Research
April 08, 2025
Economic outlook
Outlook for the economy dampened amid rising uncertainty.
Consumer strength has long served as a stabilizing force in the U.S. economy, helping it navigate multiple headwinds and stave off recessionary pressures in recent years. However, the early months of 2025 brought a wave of uncertainty that is beginning to weigh more heavily on both business and consumer confidence.
Policy-related concerns—particularly surrounding tariffs and their potential ripple effects—have further dampened sentiment. As a result, the Association has revised its economic forecast downward from earlier this year, when optimism prevailed on the back of resilient consumer activity.
While these uncertainties have not yet fully registered in official economic data, recent declines in business and consumer sentiment suggest a slowdown is increasingly likely.
Accordingly, the Association’s updated outlook includes lower projections for GDP and employment growth, alongside slightly elevated expectations for inflation. While a very modest economic expansion remains our base case, recession risks are now notably higher.
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.
Labor market expansion remains intact
Although job growth was uneven in recent months, the labor market expansion showed little signs of stalling. Employers added an average of 152,000 jobs during the last 3 months, which is only slightly below the average monthly rate of job growth during 2024.
Job growth varies by state
While the national economy is more than 7 million jobs (or 4.7%) above pre-pandemic employment levels, some states have yet to fully recover from early-pandemic job losses. Employment levels in states like Idaho (+14%), Utah (+13%), Texas (+10%) and Florida (+10%) are well above February 2020 readings. At the other end of the spectrum, the employment base in 3 states and the District of Columbia remains below pre-pandemic readings.
Unemployment rate remains historically low
The jobless rate ticked slightly higher during the second half of 2024, but continues to suggest that the economy is at or near full employment. The national unemployment rate stood at 4.2% in March, which represented the 41st consecutive month at a level of 4.2% or lower.
9 states have jobless rates of 3% or lower
Labor market trends vary significant by state. Nine states have unemployment rates of 3% or lower – led by South Dakota (1.9%), Vermont (2.6%) and North Dakota (2.6%). Meanwhile, Nevada (5.8%), California (5.4%), Michigan (5.4%) and the District of Columbia (5.4%) have the highest jobless rates.
Economy projected to add 1 million jobs in 2025
Job growth slowed in recent months, but the labor market expansion is expected to continue in 2025 – albeit at a more modest pace. The national economy is projected to add a net 1 million jobs during 2025, which would be down from the 2 million jobs added during 2024. Despite the slowdown, 2025 is expected to represent the 5th consecutive year of job growth, with total gains in excess of 17 million jobs.
Personal income growth expected to slow in 2025
After the income support programs enacted during the pandemic ran their course, household income was buoyed by the healthy labor market. Looking ahead, 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 1.4% in 2025. While still positive, that would be down from a stronger 2.7% gain in 2024.
Inflation remains sticky
After hitting a peak of 9.1% in mid-2022 – the strongest 12-month increase in 4 decades – growth in consumer prices moderated in the months that followed. Although progress has been made toward reaching the Federal Reserve’s 2% target level, prices remain sticky in many areas. Adding to the uncertainty is the potential impact that tariffs will have on consumer prices. As a result, the National Restaurant Association expects the CPI to increase 3.6% in 2025 on an average annual basis, which would be up from the 3.0% gain registered in 2024.
Economic growth expected to slow in 2025
Overall, the expectation is that the U.S. economy will slow significantly in 2025. Real Gross Domestic Product (GDP) – the value of goods and services produced in the United States – is projected to increase at a 0.9% rate in 2025. That would be down from the gains of nearly 3% in both 2023 and 2024, and would represent the weakest annual gain since 2020.
Policy-related concerns—particularly surrounding tariffs and their potential ripple effects—have further dampened sentiment. As a result, the Association has revised its economic forecast downward from earlier this year, when optimism prevailed on the back of resilient consumer activity.
While these uncertainties have not yet fully registered in official economic data, recent declines in business and consumer sentiment suggest a slowdown is increasingly likely.
Accordingly, the Association’s updated outlook includes lower projections for GDP and employment growth, alongside slightly elevated expectations for inflation. While a very modest economic expansion remains our base case, recession risks are now notably higher.
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.
Labor market expansion remains intact
Although job growth was uneven in recent months, the labor market expansion showed little signs of stalling. Employers added an average of 152,000 jobs during the last 3 months, which is only slightly below the average monthly rate of job growth during 2024.
Job growth varies by state
While the national economy is more than 7 million jobs (or 4.7%) above pre-pandemic employment levels, some states have yet to fully recover from early-pandemic job losses. Employment levels in states like Idaho (+14%), Utah (+13%), Texas (+10%) and Florida (+10%) are well above February 2020 readings. At the other end of the spectrum, the employment base in 3 states and the District of Columbia remains below pre-pandemic readings.
Unemployment rate remains historically low
The jobless rate ticked slightly higher during the second half of 2024, but continues to suggest that the economy is at or near full employment. The national unemployment rate stood at 4.2% in March, which represented the 41st consecutive month at a level of 4.2% or lower.
9 states have jobless rates of 3% or lower
Labor market trends vary significant by state. Nine states have unemployment rates of 3% or lower – led by South Dakota (1.9%), Vermont (2.6%) and North Dakota (2.6%). Meanwhile, Nevada (5.8%), California (5.4%), Michigan (5.4%) and the District of Columbia (5.4%) have the highest jobless rates.
Economy projected to add 1 million jobs in 2025
Job growth slowed in recent months, but the labor market expansion is expected to continue in 2025 – albeit at a more modest pace. The national economy is projected to add a net 1 million jobs during 2025, which would be down from the 2 million jobs added during 2024. Despite the slowdown, 2025 is expected to represent the 5th consecutive year of job growth, with total gains in excess of 17 million jobs.
Personal income growth expected to slow in 2025
After the income support programs enacted during the pandemic ran their course, household income was buoyed by the healthy labor market. Looking ahead, 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 1.4% in 2025. While still positive, that would be down from a stronger 2.7% gain in 2024.
Inflation remains sticky
After hitting a peak of 9.1% in mid-2022 – the strongest 12-month increase in 4 decades – growth in consumer prices moderated in the months that followed. Although progress has been made toward reaching the Federal Reserve’s 2% target level, prices remain sticky in many areas. Adding to the uncertainty is the potential impact that tariffs will have on consumer prices. As a result, the National Restaurant Association expects the CPI to increase 3.6% in 2025 on an average annual basis, which would be up from the 3.0% gain registered in 2024.
Economic growth expected to slow in 2025
Overall, the expectation is that the U.S. economy will slow significantly in 2025. Real Gross Domestic Product (GDP) – the value of goods and services produced in the United States – is projected to increase at a 0.9% rate in 2025. That would be down from the gains of nearly 3% in both 2023 and 2024, and would represent the weakest annual gain since 2020.