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After months without much to go off, we’re finally getting a clearer picture of the state of the U.S. economy.

The first fresh data reports since the government shutdown suggest the economy is cooling, but could be worse. Last week the November inflation reading was lower than economists had feared, and the latest retail sales figures showed consumers are still willing to spend some money, even if they’re watching every dollar. At the same time, unemployment has ticked up, and the job market is stagnating.

The readings “point toward an economy that’s slumping,” said Brett House, an economics professor at Columbia Business School.

Here’s a brief rundown of what we know.

Unemployment is on the rise and the job market is stalled

The unemployment rate ticked up to 4.6% in November, the highest it’s been in over four years, though still low compared to a big chunk of the 2000s. And the job market has yet to recover the momentum it lost this spring. After 105,000 jobs were lost in October (largely because of the government shutdown), the economy added 64,000 jobs in November. But we’re still almost exactly where we were in April.

“One month it’s up, one month it’s down, but the net is we’re not going anywhere,” Mark Zandi, chief economist at Moody’s, said on a Moody’s podcast last week.

Looking at an industry breakdown, most of the November gains came in health care and social assistance, areas that tend to be recession-proof. Construction companies also added jobs, but there were fewer jobs in manufacturing, transportation and warehousing.

The report is “modestly reassuring,” said Scott Helfstein, head of investment strategy at Global X, which manages exchange-traded funds with $70 billion in assets. But “the big question perhaps for 2026 is whether the job market will thaw or whether it cracks.”

Prices hikes have eased

The inflation rate (aka change in the Consumer Price Index) eased in November, slowing to 2.7% from 3% in September and surprising economists who had expected it to go up — to 3.1%.

While some questioned whether the rate was skewed by the gap in data collection during the shutdown (there was no reading for October), it could mean that fears about the effect of tariffs have been overblown. On the other hand, the impact of tariffs may yet to be fully realized.

The data could reflect “pricing decisions being delayed until the Supreme Court delivers a verdict on the tariffs, or even pricing decisions simply being delayed until the New Year,” wrote Dave Sloan, a senior economist at Continuum Economics.

That said, should this trend bear out, it could ease the strain on stretched consumers and give the Federal Reserve more room to cut benchmark interest rates again next year — a move that would help make borrowing more affordable.

Consumers are still spending, but cautiously

While retail sales were flat in October, declining auto sales overshadowed increases in furniture, electronics, and sporting goods, suggesting that shoppers have become more selective, but are far from tapped out.

“Consumers look like they took advantage of early holiday season sales to hunt for bargains,” wrote Scott Anderson, chief U.S. economist for BMO Economics.

So what?

The economy is in a "muddle-through" mode defined by caution rather than crisis. While we seem to have avoided the inflationary spike that many feared (at least so far,) we have also lost the post-pandemic engine of growth. The job market isn’t collapsing, but it’s not a symbol of resilience anymore either.

Related Reading

Consumers Are Feeling Gloomy About the Economy. Here’s Why They’re Spending Anyway (CNBC)

How Workers Will Adapt in the AI Era (TIME via AOL.com)

Guilt-Free Tweaks to Trim Your Holiday Budget (SoFi)

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