It’s Been A Noisy, Yet Resilient Year For The U.S. Economy

A word we have used often to characterize financial markets and the economy in 2025 has been “noisy.”

A simple, yet technical definition of noisy is “accompanied by or introducing random fluctuations that obscure the real signal or data.” In this context, the real signal or data could be economic growth, the unemployment rate, performance in equity and fixed income markets, or the financial performance of banks and credit unions. The obscurities could be tariffs, threats to Fed independence, geopolitical tensions, and the longest government shutdown in U.S. history. To be clear, each of these could prove to have true economic costs rather than being merely distractions. However, thus far, the bark has been greater than the bite.

Although ample sources of economic uncertainty and worry persist, the same could be said for economic opportunity. As such, there is a wide dispersion of potential outcomes forecasted by Wall Street economists and Fed leaders alike.

The latter has been a heightened area of focus for financial markets in recent months as they try to assess whether the FOMC might be pivoting to a less dovish, or more hawkish, policy path. The minutes of the October 29 FOMC meeting and recent speeches by various Fed leaders suggest a growing contingent more worried about lingering inflation risk. However, as of Monday, the fed funds futures market showed a 100% probability of a December cut and nearly 100 basis points of rate cuts over the next year.

If the labor market proves to be on firmer footing than what the FOMC doves seem to believe, this scenario presents upside risks to bond market yields. However, if business investment remains subdued and unemployment rises, the Fed is more likely to continue lowering the policy rate, as is currently priced by fixed income markets. As always, interest rate directionality scenarios are relative to what is already accounted for in current yields across the curve.

Visit ALM First to read more about the latest economic data and overall monthly market trends.

Jason Haley joined ALM First in 2008 and is the firm’s chief investment officer. He heads ALM First’s Investment Management Group (IMG), which is responsible for leading the investment process and investment theme development. Haley also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firm’s depository clients. He holds an MBA with a concentration in finance and a BBA with a concentration in marketing, both from The University of Mississippi.

Not an offer for investment advisory services. This content is provided for general educational information and market commentary purposes only.