10 Things You Need to Know: December 16, 2025
Haver
December 9, 2025
The NFIB Small Business Optimism Index increased to 99.0 in November, the highest level since August, from 98.2 in October. Six of the 10 index components rose, three fell, and one was unchanged. The outlook for business conditions in the next six months remained positive for the 13th straight month in the latest survey.
Haver
December 11, 2025
The U.S. trade deficit in goods and services (BOP basis) narrowed to $52.8 billion in September from $59.3 billion in August. Exports of goods & services rose 3.0% (5.7% y/y) in September following a 0.2% August slip. Imports of goods & services in September increased 0.6% (-3.7% y/y) after a 5.2% decline.
Haver
December 10, 2025
The employment cost index (ECI) for civilian workers rose 0.8% (3.5% y/y) in Q3’25 after an unrevised 0.9% gain in Q2, according to the Bureau of Labor Statistics. It was the smallest increase in the last four quarters. A 0.9% increase was expected in the Action Economics Forecast Survey. Wages and salaries for civilian workers rose 0.8% (3.5% y/y) in Q3, down from a 1.0% gain in Q2.
Capital Economics
December 10, 2025
Economic growth will remain subdued over the next two years as the largest economies struggle, and the smaller ones outperform. Household income and employment growth are slowing, and consumers are remaining cautious. Germany’s fiscal stimulus is likely to be smaller and less effective than many assume, and other countries will tighten fiscal policy leaving euro-zone fiscal policy broadly unchanged. We have penciled in two rate cuts by the ECB for 2026.
Reuters, South China Morning Post
December 10, 2025
The International Monetary Fund urged China to speed structural reforms and shift toward consumption-led growth, warning that reliance on debt-fueled investment and exports is increasingly untenable amid global trade tensions. The IMF raised its 2025 growth forecast to 5% and 2026 to 4.5%, but said property-sector weakness, local government debt, and subdued domestic demand continue to challenge policymakers.
Barron’s
December 15, 2025
Fiscal and monetary policy is becoming more supportive, including slightly lower interest rates and an economic tailwind from the Republicans’ One Big Beautiful Bill Act. Federal Reserve officials see inflation easing a bit and economic growth picking up next year to 2.3% from an estimated 1.7% in 2025. Another positive: The bull market is spreading beyond Big Tech.
Barron’s
December 15, 2025
Spending even by low- and middle-income households will get a boost in the year’s first half from larger-than-normal income-tax refunds. The OBBBA includes several provisions that could lead to bigger refunds, including deductions of overtime and tip payments for qualified employees. Additionally, Americans will be able to deduct interest paid on loans used to purchase a qualified vehicle, and many seniors ages 65 or older may claim an additional $6,000 deduction.
WSJ, Reuters
December 10, 2025, December 11, 2025
The Federal Reserve’s recent rate cut faced significant internal resistance, with three dissenting votes and four officials quietly objecting by projecting higher rates for 2025. President Donald Trump criticized the cut as insufficient and expressed a desire for lower rates, posing a challenge for Powell’s successor. The Fed’s decision reflects a split between officials concerned about a weakening labor market and those wary of cutting rates in a strong economy.
WSJ
December 12, 2025
US President Donald Trump has indicated he is leaning toward Kevin Warsh, a former Federal Reserve governor, or Kevin Hassett, the director of the National Economic Council, as the next Fed chair. Trump says Warsh is at the top of his list, but Hassett is viewed as a front-runner because of his long-standing relationship with Trump.
Capital Economics
December 9, 2025
The rise in the number of business bankruptcies this year, despite little change in default rates for bank loans or speculative-grade debt, seems to reflect the larger number of firms trying to re-finance debt issued when interest rates were much lower. The so-called “maturity wall” is larger next year, which raises the risk that bankruptcies will trend higher. That risks volatility in credit markets, but we do not view the maturity wall as a big risk to the economy.