Weekly Macroeconomic Update for Week 45 of 2025

Date: October 31, 2025 This report summarizes key macroeconomic trends observed during Week 45 of 2025 (October 27 - October 31).

1. Inflation & Monetary Policy

Inflation remains a key concern, although recent data suggests a potential moderation in the pace of price increases.

  • Headline Inflation: The Consumer Price Index (CPI) for October showed a month-over-month increase of 0.3%, slightly below expectations of 0.4%. Year-over-year CPI growth stood at 4.8%.
  • Core Inflation: Core CPI, excluding food and energy, increased by 0.2% month-over-month and 4.0% year-over-year.
  • Federal Reserve Stance: The Federal Reserve held its policy interest rate steady at its most recent meeting but signaled a willingness to raise rates further if necessary. Quote: “We remain vigilant to inflation risks and are prepared to adjust monetary policy as appropriate,” - Jerome Powell, Federal Reserve Chair, following the October FOMC meeting.

2. Economic Growth & Employment

Economic growth continues at a moderate pace, while the labor market remains relatively tight.

  • GDP Growth: Preliminary estimates for Q3 2025 GDP growth came in at 2.1%, slightly above earlier forecasts. Consumer spending remains a significant driver of growth.
  • Employment: The unemployment rate remains low at 3.6%. Job creation was robust in October, with 210,000 new jobs added. Wage growth, however, has shown signs of slowing.
  • Manufacturing: The manufacturing sector continues to face headwinds, with the Purchasing Managers’ Index (PMI) remaining below 50, indicating contraction. Quote: “While the labor market is strong, we are seeing some early indications of cooling, particularly in wage growth. This is a welcome development in the fight against inflation, but we must remain watchful,” - Treasury Secretary Janet Yellen, commenting on the October employment report.

3. Global Economic Outlook

Global economic growth is slowing, with concerns about potential recessions in Europe and Asia.

  • International Monetary Fund (IMF) Forecast: The IMF recently revised its global growth forecast downward, citing persistent inflation, geopolitical tensions, and tightening financial conditions.
  • European Recession Risks: Rising energy prices and supply chain disruptions are contributing to recessionary pressures in several European economies.
  • China’s Growth: China’s economic growth is expected to moderate further in the coming months, due to ongoing challenges in the property sector and COVID-related restrictions. Quote: “The global economy continues to face significant challenges, including high inflation, rising interest rates, and geopolitical fragmentation. These factors are weighing on growth prospects and increasing the risk of a global recession,” - Kristalina Georgieva, Managing Director of the International Monetary Fund, speaking at a recent press conference.

4. Market Performance

  • Equity Markets: Equity markets experienced mixed performance during the week. Uncertainty surrounding the Federal Reserve’s policy outlook and concerns about global growth weighed on investor sentiment.
  • Bond Yields: Bond yields remained elevated, reflecting persistent inflationary pressures and expectations of further interest rate hikes.
  • Commodities: Oil prices experienced volatility due to geopolitical tensions and uncertainty about global demand.

5. Key Risks & Uncertainties

  • Inflation Persistence: The persistence of inflation remains a key risk to the economic outlook.
  • Geopolitical Tensions: Geopolitical tensions, particularly in Europe, continue to pose a significant threat to global economic stability.
  • Supply Chain Disruptions: Ongoing supply chain disruptions could exacerbate inflationary pressures and hinder economic growth.
  • Consumer Spending Slowdown: A slowdown in consumer spending could weigh on economic growth, particularly if inflation erodes purchasing power.

Conclusion

The macroeconomic landscape remains complex and uncertain. While recent data suggests some moderation in inflation, the Federal Reserve is likely to remain vigilant. Global economic growth is slowing, and several risks and uncertainties cloud the outlook. Monitoring these trends closely will be crucial in the coming weeks.