Monthly Economic Indicators – December 2025

• Annual headline and core CPI inflation both held steady in December at 2.7% and 2.6%, respectively.
• The Fed issued its third rate cut of the year in December, taking the federal funds rate to a range of 3.5%-3.75%.
• Job growth was 50K in December, in-line with the trailing-year average. Trailing three-month job growth was -22K, reflecting a cooling employment market.
• Annual wage growth rose 20 bps to 3.8% in December. Over the last three months, wages grew by 4.1% (annualized).
• Consumer sentiment improved for a second consecutive month in January but remained very low. Views of current conditions and consumer expectations both rose.

* Latest data available.

2025 in Review

• The U.S. economy remained on solid footing in 2025 despite moderation, with a cooling labor market and falling consumer sentiment. Easing inflation allowed the Fed to cut rates three times, resulting in falling interest rates. Mortgage rates have moved lower in recent months, a positive trend for the housing market.
• Headline CPI inflation fell from 2.9% at the end of last year to 2.7% in December 2025. Core inflation also moderated from 3.2% in 2024 to 2.6% but remained above the Fed’s target rate.
• The Federal Reserve cut the fed funds rate by 75 basis points in 2025 but signaled that it may cut rates at a slower pace in 2026. The 10-year UST yield fell to 4.18% at the end of December, 40 basis points below YE 2024.
• The labor market cooled considerably in 2025, adding only 0.6M jobs, compared to 2M in the preceding year. The unemployment rate rose to 4.4% in December 2025 while labor force participation ended the year at 62.4%, falling 10 bps from YE 2024.