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 March 11.
Here’s what NerdWallet’s senior economist Elizabeth Renter will be watching for in economic news and data during the week of March 10.
It’s not unusual to be taken by surprise by economic news from time to time. And the inability to anticipate economic outcomes inserts risk into business and household financial decisions. At times of high uncertainty, many will opt to play it safe — saving rather than spending and investing. Though the effects of dramatic economic policies, such as broadbased tariffs, can shift the economic landscape, great uncertainty can too.
Coming into this year, consumers had already spent down excess savings amassed during the early years of the COVID pandemic, and returned to prepandemic debt and delinquency levels. In fact, the share of seriously delinquent credit card, auto loan and “other” consumer loan types were higher than prepandemic levels at the end of 2024. On average, households’ insulation from economic shocks has decreased, with less savings on-hand and less available credit. Households are more fragile, and being unsure about the future of price growth, job security and federal programs will serve to complicate their financial decisionmaking.
Upcoming data releases:
Mon. March 10: Survey of Consumer Expectations, NY Fed - Consumer expectations shape consumer behavior, and uncertainty can sour those expectations. I’ll be looking closely at inflation, spending and debt expectations in this release.
Tues. March 11: JOLTS, BLS - This data has more of a lag than other labor market indicators, so we’ll be looking back at January job openings, hires, quits, layoffs and the like. I don’t anticipate we’ll see much surprising here, rather continued leveling-off in hiring and openings.
Wed. March 12: CPI inflation, BLS - In January, price growth accelerated a bit, and it’s likely that we won’t see much further cooling in February's data, much to the chagrin of consumers paying those prices and the Fed who’d prefer the measure continue to moderate.
Thurs. March 13: PPI (wholesale) inflation, BLS - While we’re all concerned about the ultimate impact of tariffs at the producer level, uncertainty in the meantime could also affect price growth.
Fri. March 14: Consumer Sentiment, U. Mich. - Consumer sentiment fell fairly dramatically in February, and while I don’t anticipate it falling as much in March, it’s also unlikely to rebound.
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. economy growing?
Q3 2024 Real GDP: 2.8%
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.
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
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?
What is the U.S. unemployment rate?
February unemployment rate: 4.1%
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 had remained low since December 2021. During this period it fluctuated between 3.4% and 3.9%. But the rate began to increase this spring and has topped 4% since May.
How fast are wages growing?
December wage growth rate: 4.2%
Wage growth is moderating from what it was at this time in 2023 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?
January CPI inflation rate: 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 December, is 3.2%.
Personal consumption expenditure (PCE)
December PCE inflation rate: 2.6%
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. The core PCE, as of December is 2.8%.
» MORE: What is the PCE?
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.
» 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 survey’s final data for February registered at 64.7 down from its January reading of 71.7, according to the latest survey released on Feb. 21. The index is up 29% from its historic low of 50 in June 2022.
Current Economic Conditions registered at 65.7, compared to 75.1 in January.
The Index of Consumer Expectations was at 64, compared to 69.5 in January.
The Conference Board’s Consumer Confidence Index: The survey’s results for January showed the index declined for February (98.3) compared to January (105.3).
More readings:
The Present Situation Index fell to 136.5 in February from 139.9 in January.
The Expectations Index declined to 72.9 in February compared to 82.2 in January.
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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