As the United States approaches the end of 2025, its economic landscape presents a perplexing blend of promise and concern. While growth statistics indicate a resilient recovery, underscored by significant contributions from the technology sector, a growing disconnect exists between economic performance and public sentiment. This is a pivotal moment with the potential for transformative changes, especially with the influence of artificial intelligence and evolving economic strategies shaping the nation’s financial future.
As the United States economy heads into 2026, the report card emerging on its performance is decidedly complex. By many measures, the world’s largest economy appears to be in a robust position despite recent political and economic upheavals. After a tumultuous year marked by Donald Trump’s return to the White House and his administration’s focus on tariffs and protectionism, recent economic growth has outpaced the expectations of many analysts. In a speech this month, Trump hailed his economic record, asserting that the U.S. was on the verge of an unparalleled economic boom.
However, embedded within the economic data are signs of potential weakness that could pose risks for the future. Notably, there exists a prevalent sentiment of pessimism among the American public regarding their material circumstances. Here are some key metrics regarding the U.S. economy as 2025 draws to a close.
GDP Growth
After a modest expansion in the first half of 2025, gross domestic product (GDP) growth surged past expectations in the July-September quarter, reaching an annualized rate of 4.3 percent—the strongest performance in two years. This accelerative growth notably exceeded that of many other developed economies, including a 2.3 percent growth in the eurozone and a 1.3 percent growth in the United Kingdom. Meanwhile, Japan experienced a contraction of 2.3 percent during the same period. Much of this growth in the U.S. has been propelled by substantial investments in artificial intelligence from leading technology firms including Microsoft, Amazon, and Alphabet. By some estimates, AI-related spending contributed approximately 40 percent of overall growth in 2025, indicating that the economy’s future stability may rely heavily on AI fulfilling its transformative potential.
Consumer Sentiment
While the U.S. economy looks strong on paper, consumer sentiment is notably low, with the University of Michigan’s index lingering near record lows at 53.3 in December. Despite this, consumer spending has demonstrated resilience, with a growth rate of 3.5 percent in the July-September quarter, marking the fastest pace since late 2024. Furthermore, Mastercard’s annual report indicated a 3.9 percent increase in spending over the Christmas season, showcasing that consumer behavior might not align neatly with economic confidence. This disparity is largely influenced by the financial disparities between wealthy Americans and those with more modest incomes, as the top 10 percent of earners account for nearly half of consumer spending—the highest proportion since the inception of these records in 1989.
U.S. Stock Market
The stock market, which had experienced volatility earlier in the year due to Trump’s tariff announcements, is concluding 2025 on a positive trajectory. The benchmark S&P 500 index has gained nearly 18 percent, significantly surpassing its historical average of 10.5 percent. However, the benefits of these stock market gains have been disproportionately enjoyed by wealthier households, with ownership ranging from 87 percent in households earning over 0,000 to only 28 percent in those earning less than ,000.
Inflation
Despite concerns that Trump’s tariffs would incite inflation, prices have risen at a moderate pace, with year-on-year inflation reported at 2.7 percent in November, down from 3 percent in September. Although this marks a significant reduction from the peak inflation level of 9.1 percent in June 2022, many Americans still contend with escalating living costs. Recent polling indicated that 70 percent of respondents deemed the cost of living in their areas unaffordable, suggesting that the battle against inflation is not yet won.
Employment
Despite Trump’s promises to revive American manufacturing, unemployment has been progressively climbing, reaching a four-year high of 4.6 percent in November, up from 4 percent in January. The administration has attributed this rise in unemployment to job cuts within the Department of Government Efficiency. However, of the approximately 300,000 federal employees laid off, a more substantial increase of around one million Americans were classified as unemployed by November—highlighting broader economic challenges that go beyond governmental hiring practices.
As the U.S. steps into 2026, the interplay between economic performance and public sentiment will undoubtedly remain a focal point for policymakers, analysts, and citizens alike.
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