Lee EBCS: Third Quarter 2025 Report
August 04, 2025 / RERI Research Team
Headline numbers for the US economy suggest that the economy continues to grow at a healthy rate. For instance, the real Gross Domestic Product (GDP), a measure of domestic economic activity in our economy, increased at a 3 percent annualized rate for the second quarter, after a first quarter decline of 0.5 percent. These numbers, though, are murky with recent developments in trade and trade policy. As we “look under the hood”, we find that final sales to private domestic purchasers rose only 1.2 percent, down from the 1.9 percent reported last quarter and its lowest reading since the fourth quarter of 2022. The labor market also continued to register low numbers from a historic perspective, measured at 4.1 percent in June. Signs of slowdown also persisted in the labor, with job openings revised downward for May and June, and quit rates declining. Inflation measured by the Consumer Price Index (CPI) increased at a 2.7 percent annualized rate in June, and the Core Personal Consumption Expenditure (PCE) registered a 2.7 percent increase from last year in quarter 2. Hence, the Federal Open Market Committee (FOMC), which has a dual mandate of stable prices and maximizing employment, has decided to maintain rates at its current rate at 4.25 – 4.5 percent. Their next meeting is in September, when they will have two full months of data, and more certainty on tariff levels and their potential effects on the economy.
