U.S. Economic Growth Projected to Accelerate Amid Job Market Concerns

2025-10-14 economy

Washington, D.C., Monday, 13 October 2025.
Economists predict U.S. GDP will rise by 1.8% in 2025, an increase from earlier forecasts. However, job market challenges persist, with significant layoffs and sluggish job gains expected.

Economic Growth Forecasts

The National Association for Business Economics (NABE) has raised its forecast for U.S. GDP growth to 1.8% in 2025, up from a previous estimate of 1.3% reported in June. This increase is attributed to stronger consumer spending and business investment, which have exceeded expectations over the summer months [1][6]. The Federal Reserve’s anticipated decision to lower borrowing costs by 0.25 percentage points by the end of the year is also expected to stimulate economic activity, further boosting growth prospects [1].

Challenges in the Job Market

Despite the optimistic outlook for GDP, the U.S. job market faces significant hurdles. The percentage of long-term unemployed individuals, those jobless for 27 weeks or longer, has risen to 26% of the total unemployed population, marking the highest level in over three years [1]. Furthermore, layoffs have reached nearly 950,000 through September 2025, representing the largest number since 2020 [1]. Consequently, NABE has revised its forecast for average monthly payroll gains down to 60,000 for the remainder of the year, a decrease from the 87,000 estimated in June [1].

Inflation and Consumer Spending

Inflation, as measured by the Personal Consumption Expenditures (PCE) index, is expected to rise at an annualized rate of 3% over the rest of 2025, before cooling to 2.5% by the end of 2026 [1]. Consumer spending continues to grow, particularly among high-income households, contributing to stronger economic activity. However, tariffs are predicted to drive up consumer prices, with 95% of economists surveyed by NABE anticipating increased costs over the coming months [1][6]. This inflationary pressure could affect consumer confidence and spending patterns, posing a risk to economic momentum.

Economic Outlook and Future Projections

Looking ahead, NABE anticipates the U.S. economy to continue its upward trajectory, projecting a GDP growth rate of 1.7% in 2026, slightly higher than its previous forecast of 1.4% [1]. While the threat of recession remains low, with economists estimating a 20% to less than 40% chance of a downturn in the next 12 months, the job market’s fragility and inflationary concerns remain significant challenges [1]. The interplay between these factors will require careful navigation to sustain economic growth while maintaining labor market stability.

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economic growth job market