Two the Point — Optimism in Full Swing: Small Wins, Big Moves

Small business optimism surged in November, consumer spending remains strong, and the Federal Reserve appears likely to cut rates again, reflecting both resilience and caution in the U.S. economy. While 2024 has been a stellar year for markets, early 2025 could bring opportunities for disciplined rebalancing amid evolving dynamics.

Key Insights:

• Small Business Optimism: The National Federation of Independent Business (NFIB) Small Business Optimism Index rose 8 points in November to 101.7, its highest level since June 2021. This snapped a 34-month streak of record-high uncertainty, with nine of ten components improving.
• Consumer Spending: Cyber Monday sales hit $13.3 billion, up 7.3% year-over-year, while vehicle sales climbed to a strong 16.5 million seasonally adjusted annual rate (SAAR). Wages grew by 4.0% year-over-year in November, providing additional support.
• Labor Market Trends: November nonfarm payrolls rose +227,000, but the household employment survey showed declines for two consecutive months, and the unemployment rate ticked up to 4.2%.
• Federal Reserve Outlook: Softening labor market data and dovish Fed commentary suggest a likely 0.25% rate cut in December. Initial jobless claims remain low at 224,000.
• Market Performance: U.S. equities continue to outperform global counterparts, but early 2025 could see portfolio rebalancing after 2024’s robust gains. This highlights the importance of staying true to long-term targets.
• Global Context: While U.S. growth has been exceptional, international stimulus efforts may reduce the gap, adding potential volatility to the investment landscape.