Economy Statement for the Treasury Borrowing Advisory Committee

IntroductionThe U.S. economy remains resilient. While the picture of economic activity last quarter is somewhat obscured by the shutdown-related delay of official government statistics – as well as some missing data for October – economic data received through January 30, 2026 suggest that growth remained solid in 4Q25, with strong consumer demand and business investment in equipment and artificial intelligence. Meanwhile, labor supply and labor demand appear to be roughly in balance – and while hiring rates remain concerningly low, layoff rates are also low, suggesting that firms are delaying major labor decisions and achieving output growth via productivity improvements. Investment in and adoption of artificial intelligence may be contributing to the high productivity growth rates that the U.S. economy saw in 2Q25 and 3Q25. Turning to inflation, core price pressures eased in 4Q25. Monthly core goods prices were flat on average, and inflation for rent of housing slowed further.