The Fed lowered its short-term interest rate target. Here are five things we learned from U.S. economic data released during the week ending December 12.
A divided Federal Open Market Committee voted to cut short-term interest rates. The statement from the recent FOMC meeting mentioned that the unemployment rate has “edged up,” inflation remains “somewhat elevated,” and the U.S. economy is “expanding at a moderate pace.” The committee was “strongly committed to supporting maximum employment and returning inflation to its 2 percent objective.” With the context, members voted to reduce the fed funds target rate by a quarter percentage point, bringing it to a range of 3.50 percent to 3.75 percent (its lowest in three years). However, the decision was far from unanimous; one member desired a half-point cut, while two others preferred to keep the rate unchanged. The economic projections from FOMC participants, released alongside the statement show that most expect just one more quarter-point reduction in 2026, although opinions vary. For instance, three members anticipate a quarter-point increase, while another expects the rate to drop by 150 basis points next year.
Forward-looking economic measures declined in September. The Conference Board’s Leading Economic Index (LEI) decreased 0.3 percent to a 98.3 (2016=100). Over the past six months, the LEI has decreased by 2.1 percent, which is slightly faster than the 1.3 percent decline in the previous six-month period. Only three of the ten LEI components made a positive contribution to the index, led by the stock market. The Coincident Economic Index (CEI) edged up a small 0.1 percentage point to 115.1, showing a modest 0.3 percent growth over the last six months. All four CEI components contributed to the index’s increase, especially manufacturing/trade sales and personal income. The Lagging Economic Index (LAG) grew slightly by 0.1 percent to 119.6, up 0.5 percent over six months. Looking ahead, the Conference Board predicts the U.S. economy will grow by about 1.8 percent this year, followed by a 1.5 percent increase next year.
Hiring slowed in October even as the number of job openings remained steady. The Bureau of Labor Statistics estimates there were a seasonally adjusted 7.670 million unfilled jobs at the end of October, an increase of 12,000 from the previous month and 0.7 percent higher than a year earlier. The private sector accounted for 6.894 million open jobs, including over a million-plus unfilled positions in professional/business services, healthcare/social assistance, and leisure/hospitality. Employers hired 5.149 million people during the month, a decrease of 218,000 from September and 3.8 percent less than a year earlier. During October, 5.050 million people separated from their jobs, down 214,000 from the previous month and 4.4 percent from October 2024. Additionally, 187,000 fewer people quit their jobs during the month (to 2.941 million, an 8.6 percent decrease from a year earlier), while layoffs increased by 73,000 to 1.854 million, a 3.7 percent increase from October 2024.
The trade deficit narrowed in September. Exports increased by 3.0 percent to a seasonally adjusted $289.3 billion, and imports rose by 0.6 percent to $342.1 billion. The resulting trade deficit of -$52.8 billion left the Census Bureau and the Bureau of Economic Analysis data series down 10.9 percent from August. The year-to-date trade deficit of -$765.1 billion was up 17.2 percent compared to the same months in 2024. The goods deficit shrank by $7.1 billion to -$79.0 billion, while the services surplus narrowed by $0.6 billion to +$26.2 billion. The former was driven by higher exports of nonmonetary gold and pharmaceuticals (both of which also experienced higher imports) and lower imports of crude oil, computers, and electric apparatus. The U.S. recorded its largest goods deficits with Ireland, Mexico, and Vietnam.
Small business owners were slightly more hopeful in November. The Small Business Optimism Index increased by 8/10ths of a point to 99.0 (1986=100). This was the highest reading for the National Federation of Independent Business index since August, but it remained 2.7 points below year-ago levels. Six of ten index components improved during the month, led by expected real sales, plans to increase employment, and current inventories. Declines were observed in indices for expected economic conditions, planned capital investments, and expected credit conditions. The press release noted that business owners “were still frustrated by the lack of qualified workers.”
Other U.S. economic data released over the past week:
- Jobless Claims (Week ending December 6, 2025, First-Time Claims, seasonally adjusted): 236,000 (+44,000 vs. the previous week, -3,000 vs. the same week a year earlier). 4-week moving average: 216,750 (-3.2% vs. the same week a year earlier).
- Wholesale Trade (September 2025, Merchant Wholesaler Inventories, seasonally adjusted): $911.5 billion (+0.5% vs. August 2025; +1.8% vs. September 2024).
- Monthly Treasury Statement (November 2025, FY2026 Year-to-Date Federal Government Budget Deficit): -$457.6 billion (-26.7% vs. 1st 2 months of FY2025).
The opinions expressed here are not necessarily those of Kevin’s current employer. No endorsements are implied.
What We Learned About the U.S. Economy Last Week 