US Economy in 2025: Inflation, Job Market, and GDP Trends
Inflation remained high throughout 2025, with tariffs on imports contributing to the risk of further price increases. The Federal Reserve responded by raising interest rates aggressively to curb inflation but began cutting rates cautiously by the end of the year. Former President Trump publicly pressed for rapid rate cuts and criticized Fed Chair Jerome Powell, who was appointed during his administration.
Unemployment rose to 4.6% in November, marking the highest rate since September 2021. Job numbers fluctuated significantly during the year amid the longest government shutdown in US history. October saw a sharp loss of 105,000 jobs, largely due to the shutdown, while November's delayed data showed an increase of 64,000 jobs. Additionally, the federal workforce declined by 271,000 since January.
Economic growth in 2025 was uneven. GDP contracted in the first quarter, influenced by increased imports ahead of tariffs, then rebounded in the second quarter and continued to grow in the third quarter with unexpectedly strong figures. After 2.8% growth in 2024, GDP is expected to grow by 2.0% in 2025 and 2.1% in 2026.
The year’s economic narrative presents a stark contrast to the portrayal of a Trump-era 'economic golden age,' instead reflecting a fragile and uneven performance marked by significant challenges including high inflation, a volatile labor market, and the disruptive impact of the October shutdown.
