Favorite Fifteen – October 2025

By Vigilant Wealth Management on October 30, 2025

The Investment Policy Committee has finalized this month’s Favorite Fifteen chart pack. Below, you will find the link to the slides for October 2025.

Here are a few important observations:

Global Economic Activity: Global economic activity (Chart #2) expanded in September, led by strength in the Services sector and sustained positive momentum in Manufacturing. The Economic Surprise Index (Chart #1) indicates that recent concerns about slowing growth may have been overstated, particularly in developing markets, which showcased strong positive surprise in September.

U.S. Growth: The Weekly Economic Index (Chart #3) shows U.S. GDP growth remains resilient, albeit moderating slightly, currently tracking at 2.2%. Meanwhile, the GDP NowCast (Chart #4) points to a stronger pace of 3.9% for Q3 2025, reflecting a recovery from earlier tariff-related disruptions. U.S. economic activity (Chart #5) slowed in the month, suggesting the rate of U.S. GDP growth may weaken into year-end.

Consumer Spending: Consumer spending (Chart #6) remained robust, increasing by 0.6% month-over-month to $732.0 billion, marking a 5.0% increase compared to the same period in 2024. This growth was driven primarily by strong performance in nonstore retailers (such as e-commerce platforms) which surged 10.1% year-over-year, along with solid gains in motor vehicle and parts dealers and continued strength in food services and drinking places. These figures reflect nominal spending and are influenced by rising prices, particularly in gasoline, which saw a 4.1% increase and contributed to overall inflation.

Labor Market: (Chart #8) the U.S. Department of Labor suspended the release of the September jobs report as part of its contingency plan during the federal government shutdown that began at the end of September. This blackout includes all Bureau of Labor Statistics (BLS) data releases, such as employment, construction spending, and trade figures.

Inflation: (Chart #9) The Consumer Price Index (CPI) was delayed by the federal government shutdown. The data had been collected prior to the disruption and was released nine days later than scheduled. The report indicated that inflation remains elevated but has not accelerated sharply, despite a significant increase in tariff rates. (Bonus Chart, below) As of September 30th, the effective tariff rate on foreign goods entering the U.S. reached 19%, a level not seen since the 1930s. In response, many companies have opted to sell down excess inventory purchased ahead of tariff implementation rather than pass through higher costs to consumers. Looking ahead, tax reform is expected to deliver an average $800 increase in tax refunds, potentially boosting consumer spending in early 2026 and creating room for businesses to begin passing through some of the tariff-related costs. Consensus forecasts anticipate inflation rising to 3.5% by mid-2026 before easing into year-end.

Bond Market: The yield curve (Chart #10) has made a parallel shift lower ahead of expectations for another fed rate cut this week. Long-term yields (10–30 years) remain elevated amid rising deficit concerns, while short-term yields (1–3 years) are under pressure from near-term growth uncertainty. Bond spreads (Chart #11) remain historically tight, a reflection of strong corporate balance sheets and profitability.

Corporate Profits: Corporate earnings expectations (Chart #13) remain firm, supported by strong early Q3 results. Consensus forecasts project 11% year-over-year earnings growth in 2025 and 13.5% in 2026.

Stock Market: Equities continue to hit record highs (Chart #12), as investors look past lingering macro uncertainties. The forward P/E ratio (Chart #14) has climbed above 22x—well above the 20-year average of 16x—reflecting a notably optimistic outlook.

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