On Friday (June 27th), both the S&P 500 and the Nasdaq closed at record levels. This occurred despite growing evidence of a slowing economy and continued trade angst.1 Meanwhile, the DJIA is still -2.65% away from its 12/4/24 peak (45,014.04) and the small cap Russell 2000 remains off more than -11% from its 11/25/24 high (2,442.03).2 This isn’t a surprise to us as the industrial economy and especially small caps always feel an economic slowdown before it becomes mainstream. In addition, the DJIA and Russell 2000 have many fewer tech companies, the sector where the action is.
The table above shows that all the major indexes had a good week and month. For the year, the S&P 500 is up about 5% (about where is should be halfway through a typical 10% growth year), while the other three major indexes are lagging. The Nasdaq is up less than 1% while the DJIA (industrials) and the Russell 2000 (small cap) are underwater year to date (with the Russell 2000 off more than -5%). So, a mixed bag.1 2
Five of the Magnificent 7 (NVDA, MSFT, AMZN, META and GOOG) enjoyed a prosperous week. AAPL and TSLA were marginally positive. For the year to date, it is really a mixed bag. AAPL and TSLA are down nearly -20%, and GOOG is down more than -6%. Meanwhile META, NVDA and MSFT show substantial gains, while AMZN is just keeping its head above water. Nevertheless, on Friday, NVDA closed at a new record high.3 4
The Consumer
As the consumer goes, so goes the economy. So, when the consumers’ income falls, or inflation rises faster than that income, real consumption growth is negatively impacted. So, it isn’t good news to learn that personal earnings (excluding government transfers) fell in May (-0.1%) and have been negative in three of the past four months. Perhaps this is responsible for the -0.1% drop in consumer spending in May which, after including the effects of inflation, amounts to -0.3% in real terms. There was a fall in spending on durable goods of -1.8%, -0.3% for non-durables, and services were essentially flat (-0.03%).5
There are other signs of consumer discomfort. One such sign is the rise in the number of multiple job holders. This occurs when the income from a single job isn’t sufficient to maintain that worker’s lifestyle. Either live at a lower level or get a second job! The chart shows a steady upward trend in this statistic since the pandemic.6
Other such signs can be seen in the delinquency rates on consumer loans. Delinquencies on mortgages, auto loans and consumer credit are on the rise. The left-hand side of the chart below shows that credit card balances are at record levels as consumers try to maintain their standard of living (Charge it now – worry about paying for it later!). Note the rapid rise in delinquencies (right-hand side of the chart below) in the post-pandemic period. Note that while credit card delinquencies of 90+ days appear to have come down recently, this is most likely due to increased write-offs of such debt by the financial (bank) system.7 8
Finally, a look at the major retailer reports reinforces the aggregate data. Best Buy, for example, recently cut its sales forecast for 2025. Kohl’s reported -3.9% sales growth in Q1, and went on to forecast -5% to -7% for 2025 as a whole. Foot Locker reported that sales fell -2.6% from year earlier levels, and Hormel trimmed its earnings outlook.5
Housing
As always, housing is a good indicator of the economy’s economic health. The left-hand side of the chart below shows the slowdown in Existing Home Sales over the past couple of years, and the right-hand side indicates the rapid rise in the months’ supply of inventory at current sales rates (now higher than the pandemic peak). This is a sign of growing weakness and inevitably leads to a slowdown in new home construction with spillover effects into the labor market.
Note in the New Home Sales chart below the horizontal trend since 2023 and the latest turndown in 2025.
As demand stagnates, so do home prices. As seen from the chart below, the median sales price of new homes has stagnated for the past two years.
Final Thoughts
Equity markets continued their upward path the week ended June 27th with record highs for the S&P 500 and the Nasdaq. It was a good week and a good month for stocks. But this rising tide has put the P/E ratio significantly above its long-term mean. Investors beware! For 2025, the S&P 500 leads the pack, up nearly 5%, while small-caps also carry a “5” growth number, but with a negative sign.1 2
It was also a positive week for all of the Magnificent 7 (AAPL barely so). Year-to-date, the stock prices of four of the Mag 7 are positive and three are negative, with AAPL and TSLA each down nearly -20%!3 4
As the consumer goes, so does the economy. One can see the stress developing in the consumer sector by looking at the rising trend of multiple job holders and the rise in both credit card balances and 90+ day delinquencies.6 7 8
Housing is always a bellwether of the economy. The fact that Existing Home Sales have tanked and New Home Sales have flatlined tells an astute observer that the economy has entered rocky ground.
Robert Barone, Ph.D.
(Joshua Barone and Eugene Hoover contributed to this blog.)
Robert Barone, Joshua Barone and Eugene Hoover are investment adviser representatives with Savvy Advisors, Inc. (“Savvy Advisors”). Savvy Advisors is an SEC registered investment advisor. Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy.
Ancora West Advisors, LLC dba Universal Value Advisors (“UVA”) is an investment advisor firm registered with the Securities and Exchange Commission. Savvy Advisors, Inc. (“Savvy Advisors”) is also an investment advisor firm registered with the SEC. UVA and Savvy are not affiliated or related.
References:
1 CNBC, June 29, 2025
2 Yahoo Finance, June 30, 2025
3 Business Insider, May 20, 2025
4 Alpha Spread, March 10, 2025
5 CNBC, June 27, 2025
6 Bureau of Labor Statistics, June 9, 2025
7 Mortgage Bankers Association, May 13, 2025
8 KPAX/TransUnion, December 12, 2024