The Pulse on the Economy and Capital Markets: January 2025

To Summarize: The markets are off to a strong start in 2025 signaling optimism in the economy. Economic activity picks up as consumer spending and small business confidence continues to rise. Investments in AI are driving growth and reshaping industries. Weakness in China’s economy could increase export competition. We unpack this and more in the January edition of The Pulse.

In the Markets: Across the board, stocks and bonds are showing a strong performance, which creates opportunities for growth. The Dow Jones and the equal-weighted version of the S&P 500 highlight a potential broadening of performance beyond the tech-heavy Magnificent 7, reflecting optimism as 80% of companies have reported better-than-expected earnings thus far. However, China’s bond markets signal economic weakness from the country’s real estate struggles, aging demographics, and weak domestic consumption. 

U.S. Economic Activity Accelerates: Consumer spending during the holidays hit a record $241.5 billion, showing consumers were willing to spend despite higher prices. While consumers remain price conscious, credit card activity highlights they are continuing to spend. Small business confidence has surged reaching the highest level in years as the election has reduced some uncertainty. 

AI Investments Driving Growth: Big investments in AI infrastructure will be a key source of growth this year with an estimated spending of $250 billion, including recent capex announcements from Microsoft and Meta. AI is set to reshape many industries as more companies look to leverage AI capabilities to streamline operations, deepen customer relationships, and generate return on investments. 

Top Headlines: We’re reading about how America’s bourbon boom has come to an end, Chick-fil-A’s lemon-squeezing robots are saving 10,000 hours of work, Elon Musk explores blockchain for federal efficiency through DOGE, and how immigration will impact the U.S. economy. 

Related resources:

• America’s Bourbon Boom is Over. Now the Hangover is Here. 
• Chick-fil-A’s Lemon-Squeezing Robots Are Saving 10,000 Hours of Work
• Elon Musk Explores Blockchain for Federal Efficiency through DOGE
• How Immigration Affects the U.S. Economy

Disclosure: 

Investment advisory services are offered by Aprio Wealth Management, LLC, a Securities and Exchange Commission Registered Investment Advisor. Opinions expressed are as of the publication date and subject to change without notice. Aprio Wealth Management, LLC shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions contained herein or their use, which do not constitute investment advice, are provided as of the date written, are provided solely for informational purposes and therefore are not an offer to buy or sell a security. This commentary is for informational purposes only and has not been tailored to suit any individual. References to specific securities or investment options should not be considered an offer to purchase or sell that specific investment.  

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