Comments based on information available as of 8:00am CT on 9/5/2025
Growth: Dribbling Along? 
There’s a saying in statistics that two data points don’t make for a trend. One data point certainly doesn’t count as a trend, either. The Federal Reserve’s Beige Book in June said economic activity declined. Then in July it increased slightly. In September there was little or no change. Rather than dropping into a recession or rebounding into a recovery, the economy seems to be just dribbling along.
Inflation: One-Off Doesn’t Mean All At Once
To most humans, the term “one-off” means something happens just once. To economists it might have a different meaning. Tariffs should lead to a “one-off price increase,” but those price increases aren’t happening all at once. Instead, companies are selling through their inventories and experimenting with how–if at all–they can pass on price increases to price-sensitive consumers. .
Policy: A Done Deal?
Markets are pricing in a near certainty that the Fed will cut rates on September 17. Fed officials have been sending dovish signals, supporting that view. What’s less clear is what’s next. Is it a one-and-done, a one-and-wait, or a one-after-another cut? Given the signs of labor market weakness and indicators that tariff-induced inflation isn’t spiraling higher, the odds are tilting more and more in favor of a renewed sequence of cuts.
Looking Ahead: Last One Out, Turn Off The Lights
Congress is back from its August recess. September is known as one of the roughest months for stocks and you can’t help but wonder if there is a connection. Humorist Mark Twain once said, “No man’s life, liberty, or property are safe while the legislature is in session.” There is a full agenda, especially with the end of the government’s fiscal year at the end of September. A September showdown between Democrats and Republicans over the budget could lead to an October shutdown. Historically, shutdowns haven’t had a noticeable or lasting effect on the markets–they are important, but for the markets, they end up being a sideshow.
