By M. Ray Perryman, PhD, CEO and President – The Perryman Group
Outlook for the US Economy – 4th Quarter 2025
By M. Ray Perryman, PhD, CEO and President
The Perryman Group
Employment
Job growth across the US economy has slowed significantly in recent months, and performance has been notably uneven across industries. Just 525,000 net new jobs were added over the 12-month period ending December 2025, for an annual employment growth rate of 0.33% (a pace well below long-term patterns). Over the past year, the educational services, health care, and social assistance industries featured both the largest gains in workers (700,000) and the fastest growth in percentage terms (2.58%). The largest losses occurred in the government sector, down 157,000 workers from December 2024 to December 2025. The nation’s seasonally adjusted unemployment rate in December was 4.38%, up 0.16 percentage points from the level a year prior.
Ongoing out-migration is beginning to have an impact on employment. As with many countries, US birthrates have been falling for a number of years and virtually all population growth stems from in-migration. Recent policy has discouraged movement of people to the United States, with significant implications for the workforce.
Even with very low job growth across some industries (particularly white-collar field adjusting to the deployment of AI as well as current uncertainty), worker shortages are nonetheless in place across fields ranging from hands-on aspects of healthcare to construction to skilled trades and mechanics. Shifts in the workforce are likely to be ongoing during the near-term horizon.
Economy
Although most analysts expect moderate growth for the global economy over the near term, there are significant downside risks. Trade fragmentation and supply chain disruption could slow the pace of growth, both over the next few years and for decades to come. Whether from trade tensions due to tariffs or geopolitical conflicts, reducing the efficiency of global supply chains will work to curtail future performance.
Fiscal challenges are also a growing concern. Many countries are facing difficult decisions related to rising debt service, growing entitlements (such as pensions), and other spending. Flexibility is low, and actions such as raising taxes could further erode growth. Most advanced economies face aging populations and labor shortages. Energy prices are negatively affecting growth potential in some areas such as Europe, and overall inflation is also a concern. This overall sluggish global pattern is clearly affecting US economic performance and potential growth, and there are additional downside risks from the threats to the independence of monetary policy.
In spite of downside risks and uncertainty, The Perryman Group’s most recent projections indicate real gross product is expected to expand by +2.34% this year on a year-over-year basis, with +2.46% growth in 2027. Job gains are projected to exceed 1.5 million through 2026, with an increase of almost 2.1 million jobs next year. Additional information is provided in the following tables.
About Dr. M. Ray Perryman and the Perryman Group
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.