In the movie “Forrest Gump,” Forrest is a long-distance runner. He crosses the United States five times before he finally decides he is "pretty tired" and stops. Forrest’s run lasted 3 years, 2 months, 14 days, and 16 hours. In the US, real GDP has been growing since the two-month pandemic lockdown recession ended in April 2020. So its run has lasted 5 years, 8 months, and 7 days so far. In our Roaring 2020s scenario, we expect the economy to continue growing through the end of the decade without a recession.
If so, then the current bull market in equities should continue through the end of the decade. For now, we can say that it started on October 12, 2022, and is still going strong. We are pleased to see that Dow Theory agrees with our upbeat outlook. The Dow Jones Industrial Average (DJIA) rose to a new record high today, and the Dow Jones Transportation Average (DJTA) did the same yesterday (chart). Such mutual confirmations have signaled more economic growth ahead. The DJIA is likely to rise to 50,000 in coming weeks and could reach 70,000 by the end of the decade.
Leading the way higher recently in the DJTA has been FedEx, while UPS has been a laggard, which may be bottoming (chart).
The services economy is still running strong. The monthly ISM non-manufacturing PMI ended 2025 on an upbeat note, rising to 54.4 (chart). The new orders (57.9) and production (56.0) components were particularly robust. And the employment (52.0) component rose back above 50.0.
On the other hand, private industry payroll employment was virtually flat last year, according to ADP (chart). It rose by only 41,000 in December, below the 12-month average of 51,200. The three-month average gain through December was only 19,700.
Today's JOLTS report for November showed a dip. This series fluctuated within a tight range above 7.0 million for most of last year (chart).
November's JOLTS report showed that hires matched separations, at 5.1 million (chart). Quits edged higher, while layoffs fell slightly. The so-called "no-hire-no-fire" economy is a misleading description of the labor market. Hires are relatively high. They just don't exceed separations, which is why total payroll growth is so slow.
In recent months, the ratio of job openings to unemployed workers has been relatively stable around 1.0 (chart).
During November, labor supply slightly exceeded labor demand (chart). The bottom line is that the labor market is broadly in equilibrium.
We are puzzled, frankly, that payroll employment is lackluster, given that business applications are soaring, reaching 535,000 in November (chart). That almost matches the peak pace during the pandemic. Presumably, the applicants expect that there will be at least one employee at their new business. The pace of bankruptcies is much lower than that of new business formations. Many applicants may have lost or left their previous jobs and become self-employed.
