Economy grew 2.2% in 2025, beating predictions
The article reports that the U.S. economy grew 2.2% in 2025, despite headwinds from higher interest rates and tariffs. Key points:
– The BEA’s preliminary GDP data show quarterly changes of -0.5% in Q1, +3.8% in Q2, +4.4% in Q3, and +1.4% in Q4, with the full year’s growth adjusted for inflation at 2.2%. Thes figures are subject to revision.
– Inflation has cooled but remains above the 2% target: 2.4% overall (CPI) and 2.5% core inflation for the year ending in January.
– The labor market stayed positive: 130,000 jobs added in January and the unemployment rate at 4.3%.Though, payroll employment for 2025 was revised down by about 1 million, and average monthly payroll growth was revised from roughly 50,000 to 15,000.
– politically,the stronger-than-expected growth could help proponents of the management,despite weak consumer sentiment.Democrats are emphasizing affordability and inflation relief, while Republicans highlight tax cuts and tariff positions, with talk of easing steel and aluminum tariffs.
– The article also notes that the latest GDP data come after mixed quarterly results and that several regulatory and policy factors continue to influence the outlook.
Economy grew 2.2% in 2025, beating predictions
The economy grew 2.2% in 2025, a year of growth that came despite a number of developments that were expected to be major headwinds, including interest rate hikes by the Federal Reserve and President Donald Trump’s imposition of tariffs.
The growth figures, which are adjusted for inflation, were published Friday by the Bureau of Economic Analysis in its preliminary report for gross domestic product for the fourth quarter.
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The GDP numbers could help Trump win over voters who are dispirited by inflation.
The relatively strong GDP numbers for 2025 came even after growth turned negative in the first quarter of the year.
GDP shrank at a 0.5% annual rate in the first quarter of 2025, rose 3.8% in the second, increased a strong 4.4% in the third quarter, and ticked up 1.4% in the fourth quarter, according to the most recent estimate.
The latest GDP data for the fourth quarter will be revised twice more in the coming months as government economists continue to sift through the numbers and come to a final figure.
GDP growth has outperformed expectations over the course of Trump’s second term in office. For instance, in March, the Federal Reserve predicted that overall GDP growth for 2025 would end up being just 1.7%.
Nevertheless, consumer sentiment has been extremely low by historical standards, likely because of the sharp price hikes in recent years. Democrats are hoping to use voter discontent and Trump’s low economic approval ratings against Republicans.
Republicans and the White House have been working to highlight initiatives on affordability and on their One Big Beautiful Bill Act, which was enacted last year and prevented most Americans from seeing a tax hike and added new tax cuts for many workers.
Another positive point for the White House has been the labor market. While it has slowed over the past year, job growth has remained positive and claims for unemployment insurance benefits are low.
The economy added 130,000 jobs in January, and the unemployment rate ticked down a tenth of a percentage point to 4.3%, according to the Bureau of Labor Statistics.
Still, a revision to the past year’s data showed that payroll employment was 1 million lower at the end of 2025 than previously thought. Average monthly payroll growth for 2025 was revised down from roughly 50,000 to 15,000.
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Inflation has also fallen over the past year, but is still — concerningly — running above the central bank’s 2% goal.
Inflation fell three-tenths of a percentage point to 2.4% for the year ending in January, according to the most closely watched consumer price index. Core inflation, a measure that strips out volatile food and energy prices, fell one-tenth of a percentage point to 2.5% for the year ending in January.
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