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2025 in Data

December 31, 2025December 31, 2025Jeremy HorpedahlLeave a comment

By almost any measure, 2025 was a great year for the United States.

Despite inflation remaining elevated and the damage from new tariffs, the economy did well. Inflation-adjusted median earnings are higher than a year ago, though only by about 1.3%. While most prices are still rising, one bright spot for affordability is that home prices are falling in much of the country (according to Zillow estimates).

The S&P 500 total return is over 18% in 2025. GDP has grown at an annualized rate of about 2.5% for the first three quarters of 2025, and will probably be around 3% in the 4th quarter — not a blockbuster rate of growth, but continuing improvement for our already record high GDP of 2024.

The unemployment rate did tick up slightly, from 4.2% last November to 4.6% currently. This is definitely an indicator to watch over the next few months, but it is still well below average.

But even outside of the economy, there is plenty of good news in the data. Crime rates are plummeting. The murder rate fell something like 20%, as well as every major category of crime (violent crime overall is down 10%). This are some of the largest one-year drops in crime the US has ever seen.

Homicides aren’t the only category of deaths that are falling in 2025. For most categories of death as tracked by the CDC, there is a long lag (6 months or more) before all of the deaths are categorized. So we can’t look at complete 2025 data yet. For example, drug overdoses have increased massively in recent years, especially during the pandemic. But after plateauing in 2021-23, drug ODs started falling in 2024 and have continued to fall in early 2025. For the 12 months ending in April 2025, drug OD deaths were 26% lower than the prior 12 months. If we look at just the first 5 months of the year, 2024 was 20% lower than 2023, and 2025 was another 20% lower than 2024. For the first five months of 2025, ODs are basically back down to the same level as 2018 and 2019. Motor vehicle deaths also increased during the pandemic, but they are down 8% in the first half of 2025, essentially back down to 2018-19 levels.

Was it all good news? No, you can certainly find some data to be pessimistic about. For example, despite the efforts of DOGE and other attempts to cut federal government spending, over $2 trillion was added to the national debt in 2025, up 6 percent from the end of 2024 and surpassing $38 trillion. And as I mentioned above with the unemployment rate, there is some evidence the labor market may be weakening.

Not all is rosy as we head into 2026, but 2025 was a year filled with many positive trends on the economic front and in society more generally. May your new year be prosperous and healthy!

Are Imports Bad for GDP?

October 17, 2025October 20, 2025Zachary BartschLeave a comment

A periodically recurring conversation on social media is whether imports are bad for GDP. Everyone thinks they are clearly right, and then they lazily defer to brief dismissal of the opposing view. Some of this might be due to media format. Something just a tiny bit more thorough could help to resolve the painfully unproductive online interactions… And just maybe improve understanding.

It starts with the GDP expenditure identity:

The initial assertion is that imports reduce GDP. After all, M enters the equation negatively. So, all else constant, an increase in M reduces Y. It’s plain and simple.

Many economists reply that the equation is an accounting identity and not a theory about how the world works and that the above logic is simply confusing these two things. This reply 1) allows its employers to feel smart, 2) doesn’t address the assertion, & 3) doesn’t resolve anything. In fact, this reply erects a wall of academic distinction that prevents a resolution. What a missed opportunity to perform the literal job of “public intellectual”.

How are Imports Bad/Good/Irrelevant for GDP?

Let’s add a small but important detail to the above equation to distinguish between consumption of goods produced domestically and those produced elsewhere.

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MapGDP to teach economic growth

October 11, 2025October 7, 2025Joy Buchanan2 Comments

Economist Craig Paulsson has made a simple game free to all.

When you go to MapGDP.com you will find a real picture from Google Maps and a simple question. Guess the GDP/capita in the country where this picture was taken.

Watch his YouTube introduction

See Craig’s announcement about the game on his Substack

Many economics teachers will at some point visit the topic of “what is GDP” or “economic growth.” This web game is great for both topics. I put the website on my classroom projector and called on students to take the guess. We then could do the reveal together. I rate this high value for low effort from a teacher’s perspective. No login or account creation required.

If you are an EWED reader and not an econ teacher, you might have fun playing the game yourself. Almost as satisfying as Wordle…

Economic Freedom of the World 2025

September 25, 2025James Bailey1 Comment

The Fraser Institute released their latest report on the Economic Freedom of the World today, measuring economic policy in all countries as of 2023. They made this excellent Rosling-style graphic that sums up their data along with why it matters:

In short: almost every country with high economic freedom gets rich, and every country that gets rich either has high economic freedom or tons of oil. This rising tide of prosperity lifts all boats:

This greater prosperity that comes with economic freedom goes well beyond “just having more stuff”:

The full report, along with the underlying data going back to 1970, is here. The authors are doing great work and releasing it for free, so no complaints, but two additional things I’d like to see from them are a graphic showing which countries had the biggest changes in economic freedom since last year, and links to the underlying program used to create the above graphs so that readers could hover over each dot to identify the country (I suppose an independent blogger could do the first thing as easily as they could…).

FRDM is an ETF that invests in emerging markets with high economic freedom (I hold some), I imagine they will be rebalancing following the new report.

GDP Predictions: Pretty Good!

July 30, 2025Jeremy HorpedahlLeave a comment

Last week I wrote about the GDP predictions from Kalshi and the GDPNow Model. They were both showing 2.4% for Q2 of 2025 last week. They both changed slightly by yesterday, up to 2.8% and 2.9%. The final result (technically, the “advanced” result, but the final one for purposes of this comparison) was 2.97%. The Atlanta Fed GDPNow model continues to be a top performer, and you can’t do much better than averaging these two estimates. And you can pretty consistently do better than the median result from the WSJ/Dow Jones survey of economists.

Here’s the updated table:

And here is the original post explaining the data.

Second Quarter GDP Predictions

July 23, 2025Jeremy Horpedahl1 Comment

Back in April I wrote about 4 different estimates of GDP growth and how well they have performed since 2023. With the 2nd quarter of 2025 GDP data coming out next week, what do the best performing predictors currently say?

In that last post, I showed that the Atlanta Fed GDPNow model and the Kalshi betting market were generally the best performers. And furthermore, averaging these two improves the predictive power a little more. As of today, the GDPNow model is predicting 2.4% growth and Kalshi is… also predicting 2.4%!

There will be a few more updates to GDPNow over the next week, and of course Kalshi is constantly updating as more people bet. But as of right now, 2.4% growth seems like a reasonable prediction. That may surprise some people, especially given all of the pessimism surrounding tariffs and policy uncertainty generally. But despite all of this, the US economy appears to be just continuing to chug along.

23 MSAs Produce Half of US GDP

July 9, 2025July 9, 2025Jeremy Horpedahl4 Comments

The 23 blue-shaded MSAs in this map produce half of US GDP:

You might be tempted to think this map, like so many maps, is just a map of US population. It kind of is, but not completely. These 23 MSAs have 133 million people (as of the 2020 Census), or about 40% of the US population. That’s a lot, but it’s much less than half, which the GDP proportion they account for. In other words, these MSAs also tend to have above-average per capita income.

The three largest MSAs by population (NY, LA, Chicago) are also the three largest by GDP. But after the first three there are some interesting discrepancies. The San Francisco MSA is the 4th largest by GDP, but only the 12th largest by population — San Fran has a population similar to the Phoenix MSA, but almost double the GDP. San Francisco MSA has a very high GDP per capita (the third highest).

The San Jose MSA is also among these 23 largest MSAs for GDP, and also sticks out — it is the 13th largest by total GDP, but only the 36th largest by population. San Jose has a population similar to Cleveland and Nashville, but well over double the GDP of these two MSAs individually. In fact, there are 12 MSAs larger in population than San Jose, but that aren’t among these 23 MSAs that produce half of US GDP: places like St. Louis, Orlando, San Antonio, Pittsburgh, and Columbus. Silicon Valley really pulls up San Jose: it has the 2nd largest GDP per capita among MSAs, only beaten by much smaller Midland, Texas and its oil income.

Here is the full list of those 23 MSAs:

New York-Newark-Jersey City, NY-NJ-PA
Los Angeles-Long Beach-Anaheim, CA
Chicago-Naperville-Elgin, IL-IN-WI
San Francisco-Oakland-Berkeley, CA
Dallas-Fort Worth-Arlington, TX
Washington-Arlington-Alexandria, DC-VA-MD-WV
Houston-The Woodlands-Sugar Land, TX
Boston-Cambridge-Newton, MA-NH
Seattle-Tacoma-Bellevue, WA
Atlanta-Sandy Springs-Alpharetta, GA
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD
Miami-Fort Lauderdale-Pompano Beach, FL
San Jose-Sunnyvale-Santa Clara, CA
Phoenix-Mesa-Chandler, AZ
Minneapolis-St. Paul-Bloomington, MN-WI
Detroit-Warren-Dearborn, MI
San Diego-Chula Vista-Carlsbad, CA
Denver-Aurora-Lakewood, CO
Baltimore-Columbia-Towson, MD
Austin-Round Rock-Georgetown, TX
Charlotte-Concord-Gastonia, NC-SC
Riverside-San Bernardino-Ontario, CA
Tampa-St. Petersburg-Clearwater, FL

US State Growth Statistics 2005-2024

June 27, 2025June 27, 2025Zachary BartschLeave a comment

In macroeconomics we have basic tools to help us talk about economic growth, which is simply the percent change in RGDP per capita. What causes growth? Lot’s of things. All else constant, if more people are employed, then more will be produced. But the productivity of those workers matters too. That’s why we calculate average labor productivity (ALP), which is the GDP per worker. This tells us how much each worker produces. All else constant, more ALP means more GDP.*

What affects ALP? Nearly everything: Technology, demographics, health, culture, and public policy. Most of these have long-term effects. So, it’s better to think in terms of regimes. After all, incurring debt now can result in a lot of investment and production, but there’s no guarantee that it can be sustained year after year. This is why I don’t get terribly excited about individual good or bad policies at any moment. There’s a lot of ruin in a nation. I care more about the long-run policy regime that is fostered over time.

Given the variety of inputs to economic growth, there’s always plenty of room for complaint about policy – even if the economy is doing well. In this post, I’m inspired by a Youtube video that a student shared with me. The OP laments poor policy in Massachusetts. But compared to some other nearby states, MA is doing just fine economically. This is not the same as saying that the OP is wrong about poor policies. Rather, a regime of policy, technology, interests, etc. is built over time and there can be a lot wrong in growing economies.

In the interest of being comprehensive, this post includes basic growth stats for all states from 2005 through 2024 (the years of FRED-state GDP).** First, let’s start with the basic building blocks of population, employment, and RGDP. Institutions matter. Policy affects whether people migrate to/from the state, fertility, how many people are employed, and what they can produce.

People like to talk about migration and the flocking to Texas & Florida. But that fails to catch the people who choose to stay in their state. Utah is 43% more populous than it was 20 years ago. But you don’t hear much clamoring for their state policies. Idaho and Nevada also beat Florida in terms of percent change. Where are the calls to be like Idaho? Employment largely tracks population, though not perfectly. The RGDP numbers can change quickly with commodity prices, reflected in the performance of North Dakota. But remember, these numbers cover a 20 year span. So, any one blockbuster or dower year won’t move the rankings much.

Of course, these figures just set the stage. What about the employment-population ratio, ALP, and RGDP per capita? Read on.

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GDP Forecasting: Models, Experts, or Markets?

April 30, 2025June 18, 2025Jeremy Horpedahl4 Comments

The 2025 first quarter GDP data came in slightly bad: negative 0.3%. I think the number is a bit hard to interpret right now, but it’s hard to spin away a negative number. A big factor pulling down the accounting identify that we call GDP was a massive increase in imports, specifically imports of goods. It’s likely this is businesses trying to front-run the potential tariffs (and keep in mind this was pre-“Liberation Day,” so probably even more front running in April), so the long-run effect is harder to judge.

But aside from the interpretation of the GDP estimate, we can ask a related question: did anyone predict it correctly? I have written previously about two GDP forecasts from two different regional Federal Reserve banks. They were showing very different estimates for GDP!

Both the Fed estimates ending up being pretty wrong: -1.5% and +2.6%. But there are two other kinds of forecasts we can look at.

The first is from a survey of economists done by the Wall Street Journal. The median forecast in that survey was positive 0.4%. This survey got the direction wrong, but it was much closer than the Fed models.

Finally, we can look at prediction markets. There are many such markets, but I’ll use Kalshi, because it’s now legal to use in the US, and it’s pretty easy to access their historical data. The average Kalshi forecast for Q1 (a weighted average of sorts across several different predictions) was -0.6%. Pretty close! They got the direction right, and the absolute error was smaller than WSJ survey. And obviously, much better this quarter than the Fed models.

But this was just one quarter, and perhaps a particularly weird quarter to predict (Atlanta Fed even had to update their model mid-quarter, because large gold inflows were throwing of the model). You may say that weird quarters are exactly when we want these models to perform well! But it’s also useful to look at past predictions. The table below summarizes predictions for the past 9 quarters (as far back as the current NY Fed model goes):

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GDPNow: Still Negative on Q1, But Less So

April 16, 2025Jeremy Horpedahl1 Comment

Last month I wrote about the projected decline in GDP from the Atlanta Fed’s GDPNow model. Since then, they have released an alternative version of the model, which includes a “gold adjustment” to account for non-monetary gold inflows, which may be impacting the model to overstate the negative impact of imports (and it looks like this may be a permanent change to the model).

With those changes, and some more recent data, the GDPNow model is still pointing to a negative reading for Q1 of 2025, though only very slightly now: -0.1%.