Overview
- The Federal Reserve ended 2025 with a quarter-point rate cut, its third of the year, as a six-week shutdown left policymakers with gaps in key economic data.
- Output stayed resilient in 2025, including a 4.3% annualized GDP jump in the third quarter, with consumer spending led by higher‑income households.
- Labor conditions cooled as unemployment reached 4.6% in November and hiring concentrated in health care, leisure and government, even as layoffs remained low and wage growth held up.
- Economists warn the expansion could be job‑light as AI boosts productivity, with some caution focused on debt‑funded data‑center buildouts at firms such as Oracle and CoreWeave.
- Early 2026 could see a spending lift from large tax refunds and clearer tariff policy following court decisions, while affordability strains persist even as rents ease in markets like Las Vegas, Atlanta and Austin.