the year...