The U.S. economy has faced considerable turbulence through 2025, with mounting challenges impacting both businesses and consumers across multiple fronts. Here’s a comprehensive look at the year’s most significant negative economic developments:

Massive Corporate Layoffs Sweep Across Industries
The first 9 months of 2025 has witnessed one of the largest waves of corporate layoffs in recent years, with employers cutting nearly 950,000 jobs through September.

• UPS is cutting 48,000 positions, 14,000 in management and 34,000 in operations
• Amazon is eliminating 30,000 jobs
• Intel slashed up to 24,000 positions in one of tech’s most significant restructurings
• Nestle is cutting 16,000 positions
• Microsoft up to 15,000 employees
• Accenture: 11,000 positions
• Ford: 11,000 positions
• Novo Nordisk: 9,000 positions
• PwC: 5,600 positions
• Salesforce: 4,000 jobs
• Paramount up to 3,000 positions
• Lloyds Bank: 3,000 jobs
• Target: 1,800 corporate positions
• Applied Materials: 1,444 employees
• Kroger 1,000 employees
• Duke University: 600 staff members
• Meta: 600 employees

The tech sector alone has seen over 180,000 workers laid off across more than 400 companies globally.

The most recent time layoffs were this traumatic was in 2020 when the country’s current president was also in charge, gravely mishandling and underestimating the seriousness of the Covid-19 pandemic and thereby pushing the country into a near economic collapse.

Historic Dollar Devaluation
The U.S. dollar experienced its biggest loss since 1973, with the dollar index falling approximately 11% from January through June 2025. This historic freefall marked the end of a 15-year bull cycle that began in 2010 when President Barack Obama was credited with saving the country from the Great Recession that George Bush Jr. had plunged the American economy into.

The current president’s policies, his attacks on the Federal Reserve independence, and worries about the sustainability of Washington’s borrowing have undermined the dollar’s appeal as a safe bet. The dollar index – the value of the US Dollar compared to our trading partners – fell 10.8% in the first half of 2025. This means whatever $1 US could have bought at the beginning of the year it can now only buy about 89 cents worth of that.

Morgan Stanley Research estimates the U.S. currency could lose another 10% of its value by the end of 2026, as foreign investors put their investment dollars in other economies to reduce their U.S. asset exposure. This means by the end of next year, whatever $1 US could have bought at the beginning of January 2025, it could then only buy about 79 cents worth of that by the end of 2026.

Unprecedented Credit Rating Downgrade
On May 16, 2025, Moody’s Ratings downgraded the United States’ long-term issuer rating from AAA to AA1, stripping the America of its last perfect credit rating. Moody’s had maintained its AAA rating for the U.S. since 1917.

All three major credit rating agencies have now downgraded the United States from their highest rating—Standard & Poor’s in 2011, Fitch in 2023, and now Moody’s. The downgrade cited rising debt and interest costs “significantly higher than similarly rated sovereigns,” with projections showing U.S. federal debt could reach 134% of GDP by 2035.

Despite the $180 billion in claimed savings from the DOGE cuts in federal spending (originally, Elon Musk claimed $2 trillion would be cut), the United States, 2025 is on pace to end the year with a $1.8 trillion deficit, dead even with 2024, the highest deficit spending years in the last 20 years except for 2020 when the current president was in office and drove deficit spending to $3.1 trillion in 2020 and then President Joe Biden was elected president and lowered it to 2.5 trillion in 2021 and dropping it to $1.5 trillion one year later.

The rating downgrade resulted in raised borrowing costs over time, with higher rates on mortgages, credit cards, and personal loans.

Tariff Impact on Consumers
Tariffs enacted in 2025 are expected to raise consumer prices by approximately 2.3% in the short-run, meaning consumers will spend $3,800 per household on average in 2024 dollars for the same goods. Households at the bottom of the income distribution will see $1,700 in increased costs from the tariffs.

Corporations have shifted roughly two-thirds of tariff costs—approximately $592 billion out of $1.2 trillion in additional business costs—to consumers in the form of higher prices, according to S&P Global analysts.

Apparel prices have been hit particularly hard, rising 17% under current tariff policies, while product categories seeing major increases include furniture, car parts, electronics, and musical instruments. Certain foods that can’t be grown in the United States, such as coffee, bananas, avocados, pineapples, seafood, and more, are all seeing steep price increases.

Aggressive Immigration Policies Impact Prices
US immigration policies have impacted produce prices primarily by reducing the labor available for agriculture, which has lead to higher production costs for farmers and, consequently, higher prices for consumers. Stricter enforcement and deportations have decreased the workforce, especially for labor-intensive jobs like harvesting, forcing farmers to plant fewer crops, pay more for labor, or increase prices to cover higher costs, as well as increasing reliance on more expensive imports. In some cases, crops have gone unharvested and have been left rotting in the fields. 

Persistent Inflation Pressures
The Consumer Price Index rose 3.0% in September 2025 compared to a year earlier, up from 2.9% in August, marking inflation well above the Federal Reserve’s 2% target. Core inflation also registered at 3.0% annually.

Food prices increased 3.2% from August 2024 to August 2025, with grocery prices rising 2.7% annually—the fastest pace since August 2023. Electricity prices surged more than 6% year-over-year, driven largely by explosive data center growth.

The University of Michigan’s one-year-ahead expected inflation rate jumped to 6.5% in April 2025—the highest since the early 1980s—pushing consumer sentiment to its second-lowest level ever recorded.

$130 Billion in Lost Taxable Revenue
According to a 2024 study by the Institute on Taxation and Economic Policy (ITEP) using 2022 data, undocumented immigrants paid a total of $130.6 billion in federal, state, and local taxes.

This amount includes:
• $59.4 billion to the federal government.
• $37.3 billion to state and local governments.
• $33.9 billion into Social Security and Medicare through payroll taxes, despite being ineligible to receive these benefits.

Even though undocument immigrants receive virtually no benefit from those taxes (i.e, cannot receive Medicare, Medicaid, Social Security benefits, etc.) undocumented immigrants still pay taxes using an Individual Taxpayer Identification Number (ITIN) issued by the IRS. The IRS operated separately from the immigration enforcement which enabled undocumented immigrants to still work in the country.

The law requires all U.S. residents to pay taxes on their U.S.-sourced income, regardless of their immigration status. In addition to federal and state income taxes, they also contribute to other types of taxes (sales tax, etc.).

American citizens and legal immigrants working in the United States will need to make up for those revenue shortfalls.

These interconnected challenges have created a difficult environment for American households, with reduced purchasing power, job insecurity, and elevated prices squeezing budgets across income levels.