How Is the Economy Doing Right Now?
The current economy is defined by strong economic growth, a softening labor market and slowing inflation.
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Updated on June 27.
Here’s what NerdWallet’s senior economist Elizabeth Renter will be watching for in economic news and data during the week of June 30.
To say there is a lot going on in the world of economic potentials would be a massive understatement. Part of my job is commenting on the potential economic impacts of newsworthy events, and boy howdy has that required me to develop better prioritization skills over the past several months. However, if there are two categories of concern I’m paying extra attention to, they are labor market health and consumer resilience.
The labor market has cooled dramatically over the past year, and there are several potential risks on the horizon. Employers are currently in a holding pattern — not doing much hiring and not laying off — and workers with jobs are staying put while jobseekers face real obstacles. It’s hard to judge the ultimate impact of immigration policies on labor supply, but they won’t move things in a positive direction. Likewise, the uncertainty of tariffs and resulting supply chain disruptions will have a negative impact of a yet-unknown magnitude.
Consumers are ill-equipped to weather an economic storm, relative to the last surge of unemployment (2020) or the last high inflation period (2022). A rush of federal dollars helped the economy recover from the fastest (and one of the deepest) recessions in history, contributing to high price growth that households were largely able to absorb. Now, debt levels are climbing, savings are spent down and consumers are simply more vulnerable.
I don’t think the economic outlook is necessarily all doom and gloom, but there is much yet unknown, and these two pockets are top-of-mind for me.
Upcoming data releases:
Tues., July 1: JOLTS, BLS - I anticipate we’ll see continued cooling in job openings, hiring and quits for the month of May. We haven’t yet seen layoffs rise in this data, and I don’t expect it to (in a meaningful way) in this release either.
Thurs., July 3: Jobs report, BLS - I wouldn’t be surprised to see the unemployment rate tick up for June. Continuing claims have been slowly increasing, and as employers continue in a holding pattern (not hiring and not laying off), more people will also be in limbo.
ICYMI: Insights: Is Federal Data in Trouble? Some initial thoughts from me on the growing concern of the continued health and quality of federal economic statistics.
The state of the U.S. economy is strong despite inflation remaining elevated. The economy is expanding at a crisp pace, the labor market is loosening slightly and inflation is slowing from its peak. The Federal Reserve looks at several economic indicators — along with the stock market — to form a better picture of the economy and make decisions on interest rates.
Is the U.S. in a recession?
The United States is not currently in a recession, but the impacts of new tariffs and a looming trade war have unsettled financial markets and raised fears of an economic downturn. Even President Donald Trump has said a recession is possible. For ongoing updates on recession news, see: Are we in a recession?
Is the U.S. economy growing?
Q1 2025 Real GDP: -0.5%
The U.S. economy has shown steady growth since it dropped to unprecedented levels during the second quarter of 2020 due to the pandemic — and then rebounded almost as quickly. A year later, in the second quarter of 2021, the rate of annual growth hit a high not seen since the 1950s.
But in the first quarter of 2025, growth declined for the first time in nearly three years, primarily due to an increase in imports — a result of businesses stocking up on goods before tariffs began.
» MORE:
Gross Domestic Product (GDP) is the market value — in current dollars — of all goods and services produced within the United States in a given period. The data that shows GDP adjusted for inflation is called Real GDP. All GDP changes are expressed on an annualized basis and reports are released quarterly by the Bureau of Economic Analysis.
» MORE: GDP Report
What is the U.S. unemployment rate?
May unemployment rate: 4.2%
The U.S. unemployment rate is the share of unemployed people as a percentage of the overall labor force. Unemployed people are those who are actively seeking work. The labor force doesn’t include the entire population; it’s just the number of people who are employed plus those who are unemployed but looking for jobs.
The unemployment rate has topped 4% since May 2024.
How fast are wages growing?
March wage growth rate: 4.3%
Wage growth is moderating from what it was at this time in 2024 and is much lower than its peak in 2022. Still, the most recent data from the Federal Reserve Bank of Atlanta shows that annual growth is pacing much faster than it did in 2020.
Below is the three-month moving average of median hourly wages over the last decade.
Is inflation going down?
May CPI inflation rate: 2.4%
May core CPI inflation rate: 2.8%
Inflation measures the rate of price increases, on an annual basis. The Federal Reserve is targeting a 2% inflation rate.
Consumer price index (CPI)
The current inflation rate is typically a reflection of the consumer price index (CPI), which is released monthly by the Bureau of Labor Statistics. The CPI measures changes in prices that consumers pay for goods and services including food, gas and rent. The core measure of the consumer price index excludes two volatile factors: food and energy.
Personal consumption expenditure (PCE)
April PCE inflation rate: 2.1%
April core PCE rate: 2.5%
The Federal Reserve’s preferred measure of inflation is the core personal consumption expenditure (core PCE), which is released monthly by the Bureau of Economic Analysis. The PCE follows the goods and services consumers buy and the price they pay for them. It also tracks changes in spending habits as prices fluctuate.
» MORE: What is the PCE?
What’s happening with gas prices?
Oil prices have dropped to their lowest levels since 2021. That’s unusual since oil prices usually spike during spring and stay elevated during the summer. And yet, drivers are paying less right now than they were a year ago. There are two big reasons for the price dip: tariffs lowering demand and global output increasing.
» MORE: Gas prices in the U.S.
Here’s a snapshot of average U.S. gas prices right now.
Federal appeals court temporarily reinstates Trump’s tariffs
On May 29, a federal appeals court approved a request by the Trump administration to pause a court ruling that would block most of Trump’s tariffs. The appeals court ruling reinstates Trump’s tariffs, at least temporarily.
On May 28, a federal trade court said that Trump does not have the legal authority to implement most of his tariffs including his sweeping “Liberation Day” tariffs, as well as broad tariffs on Mexico and Canada. Most tariffs on China would also be illegal, under the ruling.
The ruling would not apply to Trump’s 25% steel, aluminum, auto or auto parts tariffs.
Since February, Trump has announced sweeping tariffs affecting virtually all U.S. trade partners. For details, see:
How much is the U.S. dollar worth now?
The dollar index measures how the dollar compares to other currencies. The U.S. dollar is usually considered a safe haven, especially during times of market volatility and economic uncertainty. But in 2025, the value of the dollar is falling as investors sell off U.S. assets, largely due to uncertainty tied to Trump’s protectionist policies and broad sweeping tariffs.
What is the current U.S. trade deficit?
U.S. trade deficit in April: $61.6 billion — a more than 55% decrease compared to March.
The U.S. has run a trade deficit for decades. BEA data shows in 2024 the goods and services deficit was $918.4 billion, compared to $784.9 billion in 2023.
Source: U.S. Census Bureau and the Bureau of Economic Analysis (BEA).
» MORE: What is the U.S. trade deficit?
How much does the U.S. import and export?
Imports are goods that one country purchases from another country, while exports are goods that one country sells to another country. The latest U.S. Bureau of Economic Analysis (BEA) data shows:
Imports in April 2025: $351.0 billion — a decrease of $68.4 billion compared to March.
Exports in April 2025: $289.4 billion — an increase of $8.3 billion compared to March.
Rent vs. inflation
Rent costs are a significant factor driving inflation. That’s because rent is included within the shelter price index and shelter comprises the biggest segment of the CPI. The rent portion of the CPI has outpaced overall inflation for decades.
However, there’s a lag in how rent data is reflected in the CPI, which means rental shifts — up or down — won’t immediately be reflected in the report. The lag is due to the cycle of lease renewals. Companies that track rental prices, like the housing website Zillow, show that rent increases have slowed down for nearly a year, but that slowdown has yet to show up in the CPI report.
» MORE: Rental market trends in the U.S.
When will interest rates go down?
Federal funds rate: 4.25% to 4.50%
The federal funds rate, also known as the Fed rate, is the interest rate that U.S. banks pay each other to borrow or loan money overnight. The federal funds rate affects interest rates on consumer lending products like credit cards and mortgages.
The fed rate is set by the Federal Open Markets Committee (FOMC), which is the monetary policymaking arm of the nation’s central bank known as the Federal Reserve. At the FOMC’s eight scheduled meetings each year, it takes action on the federal funds rate. That means it will hike, hold or lower rates, depending on economic conditions.
After a year of paused interest rates, the Fed made rate cuts at its September, November and December meetings. The FOMC paused rates at its January and March meetings.
» MORE: What is the federal funds rate?
Consumer confidence in the economy
Consumer confidence — or sentiment — is an index that reflects people’s perceptions about the economy in the short-term and the outlook for the future. There are two main consumer sentiment indexes: the University of Michigan’s Index of Consumer Sentiment and The Conference Board’s Consumer Confidence Index.
The University of Michigan’s Index of Consumer Sentiment
The final reading for June from the University of Michigan released on June 27 shows:
The Index of Consumer Sentiment registered at 60.7 for June, up from 52.2 in May.
Current Economic Conditions registered at 64.8 compared to 58.9 in May.
The Index of Consumer Expectations was at 58.1 compared to 47.9 in May.
The Conference Board’s Consumer Confidence Index: The survey’s latest results, released on June 24, showed the index went down for June (93) compared to May (98).
More readings:
The Present Situation Index registered at 129.1, compared to 135.9 in May.
The Expectations Index decreased to 69 in June from 72.8 in May.
How’s the stock market doing?
The health of the stock market is represented by major stock market indexes like the Dow Jones Industrial Average, S&P 500 or the NASDAQ 100. These indexes include broad sections of the stock market, but aren’t entirely exhaustive. That means the performance of these indexes represents the fluctuations in the entire market. So when the stock market goes up that means stock market indexes have gained value and vice versa.
» MORE: S&P 500 Index (SPX)
Data may be delayed and is for informational purposes only.
Latest mortgage interest rates
Mortgage rates change daily according to what’s happening in the economy.
NerdWallet’s daily mortgage rates below are calculated as an average of the annual percentage rate (APR) with the lowest points from a selection of major national mortgage lenders. The APR is based on the interest rate and indicates all of the costs of getting a loan including mortgage origination fees and discount points.
» MORE: Current mortgage interest rates
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