Waiting on the Fed, Mixed Economic Messages, and Elf

December 7, 2025

WAITING FOR THE FED: Investors are betting on the Fed lowering rates next week. As a result, stocks remained positive. Hopes of lower rates and lower taxes next year are providing some optimism for a reviving economy. Companies whose earnings are more sensitive to interest rates saw their stock prices rise more last week including airlines, truckers and small-cap companies (the Russell 2000, which tracks smaller company stocks, experienced more than double the gain of the S&P 500 last week). Salesforce announced its third quarter earnings, beating estimates and gaining 13% for the week.

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

HOW MUCH DID THE U.S. ECONOMY GROW IN THE THIRD QUARTER?: Due to the government shutdown, official third quarter gross domestic product growth remains a mystery. We are being told that on December 23rd, the official number will be produced. In the meantime, here are estimates by three other entities. According to the Bank of America, U.S. GDP grew by a 3.0% annual rate in the third quarter. According to Goldman Sachs, it grew by 3.5%. The GDPNow model produced by the Atlanta Fed estimates 3.5%.

U.S. SERVICE ECONOMY HEALTHY: According to the ISM Services index, the U.S. services sector was at a nine-month high in November. The index score rose to 52.6 (anything above 50 indicates growth, below represents contraction).

U.S. MANUFACTURING CONTINUES TO STRUGGLE: The ISM Manufacturing Index for November weakened again. It hit a four-month low of 48.2 (anything above 50 indicates growth, below represents contraction). This is nine straight months of contraction. This index was in negative territory in all of 2023 and 2024, rose briefly early this year, and then began more months of decline.

NEW UNEMPLOYMENT CLAIMS DECREASE: In the week that ended November 29, only 191,000 new unemployment claims were filed. That is 27,000 less than last week and the lowest weekly number since 2022.

CONSUMERS FEELING A TAD BETTER: The University of Michigan keeps a monthly consumer sentiment index. The record low is 50, set in June 2022 when inflation was soaring. The index was above 70 in January, but it was all the way down to 51 in November. In December, it rose to 53.3. The increase was due mostly to the fact that consumers are getting somewhat less pessimistic about future inflation, assuming 4.1% inflation in the year ahead, down from a 4.5% expectation last month.

HEAVY TRUCK SALES ARE LOW: Sales of heavy trucks (more than 14,000 pounds) dropped dramatically in October and bounced back a little in November. There were 367,000 heavy truck sales in November, which is better than October, which had only 339,000 sales. November's number is 25% lower than one year ago.

GLOBAL FOOD PRICES DROP: In November, global food prices fell for the third straight month. All major food staples saw decreased prices except cereals according to the Food and Agriculture Organization of the U.N. November's prices were 1.2% lower than the prior month and more than 20% below March 2022. Sugar prices fell 5.9% and dairy fell 3.1%. Meat prices were 0.8% lower.

GLOBAL GDP FROM 1980: Every country has a gross domestic product which is a measurement of the size of its economy. We watch closely how the U.S. GDP grows or shrinks from quarter to quarter. But how is the U.S. economy doing on a relative basis? According to the International Monetary Fund, in 1980, the U.S. GDP represented 25.4% of the entire global GDP. Remarkably, as of 2024, it is very close to the same at 26.3%. It has fluctuated between 21.2% (2011) and 34.6% (1985) during that period. The resilience of the U.S. economy compared to the rest of the world has been notable. How have other countries/areas done? The European Union was at 28.6% in 1980. That was the highest it has been. It has steadily decreased to 17.3% today. Japan was just over 10% in 1980, climbed to 17.8% in 1995, and has steadily decreased since then to its current 3.8%. So, what took the place of the European Union and Japan? China was at 2.7% in 1980 and now stands at 16.9% of the world's GDP having topped out at 18.0% in 2020.

FASTEST GROWING GLOBAL ECONOMIES: Below are the top ten countries in the world for growth in GDP. I have only been to one. Have you been to any? They are:

1. Guyana 16.3%

2. South Sudan 14.6%

3. Libya 10.3%

4. Palau 8.5%

5. Niger 8.3%

6. Senegal 7.9%

7. Rwanda 6.8%

8. Ethiopia 6.7%

9. India 6.5%

10. Ivory Coast 6.5%

    
    

ELF: We had a bunch of friends and family over to our house this weekend. I like to be festive.

Have a great week!

Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545

dmacgray@stonecropadvisors.com

"Someday at Christmas, men won't be boys playing with bombs like kids play with toys. One warm December our hearts will see a world where men are free. Someday at Christmas, there'll be no wars when we have learned what Christmas is for. When we have found what life's really worth, there'll be peace on earth." From the song, Someday At Christmas, performed by Stevie Wonder, written by Ron Miller and Bryan Wells.

"If it is possible, as far as it depends on you, live at peace with everyone." Romans 12:18 (NIV)

SOURCES:

GLOBAL GDP FROM 1980: https://www.visualcapitalist.com/ranked-the-top-6-economies-by-share-of-global-gdp-1980-2024/

HOW MUCH DID THE U.S. ECONOMY GROW IN THE THIRD QUARTER?:https://www.calculatedriskblog.com/2025/12/q3-gdp-tracking-mid-3.html

CONSUMERS FEELING A TAD BETTER: https://www.wsj.com/economy/consumers/consumer-sentiment-improves-slightly-in-december-8019be4a?mod=article_inline

U.S. SERVICE ECONOMY HEALTHY: https://www.ftportfolios.com/Commentary/EconomicResearch/2025/12/3/the-ism-non-manufacturing-index-increased-to-52.6-in-november

U.S. MANUFACTURING CONTINUES TO STRUGGLE: https://www.ftportfolios.com/Commentary/EconomicResearch/2025/12/1/the-ism-manufacturing-index-declined-to-48.2-in-november

FASTEST GROWING GLOBAL ECONOMIES: https://www.focus-economics.com/blog/fastest-growing-economies-in-the-world/

GLOBAL FOOD PRICES DROP: https://www.wsj.com/finance/commodities-futures/world-food-prices-fall-for-third-straight-month-543c3ed4?mod=WTRN_pos1

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

HEAVY TRUCK SALES ARE LOW: https://www.calculatedriskblog.com/2025/12/heavy-truck-sales-collapsed-in-october.html

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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.