To make caramel frosting, begin by assembling 1/2 cup of butter, 1 can sweetened condensed milk, 1 firmly packed cup dark brown sugar, 1 teaspoon butter extract, 2 cups powdered sugar and 1 teaspoon vanilla extract. If using unsalted butter, add a pinch of salt.
In a medium saucepan, combine the butter, sweetened condensed milk, brown sugar and salt. Over medium-high heat, bring the mixture to a boil, and cook for two minutes while stirring constantly. Remove from the heat, and add the butter extract and vanilla extract. Stir the ingredients, then let cool for five minutes.
Transfer the mixture to a buttered mixing bowl. Using an electric mixer, beat on medium speed for three minutes or until smooth. At this point, the frosting should resemble melted caramel. Slowly add the powdered sugar, one cup at a time, beating well after each cup is added.
Spread the frosting over a cooled cake. If the mixture begins to harden while frosting the cake, place the mixing bowl into the microwave for a few seconds to soften the frosting and make it easier to spread. Hardened frosting is difficult to handle and can cause the cake to crumble.
Other recipe versions of caramel frosting use heavy cream or evaporated milk instead of condensed milk. Caramel frosting is a staple in many Southern desserts.