February 2025
The opening weeks of 2025 has been tumultuous for the US economy. Mass federal firings, inconsistent tariff policies, and bird flu related supply chain woes have created an unstable start to the year. Although the data has not fully caught up, there are still important signals from the beginning of the year.
Change in Nonfarm Payrolls
The economy added 151k jobs in February, lower than the anticipated 171k but higher than the 125k added in January. The gains were spurred by added jobs in health care, financial activities, transportation and warehousing, and social assistance. Federal government employment declined (BLS).
Unemployment rate
The unemployment rate and number of unemployed people changed little in February. Since May of 2024 the unemployment rate has remained withing the 4.0 to 4.2 range (BLS).
Urban consumer CPI
The price level rose by 2.8 percent year over year in February according to CPI data from the BLS. This is down 0.2 percentage points from January’s 2.99% year over year change. For the month, price levels rose 0.21% compared to 0.46% in January, this is the first fall in the monthly index since June 2024. The indices for shelter and food, two of the largest contributors to the CPI, rose by 0.3 and 0.2 respectively in February (4.2 and 2.6 year over year).
Industrial Production Index
A 0.5% change in the industrial production index fell short of the 1% change posted in December 2024. According to the Federal Reserve the change in the index is partially attributed to gains in the manufacturing sector. Year over year between Jan 2024 and Jan 2025 the index is up 2%, the largest yearly increase since October 2022.
Real GDP Growth
Real GDP grew by 2.3% in Q4 2024 however, that growth is not expected to last. The Atlanta Federal Reserve’s GDPNow has a running estimate of a 2.4% contraction in the economy for Q1 2025. Losses in consumer spending, investments, and most notably exports are the major factors influencing the projected decline.
10-Year Treasury Maturity Rate
Treasury yields on 10-year bonds have been falling since mid-January signaling less confident investor sentiment. A declining yield indicates that investors are seeking safe assets amid economic uncertainty and fears of a recession.