As 2025 concludes, the Federal Reserve has implemented its final interest rate cut of the year, reducing rates by 0.25 percentage points. The decision comes after a year marked by two distinct phases in inflation and labor market trends. Early in 2025, uncertainty about national policy and minimal changes in inflation and employment figures led to no adjustments in interest rates.
However, conditions shifted in the latter half of the year as the labor market began to cool. In August, U.S. unemployment rose to 4.3 percent—the highest since 2021—and job growth fell short of expectations with only 22,000 jobs added instead of the projected 75,000. The Bureau of Labor Statistics later revised this figure to show a loss of 4,000 jobs for that month.
To address these developments and stimulate job growth—one aspect of its dual mandate—the Federal Reserve lowered interest rates by 0.25 percentage points starting in September and continued with additional cuts in October and December.
These federal decisions have nationwide effects but impact Florida differently due to its stronger labor market performance compared to national averages. Since September’s rate cuts began, Florida’s unemployment rate stands at 3.9 percent while the national rate has increased to 4.4 percent. Job growth in Florida also outpaces the U.S., with a state increase of 0.44 percent versus a national rise of 0.43 percent.
The recent federal rate cut is expected to provide some stimulus to Florida’s already robust labor market but is unlikely to significantly lower inflation, which currently stands at three percent nationally—meaning prices are three percent higher than one year ago.
Lower interest rates affect both savers and borrowers: returns on savings accounts decrease while borrowing costs for credit cards, car loans, mortgages, and other loans become cheaper. This can encourage spending among consumers and businesses, potentially boosting economic activity and supporting job creation; however, increased demand may also lead to upward pressure on prices.
The Federal Reserve appears more focused on supporting employment than curbing inflation at this time—a stance reflected by three consecutive rate cuts over recent months.
Looking ahead into next year, indications from the Federal Reserve suggest there will likely be just one further rate cut in 2026 as they expect tariffs’ influence on prices will be limited mainly to a “one-time price increase.” Fed Chair Jerome Powell commented: “There’s no risk-free path.”
Businesses seeking detailed forecasts for planning purposes can attend the Florida Chamber Foundation’s virtual Florida Economic Outlook & Jobs Solution Summit on January 29 from 1:00pm-4:00pm ET. The event will feature an exclusive forecast for Florida’s economy in 2026 along with a national outlook from keynote speaker Dr. Sean Snaith (University of Central Florida) as well as analysis on workforce needs, population trends, housing issues and more.
For ongoing updates regarding interest rates, inflation data or labor statistics relevant to business operations within Florida visit TheFloridaScorecard.org or subscribe to the Foundation’s “Florida By the Numbers” economic updates for comprehensive analysis.
“There’s no risk-free path.” — Fed Chair Jerome Powell
“At the Florida Chamber Foundation, we know the best way your business can plan for the coming year is to be armed with data and projections on Florida’s and the national economy.” — Florida Chamber Foundation
For questions about this update or involvement opportunities related to research securing Florida’s future contact Sheridan Morby.
