June 2025
The following facts and statistics describe the financial situation in the United States from January 1st to June 30th, 2025:
The S&P 500 is up 5.5% year to date.
The S&P 500’s P/E ratio currently stands at 29.5 (the average P/E of the S&P 500 is 16.15)
The NASDAQ is up 4.87% year to date.
The Dow Jones Industrial Average is 4.67% year to date.
RECENT STATISTICS AND ECONOMIC DATA THAT AFFECT INVESTMENT DECISIONS
The following statistics and data are important factors to consider when making investment decisions:
S&P 500 Q2 2025 Earnings Snapshot: Estimated year-over-year earnings growth is 5.0%, the lowest since Q4 2023 (4.0%), and down from a 9.4% estimate on March 31 due to across-the-board downward EPS revisions. So far, 59 companies have issued negative EPS guidance while 51 have issued positive. The forward 12-month P/E ratio stands at 21.9—above the 5-year average (19.9) and 10-year average (18.4).
As of May 2025, the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation measure, increased by 0.4% from the previous month. On a year-over-year basis, the PCE Price Index advanced 2.3%.
Core PCE Inflation: In May, the core PCE price index rose 2.7% year-over-year, up slightly from 2.6% in April, and 0.2% month-over-month, following a 0.1% increase in April—indicating modest upward pressure on inflation.
U.S. real GDP declined 0.5% in Q1 2025, down from 2.4% growth in Q4 2024, according to the latest estimate from the Bureau of Economic Analysis. The slowdown was driven by higher imports, lower government spending, and softer consumer demand, partly offset by gains in investment.
The estimate was revised down from the prior report due to weaker consumer spending and exports. Despite the contraction, real final sales to private domestic purchasers rose 1.9%, reflecting underlying demand.
The ADP National Employment Report for May, released on June 4, 2025, indicated a significant slowdown in private sector job growth, with only 37,000 jobs added. This is the lowest level since March 2023 and significantly below expectations. The report also highlighted a slowing pace of hiring, suggesting a weakening labor market, according to ADP's chief economist Nela Richardson.
Job openings remained steady at 7.8 million in May, with hires at 5.5 million and separations at 5.2 million, showing little overall change. Quits held at 3.3 million, and layoffs and discharges were stable at 1.6 million. Notable increases in job openings occurred in accommodation and food services (+314,000) and finance and insurance (+91,000), while openings in the federal government declined (-39,000).
The current unemployment rate in the United States is 4.2. This rate has remained relatively stable, fluctuating between 4.0% and 4.2% since May 2024. The number of unemployed individuals is approximately 7.2 million, with little change over the month.
In May, the employment-population ratio declined by 0.3% to 59.7%. The labor force participation rate decreased by 0.2% to 62.4%.
The Consumer Price Index (CPI) rose 0.1% in May, down from a 0.2% increase in April, according to the U.S. Bureau of Labor Statistics. On a year-over-year basis, prices are up 2.4%.
Shelter costs remained a key driver, rising 0.3% for the month. Food prices also rose 0.3%, with increases in both groceries and dining out. Offsetting those gains, the energy index declined 1.0%, led by a drop in gasoline prices.
Core CPI—excluding food and energy—rose just 0.1% in May, down from 0.2% in April, signaling continued moderation in underlying inflation. Increases were seen in medical care, motor vehicle insurance, household furnishings, personal care, and education, while prices fell for airline fares, used and new vehicles, and apparel. Over the past 12 months, the core index is up 2.8%.
Retail sales in the US for May 2025 saw a decrease of 0.9% compared to the previous month, and a 3.3% increase compared to May 2024, according to the latest Census Bureau report. This decline was slightly worse than the anticipated 0.6% drop. The decrease was primarily driven by a 3.5% drop in motor vehicle and parts sales.
Nonfarm business sector productivity fell 1.5% in Q1 2025—its first decline since Q2 2022—as output slipped 0.2% and hours worked rose 1.3%. Despite the quarterly drop, productivity was up 1.3% year-over-year. Unit labor costs rose 6.6%, driven by a 5.0% increase in hourly compensation and the decline in productivity. Real hourly compensation increased 1.2%.
In contrast, manufacturing productivity rose 4.4%, the strongest gain since Q2 2021, led by a 7.2% jump in durable goods productivity. Manufacturing unit labor costs rose 2.0%. Productivity in the nonfinancial corporate sector declined 1.2% in the quarter but remained up 2.0% year-over-year.
QUESTION FOR CONSIDERATION
What did your portfolio say about you on Liberation Day—and would it hold up if the market dropped 20% tomorrow? Are you investing based on headlines or a real plan tailored to your goals?
THE BOTTOM LINE
When President Trump announced his tariffs on April 2nd, “Liberation Day”—the markets reacted swiftly and sharply. The stock market plunged as uncertainty rippled across the global financial system. For many investors, the first question was: What should I do?
It’s a moment worth reflecting on. Did you sell? Did you hold? Or did you buy more, taking advantage of the drop in the market? Your response in that moment likely said less about your ability to predict short-term headlines and more about whether your portfolio was built on a solid foundation—one rooted in the correct asset allocation for you.
Asset allocation is the process of dividing your investment portfolio among different asset classes—such as stocks, bonds, cash, and alternatives—in proportions that reflect your unique situation. It’s one of the most important decisions an investor can make because it determines not only how your portfolio performs over time, but also how it behaves during periods of stress.
There’s no such thing as a one-size-fits-all portfolio. Every investor has different goals, time horizons, financial responsibilities, and risk tolerance. For example, someone saving for their daughter’s wedding might take a very different approach depending on timing. If the daughter is 10, there's time to invest more aggressively. But if she's older and getting married in the near term, a conservative approach makes more sense.
Stocks tend to outperform bonds over the long term, but they’re also more volatile. If you had been fully invested in stocks ahead of a 2022 or early 2023 wedding, your portfolio could have dropped by 18.1% (or more) in the 2022 bear market—significantly reducing what you'd saved for that goal. This is why your asset allocation must reflect not just what you're investing for, but when you'll need the money.
Before any decisions about specific investments are made, it’s essential to begin with these four core questions:
What are your goals? Are you saving for retirement, a child’s education, or a home purchase in five years? Do you want your investments to generate income, preserve wealth, or maximize growth? Your goals define the purpose of your portfolio and provide a framework for every investment decision.
What is your time frame? Time impacts everything. An investor with 25 years until retirement can ride out short-term market volatility very differently than someone planning to access their funds within the next year. Your time horizon informs how much risk your portfolio can reasonably take on.
What is your risk tolerance? How do you emotionally handle market downturns? Would a 20% decline cause panic, or would it feel like a buying opportunity? Risk tolerance isn’t just theoretical; it’s a reflection of how you’re likely to behave when markets get turbulent—and asset allocation must respect that.
What is your personal financial situation? Your income, expenses, debt levels, cash flow needs, and any upcoming major life events all influence what your portfolio can—and should—look like. A well-designed allocation supports your broader financial life, not just your investment account.
When market volatility hits—as it did during the tariff announcement, the COVID crash, or countless other events—it’s your allocation that determines how much of your portfolio is exposed to risk assets like equities versus more stable investments like bonds or cash. It allows you to stay focused on what matters: your long-term strategy.
A growth-focused investor with decades until retirement may have a portfolio heavily tilted toward equities and perhaps some alternative assets. Someone nearing retirement may prioritize capital preservation and income, leaning more heavily on bonds or dividend-producing equities. Others may require a mix to cover short-term liquidity needs while still pursuing long-term growth.
Strategic asset allocation ensures that these realities are factored in from the start. It’s not about chasing returns or reacting to headlines; it’s about building a resilient framework that can adapt to life changes, market shifts, and evolving goals.
It’s easy to get swept up in the day-to-day movement of markets or dramatic political headlines. But successful investing is not about responding to every twist and turn—it’s about creating a plan that reflects you. Asset allocation gives you the discipline to stay the course and the flexibility to adjust when life demands it.
In short, asset allocation is the bridge between your financial life and your investment strategy. And when that bridge is thoughtfully constructed, it empowers you to approach every market cycle with confidence and clarity—no matter what the headlines say. And that’s The Long and Short of It!