US Economy in 2025: Mixed Performance Amid Political Tensions
The US economy in 2025 followed a rollercoaster path, with GDP contracting in the first quarter, rebounding in the second, and experiencing strong growth in the third quarter. Full-year GDP growth was projected around 2.0%, with a forecast of 2.1% for 2026.
Inflation remained high throughout 2025, with tariffs on imports, central to President Trump's policy, raising concerns among critics about pushing prices even higher. The Federal Reserve embarked on a rate hiking cycle to curb inflation but began cautious rate reductions by year-end. Trump publicly attacked Fed Chair Jerome Powell and sought rapid rate cuts, aiming to align the Fed with his policy while signaling potential leadership changes in the Fed next year.
The labor market cooled during 2025. Labor-force growth stalled in the summer, and October payrolls fell by 105,000 amid the longest federal government shutdown. November saw a delayed addition of 64,000 jobs. The unemployment rate rose to 4.6% in November, the highest since September 2021. A decline of about 271,000 in the federal workforce since January contributed to this rise.
Trump's promise of a manufacturing renaissance did not materialize into sustained job growth, as labor force growth stalled and job gains slowed. Official statistics indicate a more nuanced economic picture than Trump's claims of a booming "Golden Age," highlighting mixed performance across inflation, employment, and growth.
