Heading into the new year, my email box groaned under the weight of reports from cheerleader market strategists, all of them predicting that 2025 will be almost as wonderful as 2024, when the S&P 500 gained 23% and concluded its best two-year run since 1999.
“Bull market is alive and well in 2025,” declared the folks at Bank of Montreal, who reckon the stock market will gain 14% this year. That’s nothing compared to the soothsayers at Deutsche Bank, who forecast it will go up by 21%. Even one of the more bearish firms, Morgan Stanley, says an 11% gain is coming.
In search of someone brave enough to steer clear of the thundering herd of optimists, I sought out Wall Street’s No. 1 astrologer, Henry Weingarten. Weingarten describes himself as a “cosmic value investor,” which means that in addition to examining economic data, he susses out market trends by charting the planets and stars.
Weingarten was feeling optimistic when I caught up with him around this time last year. Last April’s total solar eclipse was a signal of exciting times ahead, including the possibility of the Federal Reserve cutting interest rates. Months later the Fed did cut, markets raced higher, and those who heeded Weingarten’s predictions made money. Heaven knows his predictions last year were more accurate than mine.
Alas, this time Weingarten warns that the skies portend nothing good for the earthly economy. In fact, he predicts a global recession is coming this year, perhaps as soon as July.
He worries rising levels of commercial, personal and government debt exceed the ability of borrowers to pay, and the can be kicked forward for only so long. Inflation remains sticky, and he fears deficits will rise and interest rates will swing higher — a nasty combination. As for stocks, money has poured into the market since the last presidential election and there aren’t many skeptics left to be won over.
The bigger issue, in his mind, is what’s happening far above.
Starting July 25, the orbits of Saturn and Neptune will be in almost exact conjunction in the constellation Aries. Weingarten said this pattern has been associated with major disruptive events, including the fall of the Berlin Wall in 1989 and the collapse of a big Canadian mining company in 1997. It’s “the big play” for 2025, Weingarten said in a presentation to clients last month. He calls the phenomenon “rock on a cloud.”
“Think about a rock on a cloud, what’s going to happen?” he asked. Suffice it to say he does not expect a soft landing.
No doubt this is different from usual Wall Street punditry, which holds that tax-cut extensions and lighter regulation will offset whatever damage is done by higher tariffs, trade wars, and immigration crackdowns. Weingarten acknowledges the president-elect is “the most pro-stock market president in history,” but even he can’t trump the power of celestial bodies.
Like any good market strategist, Weingarten gives himself wiggle-room. He said it could take a while for the investor community to realize the economy is weakening, so markets may remain elevated. But eventually the coin will drop.
“We see high recession odds by the summer of 2025,” he said. “There are great fiscal and economic challenges.”
Consider yourself warned. While Saturn and Neptune do their thing, here are some other things to look for in Crain’s economic outlook for 2025.
Our next mayor will be…
Mayor Eric Adams is scheduled to go on trial for bribery April 21, and will run for a second term no matter the outcome. He’ll have plenty of opponents in June’s Democratic primary, including City Comptroller Brad Lander, former Comptroller Scott Stringer, and Queens Sen. Jessica Ramos. Thanks to ranked-choice voting, I would not bet on him winning the majority needed to get the nomination. My prediction: Our next mayor will be current Attorney General Letitia James, who has not yet entered the race. The city’s economy will perk up with a mayor who isn’t under indictment.
Office development starts moving
Office development has been frozen since the pandemic, but lots of developers have ambitious building plans — if they could only raise the money.
RXR Realty wants to build a new tower at 175 Park Ave. on the site of the Grand Hyatt Hotel. Around the block, BXP (formerly Boston Properties) would like to build at 343 Madison Ave. Both developers share a big problem: They haven’t found a big tenant to lease a bunch of space. No anchor tenant means no construction loans. The trouble is many of the usual anchor-tenant suspects, such as JPMorgan Chase, Goldman Sachs Group, and Bank of America, have all built new headquarter towers in the last 20 years. BlackRock, KKR, and Wells Fargo moved to brand-new space in Hudson Yards, and Deutsche Bank relocated to Columbus Circle. Citigroup and Morgan Stanley, however, have stayed out of the real estate game. One would think they are being courted by the RXRs and BXPs of the world.
Meanwhile, there’s one building project that does have a good chance of rising up soon: A new tower at 350 Park Ave., to be developed by Vornado Realty Trust and Rudin Management. An anchor tenant is already lined up: Ken Griffin’s investment firm Citadel. If ground is broken anywhere on a new office building this year, it’ll be here.
A few blocks away, look for SL Green to acquire the Roosevelt Hotel from the Pakistani government, and for the shelter residents to be moved out so a supertall tower can rise up. Another new tower following SL Green’s big success at 1 Vanderbilt Ave. would surely lift the company’s stock price, which rose by 59% last year, the most of any office landlord in the country. That said, what SL Green really wants next year is a casino in Times Square. (More about that later.)
For many of Manhattan’s existing office towers, it’s a different and sad story. Many of these buildings are struggling to retain tenants and their owners are sometimes unable to refinance their loans. A big question in the months ahead is whether troubled developer RFR can hang onto its prized Park Avenue tower, the Seagram Building, when the mortgage comes due in the spring. Sharks are circling. Expect commercial-mortgage delinquency rates to keep climbing next year after they rose to 5.2% nationwide last year from 4.3% in 2023, according to the Mortgage Bankers Association.
To help clear out the deadwood — and perhaps create more housing — expect the city to approve an incentive program to demolish obsolete office buildings. Boxy post-war towers along Lexington and Third avenues will start to come down, but developers won’t rebuild right away. Instead, small, possibly temporary versions of Bryant Park will sprout up that developers such as Charles Cohen name for themselves.
One building to watch this year is the Helmsley Building, a landmarked beauty at 230 Park Ave., next to Grand Central Terminal. Lenders moved to foreclose last year on the property, which is only 70% leased. If bold predictions are what you seek, here’s one: The Kushner family, funded by $2 billion in Saudi money, will make its comeback in New York City real estate by acquiring the Helmsley out of foreclosure for $750 million. Ivanka Trump’s role will be converting it into luxury apartments.
City of Nah
Mayor Eric Adams’ signature achievement may be City of Yes, a series of zoning changes intended to stoke development of 80,000 new homes across the five boroughs. That said, in the coming year construction of housing — especially affordable housing — will remain sluggish in spite of the best intentions. The reason: Stubbornly high interest rates will make the cost of new housing unattractive to most developers. Rates will remain elevated, with inflation lingering because wages paid to workers will keep ramping up until there’s a recession. Second, one of Washington’s top priorities is extending 2017 tax cuts, which will deprive the federal government of revenue and force it to borrow heavily to meet all its commitments.
Since the mayor is committed to more housing, the next thing he should do is lobby Albany to reform a 2019 law that restricts the amount landlords can pass along to tenants that they spend on renovations and maintenance of rent-regulated apartments, while also making it harder to convert units into condos or co-ops. The real estate industry says the law has made it impossible to recover the cost of fixing up an apartment after it’s been occupied for decades and has forced already scarce housing off the market. Amending the law would make more apartments available, landlords say. Tenant groups like the law because they say it preserves rent-regulated units. Expect them to effectively organize to boot out lawmakers who vote in favor of repeal.
A dip in New York’s economy, then a surge
The city relies on federal aid for 15% of its roughly $100 billion in total annual revenue, according to the Independent Budget Office. Look for this source of funding to shrink this year as the Trump administration reduces aid for health care and migrants. This will put pressure on the city’s budget in the first half of the year.
After suffering a defeat in the Democratic primary in June, look for Adams to switch parties for the remainder of his term, explaining he’s doing so in order to more effectively lobby Washington for assistance. The city’s fortunes, though, will turn toward the end of the year as New York’s wealthiest will have more money to spend after Congress extends and modifies the tax cuts enacted in 2017.
Tourists, tourists everywhere
Nearly 65 million tourists came to New York last year, a 3.5% increase over 2023, according to the mayor’s office. Next year, visitors will return to pre-pandemic levels of 67 million, and hotel prices will remain sky-high because the supply of 130,000 rooms remains tight.
To make the city more inviting to those who don’t want to spend $400 a night to sleep, the City Council may consider amending Local Law 18, which since 2023 has outlawed most short-term Airbnb rental listings. But I expect the influential hotel-workers union will oppose cutting Airbnb any slack and the legislation will be shelved.
The next subway is only minutes away
About 15 years after Mayor Michael Bloomberg said it was a good idea, congestion pricing is finally here, and driving a car south of 60th Street during the day requires a $9 toll.
It’s not popular with the folks who have to foot the bill, but within a few months the benefits will be clear. The number of cars in Midtown will drop by nearly 20%, mimicking London’s experience with congestion pricing, as new tolls drive commuters onto trains. Traffic delays will fall even more, crosstown buses will move faster, air quality will rise, and public transit ridership will hit post-pandemic highs. But then word will get around that Manhattan isn’t such a traffic nightmare anymore and soon the roads will be as choked as ever.
But now that the MTA has more money for repairs and signal upgrades, more trains will be put on the tracks and 10-minute-plus waits for subways during rush hour will become a thing of the past. We can dream, can’t we?
Next stop, Trump Station?
LaGuardia Airport has been rebuilt, John F. Kennedy and Newark Liberty International airports have new terminals and there’s even a new Tappan Zee Bridge across the Hudson River. But the most urgently needed public-works project remains unfinished: The transformation of Penn Station, a place Gov. Kathy Hochul rightly has called a hellhole. This project is tough because the station serving 600,000 commuters is entombed below Madison Square Garden, which isn’t going anywhere. Former Gov. Andrew Cuomo tried to link rebuilding the nation’s biggest rail hub with developing a Hudson Yards-like neighborhood around it, but that hasn’t gotten the job done.
Bold prediction: This project desperately needs a new push and could get it from Trump after someone reminds him that Hochul once said a new rail hub wouldn’t necessarily be named for the long-gone Pennsylvania Railroad. But prospects for Trump Station will take a hit when Elon Musk insists the station be named for him. The resulting bidding war will surface a dark horse winner, Michael Bloomberg.
Did someone mention a casino?
Last year, I confidently projected casino licenses would be approved for Hudson Yards, Nassau County, and at the Aqueduct Racetrack in Queens. In the end, the state made no decisions, but gaming regulators swear they will show their cards by the end of this year. There are lots of compelling bids, each with its own benefits and complications. SL Green’s bid for a Times Square casino is fiercely opposed by Broadway theater owners. Steve Cohen’s proposal for one near Citi Field involves taking over city park land. Related’s bid for Hudson Yards would require rezoning the area, a politically fraught process that could end up with the developer backing away from commitments made years ago to build housing.
It’s a crapshoot, but I’m standing by last year’s predictions. In recent months, Related’s casino bid has won the support of the Building and Construction Trades Council, a union group with lots of influence in Albany. The Nassau bid has the backing of Las Vegas Sands Corp. and Miriam Adelson’s billions. And the Aqueduct location is currently a racino (a racetrack with slot machines but no table games) operated by Genting, with an attractive location close to Kennedy Airport. If your idea of a New York vacation is to fly in, gamble, then go home, this casino would be for you.
