Research
February 17, 2026
Economic outlook
Resilient growth and mixed signals amid labor market headwinds
The U.S. economy continues to send mixed signals—showing unexpectedly strong growth, at least for now, even as the labor market slows dramatically. When people are employed and experiencing solid wage gains, consumer spending tends to hold up, including discretionary spending like dining out. However, the softening labor market represents the most significant downside risk ahead—not just for restaurants, but for the broader macroeconomic outlook.
Indeed, the abrupt slowdown in job growth in recent months has been notable. The U.S. economy generated just 181,000 jobs on net in 2025, well below the 2.52 million in 2023 and 1.46 million in 2024. We predict growth of 750,000 nonfarm payroll workers in 2026. Yet, the unemployment rate remains historically low. Wage growth also remains solid, albeit with some moderation.
If job creation continues to remain soft, it could weigh on consumer confidence and spending, particularly in sectors sensitive to discretionary income. For now, however, the economy benefits from solid wage growth and low unemployment, even as risks mount.
Spending continues to buoy the economy. Real GDP grew at a robust 4.4% annual rate in the third quarter, with fourth‑quarter growth expected to be around 3.5%. Looking ahead, the National Restaurant Association forecasts U.S. economic growth of 2.3% in 2025 and 2.8% in 2026. We anticipate meaningful tailwinds this year, including new tax incentives for consumers and businesses, as well as a modest easing in interest rates later in 2026. There is also hope for greater policy clarity, reducing some of the uncertainties seen in 2025 that held back activity.
For its part, the Federal Reserve remains in a wait‑and‑see posture as it evaluates incoming data. Strong top‑line growth is increasingly balanced against signs of labor‑market softening, prompting the Federal Open Market Committee to cut interest rates at its last three meetings of 2025 amid concerns about slowing job creation and broader momentum. Further easing remains possible in the year ahead. Lower borrowing costs should help reduce the cost of capital for restaurant operators and support firmer consumer spending.
This article presents the latest trends in key economic indicators as well as an outlook for the year ahead. Visit this page throughout the year for the Association’s latest projections for the U.S. economy.
Job growth slowed significantly in recent months
The U.S. economy added 130,000 nonfarm payroll jobs in January, far surpassing the consensus estimate of 55,000. This marked the fourth gain in the past six months. Alongside the latest figures, the Bureau of Labor Statistics issued substantial benchmark revisions, reducing previously reported job totals by 553,000 for 2024 and 487,000 for 2025. Overall, the data continues to point to a cooling labor market, with payrolls increasing by 2.52 million in 2023, 1.46 million in 2024, and just 181,000 in 2025.
On a more encouraging note, total employment rose to 164.52 million, a new record. As such, even with recent weaknesses, the U.S. economy has demonstrated surprising resilience over the past few years, navigating multiple headwinds and an uncertain policy environment. However, the recent softening in labor market conditions could challenge the prevailing narrative of post‑pandemic strength. Steady employment and wage growth have been key drivers of consumer spending, and any sustained weakness could weigh on economic activity.
Unemployment rate remains historically low
The unemployment rate inched down to 4.3% in January, the lowest since August. The number of unemployed individuals decreased from 7.50 million in December to 7.36 million in January. At the same time, the labor force participation rate edged back up from 62.4% in December to 62.5% in January. Overall, labor force participation has essentially stalled over the past three years, averaging 62.6% since January 2023.
Economy projected to add 750,000 jobs in 2026
Job growth slowed materially in 2025, adding only 181,000 nonfarm payroll workers, the weakest annual job growth since 2020. Yet, there will be enough tailwinds in the economy for the labor market to stabilize and pick up somewhat in 2026. The national economy is projected to add a net 750,000 jobs during 2026. Despite more sluggish job growth in 2025 and 2026, it should represent the sixth consecutive year of nonfarm payroll employment growth, adding the slowdown, 2025 is expected to represent the 5th consecutive year of job growth, adding roughly 16.7 million jobs since the end of 2020.
Personal income growth expected to slow
Wage growth is expected to continue in 2025, but decelerating employment gains will likely dampen the increase in aggregate income. Disposable personal income – a key driver of restaurant sales – is projected to increase at an inflation-adjusted rate of 1.2% in 2026. While still positive, that would be down from stronger growth of 2.9% in 2024 and 1.6% in 2025.
Inflation remains sticky but should moderate in 2026
After hitting a peak of 8.0% in 2022, the strongest annual growth in inflation in four decades, consumer prices have continued to moderate, albeit more slowly than some might prefer. Although progress has been made toward reaching the Federal Reserve’s 2% target level, prices remain sticky in many areas. Consumer prices grew 2.6% at the annual average in 2025, but there was some acceleration mid-year, largely from tariffs. The National Restaurant Association expects the CPI to ease to 2.4% in 2026.
Economic growth remains surprisingly resilient
Overall, the U.S. economy has remained surprisingly resilient despite numerous headwinds and a lot of “noise” in the data in 2025. Real Gross Domestic Product (GDP) should rise by 2.3% at the annual rate in 2025, but the National Restaurant Association forecasts 2.8% growth in 2026.
Indeed, the abrupt slowdown in job growth in recent months has been notable. The U.S. economy generated just 181,000 jobs on net in 2025, well below the 2.52 million in 2023 and 1.46 million in 2024. We predict growth of 750,000 nonfarm payroll workers in 2026. Yet, the unemployment rate remains historically low. Wage growth also remains solid, albeit with some moderation.
If job creation continues to remain soft, it could weigh on consumer confidence and spending, particularly in sectors sensitive to discretionary income. For now, however, the economy benefits from solid wage growth and low unemployment, even as risks mount.
Spending continues to buoy the economy. Real GDP grew at a robust 4.4% annual rate in the third quarter, with fourth‑quarter growth expected to be around 3.5%. Looking ahead, the National Restaurant Association forecasts U.S. economic growth of 2.3% in 2025 and 2.8% in 2026. We anticipate meaningful tailwinds this year, including new tax incentives for consumers and businesses, as well as a modest easing in interest rates later in 2026. There is also hope for greater policy clarity, reducing some of the uncertainties seen in 2025 that held back activity.
For its part, the Federal Reserve remains in a wait‑and‑see posture as it evaluates incoming data. Strong top‑line growth is increasingly balanced against signs of labor‑market softening, prompting the Federal Open Market Committee to cut interest rates at its last three meetings of 2025 amid concerns about slowing job creation and broader momentum. Further easing remains possible in the year ahead. Lower borrowing costs should help reduce the cost of capital for restaurant operators and support firmer consumer spending.
This article presents the latest trends in key economic indicators as well as an outlook for the year ahead. Visit this page throughout the year for the Association’s latest projections for the U.S. economy.
Job growth slowed significantly in recent months
The U.S. economy added 130,000 nonfarm payroll jobs in January, far surpassing the consensus estimate of 55,000. This marked the fourth gain in the past six months. Alongside the latest figures, the Bureau of Labor Statistics issued substantial benchmark revisions, reducing previously reported job totals by 553,000 for 2024 and 487,000 for 2025. Overall, the data continues to point to a cooling labor market, with payrolls increasing by 2.52 million in 2023, 1.46 million in 2024, and just 181,000 in 2025.
On a more encouraging note, total employment rose to 164.52 million, a new record. As such, even with recent weaknesses, the U.S. economy has demonstrated surprising resilience over the past few years, navigating multiple headwinds and an uncertain policy environment. However, the recent softening in labor market conditions could challenge the prevailing narrative of post‑pandemic strength. Steady employment and wage growth have been key drivers of consumer spending, and any sustained weakness could weigh on economic activity.
Unemployment rate remains historically low
The unemployment rate inched down to 4.3% in January, the lowest since August. The number of unemployed individuals decreased from 7.50 million in December to 7.36 million in January. At the same time, the labor force participation rate edged back up from 62.4% in December to 62.5% in January. Overall, labor force participation has essentially stalled over the past three years, averaging 62.6% since January 2023.
Economy projected to add 750,000 jobs in 2026
Job growth slowed materially in 2025, adding only 181,000 nonfarm payroll workers, the weakest annual job growth since 2020. Yet, there will be enough tailwinds in the economy for the labor market to stabilize and pick up somewhat in 2026. The national economy is projected to add a net 750,000 jobs during 2026. Despite more sluggish job growth in 2025 and 2026, it should represent the sixth consecutive year of nonfarm payroll employment growth, adding the slowdown, 2025 is expected to represent the 5th consecutive year of job growth, adding roughly 16.7 million jobs since the end of 2020.
Personal income growth expected to slow
Wage growth is expected to continue in 2025, but decelerating employment gains will likely dampen the increase in aggregate income. Disposable personal income – a key driver of restaurant sales – is projected to increase at an inflation-adjusted rate of 1.2% in 2026. While still positive, that would be down from stronger growth of 2.9% in 2024 and 1.6% in 2025.
Inflation remains sticky but should moderate in 2026
After hitting a peak of 8.0% in 2022, the strongest annual growth in inflation in four decades, consumer prices have continued to moderate, albeit more slowly than some might prefer. Although progress has been made toward reaching the Federal Reserve’s 2% target level, prices remain sticky in many areas. Consumer prices grew 2.6% at the annual average in 2025, but there was some acceleration mid-year, largely from tariffs. The National Restaurant Association expects the CPI to ease to 2.4% in 2026.
Economic growth remains surprisingly resilient
Overall, the U.S. economy has remained surprisingly resilient despite numerous headwinds and a lot of “noise” in the data in 2025. Real Gross Domestic Product (GDP) should rise by 2.3% at the annual rate in 2025, but the National Restaurant Association forecasts 2.8% growth in 2026.