Chartbook December 2025

Perspectives – January 16, 2026

The U.S. economy grew at a robust 4.3% annualized rate in the third quarter, far exceeding expectations and marking the strongest growth since Q3 2023. The expansion was driven mainly by consumer spending, particularly on healthcare – which alone added 0.8% to GDP – and on information-processing equipment such as consumer electronics. Government spending, led by federal defense outlays, contributed an additional 0.4%, while exports rose and imports fell. However, business investment slowed and consumer confidence dropped sharply in December to near five-year lows, signaling potential weakness ahead. Economists caution that slower consumer spending and the effects of the recent government shutdown are likely to weigh on growth in the final quarter of 2025.

Global equity markets ended 2025 with strong gains, led by non-U.S. stocks benefiting from a weaker dollar, attractive valuations, and rotation away from U.S. technology. Solid earnings, easing inflation, and expectations of further rate cuts supported sentiment. The S&P 500 rose ~18%, led by tech and communication services, with some broadening to cyclical and defensive sectors. International Developed markets gained 32%, while emerging markets led the pack returning 32.1% for the year. Investor optimism remained strong, though concerns about high valuations, policy, and geopolitical risks persisted heading into 2026.