There are many ways to describe the outlook for the U.S. and world economies. But at the midpoint of 2025, one word has risen to the top: uncertainty.

A lack of clarity over U.S. trade policy — with rising tariffs at the center of the storm — has delivered a severe shock to the global economy. For the first time since 2022, U.S. gross domestic product declined in the first quarter.

As policy uncertainty rises, global economic growth projections are falling. Downward revisions have been issued for the U.S., Europe, Japan and many emerging markets, based on the latest figures from the International Monetary Fund. Recent limited trade deals involving the U.S., U.K. and China are encouraging but much remains to be done. 

After years of being overshadowed by growth and tech stocks, dividend paying stocks are back in the spotlight.

Dividend payers have historically provided a measure of stability during market declines but have also provided positive returns when markets have advanced. What’s more, companies with a history of growing dividends have generated higher returns and lower volatility than both the broader equity market and the wider universe of dividend payers.

Dividend growers can be found among utilities, financials and telecom companies. With tariff negotiations likely to linger for months, dividend growers could provide portfolios with a measure of stability when markets become volatile.

Bonds are poised to ride out potential market volatility in the second half of the year, providing investors with solid income opportunities and relative stability. Given slowing U.S. economic growth and cooling inflation, bonds should provide a smoother ride for investors amid high uncertainty over U.S. trade and immigration policies, rising debt levels and worsening conflicts in Ukraine and the Middle East.

Meanwhile, inflation risks continue to plague markets — and the Federal Reserve. At its June 2025 meeting, the Fed extended the pause on rate cuts and left the target range unchanged at 4.25% to 4.50%. The latest projections show rates to end the year at 3.9%, which suggests modest rate cuts for the remainder of the year.