Weekly Economic Update: September 17, 2025

Presented by Nicholas Wealth Management

Call 9-1-1 … K

Last week, the new leadership at the Bureau of Labor Statistics (BLS) announced that jobs reported between March 2024 and March 2025 were way overstated. The U.S. added 911,000 fewer jobs than previously thought in that time period, according to new government data.1

The revision was one more example of slowing U.S. job growth that paves the way for a Federal Reserve rate cut this month. Combined with other recent signs of weakness in the labor market, a cut aimed at reigniting the U.S. economy is all but assured when the Fed’s policy-setting body meets this coming week.2

So, where do we stand? If the jobs picture was overstated, either intentionally or incompetently, that’s bad because it means the data we receive cannot be trusted due to politically motivated bureaucrats manipulating the data to benefit their preferred politicians or harm the politicians with whom they don’t agree.

If the compiling of the data is flawed or incomplete, surely in this age of artificial intelligence and the internet we can employ a better way to collect accurate data. (And no, the government doesn’t need any additional money or people to do this.)

If, however, the issues just mentioned aren’t the reason for the weak jobs numbers and what we are seeing is reality , that’s not good either because things are heading down a very difficult path, indeed.

Inflation moderates, cementing a rate cut

The latest producer price index (PPI) number came in surprising lower at 2.6% vs. expectations of 3.3% (and lower than the prior month of 3.3%).3 Meanwhile, the consumer price index (CPI) moved higher from 2.7% to 2.9%, right in line with consensus and once again confounding expectations that tariffs will cause a spike in inflation.4 Markets waffled a bit in between the readings but ultimately decided the Fed would finally move this week. After weekly unemployment numbers came out showing above-average claims, markets took off and we hit new record highs in the S&P 500, Dow and Nasdaq.5,6,7

We’ve been talking about broad-based inflation induced by tariffs since April, and it simply hasn’t happened. A lot can happen between announcing a tariff rate on goods from a country and the final price a consumer pays. Producers, importers and retailers all have a chance to lessen the impact before an item hits the shelves. Plus, consumers make the ultimate decision whether to buy at the offered price or not.

If tariffs were a guarantee prices would rise, then surely the uncertainty would have had even more harmful impact on prices. Making one thing more expensive when people have a finite amount to spend forces people to budget and seek alternatives. If they choose to spend on the higher-priced (i.e., inflated) item, then that will leave less for other things. Those products will have to compete for a smaller pie, and prices would ultimately come down to remain competitive. That’s how this works — so don’t listen to the fearmongering.

The August inflation data, coupled with the dismal recent jobs reports, should cement at least a 25-basis-point (.25%) cut by the Fed at this week’s meeting. The more interesting thing is how Chair Jerome Powell will position the Fed going forward. If his tone is alarmist, it could scare the market. If he comes off as this cut is a one-and-done, he could risk ignoring the signs that we may be lurching into a recession. It’s a delicate balancing act — but then again, it always is.

Coming this week

It’s finally here! After waiting all year, the Fed is expected to announce a quarter-point rate cut at this week’s Wednesday meeting. The probability of a 50-basis-point (0.50%) cut has decreased to around 7%.8 In our opinion, a higher cut is needed to reignite the jobs market.

Industrial production, capacity utilization, business inventories and home builder confidence are all out on Tuesday. These are all important data points, but will get lost in the glare of the Fed decision.

Wednesday will feature MBA mortgage applications, housing starts and building permits to give a glimpse into the housing markets. Thursday will feature the Philly Fed survey and leading economic indicators, which may have some market impact based on what the Fed says the day before.

Sources:

¹ Ben Werschkul. Yahoo! Finance. Sept. 9, 2025. “US employment falls by 911,000 in government revision, revealing weaker-than-reported jobs market.” https://finance.yahoo.com/news/us-employment-falls-by-911000-in-government-revision-revealing-weaker-than-reported-jobs-market-144822652.html. Accessed Sept. 14, 2025.

² Bailey Schulz. USA Today. Sept. 14, 2025. “The Federal Reserve is expected to cut interest rates. How low will it go?” https://www.usatoday.com/story/money/2025/09/14/fed-interest-rate-cut-september-preview/86065144007/. Accessed Sept. 14, 2025.

³ U.S. Bureau of Labor Statistics. Sept. 10, 2025. “Producer Price Index News Release Summary.” https://www.bls.gov/news.release/ppi.nr0.htm. Accessed Sept. 14, 2025.

⁴ U.S. Bureau of Labor Statistics. Sept. 11, 2025. “Consumer Price Index Summary.” https://www.bls.gov/news.release/cpi.nr0.htm. Accessed Sept. 14, 2025.

⁵ Yahoo! Finance. “S&P 500 (ˆGSPC).” https://finance.yahoo.com/quote/%5EGSPC/. Accessed Sept. 14, 2025.

⁶ Yahoo! Finance. “Dow Jones Industrial Average (ˆDJI).” https://finance.yahoo.com/quote/%5EDJI/. Accessed Sept. 14, 2025.

⁷ Yahoo! Finance. “NASDAQ Composite (ˆIXIC).” https://finance.yahoo.com/quote/%5EIXIC/. Accessed Sept. 14, 2025.

⁸ CME Group. “FedWatch.” https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html. Accessed Sept. 14, 2025.

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