Okay, here’s your macroeconomic report for the week, formatted as requested and incorporating a narrative approach.

Update for Week 49 of 2025

Date: December 5, 2025 The global economy continues its delicate dance between growth and inflation, with the US economy showing surprising resilience despite persistent headwinds. This week’s data paints a picture of a labor market that remains tighter than anticipated, putting upward pressure on wages and, consequently, inflation. The housing market is showing tentative signs of stabilization, but affordability remains a significant concern. Central banks globally are walking a tightrope, trying to balance the need to curb inflation with the risk of triggering a recession. The narrative this week is one of cautious optimism tempered by the ever-present threat of unforeseen shocks.

1. Inflation

Inflation remains the dominant theme, although the narrative is evolving. While headline inflation has cooled from its peak, the stickiness of core inflation, particularly in services, is a cause for concern. This week’s CPI data showed a modest increase of 0.2%, slightly above expectations, driven primarily by rising shelter costs and transportation services. The persistence of these inflationary pressures suggests that the “last mile” of bringing inflation back to target will be the most challenging.

  • Headline CPI/PCE: CPI rose 0.2% this week, with the annual rate at 3.3%. PCE data is due next week but is expected to mirror this trend.
  • Energy Prices: Energy prices saw a slight dip this week due to increased supply, providing some relief at the pump. However, geopolitical tensions in the Middle East continue to pose an upside risk.
  • Food Prices: Food price inflation remains relatively subdued, although specific items like fresh produce are experiencing volatility due to weather-related disruptions. Quote: “The fight against inflation is not yet won, and we remain vigilant in our commitment to price stability.” - Jerome Powell, Fed Chair, Congressional Testimony, December 4, 2025

2. Employment

The labor market continues to defy expectations of a significant slowdown. The unemployment rate remained unchanged at 3.7%, and initial jobless claims were surprisingly low, indicating continued labor market tightness. However, there are some signs of moderation. Job openings, while still elevated, have edged down slightly, and wage growth, although still robust, is showing signs of decelerating. The big question is whether this moderation will be sufficient to alleviate inflationary pressures without triggering a sharp rise in unemployment.

  • Unemployment Rate: Held steady at 3.7%.
  • Job Openings (JOLTS): Decreased slightly to 9.8 million, signaling a gradual cooling.
  • Wage Growth: Average hourly earnings rose 0.3% this week, with the annual growth rate at 4.5%. Quote: “We are seeing some moderation in the labor market, but it is still too early to declare victory.” - Lisa Cook, Federal Reserve Governor, Economic Outlook Speech, December 3, 2025

3. Housing Market

The housing market is showing tentative signs of stabilization after a prolonged period of decline. Mortgage rates have retreated slightly from their recent peaks, providing some relief to potential homebuyers. However, inventory remains constrained, and affordability is still a major hurdle for many. Home sales saw a modest uptick this week, but it is unclear whether this is a sustainable trend or a temporary blip. Construction activity remains subdued, reflecting concerns about future demand.

  • Mortgage Rates: The average 30-year fixed mortgage rate fell to 6.8%, down from 7.2% last week.
  • Home Sales: Existing home sales rose 2.0% this week, but are still down year-over-year.
  • Construction/Starts: Housing starts remain below historical averages, indicating a cautious approach by builders. Quote: “The housing market is finding its footing, but affordability remains a significant challenge.” - Lawrence Yun, Chief Economist, National Association of Realtors, Housing Market Report, December 2, 2025

4. GDP & Economic Growth

The US economy continues to display surprising resilience, although the pace of growth is clearly slowing. GDP estimates for the fourth quarter are hovering around 2.0%, a respectable figure but significantly lower than the growth rates seen earlier in the year. Consumer spending remains the primary driver of growth, but there are signs that consumers are becoming more price-sensitive. Business investment is also slowing, reflecting uncertainty about the economic outlook. The risk of a recession remains, but the economy has so far avoided a sharp downturn.

  • GDP Estimates: Fourth-quarter GDP growth is estimated at 2.0%.
  • Manufacturing/Services PMIs: Both manufacturing and services PMIs remain in expansion territory, but are trending downwards.
  • Consumer Confidence: Consumer confidence edged down slightly this week, reflecting concerns about inflation and the economic outlook. Quote: “The economy is slowing, but it is not collapsing. We expect a period of moderate growth in the coming quarters.” - Jan Hatzius, Chief Economist, Goldman Sachs, Economic Outlook Report, November 29, 2025

5. Monetary Policy

Central banks around the world are grappling with the challenge of taming inflation without triggering a recession. The Federal Reserve is widely expected to hold interest rates steady at its upcoming meeting, but the path forward remains uncertain. Fed officials have emphasized that future policy decisions will be data-dependent. Market expectations are for the Fed to begin cutting interest rates in the second half of 2026, but this is contingent on inflation continuing to moderate.

  • Interest Rates: The Federal Funds rate remains in a target range of 5.25%-5.50%.
  • Fed Speak/Guidance: Fed officials have emphasized the need for patience and data-dependency.
  • Market Expectations: Markets are pricing in a high probability of a rate cut in the second half of 2026. Quote: “We are committed to bringing inflation back to our 2% target, and we will do what it takes to achieve that goal.” - John Williams, President, Federal Reserve Bank of New York, Economic Club Speech, December 1, 2025

Conclusion

The global economy remains in a state of flux, with the US economy navigating a complex set of challenges. Inflation remains the primary concern, but the labor market’s resilience and the housing market’s tentative stabilization provide some grounds for optimism. Central banks face a difficult balancing act, and the risk of a policy error remains. In the coming weeks, attention will focus on the upcoming Fed meeting and the release of key economic data, including PCE inflation and the December jobs report. The narrative is one of cautious optimism, but vigilance is warranted.