2025 Q2 Market Commentary

A “Sneaky Good” First Half to 2025

 “Sneaky good” is how one of my co-workers explained the stock market and economy during a recent call. The more I thought about it, the more I realized it was an apt description.

Throughout the first half of the year, the market has performed better than many predicted, and the economy continues to be surprisingly resilient in the face of major change and uncertainty. Let’s dig a little deeper into the quarter’s biggest takeaways.

Markets Quietly Breaking Records

When discussing “the market,” it is often the S&P 500, an index that tracks the stock performance of 500 leading public U.S. companies, that is quoted, and we will continue to do so from here on. On April 8^th, the S&P had dropped by almost 17% for the year and almost 20% from its most recent highs. By the end of the latest quarter (June 30), the S&P was up just over 6% for the year, a historic recovery, as it was the fastest recovery ever after a loss of at least 15%, taking just 89 days.^[i]

Beyond the U.S. equities market, other market indicators are also performing well. In fact, the MSCI EAFE (a common benchmark for all non-U.S. stocks) was up around 20% in the first half of the year. Even core fixed income or bonds are up around 4% for the year.

Still, if you’re like me, the first half of the year didn’t feel like a great run. Maybe it is because fearful headlines sell better than good news, or maybe I’ve become a glass-half-empty guy (I hope not). But it feels more like we lived through a down 10% period more than an up 6% one. That’s why the “sneaky good” description fits so well. It’s a good reminder, to myself included, that we sometimes need to tune out the noise and look at the actual data.

I feel I could copy and paste this every quarter, but the first half of the year has been a perfect example of why we believe so strongly in the benefits of diversification. Much of what has worked best this year has lagged in prior years. In addition, holding bonds and cash gave us the flexibility to rebalance portfolios in April and take advantage of the pullback in equities.

The Broader Economy

That’s all well and good, but I’m sure some of you are thinking, “Will, you’ve said time and again that the market is not the economy, and the economy is not the market.” Fair, but the economy has also been, wait for it… “sneaky good.” The latest Gross Domestic Product (GDP) numbers, the total value of all goods and services produced domestically, show an economy that grew 0.80% in the first quarter and 4.68% from March 31, 2024, to March 31, 2025.^[ii] The current official unemployment rate is 4.1%.^[iii] Now, I won’t argue if you are skeptical of that number. It feels like we still have a lot of underemployed and working-aged individuals no longer actively looking for work omitted from this number, making the figure lower than actual unemployment. However, even with a conservative bump to that number, it is still below the long-term average unemployment rate of 5.6% since 1990.^[iv]

Inflation and “Funflation”

Inflation so far in 2025 might not quite fit the “sneaky good” theme, but it’s also not terrible. June inflation numbers were mixed, with month-over-month numbers at their highest levels since December at 0.3%, while the year-over-year figure was 2.7%.^[v] Still higher than the 2% the Federal Reserve would like to see, but much lower than 2022 levels.

A quick side note on inflation, and while this does not play a big role in our investment philosophy, it is something I find fascinating: the concept of “funflation.” (Yes, that’s a real term that real economists came up with. You can imagine how cool my kids think I am when I say I am fascinated by inflation.)

Funflation measures the increasing price tags of live events as consumers spend on the experiences they lost during the COVID years. We are now five years post-COVID and this does not seem to be slowing down. I don’t know how many of you have bought tickets for sporting events or concerts, but my goodness, the prices continue to shock me.

This desire to spend on experiences is especially true for Millennials and Gen Z, where two in five have said they’ve spent more than $5,000 on concert tickets alone for destination live events.^[vi] Dynamic, surge, or variable pricing based on demand has been a driver in the increased prices. It can also be tied to the younger generation’s desire to prioritize experiences over things and a “YOLO” (you only live once) attitude. It is not just music but sports as well. If you’re like me and trying to catch some of the biggest college football games this season, like Alabama at Georgia and Texas at Georgia, be prepared to pay around $1,000 per ticket. Unlike UGA last year, the concept of supply and demand is undefeated.

Policy Impacts

I will not spend too much time discussing tariffs or the “Big Beautiful Bill” (BBB). If you want to hear more of our thoughts on these issues, you can watch the replays of our May webinar on tariffs and our July webinar on the BBB.

The BBB, while over 800 pages, only had a few items likely to affect most of our clients:

• Existing tax brackets stayed the same
• The SALT deduction increased a lot
• The estate and gift tax exemption increased to $15M per spouse and is permanent (for now at least – a future administration could certainly change that)

As for tariffs, there is more to come. Deadlines for deals shift, as do the rates charged to specific countries. Tariff uncertainty makes short-term trading of investments very difficult, if not impossible. One leak from the White House or tweet from President Trump moves markets substantial amounts. That’s why we continue to believe in long-term investing based on detailed planning and diversified portfolios. With this strategy, otherwise worrisome volatility can present good opportunities to rebalance and invest cash not needed for 5-10 years as the market sells off.

If you have any questions or wish to discuss your specific situation, please reach out.

 The views and opinions expressed are of Persium Advisors, LLC. This commentary is provided for educational purposes only and should not be construed as investment advice. Persium Advisors is an investment advisor firm located in Atlanta, GA.

[i] https://www.marketwatch.com/livecoverage/stock-market-today-s-p-500-set-for-record-high-as-dow-nasdaq-called-higher-with-pce-data-on-tap/card/s-p-500-headed-for-fastest-ever-recovery-to-record-highs-dow-jones-data-show-QP4UbpRKPMvbqVZwPsyb

[ii] https://ycharts.com/indicators/us_gdp#:~:text=US%20GDP%20is%20at%20a,4.67%25%20from%20one%20year%20ago 

[iii] https://www.bls.gov/charts/employment-situation/civilian-unemployment-rate.htm

[iv] https://www.statista.com/statistics/193290/unemployment-rate-in-the-usa-since-1990/

[v] https://www.cnbc.com/2025/07/15/cpi-inflation-report-june-2025.html

[vi] https://www.cnbc.com/2025/01/31/funflation-concert-ticket-prices-soar-but-music-fans-dont-care.html