Today's number: 303 billion. That's how many barrels of oil are sitting in Venezuela, more than any other nation in the world. That is $18 trillion worth of oil at current oil prices, roughly equal to the GDP of China. However, none of this has anything to do with what happened this week.
Welcome to Profy Markets. I'm Edson. It is January 6th. Let's check in on yesterday's market vitals. The major indices climbed, with the Dow closing at a record. The price of oil rose on President Maduro's capture in Venezuela. More on that later. Meanwhile, Treasury yields dropped, and finally, Bitcoin rallied above $94,000.
Okay, what else is happening?
It is our first daily episode of the year, and even though we took a holiday break, the market certainly did not. So, here to help us review what we missed at the end of the year and also discuss the outlook for 2026, we're speaking with Mark Zandi, chief economist at Moody's Analytics. Mark, welcome back to Profy Markets and happy new year. Good to see you.
Happy New Year, Ed. Thanks for the opportunity. It's good to be with you.
Absolutely. You are our first guest back in the new year, which is a huge honor, as I'm sure you will know.
I'm sure you say that to all the economists. So, but I'll take it. I'll take it.
So, well, first we should want to start with your scorecard for 2025. You basically add up all of your predictions from last year and compare it to what we actually saw. You pretty much nailed most of it. I'm just looking at the scorecard now. Job growth, GDP growth, unemployment rate was pretty accurate. I mean, generally pretty accurate across the board, I guess. Which things surprised you in 2025? Which things did you get wrong? What sort of struck you?
Well, first thing is that we got that close there. As you know, Ed, there was a lot of drama in 2025. Lots of things going on. Tariffs, immigration, Doge, you know, just it seemed endless. And despite all of that, the numbers came in pretty close to what we thought they would at the start of the year, start of 2025. The thing that I took greatest pleasure in was jobs. You know, average monthly job growth in 2025 compared to 2024 was 125,000 on the nose, and our forecast was 124,000 per month. Now we got to be truthful in forecasting. You know, we were overly pessimistic about jobs in the first half of the year and overly optimistic in the second half. And when I really, the demarcation point here was Liberation Day. That was when things kind of changed. That was back in April of last year. So we didn't get the entire year right, but on average through the year we got it right. The thing that we missed most was around asset prices and the increase. I mean, the equity market was up 15% calendar year 25 over 24. We expected 10%, a good year, but it was even better than that. And even house prices, and we've been forecasting house prices and doing a lot of work there for decades. You know, they came in up 3-4%. We were expecting closer to 1-2%. So, you know, asset prices came in a little bit stronger. Again, you know, it was a pretty good year from a forecasting perspective, and it's not always that way. So, I'll take it, and I'm enjoying it.
Something that you undershot, and to be fair, let's give you your credit. I think I did, I mean, this was pretty accurate across the board, but you did undershoot on inflation. You forecasted 2.3%. It's higher than that, which is a whole other conversation. But the thing I kind of want to focus on right now is the most recent CPI report, which we got while we were gone, so we haven't had a chance to discuss it on the podcast. And it showed that inflation actually slowed down to 2.7% in November, which totally shocked me. And honestly, my first reaction, I mean, I was kind of checked out at this point, getting ready for the holiday, but my first reaction was, this is not right. And I usually hate to be that guy. I hate to be the guy who just doesn't trust the number because I think we should always just trust the numbers. But that was my first instinct. I haven't really dug into it. But then actually, you said yourself that that number is flawed. It went from 3% in September, then down to 2.7% in November, which seems crazy to me. You say that it's flawed. Why is it flawed? What is your reaction to the CPI that we saw?
Yeah. And it's okay to be that guy every once in a while when in fact it's right to be that way. You know, and this goes back to the government shutdown and the fact that the survey that the Bureau of Labor Statistics does wasn't done in the month of October. We were shut down. They couldn't do the survey. They couldn't go back and fix it. So they had to make, the BLS, the keeper of the data, had to make some assumption about what happened in the month of October. And the assumption they used is one that they always use when they have something missing. And that is no change. They assume no change in prices in the month of October. And for the missing data that they had, some data that wasn't based on their survey that they could use, but anything based on their survey, and that was the bulk of the data, 90% of the goods and services come from the survey, they just assumed effectively no change. And you know, if it's one or two products that you don't have data for and you make that assumption, no big deal. But when it's 90% of the products that you're surveying, that's a big deal. And so that makes no sense, right? And it's not just me saying that. Everyone says that makes no sense. It does not make any sense in the context of trying to understand inflation. And so what I did is went back and I said, 'Okay, I can collect even more data on different prices for goods and services. Let's use that.' And then for those things that I can't get other data for, I'm going to use my forecast because we've done a lot of work over the years modeling, you know, these different prices for different components, goods and services. And if you do that, then it shows that inflation, it did not decelerate. It remains on consumer price inflation, CPI inflation, at 3% year-over-year. And just for context, you know, the Fed would say in an ideal world, I would want CPI inflation, you know, 2%, 2.3%, something like that, and we're at 3% and we're still at 3%. So you were dead on to say something doesn't feel right because it wasn't right. And it, you know, something to consider. One last point, then I'll stop. This problem with the data is going to continue on a year-over-year basis until next October when we actually get some data. So that means we're going to be in this awkward position of trying to, you know, quote-unquote correct the data to make it more reflective of actual reality over the next year until we get to the other, we do a round trip here around on the data.
I hadn't even considered that. We are going to be arguing about which numbers are real and which are fake for another year. The ramifications are large. Let's just look at your 2026 forecast. Some interesting numbers here. We had 2.1% GDP growth in 2025. You project 2.5% GDP growth. So you believe that the economy is actually going to grow faster in 2026. Break down that number for us.
That's because we're going to get a lot of juice from monetary, but particularly fiscal policy. So, in 2025, we got a little bit of support from the Fed. The Fed cut interest rates a little bit. But on the fiscal policy side, that's government spending and taxes. That was actually a bit of a restraint on growth because of Doge. Remember Doge? The widespread job cuts that really hammered the economy earlier.
Yeah. Hard to forget. Hard to forget.
Complete, you know, utter failure, but, you know, in terms of its objectives, but, you know, it did do a lot of damage to it.
It was fun while it lasted.
Yeah.
But in 2026, because of the One Big Beautiful Bill Act, the OBBA that was passed under reconciliation back last summer, that is going to lift growth by just about the difference in GDP in 26 compared to 2025, about 4 or 5 tenths of a percent. And that's tax cuts, deficit financed. These are deficit financed tax cuts. You don't get the juice. You don't get the economic growth unless it's borrowing the money to finance it. And it's both on the corporate side. There's the, you know, expensing of investment and that juices up investment by businesses. And we're already starting to see that in some of the data. And of course, the tax cuts to individuals, that's going to start affecting the economy pretty quickly because households are going to see big refund checks this year because the tax rates went already lowered, but people's withholding didn't change. So, they're going to get, when they file their taxes, they're going to get a bigger refund check and it's almost $100 billion in additional money and that's real money to, you know, folks that are going to go out and spend it and that's going to juice things up. So, that's 4 or 5 tenths. That's the difference between 2026 compared to 2025. It's going to be an okay year. A stronger growth, but that all goes to the temporary boost that you get from the stimulus. And obviously all by design, right? This is an election year. We've got the election come November. The idea here is to, you know, juice up the economy as you get into the election process, which is going to be in full gear sometime this summer. And that's when the stimulus, the fiscal stimulus, will be at its peak. About that time.
Yes. Which would also explain the federal budget deficit, which you say will grow to $2.1 trillion. It is so funny that, you know, part of the idea that Trump campaigned on was balancing the budget. And here we are. You're telling us the economy is going to grow because we're just going to spend so much that it must grow. There are a few other numbers here I just want to get your quick reactions to. You say the unemployment rate will rise to 4.6%. You say inflation will rise to 3.1%, which is not great. That's possibly the bad side, the dark side of what we'll see in 2026. Just let's get your reactions to those numbers. Why have you gone with those numbers? What are you predicting in terms of the job market and inflation?
