US Economy Cools Down as 2025 Ends

The US economy hit a bit of a speed bump at the end of last year, growing at just a 1.4% annual rate from October through December. This is a big drop from the much faster pace we saw during the summer and fall, mostly because both the government and regular shoppers started pulling back on their spending. While things haven't come to a halt, the slowdown was more than what most experts were expecting to see.

Even with that late-year dip, the economy still grew by about 2.2% for the whole of 2025. A lot of that staying power came from people continuing to buy things, though the "holiday boost" wasn't quite enough to keep the momentum from earlier in the year. Business investments in new technology also helped keep things moving, even as other parts of the economy began to feel the weight of higher costs.

The job market is showing a similar mixed bag of results. We added 130,000 jobs in January, which sounds like a win on paper, but most of those new roles were just in the healthcare field. Other industries, like finance and transportation, actually lost workers. This lopsided growth has many business owners feeling a bit nervous, making them more likely to pause their hiring plans until they see where things are headed.

Looking forward, everyone is watching the Federal Reserve to see what they’ll do with interest rates. Because inflation is still a bit stubborn and the economy is growing—even if slowly—there’s a good chance the Fed will leave rates where they are for a while. They’re trying to walk a fine line: they don't want to cut rates too soon and risk prices spiking again, but they also don't want to keep things so tight that the economy stops growing entirely.