Grandma Betty used to make this on the first warm weekend of the year. I finally got her to share her secret step and it completely changes the texture.

While the cake chills, make the cream cheese frosting. In a medium bowl, beat the softened cream cheese and butter together with an electric mixer until smooth, creamy, and free of lumps, scraping down the sides of the bowl as needed.
Add the powdered sugar, vanilla, cinnamon (if using), and a pinch of salt to the cream cheese mixture. Beat on low at first so the sugar doesn’t puff out, then increase to medium speed. Add milk or half-and-half, 1 tablespoon at a time, just until the frosting becomes thick, smooth, and spreadable. You want it soft enough to swirl but firm enough to hold gentle peaks.
When the cake is fully chilled and the top looks moist but set, remove it from the refrigerator. Dollop the cream cheese frosting over the surface of the cake, then gently spread it to the edges with an offset spatula or the back of a spoon. Use light, swirling motions to create a soft, swirled top that shows off the creamy texture.
If you like, sprinkle a few extra chopped nuts, a pinch of coconut, or a light dusting of cinnamon over the frosting for color and texture. Return the cake to the refrigerator for at least 30 minutes to let the frosting firm up slightly before serving.
To serve, cut the cake into squares right in the ceramic pan. You’ll see the colorful bits of carrot, pineapple, and nuts in the slices, and you may notice some of the condensed milk settled near the bottom, giving each piece a moist, almost custardy layer. Store any leftovers covered in the refrigerator for up to 4 days.
Variations & Tips
For a slightly lighter version, you can use reduced-fat cream cheese and substitute half-and-half or even a splash of orange juice for some of the milk in the frosting, which adds a bright flavor that plays nicely with the carrot and pineapple. If you don’t care for nuts or have allergies in the family, simply leave out the walnuts or pecans and add a bit more shredded carrot or coconut for texture. To give the cake a little extra spice, stir 1/2 teaspoon ground cinnamon and a pinch of nutmeg into the prepared cake batter before baking. For a more colorful look—especially if you’re serving this at Easter—fold a few tablespoons of finely diced, well-drained maraschino cherries into the batter or sprinkle them over the frosted top; they’ll create pretty red and pink speckles in each slice. You can also swap the sweetened condensed milk for a flavored version, like caramel or dulce de leche, for a deeper, toffee-like sweetness. If you prefer individual servings, bake the cake in two 8-inch square pans and poke and soak both; one can be frosted and served right away while the other is wrapped well and frozen (without frosting) for up to a month, ready to thaw, frost, and serve when company drops by.