By Mike McMonagle, Director, Marketing & Communications at EDC Lancaster County
Tightening trade and immigration policies. Global geopolitical conflicts. Growing AI-automated technologies. The longest federal government shutdown on record. These are just some of the factors that have had an impact on the nation’s economy throughout 2025, leaving a trail of economic uncertainty in their wake for businesses and consumers alike.
And while national economic trends have been well documented and debated in the news these past 12 months, the impact upon local businesses isn’t always so easy to tease out in real-time. This is further complicated by the fact that county-level data is often released months – or years, as is the case for local Gross Domestic Product (GDP) – behind national and state data.
To help fill this data gap, the Center for Regional Analysis (CRA) at EDC Lancaster Countypublishes its Economic Intelligence Report for Lancaster County each quarter to provide local businesses and policymakers with timely, actionable insights into the local economy. Offering a blend of federal, state, and anecdotal data from local businesses, EDC’s Intel Reports aim to put national topics into local framing while bringing to light firsthand feedback on how local employers are faring.
With 2025 quickly drawing to a close, here are some of the high-level themes, trends, and economic indicators that the CRA team has been following since January:
Local Business Sentiment
• Generally speaking, Lancaster County businesses were feeling good entering 2025 as strong sales pipelines fueled expectations for positive growth.
• Fluctuating national tariff policies and tightening immigration policies over the course of Q1 and Q2 cultivated widespread uncertainty within the business community, however, prompting many businesses to adopt more cautious approaches to hiring and spending.
• Although local firms reported that they had begun easing back into more “typical” business practices by the end of the third quarter, many acknowledged that persistent economic uncertainty remains.
Labor Force
• Despite seeing first-quarter growth, the local labor force recorded its first-ever Q2 contraction at a time when businesses are usually in the hunt for seasonal employees.
• Although Lancaster County’s labor force growth returned to seasonal norms by Q3, local levels have remained well below just a year prior.
• Among the factors most likely contributing to the 2025 decline are an uptick in retirements among the county’s aging population, a reduction in foreign-born workers, and increasingly cautious hiring practices in the face of growing economic uncertainty.
Unemployment
• Consistently low unemployment has helped maintain a tight labor market throughout 2025.
• The tight labor market continues to pose challenges for employers in the hunt for workersto fill high-skilled positions that require specialized training or experience.
Inflation
• After dropping to 2.4% in March, the national annual rate of inflation has held steady at around 3% in the months since – a full percentage point above the Federal Reserve’s target rate of 2%.
• In recent years, costs for services (i.e. haircuts, healthcare, rent) have surged while the costs for goods (i.e. electronics, furniture, groceries) have eased, reflecting consumers’ shift from purchasing goods – as was the case during and in the wake of the COVID-19 lockdowns – to spending more on in-person experiences.
• Rising prices have also affected Lancaster County businesses, which have reported higher wages and benefit costs per employee.
Interest Rates
• Rising inflation, coupled with uncertainties around the impact of tariffs on prices, prompted the Federal Open Market Committee (FOMC) to keep the federal funds rate steady at 4.25-4.50% for four consecutive meetings in the first half of the year.
• The federal funds rate has since been lowered to 3.75%-4.00% following back-to-back rate cuts at the FOMC’s September and October meetings.
• Local businesses have cited interest rate cuts as cause for optimism for future business growth in 2026.
Consumer Sentiment & Spending
• National consumer sentiment declined sharply over the course of Q1 and has been on the decline throughout 2025 in the face of persistent inflationary pressure as well as growing concern over U.S. trade policy and job stability.
• Although consumer spending levels typically will dip alongside declining consumer sentiment, U.S. spending levels have held rather steady in 2025, even if consumers’ dollars aren’t going as far as they once had.
• Financial stress among Lancaster County residents has surged in 2025, however; the volume of individuals holding “severely delinquent” debt – that is, debt that’s more than 90 days past due – reached a 20-year high (12.7%) in Q1 2025.
The Center for Regional Analysis at EDC Lancaster County delivers timely insights on the local economy to help Lancaster’s business leaders and policymakers make informed decisions that align with the economic needs of Lancaster County. To learn more, visit edclancaster.com/cra.
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