Economic Weather Report

As we step into the final stretch of 2025, the economic landscape feels like a mix of clearing skies and lingering clouds. Here’s what’s shaping the horizon:

Inflation is cooling, but not quite cold. Prices are rising at about 3% year-over-year—a big improvement from the peaks of 2022–2023. Energy costs have eased, with oil hovering near $62 a barrel, giving consumers a little breathing room. Shelter costs remain sticky, but the overall trend points toward disinflation heading into early 2026.

Growth is steady, not spectacular. After a strong rebound in mid-year, the economy is expected to slow to a modest pace in Q4. Services are holding up, but manufacturing is still in contraction territory. Think of it as a jog after a sprint—momentum is there, just not at full speed.

Jobs? Still solid, but cooling. The last clean read showed unemployment around 4.3%. October’s data blackout from the government shutdown leaves us guessing, but early signals suggest a gradual slowdown rather than a cliff dive.

The Fed is walking a tightrope. Interest rates sit at 3.75–4.00%, and policymakers are split on whether to cut again in December. With incomplete data, expect caution. Mortgage rates have settled near 6.2%, offering some relief to homebuyers without sparking a boom.

Politics and policy are wild cards. A unified GOP government means potential shifts on tariffs, immigration, and energy. These could ripple through prices and labor markets in unpredictable ways.

What does this mean for the months ahead?
Expect a “steady as she goes” finish to 2025: slower growth, inflation trending toward 2.5%, and a Fed that’s likely to pause before easing further in 2026. Risks remain—policy surprises, labor tightening—but lower fuel costs and stable borrowing rates offer a silver lining.

For businesses in travel and hospitality, this is a moment to lean into value. Consumers are cautious but willing to spend on experiences. Keep pricing strategic, invest in high-ROI upgrades, and prepare for a labor market that may tighten before it loosens.