Taking Stock: Executive Summary December 31, 2025

As we bid farewell to 2025, we reflect on a year of contrasts, turbulence and cross currents.  It was a year of extremes, even by today’s standards … April’s sweeping tariff announcements sent markets tumbling (to the tune of $5 trillion in two days for the S&P), only to recover to previous levels by late June (AND close out the year with strong gains).  A history-making government shutdown, the longest ever, passed with no significant impact on the markets/economy.  And a seemingly unending stream of negative headlines resulting in a year of continued economic and stock market growth. It was a year of progress amid declining optimism, decreasing inflation amid historic tariffs, steady consumer spending amid affordability challenges and resilience amid volatility. If ever there was a year that validated our mantra “Stay the course.” it was 2025. 

Q4 Economic Data:

Gross Domestic Product (GDP). The GDPNow model estimate for real GDP growth in Q4   2025 is 5.3% (seasonally adjusted annual rate), reflecting strong growth fueled by consumer spending and a decreasing trade deficit. GDP growth in Q3, unavailable at the time of our last mailing due to the government shutdown, was 4.3%. (A growth rate between 2% and 3% is commonly considered “normal.”)  

Unemployment. Total nonfarm unemployment in December was 4.4%. While historically low, the unemployment rate has slowly increased during 2025, indicating a possible cooling of the labor market. 

Consumer Confidence. The Conference Board Consumer Confidence Index, an indication of consumer attitudes and buying intentions, further declined during Q4 to 89.1, with continued  concerns over jobs and wages.  This is a significant decline from 104.7 in December 2024. 

Consumer Price Index (CPI). The CPI for All Urban Consumers (CPI-U), a measure of inflation which shows “cost of living” fluctuations, increased 0.3 % in December on a seasonally adjusted basis. Over the last 12 months, the all-items index increased 2.7% before seasonal adjustments – edging closer to the Fed’s 2% inflation goal and contributing to continued interest rate cuts (two 0.25% cuts during Q4). 

Earnings. For Q4, the estimated (year-over-year) earnings growth rate for the S&P 500 is 8.3%. If this is the actual growth for the quarter, it will mark the 10th consecutive quarter of earnings growth for the index, highlighting the resilience of U.S. corporations.    

Housing. Private housing starts in October decreased 4.6% from September and 7.8%  from October 2024.  Homes values remain high, and while builder sentiment is inching higher (up one point to 39 in December, according to the NAHB/Wells Fargo Housing Market Index). With 50 being the breakeven point for the index, this shows that most builders aren’t confident about the near-term housing market outlook. “Market conditions remain challenging … according to NAHB Chairman Buddy Hughes, “Meanwhile, builders are contending with rising material and labor prices, as tariffs are having serious repercussions on construction costs.”  

Looking Ahead:

In a year of contrasts and volatility, we saw economic and market growth continue during the fourth quarter, demonstrating remarkable resilience. Again … no crystal ball; however, we expect that, even after three consecutive years of strong growth, there remains room for expansion. Pending stimulus/tax breaks from the One Big Beautiful Bill Act should boost businesses and consumers alike, consumer spending remains strong, corporate earnings continue to grow, and inflation and interest rates are declining. Sure, there are continued risks, including geopolitical and domestic shocks (just turn on the news), but As Yogi Berra once quipped, “predictions are hard – especially about the future.” That’s why, as always, we remain steadfastly committed to maintaining a disciplined approach, mitigating downside risk by concentrating on fundamentals and investing in quality companies in a diversified portfolio.  Stay the course, and as Jim Spencer always said, “Ignore the noise.”

Index	December 31, 2025	Q4 Return
DJIA	48,063.29	3.59%
NASDAQ	23,241.99	2.57%
S&P 500	6,845.50	2.35%

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Executive Summary Sources:

https://www.reuters.com/markets/global-markets-wrapup-1-2025-04-04/

https://www.reuters.com/business/sp-500-nasdaq-futures-climb-record-highs-trade-optimism-2025-06-30/

https://abcnews.go.com/Business/stock-market-ends-2025-double-digit-gains/story?id=128812306

https://www.atlantafed.org/cqer/research/gdpnow

https://www.bea.gov/news/2025/gross-domestic-product-3rd-quarter-2025-initial-estimate-and-corporate-profits

https://www.bls.gov/news.release/pdf/empsit.pdf

https://www.conference-board.org/topics/consumer-confidence/

https://www.prnewswire.com/news-releases/us-consumer-confidence-pulled-back-in-december-302338372.html

https://www.bls.gov/news.release/pdf/cpi.pdf

https://advantage.factset.com/hubfs/Website/Resources%20Section/Research%20Desk/Earnings%20Insight/EarningsInsight_121925.pdf

https://www.census.gov/construction/nrc/pdf/newresconst.pdf

https://www.nahb.org/news-and-economics/press-releases/2025/12/builder-sentiment-inches-higher-but-ends-the-year-in-negative-territory

https://www.bloomberg.com/news/articles/2026-01-05/trump-s-tax-cuts-to-boost-us-economy-in-early-2026?embedded-checkout=true&leadSource=uverify%20wall

https://www.morningstar.com/indexes/dji/!dji/performance

https://www.morningstar.com/indexes/xnas/@cco/performance

https://www.morningstar.com/indexes/spi/spx/performance

https://finance.yahoo.com/quote/%5EDJI/history?p=%5EDJI

https://finance.yahoo.com/quote/%5EIXIC/history?p=%5EIXIC

https://finance.yahoo.com/quote/%5EGSPC/history?p=%5EGSPC

 

 

Past performance is not indicative of future results.

 

The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.