With a new president, a robust economy, and significant advancements driven by artificial intelligence, Wall Street experts and analysts are making predictions about how both the economy and personal finance might shift in the year ahead.

Here are some of those insights:

Potential tariff impacts could lead to confusion

The incoming President Trump has set off alarm bells with his recent promises to impose hefty tariffs on a wide array of foreign imports, encompassing goods from not just China, but also Mexico, Canada, and other nations.

It is still unclear how assertively the new government will implement these tariffs, which could either ignite a trade war reminiscent of the 1930s or potentially lead to concessions from trading partners.

“Tariffs might disrupt trade, dampen domestic demand in the U.S., and escalate inflation,” stated investment firm UBS in a recent analysis. “Conversely, negotiations with partners or domestic legal challenges could lessen their impact and reach.”

Mark Haefele, UBS Global Wealth Management’s chief investment officer, holds an optimistic perspective, particularly regarding the influence of tariff disputes on the stock market.

He estimates a 50% chance of stock market growth in 2025 regardless of tariff developments, a 25% likelihood of a significant stock increase driven by optimism surrounding artificial intelligence, a 15% chance of a tariff-induced downturn, and a 10% probability of sharp stock declines for other factors.

The housing supply issue may persist

Although lower mortgage rates could slightly boost home affordability for new buyers, J.P. Morgan Private Bank anticipates little change in the near future, as demand still outstrips supply. The firm estimates a national shortage of new homes to be between 2 million and 2.5 million units.

Affordability is not uniform and hinges on local prices, incomes, and specific market conditions.

For instance, homes in Cleveland and Detroit are considered relatively affordable for buyers who can manage a 20% down payment, according to J.P. Morgan. The bank predicts that affordability may be achieved in Minneapolis by 2026; in Austin, Washington, D.C., Charlotte, and San Francisco by 2027; in Boston and Portland by 2028; and in Atlanta, San Diego, Dallas, and New York by 2029.

The projection suggests that affordability might be restored by 2030 in Phoenix, Seattle, Denver, and Tampa; by 2031 for Las Vegas; and by 2032 for Los Angeles, with Miami facing a timeline pushing to 2035.

These predictions assume there are no changes in mortgage interest rates. However, if rates decrease by one percentage point, affordability could materialize about a year earlier in most regions, according to J.P. Morgan’s estimates.

Unpredictable tax negotiations on the horizon

The Tax Cuts and Jobs Act of 2017, enacted during President Trump’s initial term, is set to expire at the end of 2025, potentially reverting to previous laws and generally higher personal tax rates.

Trump, with the support of Republican majorities in Congress, will seek to extend the legislation, particularly maintaining current lower tax rates and brackets.

However, there may be areas where Trump and the Republicans might face challenges or alter their priorities. For example, the legislation reduced mortgage-interest deductions for higher-income taxpayers and capped state and local tax deductions (SALT) to $10,000 per household.

“Considering the slim margins in both the House and Senate, compromise may be necessary in areas like the state and local tax-deduction cap,” J.P. Morgan stated.

Growth in the electricity sector is on the way

Many companies are experiencing financial strength and plan to reinvest significantly in new technologies, including artificial intelligence. However, J.P. Morgan Chase also foresees substantial growth in a less glamorous sector: electricity.

This growth is driven by factors like the return of U.S. manufacturing, increased electrification in vehicles, and a rising demand for data centers that store vast amounts of information, including emails, files, databases, and customer accounts.

Data centers are a particularly notable trend, expanding at about 25% annually around the globe and consuming energy comparable to that of small cities.

While renewable sources like solar energy are becoming more prevalent, J.P. Morgan predicts that nuclear energy will play a significant role in the future. They highlighted Microsoft’s involvement in reviving the once-controversial Three Mile Island nuclear plant to provide energy for its data centers.

Additionally, the bank anticipates a rise in the use of small nuclear reactors, with natural gas plants continuing to operate as part of the energy mix.

Rapid adjustments are essential to handle peak demand during times when solar and wind resources are low.

Scams are becoming increasingly advanced and risky

Consumers must stay alert to financial fraud, as scammers are utilizing more sophisticated methods.

A recent alert from Authority Hacker, a firm that guides small businesses in digital marketing, reveals that scams involving artificial intelligence have surged, with a doubling in cases over the last year, leading to reported losses of $108 million. These statistics were obtained through a Freedom of Information Act request the company submitted to the Federal Trade Commission for data on AI-related crimes.

A significant new risk entails AI scams that employ fabricated images, texts, or videos, frequently impersonating celebrities, politicians, or even close friends and family in attempts to trick victims into giving away money.

Mark Webster, co-founder of Authority Hacker, cautioned, “As these scams evolve and become more intricate, they are increasingly difficult to identify. It’s crucial to verify any unusual requests through reliable channels.”

If someone asks you to send money or provide confidential details such as those related to your investment accounts, it’s important to confirm the request by directly contacting the individual you believe is asking, he advised.

Additionally, creating pre-established “safe words” with friends and family can be an effective way to verify each other’s identities when necessary.