How Is the Economy Doing?
The current economy is defined by strong economic growth, a softening labor market and slowing inflation.
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Updated on June 8.
Here’s what NerdWallet’s senior economist Elizabeth Renter will be watching for in economic news and data during the week of June 9.
The story this week’s data told was of continued cooling in the labor market, but not one fully on-ice. Fewer jobs are being added, hiring continues to slow and workers aren’t quitting their jobs with expectations of finding another quickly. This hard data continues to confirm what we’ve heard from consumer sentiment (“soft”) data about the labor market — that there are fewer jobs available, and that folks are less optimistic about their ability to hold onto their current role. That said, the unemployment rate remains steady and layoffs aren’t climbing.
Next week, we’ll receive the last bits of economic data to come in before the next Fed meeting. While the Fed’s preferred inflation measure (PCE index) won’t be released until after their meeting, inputs to it will. Consumer and wholesale inflation, as measured by the CPI and PPI respectively, will provide some insight into the shape of price growth. Most recently, these data points have shown continued (albeit more gradual) progress towards the Fed’s inflation goal, but price pressures spurred by tariffs are expected to eventually make their way into the numbers.
There’s a pretty valid concern that the Fed will be caught between conflicting potential next-moves in coming months. Their dual mandate of full employment and stable prices is a balancing act, and if both signal trouble, the FOMC will have to make a judgement call on which is the more pressing priority. I don’t think this will be the case at their June meeting, however. Given what we’ve seen in labor market data this week and what I anticipate next week in inflation data, they’re likely to keep rates as-is and continue to monitor.
Upcoming data releases:
Mon., June 9: Survey of Consumer Expectations, NY Fed - This month, I’ll be paying extra attention to how consumers are feeling about their current situation. We know their expectations about the near future have been suffering under economic uncertainty, but when their perspective on current conditions deteriorates, it could be a sign of trouble.
Wed., June 11: Consumer Price Index (consumer inflation), BLS - Inflation continued to moderate in April, in part due to decreasing demand for services. But in May’s data, I’ll be looking for signs of the impact of tariffs on goods prices.
Thurs., June 12: Producer Price Index (wholesale inflation), BLS - Paired with the (above) CPI, this release will help provide perspective on where the Fed’s preferred measure (PCE) will land in a few weeks.
Fri., June 13: Survey of Consumers, University of Michigan - This will be the first look at June’s consumer sentiment surrounding the economy. As of May, the score is down nearly one-fourth over the year, and I don’t foresee it improving as we head into summer. Many consumers would likely love to get off the roller coaster of economic policy at this point.
ICYMI:
Insights: Recession Indicators - the Real, the Correlations and the Just-For-Fun - Google searches for “are we in a recession?” recently hit a mark not seen since mid-2022, and social media is abuzz with #recessionindicators. In this post, I discuss some of the real and absolutely not real indicators of an economic downturn.
First-Time Home Buyer Affordability - Q1 2025 - It’s tough for first-timers: “The typical first-quarter list price was $413,700. With a 9% down payment (the average for first-time home buyers last year), buyers would be looking at a $3,240 monthly mortgage payment.”
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: -0.2%
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?
April CPI inflation rate: 2.3%
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. The core CPI, as of April, is 2.8%.
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 March: $140.5 billion — a 14% increase compared to February
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 March 2025: $419 billion — an increase of $17.8 billion compared to February.
Exports in March 2025: $278.5 billion — an increase of $0.5 billion compared to February.
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 second reading for May from the University of Michigan released on May 30 shows:
The Index of Consumer Sentiment registered at 52.2 for May, unchanged from its April reading.
Current Economic Conditions registered at 58.9 compared to 59.8 in April.
The Index of Consumer Expectations was at 47.9 compared to 47.3 in April.
The Conference Board’s Consumer Confidence Index: The survey’s latest results, released on May 27, showed the index went up for May (98) compared to April (85.7).
More readings:
The Present Situation Index registered at 135.9 in May, compared to 131.1 in April.
The Expectations Index increased to 72.8 in May from 54.4 in April.
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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