But the top-line numbers mask signs of cooling.<\/p>\n
Unemployment<\/a> is rising and inflation remains elevated. Wage growth is easing and households are saving less than they did earlier in the year, suggesting that incomes aren\u2019t keeping pace with rising costs.<\/p>\n \u201cWhile top level growth of 4.3 percent looks good prima facie, there are some troubling signs when you pop open the hood,\u201d Boston College economist Brian Bethune said in a note.<\/p>\n Still, the probability of recession remains low \u2014 30 percent, according to economists tracked by Bloomberg, down from 40 percent after President Trump rolled out his \u201cLiberation Day\u201d tariffs in April. <\/p>\n Jobs: The labor market has been sluggish and is expected to remain so next year.<\/p>\n Employers added more than a million fewer jobs in the first 11 months of the year than they did last year. That\u2019s despite GDP growth running near its top sustainable pace.<\/p>\n While layoffs have remained relatively tame, an influx of job seekers nudged US unemployment up to 4.6 percent in November, the highest since 2021. <\/p>\n Federal Reserve chair Jerome Powell doesn\u2019t see the jobless rate climbing much further, an assessment shared by most private forecasters. <\/p>\n \u201cWe won\u2019t see any kind of a sharper downturn\u201d in employment, he told reporters<\/a> earlier this month.<\/p>\n The Fed\u2019s optimism stems from its belief that interest rates are now low enough to steady the labor market. (Policymakers have cut their benchmark lending rate by 1.75 percentage points to a range of 3.5\u20133.75 percent since September 2024.)<\/p>\n AI: Artificial intelligence promises to reshape the economy, but its impact on workers remains a big unknown.<\/p>\n Products such as ChatGPT and Google Gemini improved dramatically, speeding adoption by businesses and consumers. Spending on AI hardware, software, and data centers accelerated economic growth. And AI exuberance spilled into the stock market, raising concerns that a bubble is about to burst.<\/p>\n More importantly, AI poses the threat of massive job losses. Many firms have already curtailed hiring as they assess how they will deploy the technology. Some have laid off workers in anticipation of more widespread AI use.<\/p>\n \u201cDespite concerns about widespread job losses, AI adoption is expected to have only a modest and relatively temporary impact on employment levels,\u201d Goldman Sachs researchers wrote in an August report<\/a>.<\/p>\n At the other extreme, Dario Amodei, chief executive of AI-maker Anthropic, has said AI could eliminate half of all entry-level white-collar jobs and push unemployment to 10\u201320 percent within five years.<\/p>\n \u201cWithout intervention, it\u2019s hard to imagine that there won\u2019t be some significant job impact there. And my worry is that it will be broad, and it will be faster than what we\u2019ve seen with previous technology,\u201d Amodei said in an interview<\/a> that CBS News\u2019 \u201c60 Minutes\u201d aired in November.<\/p>\n Tariffs: All of this \u2014 a cooling labor market and a fast-moving AI transition \u2014 is unfolding against the backdrop of disruptive trade policy.<\/p>\n Economists initially warned that Trump\u2019s tariffs<\/a> \u2014 a 10 percent baseline import tax plus rates of up to 40 percent on nearly all US trading partners \u2014 would light a fire under inflation or cause a recession<\/a>. It didn\u2019t happen. The president backed off some tariffs and postponed others, and companies rushed to build up inventories while absorbing some or all of their increased costs.<\/p>\n In 2026, tariffs are expected to be a modest drag on GDP. The Conference Board forecasts that year-over-year growth will slow to 1.3 percent in the fourth quarter of next year, down from 1.7 percent this year.<\/p>\n Tariffs will also keep inflation higher than it would otherwise be as US firms pass on more of their increased costs to customers. In September, the Fed projected<\/a> that its preferred inflation gauge<\/a> \u2014 which excludes often volatile food and energy costs \u2014 would rise 2.6 percent next year, up from a June estimate of 2.4 percent. The central bank\u2019s target is 2 percent. <\/p>\n Final thought: A weak labor market, AI disruption, and tariff headwinds are a recipe for uncertainty but not an imminent recession.<\/p>\n But they may well leave Americans frustrated with a slow-moving economy and high prices, especially if tariffs don\u2019t yield the gains in US jobs that Trump promised. If so, the midterm elections could deliver a harsher-than-usual rebuke to Republicans as the party in power.<\/p>\n Welcome to 2026. Don\u2019t be surprised if it feels a lot like 2025.<\/p>\n \u201cThe pessimists have just been wrong for so long that people are kind of tired of that schtick.\u201d<\/p>\n \u2014 Stock market strategist Ed Yardeni. None of the 21 Wall Street prognosticators surveyed by Bloomberg News is predicting<\/a> a market decline in 2026. <\/p>\n Crying foul<\/a>: How a developer\u2019s lawsuit against Cambridge aims to topple affordable housing rules across Massachusetts.<\/p>\n Secret to success<\/a>: Warren Buffett\u2019s greatest asset is his character, writes biographer Roger Lowenstein.<\/p>\n Dreambuilder<\/a>: The family foundation of Bob Marr, the construction firm owner who died in 2022, has pledged $6.5 million to help make the Fieldhouse+ project in Dorchester a reality.<\/p>\n Legal twist<\/a>: The Trump administration has launched investigations into the use of diversity initiatives in hiring and promotion at major US companies, built on the novel use of a federal law meant to punish businesses that cheat the government.<\/p>\n Slamming the door<\/a>: What America might look like with zero immigration.<\/p>\n Change of address<\/a>: Google is rolling out a new feature that allows users to change their @gmail.com addresses without losing their data.<\/p>\n $400,000<\/p>\n \u2014 The value of lobster meat that vanished<\/a> en route from a warehouse in Taunton to Costco locations in the Midwest.<\/p>\n It\u2019s been a good year for stocks, though not quite as good as 2023 or 2024.<\/p>\n Going into the final three trading days of 2025, the Standard & Poor\u2019s 500 index had returned 19 percent including dividends. The tech-heavy Nasdaq\u2019s return was 23 percent. For all of last year, the indexes returned 25 percent and 30 percent, respectively.<\/p>\n But even with all the focus on the AI-fueled stock rally, the big gains were found elsewhere this year.<\/p>\n Silver soared 174 percent through Friday, outshining gold, which gained 73. Investors have plowed into both metals as a hedge<\/a> against political uncertainty and inflation. Silver\u2019s surge also reflects demand from industrial users.<\/p>\n On the downside, the spot price of crude oil at the Cushing, Okla., hub dropped 18 percent. Supply has been steadier than forecast and demand has been weaker than hoped.<\/p>\n After setting a record in October, the bitcoin rally \u2014 sparked in part by demand from new exchange traded funds \u2014 has faltered. The cryptocurrency was off 6.3 percent for the year as of Friday as investors moved their money to gold, silver, and other better-performing assets. <\/p>\n As always, please remember that past performance is not indicative of future results.<\/p>\n \ud83d\udcc6 On this date in 1891, Thomas Edison patented a wireless telegraphy system<\/a> \u2014 based on electromagnetic induction and conduction \u2014 that anticipated some practical uses of cable-free communication, but it was distinct from the radio technologies developed a decade later.<\/p>\n \ud83d\udc4b Thanks for reading. Trendlines will be back next Monday. Have a safe and happy New Year! <\/p>\n \u270d\ud83c\udffc If someone sent you this newsletter, you can sign up for your own copy<\/a>.<\/p>\n![\"Dario](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/12\/7PLYDGPTLQ2EWRBLYRJCGAPHP4.jpg\")
Dario Amodei, chief executive and cofounder of AI-maker Anthropic. KARSTEN MORAN\/NYT<\/p>\n![\"US](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/12\/BYSA7TNZLMSDPUJHOKFCI2OJVU.jpg\")
US companies are expected to pass along more of the costs of tariffs to their customers in 2026.MAGGIE SHANNON\/NYT<\/p>\n![\"The](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/12\/BK5F3KFPZ6E6YCFFZYE7TRXEIM.jpg\")
The price of silver has more than doubled this year.Wei Leng Tay\/Bloomberg<\/p>\n