As we step into 2026, the U.S. economy is sending clear, yet mixed, signals. The final months of 2025 revealed a landscape of consumer resilience shadowed by growing caution, a cooling labor market, and bold policy proposals aimed at critical pain points. Let's break down the key trends that closed out last year and what they might mean for the months ahead.
Holiday Spending: A Moderate Boost with a Debt Hangover
The 2025 holiday season showcased the enduring strength of the American consumer, but with a clear digital tilt and emerging concerns.
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The Numbers: According to Visa, overall holiday retail spending grew 4.2% year-over-year. The standout was ecommerce, jumping 7.8%, though in-store purchases still made up 73% of total volume.
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Category Spotlight: Electronics (+5.8%) and apparel (+5.3%) led the gains. However, home-related spending was soft, with furniture barely growing and building materials declining.
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The 2026 Caution: Much of this spending was fueled by credit cards and "buy-now-pay-later" plans. The resulting rise in consumer debt is a likely catalyst for a spending pullback in early 2026, as households focus on balance sheets.
The Labor Market: A Year of Cooling Ends with Soft Gains
The jobs report for December capped off the slowest year of hiring since 2020, with only 584,000 jobs added in all of 2025.
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December's Slowdown: The economy added just 50,000 jobs, missing forecasts. Sectors like restaurants and healthcare saw gains, but retail shed 25,000 positions.
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A Silver Lining? The unemployment rate ticked down slightly to 4.4%, and wages grew a solid 3.8% annually—good news for those employed, but a sign of a less dynamic market overall.
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The Takeaway: The labor market is cooling in an "orderly" fashion. The key question for 2026 is whether this softness stabilizes or accelerates.
Policy Shake-Up: A Double-Barreled Approach to Housing
In a significant move, two major proposals targeted housing affordability, sparking immediate market reactions and debate.
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The $200 Billion Mortgage Push: President Trump announced a plan to direct Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds. The goal? To lower borrowing costs. Markets reacted swiftly, with the average 30-year fixed rate briefly falling to near 6%, its lowest since early 2023.
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A Ban on Institutional Buyers? A separate social media announcement proposed banning large Wall Street firms from buying single-family homes. While light on details, the aim is to reduce competition for individual buyers. Industry groups like the National Association of REALTORS® welcomed the focus on affordability but urged solutions that also expand supply.
The Consumer Mindset: A K-Shaped Reality
The New York Fed's survey captured the nation's economic anxiety perfectly:
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Pessimism on Jobs: Consumers are more worried about job loss (perceived probability hit 15.2%, the highest since April) and feel it would be harder to find a new one.
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Optimism on Finances: Paradoxically, fewer people felt worse off financially than a year ago, and more were optimistic about their future finances.
This split suggests a "K-shaped" reality: even amid stock market highs, anxiety over job security is rising, creating a diverging experience across the economy.
The Bottom Line for 2026
The closing chapter of 2025 set the stage for a nuanced 2026. We're looking at a consumer potentially tapped out after the holidays, a job market that's lost its robust momentum, and high-stakes policy experiments in the critical housing sector. Buckle up—the new year promises to be another fascinating economic ride.
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