The climbing limo method of forecasting future GDP in the United States projects the nation's economic output in the fourth quarter of 2024 will be approximately $29.6 trillion.

If that number sounds familiar, it's nearly identical to the climbing limo's forecast for 2024-Q3, in which we indicated that quarter's nominal GDP would "be within a few percentage points" of that figure. With the third estimate of GDP now available, we can confirm that forecast was less than one percent off the mark. At $29,374.9 billion, nominal GDP came in below the climbing limo's forecast by 0.8%.

This time around, we think that with the climbing limo forecast nearly unchanged from the previous quarter, the actual nominal GDP figure to be reported by the Bureau of Economic Analysis has a good chance of coming in higher that the climbing limo forecast, similar to what happened in 2024-Q1.

You can judge that likelihood for yourself in the following chart, which tracks the climbing limo method's forecast against the recorded nominal GDP over the past 10 quarters for which GDP data has been finalized outside of annual revisions.

This chart adds the climbing limo's forecast for GDP in 2025-Q2, which at nearly $30.54 trillion, represents a 1.3% increase over the forecast for 2025-Q1.

About the Climbing Limo Forecasting Method

The climbing limo method is a very simple forecasting technique that projects the level of GDP some three quarters into the future using the nominal GDP figures from five quarters and three quarters before that point in time. As such, its forecast represents the momentum of the U.S. economy recorded between the two data points it uses. Deviations between the actual trajectory of GDP and the forecast tells how the momentum of the U.S. economy has changed, which provides useful information even when the differences between forecast and actual values are large.

For example, the biggest deviations it sees typically happen at turning points for the U.S. economy, when it either enters or exits periods of recession. Since 2022-Q3, the forecasts confirm the growth momentum of the U.S. economy has slowed, though it remains on an upward trajectory.

References

U.S. Bureau of Economic Analysis. National Income and Product Accounts. Table 1.1.5. Gross Domestic Product. [Online Database]. Accessed 19 December 2024.

Political Calculations. Forecasting GDP Using the Climbing Limo. [Online Tool]. 10 May 2005.

Image Credit: Microsoft Copilot Designer. Prompt: "A limousine driving up a bumpy, dirt road with the license plate labeled 'GDP'".

From time to time, we'll try to tell a big story mostly using charts. Today's story is about trade between the U.S. and China during both President Trump's and President Biden's first terms in office. Our first chart presents the inflation-adjusted total value of goods traded between the two nations from January 2017 through November 2024 (the most recent data for which U.S. trade data is available at this writing). The data for President Trump's previous term is indicated in blue, the data for President Biden's current term, which will end on 20 January 2025, is shown in orange, and the given values are in terms of constant 2017 U.S. dollars:

Overall, the value of trade between the U.S. and China has been lower during the Biden-Harris administration than it was during President Trump's first term in office, which is remarkable because President Trump's first term includes both the 2018-19 tariff war that initiated a decline in trade between the two nations starting after September 2018 and also the plunge in trade that accompanied 2020's Coronavirus Pandemic. The Biden-Harris administration achieved that outcome through its own policies. It first broke the recovery in trade between the U.S. and China by unleashing high inflation in March 2021, then crushed trade to new lows with its own anti-free trade restrictions starting after September 2022.

In our second chart, we show how much the inflation-adjusted level of trade between the two nations has changed since September 2018, which marks the peak of trade between the countries before President Trump imposed tariffs against Chinese-produced goods and China retaliated in kind:

The total value of trade between the U.S. and China bottomed at 21% below its September 2018 peak in April 2020 during President Trump's first term in office. Although it recovered all but 6% of that loss in the recovery that followed, it stagnated after March 2021 before plunging again after September 2022. The total value of trade between the U.S. and China bottomed at more than 24% below its September 2018 peak in May 2024 and now sits at 23% below that peak, at least through November 2024.

There's a unique symmetry in the anti-China trade actions taken by President Trump and President Biden, in that the most negative anti-free trade actions they initiated were announced in September of each their second year in office. In our third and final chart, we've set September 2018 as Month 0 for President Trump's trade actions and September 2022 as Month 0 for President Biden's to produce a direct side-by-side comparison that will span identical periods of time following their pre-trade restriction peaks.

Aligning the data this way produces an unambiguous answer to the question of which President's trade-specific policies have been more damaging for trade between the U.S. and China. President Biden's policies have sustained a more negative outcome than President Trump's first-term policies. Was that the answer you expected?

References

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with China, Not Seasonally Adjusted, Nominal Figures, Total Census Basis. [Online database]. Accessed 14 January 2025.

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). U.S. Trade in Goods with World, Seasonally Adjusted, Nominal Figures, Total Census Basis. [Excel spreadsheet]. Accessed 14 January 2025.

U.S. Census Bureau. U.S. International Trade in Goods and Services (FT900). Real U.S. Trade in Goods with World, Seasonally Adjusted, Chained 2017 U.S. Dollars, Total Census Basis. [Excel spreadsheet]. Accessed 14 January 2025.

The market capitalization of the S&P 500 (Index: SPX) increased by a little over 2.5% during the fourth quarter of 2024. According to Standard and Poor, the index ended 2024-Q4 with a market cap of $51.86 trillion.

Since the end of the third quarter of 2024, the value of the Top 10 stocks within the market cap-weighted index rose from representing 34.6% of the index' total value to 37.3%, which means these ten stocks account for $3 out of every $8 of the index' total value.

The combined market capitalization of the Top 10 firms of the S&P 500 increased from $17.51 trillion to $19.35 trillion.

Meanwhile, the other 493 firms that make up the index collectively fell by $525 billion. The market cap of all these other firms rounded up to a total of $32.51 trillion.

The following chart shows the relative shares of the top 10 stocks in the S&P 500 at the end of the 2024-Q4.

Here are the approximate market capitalizations of each of the S&P 500's top ten component firms at the end of 2025's first day of trading on Thursday, 2 January 2025:

• Apple (NASDAQ: AAPL) $3,848,019,662,634 (7.42%)
• Nvidia (NASDAQ: NVDA) $3,542,045,053,341 (6.83%)
• Microsoft (NASDAQ: MSFT) $3,246,442,464,702 (6.26%)
• Amazon (NASDAQ: AMZN) $2,152,194,285,705 (4.15%)
• Meta Platforms (A) (NASDAQ: META) $1,363,920,716,001 (2.63%)
• Tesla (NASDAQ: TSLA) $1,156,480,302,921 (2.23%)
• Alphabet (A) (NASDAQ: GOOGL) $1,130,550,251,286 (2.18%)
• Broadcom (NASDAQ: AVGO) $1,104,620,199,651 (2.13%)
• Alphabet (C) (NASDAQ: GOOG) $949,039,889,841 (1.83%)
• Berkshire Hathaway (B) (NYSE: BRK.B) $860,877,714,282 (1.66%)

Apple (NASDAQ: AAPL) retained its position as the most valuable company in the world as measured by its market cap.

However, since the end of September 2024, Nvidia has surpassed Microsoft to become the second largest firm of the index, while Microsoft now ranks third-largest. Notably, each of the Top 3 companies of the S&P 500 has a market cap in excess of $3 trillion.

There was no change in the rankings for the next two slots. Amazon held onto fourth place and Meta clung to fifth place. Perhaps the biggest change was Tesla, which boomed upward to become the sixth largest company within the S&P 500 with a market cap exceeding $1 trillion.

While the remaining firms saw their market caps rise, their relative position within the index dropped. Class A shares of Alphabet (formerly known as Google) came in seventh. Broadcom jumped into eighth place, Class C shares of Alphabet kept the ninth slot, while Berkshire Hathaway's position went from being the seventh largest firm of the S&P 500 to become the tenth largest.

References

Standard and Poor. S&P Market Attributes. [Excel Spreadsheet]. 31 December 2024. Accessed 2 January 2025.

What demographic group had the biggest gains in the U.S. job market during 2024?

The answer is both really surprising and surprisingly narrow. The raw number of older teens, Age 18-19, saw their numbers among the employed grow by 322,000 in 2024, increasing from 3,308,000 in December 2023 to 3,630,000 in December 2024.

By comparison, the numbers for every other age group is much less impressive. The number of Americans Age 16-17 along with Americans Age 20 and older rose by 219,000, with the total number of working Americans in this age group increasing from 157,446,000 to 157,665,000. Overall, older teens accounted for about 60% of the net increase of 540,000 in employed Americans during 2024, with the total count of working Americans Age 16 and older coming in at 161,294,000.

The following chart shows these net changes for each of these demographic groupings, which have not been adjusted to account for seasonality.

Adjusted for seasonality, the numbers become a little different. Instead of 3,630,000, the number of employed Americans Age 18-19 in December 2024 bumps up to 3,762,000. Meanwhile, after adjusting for seasonality, the total number of working Americans Age 16 and older is bumped up from 161,294,000 to 161,661,000.

Compared to November 2024, both figures are higher. The number of older teens with jobs increased 132,000 month-over-month, while the total number of all other working Americans increased by 478,000. Which is to say older teens accounted for somewhere in the ballpark of 28% of the increase in jobs recorded between November and December 2024. Or would, if the seasonal adjusted data could be added together the way jobs data that hasn't been adjusted for seasonality can be. Still, this data is enough to suggest how narrow the job gains have been in the U.S. economy, with so many jobs being added within a demographic group that accounts for just 3% of the total population of Americans Age 16 and higher.

It's even more remarkable when you consider the impact the release of the December 2024 jobs had upon markets. Treasury yields jumped after the jobs report "smashed expectations". The U.S. stock market "wavered" because the "robust" jobs data put investors' expectations for rate cuts during 2025 "on ice".

Would any of that have happened if investors knew how concentrated the reported job gains really were by age group within the working-age population? Since this employment data is collected by surveys of American households, the employment data could be like the political polls of 2024 in being based on a sample that's not fully representative of the population as a whole. How far off is the real number of employed 18 and 19 year-olds in the U.S.?

Most surveys see statistical variation from their sampling, so really the best measure is to consider the trends over time, where the data generally reverts back toward the mean. The next chart presents the seasonally-adjusted employment data for teens Age 16-19 from January 2016 through December 2024, showing the number employed and the employment-to-population ratio, which also breaks out the data for younger teens Age 16-17 and older teens Age 18-19.

December 2024 was an okay month for younger teens who have otherwise been on an extended downward trend for employment, but an outstanding month for older teens. Outstanding enough apparently to affect expectations for how interest rates in the U.S. will be set during 2025 and by extension, the outlook for the entire U.S. economy.

References

U.S. Bureau of Labor Statistics. Labor Force Statistics (Current Population Survey - CPS). [Online Database]. Accessed: 10 January 2025.

The prospects for at least one rate cut in 2025 dimmed thanks to a 'surprising' jobs report. The S&P 500 (Index: SPX) declined 1.9% from the previous Friday's close to end the trading week ending on Friday, 10 January 2025 at 5,827.04.

The jobs report is more surprising than has been reported, which we'll discuss in a separate analysis in the very near future. As a preview, much of the reported net increase in new jobs is unusually concentrated within a particular and very narrow demographic.

With the surprisingly strong December 2024 employment situation report, investors reacted by pushing the expected timing of the Fed's lone expected rate cut for 2025. The CME Group's FedWatch Tool indicates the timing single rate cut it was expecting in 2025 changed from 7 May to 18 June (2025-Q2).

That kept the forward-looking focus of investors on the second quarter of 2025. In the latest update to the alternative futures chart, which we've rolled forward to reveal the potential trajectories the S& 500 is likely to take during 2025-Q1, we find the trajectory of the index falls within the lower range the dividend futures-based model projects will hold when investors are focused on 2025-Q2.

The trading week was shortened by a market holiday on Thursday, 9 January 2025 to mark former U.S. President Jimmy Carter's death. Here are the week's market moving headlines:

Monday, 6 January 2025

• Signs and portents for the U.S. economy:
• Oil prices ease as weak economic data offsets higher US winter storm heating demand
• Trump's policies may not prove inflationary, Bernanke, others say
• US manufacturing PMI rises to nine-month high, but challenges loom
• Weak demand for aircraft weighs down US factory orders in November
• Fed minions say they need to keep mopping up Bidenflation:
• Fed's Kugler, Daly say job not done on inflation
• Fed's Kugler says data will drive Fed policy choices amid uncertainty
• Fed's Cook: Further rate cuts can come cautiously
• Bigger trouble, bailouts developing in China:
• China hurries to shore up sliding yuan and stock markets
• Morning Bid: China two-year yield eyes fall below 1.00%
• Exclusive: Chinese exchanges ask big fund managers to restrict stock selling
• China seeks to bolster ports and aviation hubs in western regions
• China Effectively in State of Constant Stimulus
• Chief BOJ minion claims BOJ will keep hiking Japan's interest rates:
• BOJ's Ueda vows to keep hiking rates with focus on risks
• Bigger trouble developing in Eurozone:
• Euro zone economy ended 2024 in precarious state, PMI shows
• S&P 500, Nasdaq end higher, driven by tech stocks
• Nasdaq, S&P, and Dow closed mostly higher to start the shortened trading week

Tuesday, 7 January 2025

• Signs and portents for the U.S. economy:
• Oil prices rise as concerns grow over supply disruptions
• Global crude exports dip as trade routes reshuffle again
• US service sector growth picks up; input prices gauge highest in nearly two years
• US labor market stable as job openings rise, hiring eases in November
• US corporate bankruptcies hit 14-year high as interest rates take toll
• Bigger trouble developing in China:
• China's tumbling bond yields intensify 'Japanification' risks
• ECB minions get new problem they didn't want:
• Euro zone inflation jumps on higher energy costs
• Wall Street ends lower as inflation fears mount
• Nasdaq slides 2%, S&P slips 1% as Wall Street sells off on revised rate cut bets

Wednesday, 8 January 2025

• Signs and portents for the U.S. economy:
• Oil prices down on US fuel stocks build, dollar strength
• Bond market selloff jolts global investors as 'tantrum' hovers
• Fed minions say their failure to fix persistent Bidenflation to slow pace of future rate cuts:
• Fed's Waller: More cuts likely though timing depends on inflation progress
• Fed minutes show Wall Street pushed back expected end of balance sheet drawdown
• Fed officials worry Trump policies may lengthen inflation fight
• Bigger trouble, stimulus developing in China:
• China expands consumer trade-in scheme to revive economic growth
• China expects increase in New Year travel numbers, despite economic doldrums
• ECB minions think bigger trouble developing in Eurozone because people not wanting to get out there and spend, also think they'll be done with rate cuts by Summer 2025:
• Euro zone households likely to keep saving to rebuild wealth, ECB says
• ECB could reach neutral rate by summer, Villeroy says
• Wall Street little changed as investors assess inflation path
• Stocks end choppy session mixed; Fed minutes show inflation concerns, less rate cuts

Thursday, 9 January 2025

• Signs and portents for the U.S. economy:
• US hiring announcements in 2024 lowest in nine years
• Los Angeles wildfire economic loss estimates top $50 bln
• Oil prices steady as markets weigh demand against US inventories
• Some Fed minions think they're done with rate cuts:
• Fed's Bowman: supported Dec. rate cut as 'final' recalibration step
• Fed's Schmid says central bank 'near' neutral interest rate level
• Fed's Collins says now is time for patient, gradual approach to rate cuts
• Fed's Harker still expects rate cuts but says imminent move not needed
• Bigger trouble, stimulus developing in China:
• China's consumer inflation slows as demand weakens
• China's consumer prices stall in 2024 on feeble demand
• BOJ minions worried they might have to hike Japan interest rates:
• BOJ sees widening wage hikes, signals chance of near-term rate hike
• Japan November household spending falls as price pressures persist

Friday, 10 January 2025

• Signs and portents for the U.S. economy:
• Surprising Dec US payrolls jump supports longer Fed pause
• Jobs report fuels Treasury yield surge as markets brace for 5% threshold
• Union, employers credit Trump in US port deal that may shape future talks
• LA wildfire insured losses total billions of dollars, ratings agencies say
• Insurance industry stares at potential record-breaking losses from Los Angeles wildfires
• Bigger trouble, stimulus developing in China:
• China's central bank halts bond buying as yuan struggles
• China central bank is moving faster towards its policy limits
• China has ample fiscal space to bolster growth this year
• Wall Street's tough week pushes S&P 500 into negative territory for the new year
• Wall Street ends lower as blowout job data spooks traders
• US property and casualty insurers slide as Los Angeles wildfire losses mount

The Atlanta Fed's GDPNow tool's projection of the real GDP growth rate for the current quarter of 2024-Q4 rose to +2.7% from the previous week's +2.4% annualized growth estimate.

Image credit: Microsoft Copilot Designer. Prompt: "An editorial cartoon showing a smiling bear taking a box away from a sad Wall Street Bull. The box has the words 'Future Rate Cuts' written on it."