U.S. Economy 2025: Inflation Remains High, Growth Significantly Slows Down

The United States announced new economic data indicating that inflationary pressures remain high into the end of 2025, while economic growth slowed more than expected. The core personal consumption expenditures (core PCE) index increased by 3.0% year-over-year and 0.4% month-over-month in December. Total PCE rose by 2.9% year-over-year, showing that inflation remains above the Federal Reserve’s long-term target.

Meanwhile, the underlying fundamentals of consumer spending remain relatively positive. Personal income increased by 0.3% month-over-month, while consumer spending rose by 0.4%, reflecting household demand maintaining stability despite high prices and borrowing costs.

However, economic growth was disappointing. U.S. GDP in Q4 grew only 1.4% annually, well below the forecast of 2.5%. For the entire year of 2025, the U.S. economy grew by 2.2%, down from 2.8% in 2024, indicating that the growth momentum is cooling.