Okay, here’s your comprehensive macroeconomic report for the US and global economy, covering Week 52 of 2025:

Update for Week 52 of 2025

Date: December 26, 2025 The final week of 2025 paints a picture of an economy at a crossroads. While inflation shows signs of continued moderation, concerns linger about the strength of the labor market and the potential for a slowdown in economic growth. The housing market remains sensitive to interest rate fluctuations, and the Federal Reserve’s monetary policy decisions are being scrutinized more closely than ever. Overall, the global economy exhibits similar trends, with some regions showing more resilience than others. The key theme is uncertainty, as economic indicators send mixed signals, making forecasting a challenging endeavor.

1. Inflation

Inflation continued its downward trend this week, but the pace of deceleration has slowed. The initial rapid decline seen earlier in the year has given way to a more gradual easing, suggesting that the “last mile” of bringing inflation back to the Fed’s 2% target may be the most difficult. Underlying drivers include persistent supply chain bottlenecks in certain sectors and continued, albeit moderating, wage pressures. Looking forward, the trajectory of inflation will heavily depend on the evolution of these factors and the effectiveness of monetary policy in curbing demand.

  • Headline CPI/PCE: Headline CPI rose by 0.2% in November, bringing the year-over-year increase to 2.8%. Core PCE, excluding food and energy, increased by 0.1%, with the annual rate at 2.5%. These figures indicate that while inflation is cooling, it remains above the Fed’s target.
  • Energy Prices: Energy prices saw a slight rebound this week due to geopolitical tensions in the Middle East. Crude oil prices increased by 3%, contributing to higher gasoline prices at the pump.
  • Food Prices: Food price inflation remained relatively stable, with a marginal increase of 0.1%. Supply chain improvements and moderating input costs have helped to keep food prices in check. Quote: “We are committed to achieving our 2% inflation target and will use our tools to ensure price stability.” - Jerome Powell, Federal Reserve Chair, Press Conference, December 17, 2025

2. Employment

The labor market showed signs of cooling this week, with a slight increase in the unemployment rate and a decrease in job openings. While the labor market remains relatively tight, there are indications that the demand for labor is beginning to moderate. Wage growth also slowed, suggesting that wage pressures may be easing. The participation rate remained unchanged, indicating that the supply of labor is not increasing significantly.

  • Unemployment Rate: The unemployment rate edged up to 3.9% in November, a slight increase from the previous month.
  • Job Openings (JOLTS): Job openings decreased to 8.5 million in October, the lowest level in over a year. This suggests that employers are becoming more cautious about hiring.
  • Wage Growth: Average hourly earnings increased by 0.2% in November, bringing the year-over-year increase to 4.1%. While still elevated, this represents a slowdown from the rapid wage growth seen earlier in the year. Quote: “The labor market is still strong, but we are seeing some signs of moderation.” - Nela Richardson, Chief Economist, ADP, Employment Report, December 4, 2025

3. Housing Market

The housing market remains sensitive to interest rate fluctuations. Mortgage rates saw a slight increase this week, which led to a decrease in home sales and construction activity. Inventory levels remain low, which is supporting prices, but affordability remains a significant challenge for many potential buyers.

  • Mortgage Rates: The average 30-year fixed mortgage rate increased to 6.8% this week, up from 6.7% the previous week.
  • Home Sales: Existing home sales decreased by 2% in November, reflecting the impact of higher mortgage rates on affordability.
  • Construction/Starts: Housing starts decreased by 3% in November, indicating that builders are becoming more cautious in response to slowing demand. Quote: “The housing market is facing headwinds from higher interest rates and affordability challenges.” - Lawrence Yun, Chief Economist, National Association of Realtors, Housing Market Report, December 22, 2025

4. GDP & Economic Growth

Economic growth remains sluggish, with GDP estimates suggesting a modest expansion in the fourth quarter. Consumer spending remains the primary driver of growth, but there are concerns that it may slow as consumers become more cautious in response to inflation and economic uncertainty. Business investment remains subdued, reflecting concerns about the economic outlook.

  • GDP Estimates: The Atlanta Fed’s GDPNow estimate for fourth-quarter GDP growth is 1.8%.
  • Manufacturing/Services PMIs: The Manufacturing PMI remained below 50 in December, indicating contraction in the manufacturing sector. The Services PMI remained above 50, but it decreased slightly from the previous month, suggesting a slowdown in the services sector.
  • Consumer Confidence: The Consumer Confidence Index decreased slightly in December, reflecting concerns about the economic outlook. Quote: “The economy is growing at a moderate pace, but there are risks to the outlook.” - Jason Furman, Professor of Practice, Harvard Kennedy School, Economic Outlook, December 15, 2025

5. Monetary Policy

The Federal Reserve held interest rates steady at its December meeting, but signaled that it may begin to cut rates in the coming months. The Fed’s decision will depend on the evolution of inflation and the labor market. Market expectations are for the Fed to begin cutting rates in the first half of 2026.

  • Interest Rates: The Federal Funds rate remains in a range of 5.25% to 5.50%.
  • Fed Speak/Guidance: In its December meeting, the Federal Reserve signaled a potential shift in monetary policy, hinting at possible rate cuts in 2026 if inflation continues to moderate. However, the Fed emphasized that any decisions will be data-dependent.
  • Market Expectations: Market expectations are for the Fed to begin cutting rates in the first half of 2026, with a total of 50-75 basis points of cuts expected by the end of the year. Quote: “We are prepared to adjust our monetary policy stance as appropriate to achieve our goals.” - Jerome Powell, Federal Reserve Chair, Press Conference, December 17, 2025

Conclusion

The economic outlook for the coming weeks remains uncertain. While inflation is moderating, the labor market is showing signs of cooling, and economic growth remains sluggish. The housing market remains sensitive to interest rate fluctuations, and the Federal Reserve’s monetary policy decisions will be critical in shaping the economic outlook. Investors should remain cautious and monitor economic data closely. The interplay between inflation, employment, and monetary policy will be crucial in determining the trajectory of the economy in the new year.