The U.S. economy received an upside surprise in the third and final estimate of GDP for the first quarter of 2026. In nominal (not adjusted for inflation) terms, the nation's GDP reached $31.866 trillion after growing by an annualized rate of 5.76% over the previous quarter. The actual year-over-year increase in nominal GDP is 6.07%.

That's $361.7 billion (or 1.1%) higher than had been forecast by the climbing limo GDP forecasting method nearly three quarters ago, which we anticipated would understate the economy's growth.

Reports indicate business investments in Artificial Intelligence (AI) technology are responsible for the outperformance:

The most striking feature of the Q1 data is not its size but its composition. Business investment jumped 10.6% in the first quarter, a sharp acceleration from the 2.4% recorded in Q4 2025. Nearly all of that increase was concentrated in information processing equipment — computers, servers, and the physical infrastructure powering the artificial intelligence buildout — along with software and research and development spending.

Analyst estimates based on BEA sub-component data suggest that AI-related investment contributed roughly three-quarters of the quarter’s total GDP growth. The information sector, federal government spending, professional and scientific services, and durable goods manufacturing were the leading industry contributors. Meanwhile, retail trade, wholesale trade, and finance and insurance all declined.

Looking forward, the climbing limo GDP forecasting method anticipates nominal GDP will continue rising in 2026-Q2, reaching around $32.75 trillion. The following chart shows how actual non-inflation adjusted GDP estimates are tracking with the model's previous projections:

This estimate assumes the momentum the U.S. economy recorded in growing between 2025-Q1 and 2025-Q3 will be sustained through the ending calendar quarter of 2026-Q2. Given the momentum of actual GDP and the impact of the Iran war geopolitical event that wasn't a factor influencing the projection of GDP at the time of the model's momentum-based forecast, we think the climbing limo's projection of nominal GDP in 2026-Q2 will overstated.

The most distant future projection we can make with available finalized GDP data is for 2026-Q4, where the climbing limo forecasting method anticipates the nation's nominal GDP will end the year around $33.05 trillion.

References

U.S. Bureau of Economic Analysis. National Income and Product Accounts. Table 1.1.5. Gross Domestic Product. [Online Database]. Accessed 25 June 2026.

Image Credit: Microsoft Copilot Designer. Prompt: "A chart showing a limousine driving up a bumpy GDP trajectory that rises over time".

The S&P 500 (Index: SPX) lost money every day of the trading week ending on Friday, 26 June 2026. By week's end, the index dropped 1.95% from the previous week's close, ending up at 7,354.02. That's about 3.4% below its 2 June 2026 record high.

It wasn't a big change as stock market volatility goes, but there is something interesting going on within it. The biggest stocks within the S&P 500, many of them making big bets on Artificial Intelligence (AI) technologies or having become big because they produce the infrastructure those bets on AI require, were down.

Since the S&P 500 weights its holdings of its component stocks by their market capitalization, having these biggest stocks of the index decline would be expected to take a bite out of the index as a whole. Which is indeed what happened.

What wouldn't necessarily be expected in that scenario is for the other, smaller stocks of the index to power higher, which also happened.

In the latest update of the alternative futures chart, we've added a new redzone forecast range to compensate for the echo of 2025's AI-powered recovery from the 'Liberation Day' global tariff event, during which we anticipate the S&P 500 will undershoot the dividend futures-based model's raw projections.

The echo effect arises because the model incorporates historic stock price data as the base reference points of its projections of the index' likely future trajectories. We add the redzone forecast ranges when we know the echoes of the past volatility of stock prices will affect the model's projections, in which we bridge across the period that will be affected. For this newest redzone forecast range, we've assumed investors will focus on the now current quarter of 2026-Q3 in setting current day stock prices, anchoring it on that trajectory on 18 June 2026 and setting the other end on the model's projections of where the S&P 500 will be on 27 July 2026, provided they hold their forward looking focus on 2026-Q3.

We expect investors will mostly hold their focus on this quarter because of the likely timing for when the Federal Reserve will hike short term U.S. interest rates. On that count, the CME Group's FedWatch Tool continued to project the Fed will hike the Federal Funds rate by a quarter point to a target range of 3.75-4.00% after the Fed meets on 16 September (2026-Q3).

Meanwhile, here are the market moving headlines that investors had to absorb during the trading week that was:

Monday, 22 June 2026

• Signs and portents for the U.S. economy:
• Oil settles down more 3% after US-Iran talks signal easing supply risks
• US proposes to slash costs for energy drillers on federal lands
• New chief minion's style affecting how investors read Federal Reserve's intentions:
• Warsh brings a skinny approach to a complex world
• Mixed economic signs developing in China:
• China's 618 shopping festival sees flat e-commerce sales as shoppers remain cautious
• China youth jobless rate drops to 11-month low in May
• Bigger stimulus slowly developing in Japan:
• Japan to target $2.3 trillion public-private investment by 2040, Nikkei reports
• ECB minions say their 'neutral rate' analysis is useless for policymaking:
• ECB not using neutral rate estimate to decide policy, Lagarde says
• ECB chief Lagarde plays down second-round inflation worries
• S&P 500, Nasdaq end in the red as tech suffers, traders weigh in Middle East peace talks
• S&P 500, Nasdaq close lower, dragged by Alphabet and megacap tech; focus on Iran
• Alphabet has its worst day in over a year on AI concerns after high-profile exits
• Without AI and energy, the S&P 500 is actually in the red in 2026
• Alphabet Sinks 6%, Amazon Slides 4% Amid AI Capex Anxiety Across the Hyperscalers

Tuesday, 23 June 2026

• Signs and portents for the U.S. economy:
• US Manufacturing Hits 49-Month High As 'Input Costs Show Signs Of Cooling'
• Treasury yields fall despite rate hike concerns hitting tech stocks
• Oil steady as investors focus on Hormuz flows after peace talks
• US gasoline prices tumble for sixth straight week
• US Airlines Set To Pocket $40 Billion As Jet Fuel Prices Crash
• Fed minions slow to respond to changing conditions for inflation; say Iran war oil price shock wasn't big deal:
• Fed's Goolsbee says labor market stable, inflation going the wrong way
• Oil shock nicked US GDP but resilience was the message, Dallas Fed research finds
• Bigger trouble, stimulus developing in China:
• China targets US rare earth and other firms with export controls
• China announces measures to expand automotive after-market
• ECB minions say they'll wait for data, but signal more interest rate hikes are coming even as bigger trouble develops in Eurozone:
• ECB's Kazimir: next steps will depend on data but direction is clear
• Euro zone inflation could stay high even with peace deal, ECB's Lane says
• Euro zone private sector contraction eases in June but services stay weak, PMI shows
• U.S. stocks end deep in the red as tech trade struggles
• S&P 500 and Nasdaq turn lower as tech stocks fall under pressure
• Nasdaq 100 set to shed over $1 trillion as tech selloff deepens; SpaceX slides
• Here Is The Korean Article That Sent Memory Stocks Tumbling And Sparked A Global Selloff

Wednesday, 24 June 2026

• Signs and portents for the U.S. economy:
• US new single-family home sales post second straight monthly decline
• Brent settles at lowest since before start of Iran war as more tankers exit Hormuz
• US manufacturing rises on front-loading of orders, but factory employment tumbles to six-year low
• Fed minions give passing stress test results to U.S. banks:
• Fed says large US banks well-positioned to weather hypothetical downturn, several raise dividends
• Growth signs developing in China:
• China's coal power on the rise again in 2026, reversing first-in-a-decade decline
• BOJ minions thinking about next move to hike Japan's interest rates:
• Some Bank of Japan members call for faster rate hikes, summary shows
• U.S. stocks pull back as tech selloff persists, oil prices drop
• Nasdaq, S&P end lower as tech stocks fall
• Gold hits over seven-month low as dollar firms, rate hike bets rise

Thursday, 25 June 2026

• Signs and portents for the U.S. economy:
• US PCE inflation measure tops 4.0% in May; consumer spending strong
• 10-year Treasury yield declines after May inflation data comes in as expected
• Core inflation rate hit 3.4% in May, highest since October 2023, Fed’s preferred gauge shows
• Apple stock drops 5% on MacBook and iPad price hikes due to memory crunch
• US first-quarter GDP revised sharply higher; but consumer spending nearly stalls
• US prices for new drugs fell in 2025 as fewer costly gene therapies were launched
• Oil prices at pre-war levels on rising Middle East supply
• Fed minions expected to take summer off from more rate hikes, say their policy is 'well positioned' to lower inflation:
• Fed expected to hold rates steady in July, hike in September
• Fed's Williams: Inflation still too high, rate policy 'well positioned' to lower price pressures
• Fed's Goolsbee sees glimmer of hope in latest inflation data
• Bigger stimulus, trouble developing in China:
• China central bank to add tool to better manage short-term liquidity
• China's 'future industries' push triggers flood of venture capital, bubble concerns
• China's carmakers rush to Canada as a ‘practice run’ for US sales
• China's top auditor says major state banks have committed tax evasion or lending violations
• Bigger stimulus, rate hikes developing in Japan:
• Japan's government blueprint nudges BOJ to fuel demand, clouding rates path
• Hawkish BOJ policymaker calls for rate hike once every few months
• ECB minions say persistent inflation in Eurozone will make them keep hiking interest rates:
• ECB's Schnabel sees more tightening even after Iran ceasefire
• Wall St ends mixed as tech megacap declines outweigh upbeat chip outlook
• U.S. stocks struggle to end positively despite great Micron's 3Q results, in-line inflation
• Micron in charts: DRAM and NAND revenues rocket over 340% Y/Y in historic FQ3 '26 surge

Friday, 26 June 2026

• Signs and portents for the U.S. economy:
• Oil prices dive as more tankers move through Strait of Hormuz
• Fertiliser shipments begin exiting through Hormuz strait
• Surge in imports drives US goods trade deficit to 14-month high in May
• Bigger stimulus developing in China:
• China's central bank urges banks to boost lending as demand remains weak, sources say
• BOJ minions find inflation to fight in Japan:
• Core inflation in Tokyo accelerates as energy-driven price pressures begin to broaden
• Bigger trouble developing in Eurozone:
• Which Volkswagen factories in Germany could be shut down?
• Volkswagen declines to comment on reported job cuts
• Tech rout drags S&P 500 to weekly decline
• S&P 500 ends lower; chips tumble and Moderna rallies
• S&P 500 Index divergence: Equal-weight climbs while cap-weight melts
• Nasdaq suffers more than 4% weekly loss as Big Tech drags

The Atlanta Fed's GDPNow tool's estimate of real GDP growth for the U.S. economy in the current quarter of 2026-Q2 dropped to +2.5% from the previous week's real growth estimate of +3.0%.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon of a Wall Street bull looking under the hood of a convertible while a bear points to overinflated tires labeled 'AI'".

According to the Federal Reserve Bank of Atlanta's Home Ownership Affordability Monitor, the national median household income was $85,828 in March 2026. This figure compares with Motio Research's estimate of $88,310 and our estimate of $87,164 for that month.

But when you drill down into smaller regions within the U.S., such as the metropolitan areas surrounding the nation's largest cities, the median household income for each can vary quite a lot from the figure that applies for the national population. Visual Capitalist's Gabriel Cohen, Niccolo Conte, and Miranda Smith dug into the median household income data for the fifty largest metropolitan areas to create the following infographic:

By definition, median household income is the amount of total money income earned by a household that falls in the exact middle of a given population's income spectrum. Half of the households within that population will have a higher income, half will have a lower income.

With that definition in mind, the three metropolitan areas with the highest median household incomes are:

• San Jose, California: $175,491
• San Francisco, California: $141,277
• Washington, DC: $130,587

The three major metropolitan areas with the lowest median household incomes are:

• Buffalo, New York: $74,258
• Memphis, Tennessee: $70,056
• New Orleans, Louisiana: $65,021

San Jose is the only major metropolitan area of the U.S. with a median household income that is double the U.S. national median household income.

If you're a World Cup fan reading this article from outside the U.S. and wonder how your nation's median household income compares to those in the U.S., you might try using this tool or others similar to it to convert the U.S. median household incomes by city into your national currency after adjusting for their relative purchasing power. For example, the gross "equivalised" median household income in the United Kingdom in 2023/24 for all households was £44,300 (see Table 20a in this spreadsheet from the UK's Office of National Statistics), which would convert to about $61,357 in U.S. dollars in 2026 and puts the UK's median household income below that of New Orleans.

Image credit: Mapped: How Household Income Varies Across Major U.S. Metros by Gabriel Cohen, Niccolo Conte, and Miranda Smith. Visual Capitalist. 10 June 2026.

The Thanksgiving Leftover stocks of 2025 turned in a bad showing during June 2026. The ten worst performing stocks of the S&P 500 (Index: SPX) in 2025 collectively dropped by both measures we use to track their performance.

Our market capitalization-based weighted index of the ten stocks went from holding 92.2% of their value on the day after Thanksgiving 2025 as of 26 May 2026 to 84.6% of that value through the close of trading on 24 June 2026. But that wasn't low as the equal-weighted index, which went from 87.2% to 82.7% of their post-Thanksgiving Day 2025 value as determined by that method.

The S&P 500 was also down month over month, dipping from 109.8% to 107.4%. However, as these values are both over 100%, the index is holding gains, putting its performance on a much better position than that of its ten laggards. The following chart shows how the performance of both the market cap-weighted and equal-weighted Thanksgiving Leftover indices compare with the entire S&P 500 index.

Not all is dismal among the worst performing S&P 500 stocks of 2025. Three, Molina Healthcare (NYSE: MOH), Dow Inc. (NYSE: DOW), and Deckers Outdoor (NYSE: DECK), are outperforming the S&P 500 index, but in the case of Dow, not as strongly as it had been.

The remaining seven Thanksgiving Leftover stocks of 2025 however are doing worse, which can be seen in the next chart:

From here, we'll focus on the stocks of the three firms to see the biggest month-over-month declines:

Dow Inc. (NYSE: DOW). The chemical giant's stock price has risen and fallen in recent months in conjunction with the disruptive impact of the geopolitical event of the Iran war. The firm, which announced a restructuring in January 2026, benefited from the event's effect upon its international competition, sharply boosting its profits while trade from the region was affected by the conflict. But that benefit has increasingly dissipated as the ceasefire reached in late March 2026 has held, which benefits Dow's biggest international competitors as they recover from the disruption. The company is now facing a delayed market evaluation of the effectiveness of its restructuring.

The Trade Desk (NASDAQ: TTD) continues to find new ways to disappoint investors with its prospects for a turnaround still in doubt. The outlook of the company's core digital advertising business continues to be hammered as the disruption from AI technologies makes it increasingly vulnerable to competition. At the same time, The Trade Desk has also endured management turmoil and in June 2026, welcomed its third CFO since the beginning of the year.

Keep in mind that The Trade Desk's stock has been doing badly since the end of 2024. Its stock price fell by 66.3% by Thanksgiving 2025 to earn its place on the list of 2025's Thanksgiving Leftover stocks. Since Thanksgiving 2025, The Trade Desk's stock price has gone on to lose 55.3% of that already much reduced value.

Lululemon Athletica (NASDAQ: LULU) is another Thanksgiving Leftover stock facing stronger competition while undergoing extreme management turmoil. Here, the battle between the company's board of directors and its founder Chip Wilson have reached a truce, with the now-outsider Wilson successfully getting his two candidates on the board, which he can use to change the company's direction. Unfortunately, there's a lot of opportunity for improvement as the company's product lines failed to generate either positive sales growth or earnings in its North American markets.

Running struggling businesses like these is not easy. Turning around a struggling business is likewise hard, but there is a lot of potential value that can be realized if it can be successfully done. The trick for investors considering these stocks as potential turnaround stories is to sort the proverbial wheat from the chaff. Our sense from sampling of companies we highlighted in this edition is that that some 2025's Thanksgiving Leftover stocks might qualify as positive turnaround stories, but are taking an excessive amount of time to get themselves properly sorted out. It's no wonder those companies have continued losing substantial value in 2026, dragging down the market-cap and equal-weighted groups as a whole.

Imagine this scenario. You've just left your old job, but you still have a 401(k) retirement savings account at your former employer into which you had been making pre-tax contributions. You're ready to move that money into an Individual Retirement Account (IRA) where you're thinking about rolling it over into a Roth IRA so it can grow completely tax free into the future. But if you do, you'll have to pay income taxes on the amount you roll over, which you'll have to have withheld out of the money that's in your pre-tax account because you don't have the cash to otherwise pay them.

How much of those pre-tax savings will you have to have withheld to pay those income taxes? And how long will it take you to recover that money with the tax-free growth of the post-rollover amount invested in the Roth IRA?

Believe it or not, these are questions that many Americans may find they need to answer several times during the course of their working lives. In 2025, about half of working Americans were contributing money directly from their paychecks to 401k-type plans through their employers, with most making their contributions on a pre-tax basis.

At the same time, about half of Americans will change employers after about four years on the job. If they've been making pre-tax contributions to their retirement savings, they'll have these exact questions.

Which is why we've built the following tool! Here, we'll need you to enter the amount of money you might be looking to convert from a pre-tax retirement savings account to a Roth IRA and your marginal income tax rate for the tax year in which you'll make the change, assuming the taxes withheld will have to come out of your accumulated pre-tax retirement savings. We'll then estimate the amount of taxes to be withheld and how long your tax-free savings will take to recover back to your pre-tax savings amount. If you're reading this article on a site that republishes our RSS news feed, click here to access a working version of this tool!

In using this tool, the marginal federal tax rate is the one that applies when you add the amount of pre-tax income you're seeking to roll over into a Roth IRA to your expected taxable income for the year. For our default example, we've set the marginal federal income tax rate to be 22%, which applies to the following taxable income amounts for the indicated income tax filing status:

• Single or Married filing separately: $48,476 - $103,350
• Married filing jointly: $96,951 - $206,700
• Head of household: $64,851 - $103,350

The expected growth rate of the tax-free investment is set at 9%, which is rounded down from the average rate of return for an investment in the S&P 500 of any duration in the years since January 1871.

With these defaults and a pre-tax amount of $24,000, the tool finds the amount of income taxes to be withheld is $5,280, which reduces the amount of funds being rolled into a Roth IRA down to $18,720. If it grows at an average of 9% a year, the amount rolled into the Roth retirement account would take 2.88 years to recover its pre-tax value.

Since those default values may be very different from ones that might be relevant for you, you're welcome to change them to ones that apply for whatever scenario you'd like to consider.

In Part 2, we'll use the same math to explore a different scenario for executing a pre-tax to Roth rollover that can lead to a potentially better outcome for investors considering executing this kind of strategy.

Image Credit: Microsoft Copilot Designer. Prompt: "A digital art concept of a pre-tax retirement account being rolled over into a Roth IRA that shows income taxes being paid out of the pre-tax retirement account".