1. Consumer Behavior

American consumers are still spending, with retail sales rising in late summer 2025. Despite price pressures, households continue to shop, reflecting resilience in demand. However, the cost of essentials like housing and groceries weighs heavily on lower and middle-income families.

2. Inflation Trends

Inflation remains above the Federal Reserve’s 2% target. Core consumer prices (excluding food and energy) continue to rise, signaling persistent price pressures. The Fed is balancing between controlling inflation and avoiding an economic slowdown.

3. Jobs and the Labor Market

The labor market is softening compared to prior years. While unemployment remains relatively low, job creation has slowed, and wage growth is flattening. These shifts influence household confidence and policy decisions at the Fed.

4. Federal Deficit & Debt

The U.S. federal deficit remains in the trillions, driven by entitlement programs, rising interest payments, and sustained government spending. This trajectory raises long-term questions about fiscal sustainability.

5. What to Watch Next

• Federal Reserve Decisions: Upcoming rate moves will shape borrowing costs.
• Inflation Data: CPI and PCE reports are key indicators of progress.
• Fiscal Policy: Debates over government spending and taxes remain critical.