How Is the Economy Doing Right Now?
The U.S. economy is growing again after a Q1 decline in GDP.
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Updated on Aug. 12 with CPI figures for July.
Trump drops labor statistics chief over weak jobs report
On Aug. 1, President Donald Trump fired Erika McEntarfer, the Biden-appointed head of the Bureau of Labor Statistics, after accusing her of manipulating data to damage his administration. Trump provided no supporting evidence for his claim.
McEntarfer’s dismissal followed a worse-than-expected jobs report for July that included significant downward revisions to the number of jobs added in May and June — down by 258,000. The White House claimed the BLS numbers were “unreliable” due to large revisions.
Criticism was swift as economists, media, lawmakers and critics slammed the move and questioned whether economic data produced by the U.S. government would be credible moving forward.
On Sunday, Former Treasury Secretary Larry Summers said on ABC News’ “This Week” that an official manipulating jobs report data was “preposterous” adding, “These numbers are put together by teams of literally hundreds of people following detailed procedures that are in manuals. There’s no conceivable way that the head of the BLS could have manipulated this number.” He added that the numbers in the jobs report are in line with those of private sector data sources, adding that the firing “is the stuff of democracies giving way to authoritarianism.”
Also on Sunday, on CNN’s “State of the Union,” William Beach, the former BLS Commissioner during Trump’s first term, explained why the president’s claim that McEntarfer couldn’t have manipulated data. “There’s no way for that to happen,” he said. “The commissioner doesn’t do anything to collect the numbers. The commissioner doesn’t see the numbers until Wednesday before they’re published. By the time the commissioner sees the numbers, they’re all prepared, they’re locked into the computer system. The only thing the commissioner does on Wednesday is to kind of do the edits on the text so there’s no hands-on at all for the commissioner.”
On Monday, Trump doubled down on his claim, posting on Truth Social, “Last weeks Job’s Report was RIGGED” and said he would pick “an exceptional replacement.”
What NerdWallet's economist is watching this week
Here’s what NerdWallet’s senior economist Elizabeth Renter will be watching for in economic news and data during the week of Aug. 11.
It’s been a week since Trump fired the BLS Commissioner under allegations of flawed labor market statistics, so by now we’ve all read numerous takes on the topic. Last month, I shared my thoughts on the current pressures on federal statistical agencies, but didn’t realize how immediate the concern would become. I wrote, “I have great faith in the experts at these agencies to do high-quality work and produce accurate data, but the absence of protection against political influence and years of inadequate funding put them at risk.”
I still have confidence in our federal statistical agencies. But I am concerned. And I would certainly understand if the latest move causes the general public to be more distrusting of federal economic data — whether they believe the firing was justified or believe the political influence is a sign of more to come.
When the economy is going through dramatic changes, revisions to federal data often get larger. That’s because, in part, these estimates are based on historic patterns. When shocks are jostling the economy in ways they never quite have, these patterns aren’t as reliable as they otherwise would be. That doesn’t mean the data is wrong, but that the adjustments made to take preliminary data to its final form may be a bit of a bumpy ride. The last time we saw dramatic revisions to federal jobs data was in 2020 and 2021, and this was also the last time we saw shocks jostling the economy in ways they never quite have.
Upcoming data releases:
Tues., Aug. 12: Consumer Price Index (consumer inflation), BLS - We’re likely to see ongoing (but subtle) price pressures from tariffs in July’s consumer inflation figures. Like the policies steering these figures, the impact on the data will probably bounce around a bit, but see a generally upwards trajectory.
Thurs., Aug. 14: Producer Price Index (wholesale inflation), BLS - This tracks price changes charged by domestic producers, so while it would reflect the impact of some tariffs on intermediate goods, it would miss impacts paid by retailers who import finished goods directly from other countries. Still, I do anticipate this will tick up in the July data.
Fri., Aug. 15:
Retail Trade, U.S. Census - This release will be telling. June’s data showed an uptick in retail spending after two consecutive months of declines. I anticipate a potential downward revision for last month’s data and subtle (if any) growth in the July preliminary figures.
Consumer Sentiment, U. Mich - This is the first read of August consumer sentiment data. It’s possible that consumers are discounting economic developments because they’re simply weary, but new tariffs taking effect may rattle their economic sentiment once again.
Publishing next week from the NerdWallet studies team:
2025 Medicare and Retirement Report - This annual look at Medicare and Social Security finds a notable share of Americans believe Social Security and/or Medicare benefits will be reduced under the current administration. Contact [email protected] if you’d like to receive this report in advance under embargo.
The state of the U.S. economy is strong despite inflation remaining elevated. The economy is expanding again after a dip in Q1, the labor market is stable and inflation is below 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?
Q2 2025 Real GDP: +3.0%
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. The economy moved back into positive territory in the second quarter, according to an advance estimate released on July 30, attributed to a drop in imports and an increase in consumer spending.
» 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.
Why it matters: GDP is a barometer for the health of the country. When it’s growing, that’s a good sign: consumers are spending, businesses are producing and jobs are being created. But when the GDP shrinks, or contracts, it signals that the economy may be slowing. If it contracts for two quarters, that can be considered a recession.
» MORE: GDP Report
What is the U.S. unemployment rate?
July 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.
Why it matters: Unemployment shows how the labor market is doing. When it’s low, people are finding work and feeling confident about job-hopping. When the rate is elevated, it shows the economy could be struggling, with fewer positions available for jobseekers.
How fast are wages growing?
June wage growth rate: 4.2%
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.
Why it matters: Wage growth shows how workers are doing. If wages are rising, it means the job market is strong and employers are competing for workers. But when inflation rises faster than wages, then raises won’t stretch as far and consumers lose purchasing power.
Below is the three-month moving average of median hourly wages over the last decade.
Is inflation going down?
Inflation measures the rate of price increases, on an annual basis. The Federal Reserve is targeting a 2% inflation rate.
Why it matters: The Federal Reserve targets a 2% inflation rate. Inflation reports like the consumer price index (CPI) and personal consumption expenditure (PCE) index show how fast prices are rising. When inflation rates spike and wages don’t increase as strongly, it means it could be harder for households to stay afloat.
Consumer price index (CPI)
July CPI index: 2.7%
July core CPI index: 3.1%
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) index
June PCE inflation rate: 2.6%
June core PCE rate: 2.8%
The Federal Reserve’s preferred measure of inflation is the core personal consumption expenditure (core PCE) index, 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.
Why it matters: High gas prices mean consumers have less money available for other spending, which can slow the economy. Higher fuel prices also increase costs for businesses that rely on shipping, which can pass higher costs to consumers and fuel inflation.
» MORE: Gas prices in the U.S.
Here’s a snapshot of average U.S. gas prices right now.
What’s going on with 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.
Why it matters: The strength of the U.S. dollar shows its global demand. A strong dollar makes imported goods and services cheaper for U.S. consumers and businesses. It also eases inflationary pressure in the U.S. But a strong dollar could reduce demand for imports from U.S. businesses, which could slow growth.
What is the current U.S. trade deficit?
U.S. trade deficit in June: $60.2 billion, compared to $71.7 billion in May.
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:
Exports in June 2025: $277.3 billion — a decrease of $1.3 billion compared to May.
Imports in June 2025: $337.5 billion — a decrease of $12.8 billion compared to May.
Rent 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.
Why it matters: When rent rises faster than wage growth, it increases living costs, which means households have less money available for other expenses. High prices also shrink the affordable options available in the rental market.
» 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 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 has held rates steady at each of its 2025 meetings to date.
Why it matters: The federal funds rate affects interest rates on consumer lending products like credit cards and mortgages. When the rate rises, borrowing becomes more expensive. That can lead to tighter lending standards, which means consumers and businesses tend to borrow less.
» 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.
Why it matters: Consumer sentiment shows how people feel about the economy and economists consider it a useful tool in predicting economic changes. How people feel about the economy can shape their behavior: If consumers are feeling optimistic, they’re more likely to spend money. But if their feelings are negative, they may pull back spending, which can slow economic growth.
The University of Michigan’s Index of Consumer Sentiment
The final reading for July from the University of Michigan released on Aug. 1 shows:
The Index of Consumer Sentiment registered at 61.7 for July, up from 60.7 for June.
Current Economic Conditions registered at 68 for July, up from 64.8 for June.
The Index of Consumer Expectations registered at 57.7 for July, down from 58.1 for June.
The Conference Board’s Consumer Confidence Index: The survey’s latest results, released on July 29, showed the index rose modestly (97.2) compared to June (95.2).
More readings:
The Present Situation Index registered at 131.5, compared to 133 in June.
The Expectations Index increased to 74.4 in July from 69.9 in June.
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.
Why it matters: The stock market reflects investor confidence in the economy. When stock prices rise, it means investors are feeling optimistic. When prices fall, it signals investors are uncertain or concerned about the economy. These stock fluctuations affect investments, retirement accounts, consumer confidence and business decisions.
» 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.
Why it matters: Mortgage rates affect housing affordability. When rates go up, so do monthly payments for buyers, which could make it harder to afford homes. For current homeowners, high rates may discourage them from selling, which can tighten the housing market and drive up home prices.
» MORE: Current mortgage interest rates
(Photo by Spencer Platt/Getty Images News via Getty Images)