The U.S. Economic Situation – December 23, 2025 Update

Perhaps the main reason that I write of our economic situation is that I continue to believe, based upon various analyses, that our economic situation is in many ways misunderstood.  While no one likes to contemplate a future rife with economic adversity, current and future economic problems must be properly recognized and rectified if high-quality, sustainable long-term economic vitality is to be realized.

There are an array of indications and other “warning signs” – many readily apparent – that current economic activity and financial market performance is accompanied by exceedingly perilous dynamics.

I have written extensively about this peril, including in the following:

“Building Financial Danger” (ongoing updates)

“A Special Note On Our Economic Situation”

“Forewarning Pronounced Economic Weakness”

“Thoughts Concerning The Next Financial Crisis”

“Was A Depression Successfully Avoided?”

“Has the Financial System Strengthened Since the Financial Crisis?”

“The Next Crash And Its Significance”

My analyses continues to indicate that the growing level of financial danger will lead to the next stock market crash that will also involve (as seen in 2008) various other markets as well.  Key attributes of this next crash is its outsized magnitude (when viewed from an ultra-long term historical perspective) and the resulting economic impact.  This next financial crash is of tremendous concern, as my analyses indicate it will lead to a Super Depression – i.e. an economy characterized by deeply embedded, highly complex, and difficult-to-solve problems.

For long-term reference purposes, here is a chart of the Dow Jones Industrial Average since 1900, depicted on a monthly basis using a LOG scale (updated through December 19, 2025 with a last value of 48,134.89):

(click on chart to enlarge image)(chart courtesy of StockCharts.com)

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 6878.49 as this post is written

S&P500 Price Projections – Livingston Survey December 2025

The December 2025 Livingston Survey published on December 19, 2025 contains, among its various forecasts, a S&P500 forecast.  It shows the following price forecast for the dates shown:

Dec. 31, 2025 6830.0

June 30, 2026 6909.9

Dec. 31, 2026 6990.0

Dec. 31, 2027 7285.90

These figures represent the median value across the forecasters on the survey’s panel.

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 6834.50 as this post is written

The CFO Survey Fourth Quarter 2025 – Notable Excerpts

On December 17, 2025 The CFO Survey was released.  It contains a variety of statistics regarding how CFOs view business and economic conditions.

In the CFO Survey press release, I found the following to be the most notable excerpts – although I don’t necessarily agree with them:

The top concern among U.S. CFOs remains tariffs, though their extent of concern is smaller than it was last quarter. Other top five concerns include demand for products and services, labor quality and skills mismatch, monetary policy, and inflation.

also:

Real GDP growth is expected to increase by 1.9 percent in 2026, nearly the same as last quarter’s 12-month-ahead forecast. The CFO Optimism Index for the overall economy has softened somewhat, falling from 62.9 last quarter to 60.2 this quarter (on a scale from 0 to 100). Own-firm optimism has fallen among large companies.

The CFO Survey contains an Optimism Index chart, with the blue line showing U.S. Optimism (with regard to the economy) at 60.2, as seen below:

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It should be interesting to see how well the CFOs predict business and economic conditions going forward.   I discussed past various aspects of this, and the importance of these predictions, in the July 9, 2010 post titled “The Business Environment”.

(past posts on CEO and CFO surveys can be found under the “CFO and CEO Confidence” label)

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6721.48 as this post is written

Trends Of S&P500 Earnings Forecasts

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” report of December 12, 2025:

from page 30:

(click on charts to enlarge images)

from page 31:

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6827.41 as this post is written

S&P500 EPS Forecasts For 2025-2027 As Of December 12, 2025

As many are aware, Refinitiv publishes earnings estimates for the S&P500.  (My other posts concerning S&P earnings estimates can be found under the S&P500 Earnings label)

The following estimates are from Exhibit 24 of the “S&P500 Earnings Scorecard” (pdf) of December 12, 2025, and represent an aggregation of individual S&P500 component “bottom up” analyst forecasts.  For reference, the Year 2014 value is $118.78/share; the Year 2015 value is $117.46/share; the Year 2016 value is $118.10/share; the Year 2017 value is $132.00/share; the Year 2018 value is $161.93/share; the Year 2019 value is $162.93/share; the Year 2020 value is $139.72/share; the year 2021 value is $208.12/share; the year 2022 value is $218.09/share; the year 2023 value is $221.36/share; and the year 2024 value is $242.73/share:

Year 2025 estimate:

$276.99/share

Year 2026 estimate:

$317.06/share

Year 2027 estimate:

$362.81/share

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6827.41 as this post is written

Standard & Poor’s S&P500 EPS Estimates 2025 – 2026 – December 3, 2025

As many are aware, Standard & Poor’s publishes earnings estimates for the S&P500.  (My posts concerning their estimates can be found under the S&P500 Earnings label)

For reference purposes, the most current estimates are reflected below, and are as of December 3, 2025:

Year 2025 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $263.76/share

-From a “bottom up” perspective, “as reported” earnings of $241.97/share

Year 2026 estimates add to the following:

-From a “bottom up” perspective, operating earnings of $308.28/share

-From a “bottom up” perspective, “as reported” earnings of $283.96/share

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6827.41 as this post is written

CEO Confidence Surveys 4Q 2025 – Notable Excerpts

On December 11, 2025, the Business Roundtable released its CEO Economic Outlook Survey for the 4th Quarter of 2025.   Notable excerpts from this release, titled “Business Roundtable CEO Index Improves But Remains Below Historic Average“:

The overall Index posted a four-point increase from last quarter to 80, below its historic average of 83. The slight shift reflects a modest uptick in CEO expectations for sales, with plans for capital investment inching up but essentially remaining flat. Additionally, while hiring plans rose by four points, this marks the third consecutive quarter in which more CEOs have anticipated that their company’s employment will decrease than increase.

On October 16, 2025, The Conference Board released the Q4 2025 Measure Of CEO Confidence.   The overall measure of CEO Confidence was at 48, down from the previous reading of 49. [note:  a reading of more than 50 points reflects more positive than negative responses]

Notable excerpts from this Press Release include:

“CEO confidence weakened slightly in the fourth quarter, signaling continued caution among leaders of large firms,” said Stephanie Guichard, Senior Economist, Global Indicators, The Conference Board. “CEOs’ views of general economic conditions now versus six months ago remained slightly negative while CEO’s six-month expectations for the economy turned from neutral to pessimistic. CEOs’ expectations for their own industry were stable, still showing cautious optimism. Meanwhile CEOs’ assessments of current conditions in their own industries—a measure not included in calculating the topline CEO Confidence measure—was slightly less negative. Over the next 12-18 months, most CEOs (64%) expected a mild economic slowdown with slightly increased inflation pressure. Only 4% expected a recession. Geopolitical instability and cyber risks continued to dominate top business risks impacting CEOs’ industries, closely followed by AI and innovation. Meanwhile, trade and tariffs risks were pushed down to fifth place by legal and regulatory risks.”

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Additional details can be seen in the sources mentioned above.

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this site are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 6827.41 as this post is written

Fannie Mae Home Price Expectations Survey (HPES) Q4 2025

On December 11, 2025, the Fannie Mae Q4 2025 Home Price Expectations Survey (HPES) results were released.  This survey is done on a quarterly basis.

Various Q4 2025 Fannie Mae Home Price Expectations Survey information is available, including the chart seen below:

As one can see from the above chart, the average expectation is that the residential real estate market, as depicted by the Fannie Mae Home Price Index, will continually climb.

The detail of the survey is interesting.  Of the survey respondents, only three (of the displayed responses) forecasts a cumulative price decrease through 2030.

The Median Cumulative Home Price Appreciation for years 2025-2030 is seen as 2.70%, 4.84%, 7.69%, 11.39%, 15.68%, and 20.22%, respectively.

For a variety of reasons, I continue to believe that these forecasts will prove far too optimistic.

I have written extensively about the residential real estate situation.  For a variety of reasons, it is exceedingly complex.  While many people continue to have an optimistic view regarding future residential real estate prices, in my opinion such a view is unsupported on an “all things considered” basis.  Residential real estate is an exceedingly large asset bubble. As such, from these price levels there exists potential for a price decline of outsized magnitude. 

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 6901.00 as this post is written