Dec 16, 2025
Growth Unemployment and Inflation
Growth Holds, Labor Softens
Recent grew at an annual rate (change from preceding period) of 3.8 percent in the second quarter of 2025 (April through June), according to the third estimate released by the U.S. Bureau of Economic Analysis. This follows a revised decline of 0.6 percent in the first quarter. The second quarter’s growth was driven mainly by a decline in imports, which are subtracted in the calculation of GDP, along with stronger consumer spending. These gains were partly offset by declines in investment and exports (U.S. Bureau of Economic Analysis, 2025). The GDPNow (An official forecast of the Atlanta Fed) model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.6 percent on December 11, up from 3.5 percent on December 5. Real GDP expanded by 2.3 percent in the first quarter compared to the corresponding period of the previous year, and by 2.0 percent in the second quarter.
Consistent with the growth trend, the unemployment rate averaged 4.4 percent in the first quarter of 2025 and declined to 4.1 percent in the second quarter (3.9 percent in April). It then edged up to 4.5 percent in August before settling at 4.3 percent in September. Fed Chair Jerome Powell warned after last rate cut that the job market is even weaker than it appeared. Data show that the economy has added less than 40,000 jobs a month since April.
The annual inflation rate in the United States rose to 3.1 percent in September 2025—the highest level since January—after remaining steady at 3 percent in both June and July, consistent with market expectations. Core inflation (excluding food and energy) stayed near 3 % in September. Many analysts are interpreting these numbers as signs that inflation is proving more persistent than hoped. The full impact of tariffs may still be working its way through to consumer prices.
It should be noted that “No survey of households was conducted to get information on employment status, among other details, required to calculate the unemployment rate for October. Government workers also did not make visits to supermarkets and stores to get the information needed to calculate the CPI and other price measures for October.” (Source: Reuters)
Description: Growth reflects the expansion of an economy's output, while the unemployment rate measures the percentage of people actively seeking but unable to find work, and inflation tracks the rise in prices, impacting purchasing power. Together, these indicators provide a snapshot of economic health and stability.
