Economic Update 12-29

In my update last week, I said the economic numbers were indicating a stronger economy than originally forecast. Indeed, the third-quarter GDP report showed the economy grew at a 4.3% rate. This was much stronger than the forecasted level of 3.7% and also exceeded the second-quarter growth rate of 3.8%. In actuality, it was the highest growth number since the third quarter of 2023. The growth factors contributing to this attractive level were consumer spending and exports. Both of these contributors could provide the basis for an even stronger fourth quarter.

Industrial production, on a year-over-year comparison, was up 2.5% for November. This is an increase from the 2.2% reported in October. The strength in manufacturing and overall production speaks well for not only economic growth but for employment gains as well.

I think the above numbers not only show ongoing growth in the economy but also should provide the basis for equities to start 2026 in a strong position. In addition, the increase in various products in many sectors lays the groundwork for a return to the “supply-side” economic theory that supports lower inflation and interest rates. I think you will be hearing more of this discussion as the new year begins.

Considering we are only three days from the start of 2026, I hope everyone had a Merry Christmas and is looking forward to the New Year. We really do have much to be grateful for. Talk to you next year.