Santa Rally, Growing GDP, Less Money Supply, and The Grinch

December 28, 2025

SOLID ECONOMIC GROWTH REPORTED FOR THIRD QUARTER: Due to the government shutdown, the third quarter gross domestic product report by the U.S. Bureau of Economic Analysis was delayed until last week. The report showed an annualized growth rate of 4.3%. The biggest driver of growth was consumer spending, which remained robust. Consumers were spending more on healthcare, international travel, legal services, personal computers, and software. This puts the first three quarters' growth at an annualized rate of 2.5%, slightly ahead of 2024 (2.4%). Business investment in equipment rose for the third straight quarter.

HO HO HO You can't read too much into market movements, positive or negative, during this time of year. We often get a "Santa Clause Rally" while significantly less trading is occurring. On Christmas Eve, major U.S. stock indices rose for the fifth straight day before coming down slightly on Friday. The solid third-quarter GDP report (see above) did not hurt, but at this point it seems like old news.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

SUPPLY OF MONEY ROSE SLIGHTLY: M2 is a measure of the supply of money in the U.S. It stands to reason that if money is being created too fast, inflation will be a natural result, so this data point is an important one. In November, the M2 measure of money supply rose 0.1%. It is up 4.3% over the past 12 months, below the historical growth rate of around 6%. This should help keep inflation in check if it continues.

INDUSTRIAL PRODUCTION UP SLIGHTLY: The Fed released its October and November reports for U.S. industrial production (mining, manufacturing, and utilities). It was down 0.1% in October and up 0.2% in November. November's rate was 2.5% higher than one year ago.

NEW UNEMPLOYMENT CLAIMS DECREASED: 214,000 new claims for unemployment were filed in the week ending December 20, a decrease of 10,000 from the prior week. This figure has been hovering in the same range for quite a while.

SETTING GOALS FOR 2026: I came across this great video of a German commercial yesterday. It demonstrates the importance of two things. The first is goal setting. Set meaningful goals. The second is execution. Once you have a goal, make a plan keeping the end goal in view at all times, and carry through. Click here to watch the video, but before you do, prepare yourself for a tear or two.

SMILE!: We were very, very blessed to be able to spend lots of time with family this Christmas. One of the necessary activities is posing for all those pictures. Each time we line up, we all have to smile. For me, smiling takes some energy. So, if multiple pictures are being taken, I pause, work up some energy, and smile again. Somehow, one of the pictures caught me looking like this. And this just happened to be the picture one of my family members posted online! I guess it fits because my seven-year-old granddaughter called me the Grinch this year.

Have a great week!

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President

Stonecrop Wealth Advisors, LLC

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“Beloved, I wish above all things that thou mayest prosper and be in health, even as thy soul prospereth." III John 2 (KJV)

SOURCES:

SOLID ECONOMIC GROWTH REPORTED FOR THIRD QUARTER: https://www.bea.gov/news/2025/gross-domestic-product-3rd-quarter-2025-initial-estimate-and-corporate-profits AND https://www.ftportfolios.com/Commentary/EconomicResearch/2025/12/23/real-gdp-increased-at-a-4.3percent-annual-rate-in-q3 AND https://www.wsj.com/economy/us-gdp-q3-2025-2026-6cbd079e?mod=article_inline

SUPPLY OF MONEY ROSE SLIGHTLY: : YCharts.com

INDUSTRIAL PRODUCTION UP SLIGHTLY: https://www.federalreserve.gov/releases/g17/Current/default.htm

NEW UNEMPLOYMENT CLAIMS DECREASING: https://www.dol.gov/ui/data.pdf

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Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.