Overview of the US Economy as of October 18, 2025
The US economy presents a mixed picture: robust GDP growth signals resilience, but a softening labor market, rising inflation pressures from tariffs, and widespread consumer pessimism point to emerging risks. A federal government shutdown, now in its second week, is delaying key data releases (like September jobs and CPI reports) and could exacerbate uncertainty by furloughing ~750,000 workers. The Federal Reserve is expected to cut interest rates by 25 basis points at its October 28-29 meeting, with further cuts likely in December, to support growth amid these headwinds. Political factors, including higher tariffs and immigration policies under the Trump administration, are contributing to volatility, potentially weighing on late-2025 GDP.
Key Economic Indicators
Here’s a snapshot of the latest available data (note: some September figures are estimates due to the shutdown delaying official BLS releases):
| Indicator | Value | Period | Notes |
| Real GDP Growth | +3.8% (annualized) | Q2 2025 (Apr-Jun) | Strong rebound from Q1’s -0.6% contraction, driven by consumer spending and net exports. |
| 1 | |||
| 8 | |||
| Real GDP Growth (Est.) | +3.9% (annualized) | Q3 2025 (Jul-Sep) | Atlanta Fed’s GDPNow model, up slightly from prior estimate; reflects healthy spending but risks from shutdown. |
| 21 | |||
| 22 | |||
| Unemployment Rate | 4.3% | Aug 2025 (official); Sep est. 4.3% | Stable but near 4-year high; job growth slowed sharply to +22,000 in Aug and est. +50,000 in Sep. |
| 27 | |||
| 29 | |||
| 32 | |||
| CPI Inflation (Headline) | +2.9% (y/y) | Aug 2025 | Up from 2.7% in Jul; fastest since Jan, partly due to tariff pass-through on goods like apparel and groceries. |
| 38 | |||
| 39 | |||
| 40 | |||
| Sep data delayed to Oct 24. | |||
| Core CPI Inflation | +3.1% (y/y) | Aug 2025 | Excludes food/energy; stable but above Fed’s 2% target, with shelter costs (+0.4% m/m) as a key driver. |
| 38 | |||
| 40 | |||
| Dow Jones Industrial Average | 45,952 (close) | Oct 16, 2025 | Down 0.7% that day on bank credit worries; rebounded +0.5% on Oct 17 amid easing trade tensions. |
| 17 | |||
| 18 | |||
| 20 | |||
| S&P 500 and Nasdaq also up ~0.5% on Oct 17. |
Recent Developments
- Growth and Spending: Q2’s surge was fueled by a reversal in net exports and solid consumer outlays, with the economy appearing “healthily” on track per Fed Governor Waller. However, Q4 could see an “air pocket” from seasonal factors and policy uncertainty.
- Labor Market Softening: Hiring has stalled (avg. +29,000/month over summer), with long-term unemployment rising to 25.7% of total unemployed—echoing post-recession trends. New college grads face 5.3% unemployment, up sharply. ADP data showed a Sep private payroll drop of 32,000.
- Inflation Pressures: Tariffs are pushing up goods prices (e.g., +0.2% y/y for apparel after declines), while services disinflation has paused. 39 44 Grocery inflation hit 2.7% y/y, fastest since 2023.
- Markets and Sentiment: Stocks are volatile but stabilizing, with oil prices steady. 18 Public pessimism spans parties, focused on jobs and prices—even among MAGA supporters.
Outlook
Economists project 1.8% full-year GDP growth in 2025, slowing to 1.4% in 2026 due to tariffs and uncertainty, before rebounding above 2% in 2027. 23 Potential long-term growth is ~2.1% through 2029. The shutdown risks a “data dark age” if prolonged, skipping October metrics entirely. 3 Watch for Fed actions and shutdown resolution for near-term direction. Globally, US growth aligns with a slowing world economy (3.2% in 2025).
