Despite a series of road bumps, the 2025 economy proved surprisingly steady.
Americans kept spending and businesses kept investing, especially in artificial intelligence. Other bright spots for the economy included gas prices that hovered close to $3 a gallon, an unemployment rate that stayed close to 4 percent, and Americans saving about 5 percent of their paychecks each month.
But there were concerns — home sales remained sluggish and manufacturing contracted amid tariff uncertainties. And despite relatively stable metrics, Americans grew uneasy about the state of the economy.
What comes next? Economists are watching closely for signs that a slowing job market or worsening inflation could derail growth. They’re also keeping a close eye on whether Americans’ glum outlook on the economy begins changing the ways they spend and save.
Here are 10 areas economists are tracking to gauge where things may be headed.
1. Inflation
Inflation was at 2.7 percent as of November and spent most of the year higher than what Americans or policymakers would like. Inflation has come down significantly from a post-pandemic peak of 9 percent, but escalating costs continue to dominate worries about the economy.
A number of everyday costs, including electric bills, used cars and coffee, picked up in 2025, largely because of President Donald Trump’s new tariffs and policy changes. But some prices went down, including eggs (which are 13 percent cheaper than they were a year ago) and TVs (7 percent less). And last month, Trump dropped tariffs on a wide array of groceries,including coffee, beef, bananas and tomatoes.
It’s too soon to tell whether inflation will continue cooling. Some economists worry that the president’s policies could drive up a variety of costs, including for imported goods and health care premiums.
“Policy out of Washington is the biggest wild card,” said Mark Zandi, chief economist at Moody’s Analytics. “There are all kinds of proposals, from $2,000 stimulus checks to Trump Accounts and more checks for farmers — all of which come with costs and complications.”
2. Job market
The job market cooled significantly in 2025, with employers adding less than one-third of the jobs they did in 2024, at least through November. Unemployment has edged higher, and laid-off workers say it’s becoming harder to find new jobs.
Economists say it’s unclear where things are headed: Some expect hiring to pick up at the turn of the year, while others say Americans could be facing several more months of rising unemployment. Still, one thing they can agree on is that the fate of the economy largely hinges on what happens next in the labor market.
“We’re not expecting a hiring boom, but we are looking for some [thawing] from this ‘no-hire, no-fire’ environment,” said Kathy Bostjancic, chief U.S. economist at Nationwide.
3. AI-related investments
Business spending on artificial intelligence has juiced the economy in a big way. Investment in information processing equipment and software accounted for the majority of growth in gross domestic product in the first half of 2025, according toHarvard University economist Jason Furman. Firms have invested billions in data centers and new technology, in hopes that AI will revolutionize the economy. By 2030,industry and government projections show, data centers could account for more than 10 percent of the nation’s power usage.
“So far AI has been a powerful tailwind for growth,” said Zandi, adding that it’s less clear whether that will continue. “If productivity starts kicking in, does that mean we lose jobs? Or, on the other hand, if that doesn’t happen, will investors say, ‘Oh my gosh, I’ve overpaid,’ which would knock down stocks and pose threats across the economy? We just don’t know.”
AI-related spending contributed to about 14 percent of the third quarter’s GDP growth, Joe Brusuelas, chief economist at RSM US, wrote in an email to clients. Businesses spending on equipment and intellectual property continued to grow, albeit at a slower pace than it did earlier in the year.
4. Borrowing costs
Trump has made it clear he’d like interest rates to fall to zero. But rates have remained stubbornly high for much of the year.
Generally, higher interest rates help slow down the broader economy, playing a key role in keeping inflation in check. With inflation holding fairly steady throughout much of the year, the Federal Reserve lowered interest rates three times before hinting at its December meeting that it would stay put for a while.
“We’re well positioned to wait and see how the economy evolves from here,” Fed Chair Jerome H. Powell said at the time.
Interest rates have been edging down for the past few months, though borrowing costs for mortgages, cars and other longer-term loans have not immediately changed in response to Fed rate cuts.Fixed-term mortgage rates, in particular,are more influenced by Treasury bond yields, which are determined by investors’ views of the economy as a whole.
5. Home sales
Home sales stayed sluggish throughout the year, marking three straight years of subpar performance, said Lawrence Yun, chief economist at the National Association of Realtors.
The top concern suppressing the market is higher costs, or what some are calling affordability. Home prices have risen, mortgage rates remain relatively high and would-be shoppers are feeling the impact of high costs on other parts of life press in on them.
Builders are dealing with rising material and labor costs, Raymond James Chief Economist Eugenio Aleman said in a statement about the December National Association of Home Builders housing market index.
“We continue to expect weakness in the housing market during 2026 as mortgage rates are expected to remain relatively high during the year,” he said.
But some experts are optimistic that things could start to turn around in 2026. Inventory crunches are starting to ease, Yun said. He expects mortgage rates to continue falling next year.
“Housing is very cyclical,” he said, noting that people eventually have to move. “People want to downsize, some people to upsize, there are always life-changing events.”
6. Manufacturing
U.S. manufacturing has slowed this year as tariff uncertainty drags on the sector. Economic activity shrank for the ninth straight month in November, according to the Institute for Supply Management.
Trump has positioned his widespread tariffs as necessary to bring a “Golden Age” back to American manufacturing, a sector that has shrunk significantly since its heyday last century. White House leaders have said this process will take time and may include some short-term pain.
While some businesses have benefited, many arestruggling to deal with higher costs on imported materials and the general uncertainty of tariffs.
“The jobs gained by protecting sectors like steel and aluminum, for example, were far outweighed by losses due to those inputs becoming more expensive,” Meagan Martin-Schoenberger, senior economist at KPMG, told The Post in October.
Two-thirds of panelists surveyed by the Institute for Supply Management said that their companies were “managing head counts” rather than hiring. The manufacturing industry’s fate next year is tied to that of Trump’s tariffs, which hangs in the balance, waiting for the U.S. Supreme Court to issue a ruling on the bulkof this year’s levies.
7. GDP
So far in 2025, economic growth is looking like a bright spot, despite broader uncertainty. After a dip earlier in the year, the U.S. economy grew at its fastest pacein two years from July through September.
But economists caution that pace is unlikely to continue. The summer boost was driven mainly by consumer spending and a rise in net exports, as U.S. companies sold more industrial supplies, pharmaceuticals and gold abroad.
Economists forecast the GDP will show tepid, if any, growth in the current quarter, largely because of the spending and investment hit from the lengthy government shutdown.
8. Gas prices
Gas prices were another bright spot for Americans in 2025, holding relatively steady and avoiding the surges that make Americans sour on the economy.
OPEC increased oil output, leading to more supply on the market, and the U.S. avoided some of the seasonal price increases it usually sees as tariff uncertainty gripped the economy.
Gas prices have been a source of consternation for U.S. consumers in recent years, especially during the 2022 inflation increases and when the war in Ukraine and other factors have caused volatility.
“A lot of that has finally settled down, and that has brought Americans a year of remarkable stability,” said Patrick De Haan, head of petroleum analysis at GasBuddy. He expects gas prices to continue to ease slightly next year, and seasonal price changes to take hold once again.
9. Stock market
The stock market soared this year, climbing about 17 percent as investors remained optimistic about corporate earnings and the AI boom.
The market’s gains were partly led by big tech companies, which are benefiting from the technology and potential of artificial intelligence. And company profits have stayed strong this year, despite a softening labor market.
Despite concerns about a possible AI bubble and an economy increasingly divided between high-and low-income consumers, analysts are hopeful that the stock market’s staying power will persist next year.
Interest rates are easing, and possible productivity gains from AI are making businesses optimistic. JPMorgan Chase forecasts the S&P 500 will grow between 13 percent and 15 percent for the next two years.
10. Consumer spending
Brisk consumer spending, led by health care, recreational goods and cars, made up more than half of the latest quarter’s GDP growth.
Some of this year’s spending looks different, however — Americans scooped up more necessities during their early holiday spending sprees this year, buying appliances, clothing and furniture. Economists note that the gap between the highest earners and everyone else has recently widened, as economic stress begins to pinch the middle class. And consumer confidence in the economy keeps falling.
Still, despite concerns about affordability, consumers are still spending money and driving the economy.
S&P Global analysts expect consumer spending growth to cool slightly next year.
“We think a weakening job market, lingering sticker shock, higher bills on student loans, and restrictive immigration policies will limit any upside to spending growth from lower interest rates and tax refunds,” analysts wrote in a note this month.
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