The major averages closed the first full week of trading to begin the year with solid gains. Since last Fridays close the S&P 500 increased 108 points or 1.57%, the NASDAQ picked up 435 points or 1.87% while the DOW jumped 1.122 points or 2.32%. Driven by significant improvements to the economic data and continued strong earnings.
Could Tariffs Work
The trade deficit fell to just 29.4 billion in October. After exports hit an all time record high north of 300 billion for the month reaching 302 billion. Imports slipped 11 billion to 331.4 billion. The Supreme Court is still considering the legality of tariffs, but decided to postpone its decision to a later date. While 1-month does not make a trend with respect to business cycle or economic data. The dramatic improvement in the trade balance is promising, will see what the data for November and December shows.
Its the Economy
Imports subtract from GDP or Gross Domestic Product. So, the dramatic narrowing of the trade deficit to a more than 15-year low per the Census Bureau is a net positive to economic growth. As a result, the Atlanta Fed’s 4th quarter GDPNow model was doubled from +2.7% to +5.4% growth with today’s update. That said the Atlanta Fed often gets carried away with its estimates. This certainly seems like one of those times. The previous estimates were running about 3%. February 20th will see The Bureau of Economic Analysis release its 1st estimate of 4th quarter GDP. 3.5% wouldn’t surprise me. It will definitely “surprise” the Blue Chip experts.
Weak Job Growth
Has dogged the economy during Trumps second term. Trailing demographic trend that requires about 150,000 new jobs each month just to keep pace with population trends. Per data from the Bureau of Labor Statistics showing just 50,000 new jobs in December. While this marked another anemic jobs report. 2025 finished the year with solid wage growth up .3% in December and 3.8% for all of 2025. Good news for an economy that is largely driven by consumer spending, 68% at last count.
Have a great weekend everyone! See you next Friday.
Last Week’s Post: A Rough Start
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