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This year’s positive economic performance is expected to continue, according to the National Retail Federation (NRF), but uncertainty still stands as the White House and Congress make pivotal economic decisions.
“While the U.S. economy has entered 2025 with a fair amount of momentum, the mix of policies being debated on immigration, tariffs, deregulation and taxes blur the economic outlook and its narrative, with many crosscurrents at work,” says Jack Kleinhenz, NRF chief economist. “While deregulation and tax cuts could provide positive momentum, immigration restrictions and tariffs could be a drag on the economy and have adverse effects. Although recent economic data remains strong, we are concerned about the downside risks.”
Gross domestic product adjusted for inflation grew 2.8% in 2024, crediting increased consumer spending as a significant growth factor, according to the NRF. In January of this year, core retail sales decreased 0.9% from December after an intense holiday season but rose 4.2% year over year.
143,000 jobs were added in January 2025, down from 207,000 in December 2024 and the unemployment rate fell to 4% following a steady 4.1% to 4.2% since June 2024, showing signs of worker scarcity and not slack in the labor market, Kleinhenz says.
Inflation increased in January, with the Consumer Price Index up 3% year over year compared to 2.9% in December.
“The critical question is whether the trend will continue,” Kleinhenz says. “Given the hot January inflation readings for consumer and producer prices alike, the Federal Reserve is unlikely to cut interest rates anytime soon.”
