The U.S. Department of the Treasury said the U.S. economy entered 2026 on “firm footing,” citing solid growth, easing inflation pressures, and generally stable labor markets in an economy statement released Monday ahead of its Quarterly Refunding meetings.
The statement, prepared for the Treasury Borrowing Advisory Committee (TBAC), said economic data available through January 30 suggest growth remained solid in the fourth quarter of 2025 despite reporting delays caused by last fall’s government shutdown.
Treasury noted that the most recent official data show real GDP grew at a 4.4% annual rate in the third quarter of 2025, accelerating from 3.8% in the second quarter, driven by stronger consumer spending, government expenditures, and business investment. Private-sector forecasters cited by Treasury projected 4Q25 GDP growth of 2.2% at an annual rate.
Treasury pointed to continued business investment—particularly in equipment and artificial intelligence—as a key growth driver. Shipments of core capital goods averaged $77.9 billion in October and November, a 6.7% annualized increase from the prior quarter, according to Census Bureau data referenced in the statement.
Labor supply and demand appear “roughly in balance,” Treasury said. The unemployment rate averaged 4.5% in November and December, up slightly from 4.3% in the third quarter, a change Treasury attributed to slower hiring rather than rising layoffs. Prime-age labor force participation averaged 83.8% late last year, remaining above pre-pandemic levels.
Inflation pressures eased further late in 2025, according to Treasury. Core consumer price inflation averaged 0.1% per month in the fourth quarter, down from 0.3% in the prior quarter, while twelve-month core inflation slowed to 2.6% by December. Housing-related inflation continued to cool, with rent inflation averaging 0.2% per month in the fourth quarter.
Sources. Bureau of Labor Statistics, Consumer Price Index – December 2025. Bureau of Economic Analysis, Personal Income and Outlays, November 2025.
Treasury also cited declining recession risk as a sign of resilience, noting that the Wall Street Journal’s January survey of economists put the probability of a recession in the next year at 27%, the lowest reading since early 2025.
As previously reported by The Dallas Express, the Treasury on Monday projected $574 billion in borrowing for the first quarter of 2026, with the economy statement released as part of the same Quarterly Refunding cycle.
Treasury said additional details related to its Quarterly Refunding will be released Wednesday morning.
