The "Big Beautiful Bill" under the roof

Moderate economic growth, a further slight decline in inflation rates and productivity increases due to increased AI applications in the operating processes of the companies represented in the S&P 500 are positive components and drivers of the current handsome stock market valuation. We assume that the customs dispute will not escalate any further, but continue to expect increased volatility until it is resolved.

With the passing of the 'Big Beautiful Bill (BBB)' by Congress and its signing by Donald Trump, the President is implementing further election promises. As some of the tax cuts are only temporary, the majority of economists believe that the BBB will have a slightly positive effect on growth in the first few years and a slightly negative effect on economic output thereafter. However, the US will not be able to avoid bringing its increasingly excessive national debt back into balance over the next few years.

The economy remains on track

At its June meeting, the Fed reduced its GDP estimate for 2025 from 1.70% to 1.40% and for 2026 from 1.80% to 1.60%, but is still assuming moderate growth. This is also confirmed by the S&P Global US Composite PMI (purchasing managers' index) for June 2025 with a value of 52.9 points (-0.1 points compared to May). It is also positive to note that the value for the manufacturing industry is now clearly above the expansion threshold of 50 points again. In June, unemployment fell from 4.20 to 4.10% and 147,000 new jobs were created outside of agriculture, which is almost exactly the 12-month average of 146,000 jobs.

Inflation and interest rates

Inflation stood at 2.40% in May 2025 and core inflation at 2.80%. The decline in inflation into the Fed's target range (2.00%) thus appears to be continuing, but the 'last mile' seems to be stubborn. Accordingly, the US central bank is cautious with further interest rate cuts. In view of the solid labor figures and the potentially price-driving effect of the new trade tariffs, this is hardly surprising. Nevertheless, two further key interest rate cuts of 0.25% each to a target range of 3.75 - 4.00% are possible by the end of the year. Of course, it is important that the tariff dispute does not escalate further, as this could give inflation a noticeable boost again.

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GDP2025 (IMF): +1.80% (E)

Inflation2025 (IMF): +3.00% (E)

Fed Fund Rate: +4.25-4.50%

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Dr. Patrick Huser, CEO

^{Sources: Trading Economics, FuW, US Bureau of Labor Statistics, Statista, IMF, FMOC}

‍^{Status: 07.07.2025}

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