The S&P 500 finished off a volatile week with its best day of the year, gaining 2.1% on Friday. However, the index finished the week in the red for the fourth consecutive week, its longest streak in eight months.

The yield on the 10-year note ended March 14, 2025 at 4.31%. Meanwhile, the 2-year note ended at 4.02% and the 30-year note ended at 4.62%.

The Michigan Consumer Sentiment Index declined further this month, indicating growing pessimism among consumers. In March, the index plummeted to 57.9, the lowest level since November 2022. This represents a 10.5% (6.8 points) drop from the previous month, falling short of the anticipated 63.1.

As of Q4 2024, the latest Fed balance sheet indicates that household net worth has risen 186% since reaching its 2009 low. However, when adjusted for inflation, household net worth has actually increased by only 93% since the 2009 trough.

The 20th century Baby Boom was one of the most powerful demographic events in the history of the United States. We've created a series of charts to show seven age cohorts of the employed population from 1948 to the present.

Today, one in three of the 65-69 cohort, one in five of the 70-74 cohort, and nearly one in ten of the 75+ cohort are in the labor force.

The labor force participation rate (LFPR) is a simple computation: You take the civilian labor force (people aged 16 and over employed or seeking employment) and divide it by the civilian non-institutional population (those 16 and over not in the military and or committed to an institution). As of February, the labor force participation rate is at 62.4%, down from 62.6% the previous month and the lowest level since January 2023.

Our monthly workforce recovery analysis has been updated to include the latest employment report for February. The unemployment rate inched up to 4.1%. Additionally, the number of new non-farm jobs (a relatively volatile number subject to extensive revisions) came in at 151,000.

Wholesale inflation eased significantly in February, slowing more than expected. The producer price index for final demand was flat month-over-month, down from 0.6% in January and lower than the 0.3% forecast. On an annual basis, headline PPI increased 3.2%, down from 3.7% in January and below the 3.3% forecast.

In the week ending March 8th, initial jobless claims were at a seasonally adjusted level of 220,000. This represents a decrease of 2,000 from the previous week's figure. The latest reading was lower than the 226,000 forecast.

The Consumer Price Index for Urban Consumers (CPI-U) release for February puts the year-over-year inflation rate at 2.82%. The latest reading keeps inflation below the 3.73% average since the end of the Second World War. Additionally, inflation now sits below the 10-year moving average which is now at 2.93%.

Bitcoin's closing price dropped below $80,000 this week, hitting its lowest level in six months. BTC is down ~12% year to date and ~22% below its record high.

Inflation affects everything from grocery bills to rent, making the Consumer Price Index (CPI) one of the most closely watched economic indicators. The Bureau of Labor Statistics (BLS) tracks this by categorizing spending into eight categories, each weighted by its relative importance.

Inflation cooled for the first time in five months in February. According to the Bureau of Labor Statistics, the headline figure for the Consumer Price Index was at 2.8% year-over-year, lower than the expected 2.9% growth. Core CPI also came in lower than expected, cooling to 3.1% year-over-year.

Six of the nine indexes on our emerging markets watch list have posted gains through March 10, 2025. Russia's MOEX is in the top spot with a year to date gain of 11.1%. Chile's IPSA is in second with a year to date gain of 10.1% while South Korea's KOSPI is in third with a year to date gain of 8.84%.

Gas prices were down for a third straight week, hitting their lowest level in nearly two months. As of March 10th, the price of regular and premium gas were down 1 and 2 cents from the previous week, respectively. The WTIC end-of-day spot price for crude oil closed at $66.03, down 3.4% from last week and the lowest level since August 2021.

The latest Job Openings and Labor Turnover Survey (JOLTS) report showed that job openings rose more than expected in January, while hiring and quits also edged higher. Vacancies increased to 7.740 million, up from December's downwardly revised 7.508 million. The January figure came in above the expected 7.650 million.

The NFIB Small Business Optimism Index dropped for a second straight month, falling to 100.7 in February. While optimism among small business owners moderated last month, uncertainty spiked to its second highest reading of all time.

Five of the nine indexes on our world watch list have posted gains through March 10, 2025. Hong Kong's Hang Seng is in the top spot with a year to date gain of 21.20%. Germany's DAXK is in second with a year to date gain of 12.64% while France's CAC 40 is in third with a year to date gain of 8.84%.

Multiple jobholders account for 5.5% of civilian employment, the highest level since 2009. The survey captures data for four subcategories of the multi-job workforce, the relative sizes of which we've illustrated in a pie chart.

Let's take a close look at February's employment report numbers on Full and Part-Time Employment. The latest data shows that 82.5% of total employed workers are full-time (35+ hours) and 17.5% of total employed workers are part-time (<35 hours).

What does the ratio of unemployment claims to the civilian labor force tell us about where we are in the business cycle and recession risk?

Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process.

There is a general belief that there are four big indicators that the NBER Business Cycle Dating Committee weighs heavily in their cycle identification process. This commentary focuses on one of these indicators: nonfarm employment. In February, total nonfarm payrolls increased by 151,000, while the unemployment rate inched up to 4.1%.

Travel on all roads and streets increased in December. The 12-month moving average was up 0.13% month-over-month and was up 0.99% year-over-year. However, if we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) was up 0.07% MoM and up 0.38% YoY.

The moving average for vehicle sales per capita series peaked in August 1978. Fast forward more than 45 years, it is now down 37.2% from that peak.

The latest employment report showed that 151,000 jobs were added in February, falling short of the expected 159,000. Meanwhile, the unemployment rate unexpectedly inched up to 4.1%.

Here's an interesting set of charts that will especially resonate with those of us who follow economic and market cycles. Imagine that five years ago you invested $10,000 in the S&P 500. How much would it be worth today, with dividends reinvested but adjusted for inflation? The purchasing power of your investment has increased to $16,440 for an annualized real return of 9.98%.

Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations for investment returns. This analysis focuses on the P/E10 ratio, key indicator of market valuation, and its correlation with inflation and the 10-year Treasury yield.

The U.S. trade deficit widened more than expected, as a surge in imports exceeded a smaller increase in exports. In January, the trade deficit expanded 34.0% to -$131.4B, the largest one month jump since 2015 and the largest deficit on record. 

In the week ending March 1st, initial jobless claims were at a seasonally adjusted level of 221,000. This represents a decrease of 21,000 from the previous week's figure. The latest reading was lower than the 234,000 forecast.

The S&P 500 real monthly averages of daily closes reached a new all-time high in December 2024 but has retreated from it the past few months. Let's examine the past to broaden our understanding of the range of historical bull and bear market trends in market performance.

Here is a summary of the four market valuation indicators we update on a monthly basis.

• The Crestmont Research P/E ratio
• The cyclical P/E ratio using the trailing 10-year earnings as the divisor
• The Q ratio, which is the total price of the market divided by its replacement cost
• The relationship of the S&P composite price to a regression trendline

Here is the latest update of a popular market valuation method, Price-to-Earnings (P/E) ratio, using the most recent Standard & Poor's "as reported" earnings and earnings estimates, and the index monthly average of daily closes for the past month. The latest trailing twelve months (TTM) P/E ratio is 27.9 and the latest P/E10 ratio is 37.1.

With the Q4 GDP second estimate and the February close data, we now have an updated look at the popular "Buffett Indicator" -- the ratio of corporate equities to GDP. The current reading is 205.0%, down slightly from the previous quarter.

Here is a look at real (inflation-adjusted) charts of the S&P 500, Dow 30, and Nasdaq composite since their 2000 highs. We've updated this through the February 2025 close.

Based on the February S&P 500 average of daily closes, the Crestmont P/E of 40.8 is 169% above its arithmetic mean, 179% above its geometric mean, and is in the 99th percentile of this 14-plus-decade series.

The Institute for Supply Management (ISM) released its February Services Purchasing Managers' Index (PMI), with the headline composite index at 53.5—above the forecast of 52.5. This marks the eighth consecutive month of expansion despite anxieties over tariffs and federal spending cuts.

The February U.S. Services Purchasing Managers' Index (PMI) from S&P Global came in at 51.0, higher than the 49.7 forecast. The reading marks the 25th consecutive month of expansion but is the slowest growth since November 2023.

The ADP employment report revealed that 77,000 nonfarm private jobs were added in February, the fewest amount since July. The latest reading was lower than the expected 141,000 addition.

The Q Ratio is the total price of the market divided by the replacement cost of all its companies. The latest Q-ratio is at 1.81, down from 1.84 in January.

At the end of February, the inflation-adjusted S&P Composite Index was 178% above its long-term trend, up from 177% in January and just below its record high of 185% in December.

The 10-year Treasury yield has experienced dramatic fluctuations, ranging from a peak of 15.68% in October 1981, during the height of the Volcker era, to a historic low of 0.55% in August 2020, amidst the economic uncertainty of the pandemic. As of February 28, 2025, the weekly average stood at 4.31%.

The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) came in at 50.3 in February, indicating marginal expansion in U.S. manufacturing for a second straight month. The latest reading was worse than the forecast of 50.6.

The U.S. manufacturing sector grew at its fastest rate since June 2022 in February. The S&P Global U.S. Manufacturing PMI rose for a second straight month to 52.7, exceeding the 51.6 forecast.

The weekly leading economic index (WLEI) is a composite for the U.S economy that draws from over 20 time-series and groups them into the following six broad categories which are then used to construct an equally weighted average. As of February 21st, the index was at 22.009, up 0.987 from the previous week, with 5 of the 6 components in expansion territory.

With the release of January's report on personal incomes and outlays, we can now take a closer look at "real" disposable personal income per capita. At two decimal places, the nominal 0.84% month-over-month change in disposable income comes to 0.51% when we adjust for inflation, the largest monthly gain in a year. The year-over-year metrics are 3.58% nominal and 1.05% real, the lowest level since 2022.

The BEA's core Personal Consumption Expenditures (PCE) Price Index for January showed that core inflation continues to be above the Federal Reserve's 2% long-term target at 2.6%. The January core Consumer Price Index (CPI) release was higher, at 3.3%. The Fed is on record as using core PCE data as its primary inflation gauge.

The Chicago Purchasing Managers’ Index (Chicago Business Barometer) rose for a second straight month in February but remains historically low. The index increased to 45.5 from 39.5 in January, surpassing the 40.5 forecast. The index remained in contraction territory for a 15th consecutive month.