Our monthly market valuation updates have long had the same conclusion: US stock indexes are significantly overvalued, which suggests cautious expectations for investment returns. This analysis focuses on the P/E10 ratio, key indicator of market valuation, and its correlation with inflation and the 10-year Treasury yield.

The U.S. trade deficit narrowed as exports surged and imports inched lower. In February, the trade deficit shrank 6.1% to -$122.7B, the first decline in four months.

The Institute for Supply Management (ISM) released its March Services Purchasing Managers' Index (PMI), with the headline composite index at 50.8—below the forecast of 53.0. This marks the ninth consecutive month of expansion but the slowest growth since June 2024.

The March U.S. Services Purchasing Managers' Index (PMI) from S&P Global came in at 54.4, just above the 54.3 forecast. The reading marks the 26th consecutive month of expansion and the fastest growth of the year so far.

Here is a summary of the four market valuation indicators we update on a monthly basis.

• The Crestmont Research P/E ratio
• The cyclical P/E ratio using the trailing 10-year earnings as the divisor
• The Q ratio, which is the total price of the market divided by its replacement cost
• The relationship of the S&P composite price to a regression trendline

Based on the March S&P 500 average of daily closes, the Crestmont P/E of 38.2 is 152% above its arithmetic mean, 175% above its geometric mean, and is in the 99th percentile of this 14-plus-decade series.

Here is the latest update of a popular market valuation method, Price-to-Earnings (P/E) ratio, using the most recent Standard & Poor's "as reported" earnings and earnings estimates, and the index monthly average of daily closes for the past month. The latest trailing twelve months (TTM) P/E ratio is 26.1 and the latest P/E10 ratio is 34.7.

The Q Ratio is the total price of the market divided by the replacement cost of all its companies. The latest Q-ratio is at 1.85, down from 1.97 in February. This is the lowest level in eight months.

At the end of March, the inflation-adjusted S&P Composite Index was 160% above its long-term trend, down from 178% in February. This is the lowest variance in seven months.

The ADP employment report revealed that 155,000 nonfarm private jobs were added in March, almost twice as much as the 84,000 from February. The latest reading was higher than the expected 118,000 addition.

The 10-year Treasury yield has experienced dramatic fluctuations, ranging from a peak of 15.68% in October 1981, during the height of the Volcker era, to a historic low of 0.55% in August 2020, amidst the economic uncertainty of the pandemic. As of March 31, 2025, the weekly average stood at 4.33%.

February's Job Openings and Labor Turnover Survey (JOLTS) revealed a larger-than-anticipated drop in job openings, falling to 7.568 million from January's revised 7.762 million. The latest reading was below the forecast of 7.690 million. Additionally, layoffs and hiring saw slight increases, while quits declined.

The Institute for Supply Management (ISM) manufacturing purchasing managers index (PMI) came in at 49.0 in March, indicating contraction in U.S. manufacturing after marginal expansion in February. The latest reading was worse than the forecast of 49.5.

U.S. manufacturing growth stalled in March amid economic and tariff uncertainty. The S&P Global U.S. Manufacturing PMI remained in expansion territory for a third straight month in March at 50.2 signaling a marginal improvement in operating conditions. The latest reading was higher than the 49.8 forecast.

Consumer attitudes are measured by two monthly surveys: the University of Michigan’s Consumer Sentiment Index (MCSI) and the Conference Board’s Consumer Confidence Index (CCI). In March, the MCSI fell to 57.0, its lowest level since November 2022. Meanwhile, the CCI dropped to 92.9, is lowest level since February 2021.

The Dallas Fed released its Texas Manufacturing Outlook Survey (TMOS) for March. The general business activity index came in at -16.3, its lowest level since July. This marks an 8 point decline from the previous month and the second straight monthly decline.

The BEA's core Personal Consumption Expenditures (PCE) Price Index for February showed that core inflation continues to be above the Federal Reserve's 2% long-term target at 2.8%. The February core Consumer Price Index (CPI) release was higher, at 3.1%. The Fed is on record as using core PCE data as its primary inflation gauge.

The Chicago Purchasing Managers’ Index (Chicago Business Barometer) rose for a third straight month in March, reaching its highest level since November 2023. The index increased to 47.6 from 45.5 in February, surpassing the 45.5forecast. The latest reading marks the 16th consecutive month the index has contracted.

With the release of February's report on personal incomes and outlays, we can now take a closer look at "real" disposable personal income per capita. At two decimal places, the nominal 0.83% month-over-month change in disposable income comes to 0.50% when we adjust for inflation, the largest monthly gain since January 2024. The year-over-year metrics are 3.63% nominal and 1.06% real.

Personal income (excluding transfer receipts) rose 0.4% in February and is up 3.7% year-over-year. However, when adjusted for inflation using the BEA's PCE Price Index, real personal income (excluding transfer receipts) was up 0.1% month-over-month and up 1.1% year-over-year.

The BEA's Personal Income and Outlays report showed inflation remained elevated at the start of 2025. The Fed’s preferred inflation gauge, the core PCE price index, rose 2.8% year-over-year in February and 0.4% from December. Both readings were higher than expected.

Real gross domestic product (GDP) is comprised of four major subcomponents. In the Q4 GDP second estimate, three of the four components made positive contributions.

The third estimate for Q4 GDP came in at 2.45%, a deceleration from 3.07% for the Q3 third estimate. With a per-capita adjustment, the headline number is lower at 1.82%, a slowdown from 2.22% for the Q3 headline number.

The National Association of Realtors® (NAR) pending home sales index increased more than expected in February, rebounding from the previous month's record low. The index came in at 72.0, a 2.0% rise from the previous month but a 3.6% drop from one year ago. Pending home sales were expected to rise 0.9% month-over-month.

Real gross domestic product increased at an annual rate of 2.45% in Q4 2024, according to the third estimate. The latest estimate was higher than the 2.3% forecast but lower than the Q3 final estimate of 3.1%.

The Conference Board's Consumer Confidence Index® sank to its lowest level in over four years in March. The index fell to 92.9 this month from February's upwardly revised 100.1, marking the fourth consecutive monthly decline, the longest streak since 2012

Home prices continued to trend upwards in December as the benchmark national index rose for a 24th consecutive month to a 19th straight record high. The seasonally adjusted home prices for the national index saw a 0.6% increase MoM, and a 4.1% increase YoY. After adjusting for inflation, the MoM fell to 0.3% and YoY fell to -0.5%.

The Federal Housing Finance Agency (FHFA) house price index (HPI) rose to 436.5 in January. U.S. house prices were up 0.2% from the previous month, as expected, and up 4.8% from one year ago. This marks the 29th consecutive monthly increase for the index.

When we think of the U.S. government's finances, we often focus on the massive debt. But what about the assets? What does Uncle Sam actually own, and which asset is the largest?

When we think of the U.S. government's finances, we often focus on the massive debt. But what about the assets? What does Uncle Sam actually own, and which asset is the largest?

The Federal Reserve concluded its second meeting of the year by keeping the federal funds rate (FFR) at 4.25-4.50%, as expected.

As of Q4 2024, the latest Fed balance sheet indicates that household net worth has risen 186% since reaching its 2009 low. However, when adjusted for inflation, household net worth has actually increased by only 93% since the 2009 trough.

In the week ending March 1st, initial jobless claims were at a seasonally adjusted level of 221,000. This represents a decrease of 21,000 from the previous week's figure. The latest reading was lower than the 234,000 forecast.

Household debt increased by $93 billion (0.52%) in Q4 2024, reaching $18.04 trillion. While all debt categories saw quarterly gains, the overall rise was primarily driven by credit card debt.

The Ivy Portfolio is based on the asset allocation strategy used by endowment funds from Harvard and Yale. It is an equally weighted portfolio constructed with 5 ETFs that feature a mix of different asset classes. By allocating across different asset classes, diversification is achieved, and risk is reduced.

The Census Bureau released its latest quarterly report for Q4 2024 showing the latest homeownership rate is at 65.7%, up from Q3 but practically unchanged from a year ago.

A few months ago, the Census Bureau released its annual report on household income data for 2023. During 2023, the median (middle) average household income rose 8.0% to $80,730. Let's take a closer look at the quintile averages, which dates from 1967, along with the statistics for the top 5%.

This chart series features an overlay of the Four Bad Bears in U.S. history since the equity market peak in 1929. The numbers are through the December 31, 2024 close. These charts are not intended as a forecast but rather as a way to study the current market in relation to historic market cycles.

Earlier this week we posted an update on the median household income for the 50 states and DC which includes annual data from 1984 to 2023. Let's now look at the actual purchasing power of those median incomes. For this adjustment, we're using the "C2ER Cost of Living Index" produced by C2ER, the Council for Community and Economic Research.

The median US income in 2023 was $80,610, up from $22,420 in 1984 — a 260% rise over the 39-year time frame. However, if we adjust for inflation chained in 2023 dollars, the 1984 median is $55,828, and the increase drops to 37%.

What is the relationship between education and household income? The Census Bureau’s 2023 annual survey data provides valuable insights into this question. The median household income for individuals aged 25 and older was $82,010, but how does this figure vary based on educational attainment?

The median household is the statistical center of the Middle Class. Let's take a closer look at the Census Bureau's latest annual household income data with a focus on middle class income. In this update, we'll focus on the growing gap between the median (middle) and mean (average) household incomes across the complete time frame of the Census Bureau's annual reporting from 1867 to 2023.

Our commentary on household income distribution offers some fascinating insights into average U.S. household incomes, but misses the implications of age for income. In this update, we examine household income with a focus on age bracket.

A few months ago, the Census Bureau released its annual report on household income data for 2023. During 2023, the median (middle) average household income rose 8.0% to $80,730. Let's take a closer look at the quintile averages, which dates from 1967, along with the statistics for the top 5%.

In the week ending January 4th, initial jobless claims fell to their lowest level since February 2024. Initial jobless claims were at a seasonally adjusted level of 201,000, a decrease of 10,000 from the previous week's figure. The latest reading was better than the 214,000 forecast.

With 2024 behind us, let's revisit the top 10 most-read charts of the year.

The Conference Board Leading Economic Index (LEI) increased slightly in November. The index rose 0.3% from the previous month to 99.7 after eight consecutive monthly declines.

Economic indicators provide insight into the overall health and performance of an economy. They are essential tools for policymakers, advisors, investors, and businesses because they allow them to make informed decisions regarding business strategies and financial markets. In the week ending on August 15th, the SPDR S&P 500 ETF Trust (SPY) rose 0.14% while the Invesco S&P 500® Equal Weight ETF (RSP) was up 2.45%.

Economic indicators are released every week to provide insight into the overall health and performance of an economy.