Weekly Market Commentary December 29, 2025
WEEK IN REVIEW
It was a shortened week due to the Christmas holiday, but several key economic reports were released that provided a snapshot of current conditions.
On Tuesday, Durable Goods Orders for November fell 2.2% month-over-month, a sharper decline than expected and a reversal from October’s gain. The weakness was driven by a steep drop in transportation equipment, particularly civilian aircraft orders. Excluding transportation, core orders rose a modest 0.2%, suggesting underlying manufacturing demand remains steady despite sector volatility.
Also Tuesday, the final estimate of third-quarter gross domestic product (GDP) confirmed strong growth at an annualized 4.3%. Consumer spending and government outlays were key contributors, while inflation measures such as the Personal Consumption Expenditures (PCE) Price Index held at 2.8%, indicating price pressures remain elevated but manageable. In contrast, the Conference Board’s Consumer Confidence Index fell to 89.1 in December from 92.9 in November. The Present Situation Index dropped sharply, reflecting concerns about labor conditions and inflation, while expectations stayed subdued — signaling persistent caution among households heading into 2026.
On Wednesday, weekly jobless claims offered a more positive signal. Initial claims declined by 10,000 to 214,000, beating expectations and showing layoffs remain historically low. However, continuing claims edged up to 1.92 million, suggesting hiring may be slowing and more individuals are staying on unemployment rolls longer. This points to a labor market that is steady but cautious as employers maintain staffing levels without aggressively expanding.
In summary, last week’s data paints a mixed picture: economic growth remains strong, but consumer sentiment is weakening, and manufacturing faces headwinds from transportation volatility. The labor market continues to show resilience, though signs of cooling persist. As we move into the new year, markets and policymakers will watch closely to see whether consumer caution and slower hiring begin to weigh on broader momentum.
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