Monthly Update – January 9, 2025

Unemployment

The 1/9/2025 BLS Employment Situation Report reports that the December 2025 unemployment rate decreased by 0.1% to  4.4%.

Our UER model does  signal a recession with a recession probability of  40% (see graph).

 

 

CAPE-Cycle-ID

Fig 9a depicts the CAPE-Cycle-ID and the year-on-year rate-of-change of the Shiller CAPE;  the level switched from -2 to 0 end of June 2023 generating a buy  signal. This indicator now invested in the markets. This indicator is described here.

To avoid the bear market, exit stocks when the spread between the 5-month and 25-month moving averages of S&P-real becomes negative and simultaneously the CAPE-Cycle-ID score is 0 or -2. (read more)

 

Estimated Forward 10-Year Returns

The estimated forward 10‐year annualized real return is 4.3% (previous month 4.4%) with a 95% confidence interval 2.8% to 5.8%  (2.9% to 5.9%). Also refer to the  Realized Forward 10-Year Returns vs. Inflation Rate We may be in a rising inflation period with a falling CAPE-MA35 ratio similar to 1964-1973. This implies very low or negative 10 year forward annualized real returns, much lower than the returns indicated by regression analysis shown in the Estimated Forward 10-Year Returns.

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iM-GT Timer

 

 

Trade Weighted USD

 

 

 

TIAA Real Estate Account