Economic Developments Report for February 2025

This document is an economic developments report for February 2025, detailing the current state of the economy as it enters the new year. It outlines the strong momentum indicated by recent economic data, including GDP growth and labor market conditions. The report presents a revised GDP outlook of 2.2 percent for Q4/Q4 in 2025, alongside an upward adjustment in the inflation forecast, expecting the Consumer Price Index to reach 2.8 percent. The document also discusses the impact of a 10 percent tariff on imports from China, which has slightly reduced the GDP forecast and increased inflation expectations. Additionally, it highlights the firming labor market, with a notable decline in the unemployment rate to 4.0 percent. The report addresses the uncertainty surrounding trade policies and their potential effects on mortgage rates, emphasizing that the economic outlook remains subject to risks. Overall, it provides a comprehensive view of the economic landscape as of early 2025.