Economic Monitor – Weekly Commentary
by Eugenio Alemán

Uncertainty persistence versus economic resiliency

October 3, 2025

Chief Economist Eugenio J. Alemán discusses current economic conditions.

The US economy has had to endure many changes in policies that have tested its resilience during the year. In this environment, which has been ever-changing, two sectors of the economy have kept the economy above ground. The first one is the US consumer, which, as we know, is not only the largest component of GDP but also the most stable one. Not that consumers have not been challenged during the year, because they have, especially at the middle to low-income levels. However, at the upper middle- and higher-income levels, an accumulation of savings during the early part of the year, as well as the surge in wealth due to the strength of the US stock market, has provided enough support to keep demand going.

It was also true that up to the early part of the summer, employment growth supported consumption at every level of income, while the rate of unemployment remained at what is typically called full employment. That is, having a job meant that, even if your situation wasn’t optimal, it was going to allow you to continue to pay your bills and keep the ball rolling. The second sector that has remained strong is nonresidential investment, a sector that has been booming due to the recent construction of so many new factories. These factories are now in the process of being stocked with the technology and equipment needed for operations. Also, the recent acceleration in investment in AI, has energized not only the stock market, but also real investment in information processing equipment and software.

However, the recent downward revision of employment numbers, weakening of the private employment ADP survey number, and the increase in the rate of unemployment are starting to raise eyebrows about how much longer consumers can keep up the current pace of demand. In fact, despite a recent uptick, small business hiring plans have been on a steady decline since 2022 and remain at historically low levels. This week’s consumer confidence data revealed a further increase in the number of people who believe jobs are hard to get, reaching levels not seen since 2021. Meanwhile, the share of respondents who view jobs as “plentiful” dropped to 26.9%, the lowest since February 2021.

Both ISM employment indices have remained in contraction for several months and continue to signal weakness in labor demand. Additionally, the three-month average of job openings has fallen to its lowest level since February 2021, while the hires average is now at its lowest point since the pandemic, or 2015, if we exclude COVID-related distortions.

If this wasn’t enough, the current government shutdown is going to add to this uncertainty, especially during a period when labor indicators are all blinking yellow. We know that not many people have confidence in the job numbers being published today by US statistical agencies, but the numbers being published by private agencies are not much better. At the same time, the majority of the numbers being produced by private companies/institutes are partial, mostly soft data, and they seldom have broad-base coverage, as is the case for those reported by US statistical agencies.

Yes, they are partially useful in trying to make sense of what is happening in the US economy, and we use them as complementary to official numbers. But they lack the depth, breadth, and insight official numbers provide for decision-making purposes, even if official numbers are prone to large revisions, as we have seen over the last several months.

In summary, although the US economy has remained resilient in the face of increased uncertainty regarding new policies, today, more than ever, economic decision makers need more data, not less, and the federal government shutdown is not making things easy. Thus, we hope that the political class realizes the risks posed to the economy and comes to a negotiated agreement on the need to reopen the government, even if it is only to allow our statistical agencies to release badly needed economic indicators.

That is, our view is that statistical agencies’ work is essential, and we should keep them open even during government shutdown periods.

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Economic and market conditions are subject to change.

Opinions are those of Investment Strategy and not necessarily those Raymond James and are subject to change without notice the information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. There is no assurance any of the trends mentioned will continue or forecasts will occur last performance may not be indicative of future results.

Consumer Price Index is a measure of inflation compiled by the U.S. Bureau of Labor Studies. Currencies investing are generally considered speculative because of the significant potential for investment loss. Their markets are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

The National Federation of Independent Business (NFIB) Small Business Optimism Index is a composite of ten seasonally adjusted components. It provides a indication of the health of small businesses in the U.S., which account of roughly 50% of the nation's private workforce.

The producer price index is a price index that measures the average changes in prices received by domestic producers for their output. Its importance is being undermined by the steady decline in manufactured goods as a share of spending.

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