Week of September 8, 2025

Key Points for the Week

• The S&P 500 moved back to new highs last week, before a modest drop on Friday.
• It has officially been one of the best 100-day rallies in history.
• The labor market continues to weaken, both on the headline number and underneath the surface.
• The health care sector has accounted for most of the net job growth over the last four months while key cyclical sectors have seen job declines.

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Current Trends & News is a weekly financial recap curated by SPC Financial®'s team of wealth management and tax-integrated advisors. We monitor and explore the intricacies of the financial world and share insights into market developments.

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Economic Update

In financial markets, sometimes bad news is good. It looked like that might be the case last week. On Friday, the Employment Situation Summary was released. It showed U.S. businesses added just 22,000 jobs in August – well below expectations. Economists polled by Reuters had predicted 75,000 new jobs would be added. The unemployment rate ticked higher, moving from 4.2 percent to 4.3 percent.

That was not good news for American workers.

“The [employment data] will likely heighten concerns about the durability of the labor market…Accounting for the revisions in this report, employment growth in the last three months has averaged just 29,000. Payrolls have come in under 100,000 for four straight months, extending the weakest stretch of job growth since the pandemic.”

Molly Smith, Bloomberg

At first, investors celebrated, and U.S. stocks moved higher. The bad news was good news because it increased the likelihood the Federal Reserve (Fed) would lower the federal funds rate at its next meeting. When the Fed lowers the federal funds rate, rates on credit cards, home equity loans, and other types of loans typically move lower, too. Low rates inspire more spending and make it cheaper to borrow, which can stimulate economic growth and lift stock prices.

As investors considered what a less robust job market might mean for economic growth, sentiment shifted. “Strong evidence the U.S. labor market is slowing rippled through Wall Street, driving stocks lower and bonds higher on concern the Federal Reserve will now have to rush to prevent further weakness. The sharp cooling triggered fears about a more pronounced jobs slowdown, sparking a flight to Treasuries, with two-year yields hitting the lowest level since 2022.”

Rita Nazareth, Bloomberg

Investors may have recalled a late-August speech in which Fed Chair Jerome Powell noted the U.S. labor market was in a “curious kind of balance” due to “a marked slowing in both the supply of and demand for workers. This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.

The Standard & Poor's 500 and Nasdaq Composite Indexes gained over the week, despite dipping lower on Friday. The Dow Jones Industrial Average finished the week lower. Treasury yields fell across all maturities.

This Week in the Markets

The S&P 500 was up more than 28% the 100 trading days after the April 8 lows, which was one of the best 100-day rallies ever. As we noted many times back during the worst of the tariff-related meltdown, it is perfectly normal for the worst 100 days to take place right next to the best 100 days.

We found 11 other times the S&P 500 was up more than 25% in 100 days (using the first signal in a cluster) and the future returns are very impressive. Never lower three months later suggests that any near-term seasonal weakness indeed shouldn't be anything more than a buying opportunity, while a year later stocks were higher 10 out of those 11 times with a solid average and median return of about 13%.

We also found that the average number of advancers on the New York Stock Exchange has increased each of the past three years (2023, 2024, and 2025 through August). in other words, more stocks have been advancing each of the past three years than have been declining, even as the drumbeat has gotten louder about how only a few large stocks are going higher. But don't get confused between strength at the top and a lack of breadth. To us, this in fact is a healthy bull market with solid breadth.

The Labor Market

The August payroll report was expected to be soft, but it didn't even manage to meet low expectations. The bottom line is that the labor market is in trouble, but that cements expectations for an interest rate cut in September.

The economy created just 22,000 jobs in August but take that with heaps of salt—the number is going to be revised significantly (though it's hard to predict in what direction). The revised estimates for June and July are slightly more reliable, and the news wasn't good:

• July payrolls were revised up by 6,000: from +73,000 to +79,000
• June payrolls were revised down by 27,000: from +14,000 to -13,000

Anytime you get a month with negative payroll growth, that should be a big flashing red warning signal. Historically, that only happens near recessions. Even if you take the 3-month average, that's only 29,000. For perspective, the 3-month average was 111,000 in March and 209,000 back in December 2024. We've seen a sharp slowdown over the last few months, and it shouldn't be a huge surprise given the tariff chaos in April and May.

Now, the economy likely doesn't need to create as many jobs as it did last year to keep up with population growth, since immigration has stalled. But there's no question that hiring is weak, which is pushing the unemployment rate higher. The unemployment rate hit 4.32% in August—that's historically low but it's moving in the wrong direction and just hit the highest level since October 2021. The only plus in the payroll report is that the prime age employment-population ratio (which sort of controls for an aging population and labor force definitions) picked up to 80.7%. That's higher than at any point in the 2000s and 2010s expansions. The fact that this is stable tells you that labor market weakness may be concentrated at both ends of the age spectrum: younger and older people.

From May through August (the post-Liberation Day phase), the economy created 107,000 jobs. But get this: the health care sector created 249,000 jobs. Without that, the economy would have lost 142,000 jobs over the last four months. The weakness is across the board in cyclical areas:

• Professional and business services lost 74,000 jobs.
• Manufacturing lost 42,000 jobs.
• Wholesale trade lost 31,000 jobs.
• Construction, which had been bit of a bright spot a few months ago, lost 8,000 jobs.

The government sector also lost 50,000 jobs over this period but there's no way to sugarcoat the fact that there's real weakness in the private sector. The tariffs have clearly taken a toll, which is why cyclical areas are struggling. There was softness even prior to May—manufacturing had lost 84,000 jobs over the twelve months through April 2025, likely due to elevated interest rates. But we've seen a collapse in recent months.

The weak jobs report should cement a rate cut in September and even raises the odds of a larger 0.50%-point cut (though this seems unlikely). In some ways, the situation over the summer mimics what we saw a year ago, when labor market weakness led to a big 0.50%-point cut by the Federal Reserve (Fed) at their September 2024 meeting, followed by two more 0.25%-point cuts in November and December. But there are two crucial differences:

• The policy rate was way more restrictive a year ago, at 5.4% versus 4.4% today.
• Inflation was coming down then whereas it's heading in the wrong direction now (and remains well above the Fed's target).

It's clear that the Fed has an inflation problem. It would be one thing if all the heat was coming from durable goods, since you could argue that's “transitory.” But there's heat in services as well and it's harder to brush that off as tariff related. Note that the Head of the President's Council of Economic Advisors (and the president's nominee to take the vacant seat on the Fed Board of Governors), Stephen Miran, has argued that tariffs are not the cause of inflation heat, but that would mean the Fed actually has an even bigger problem, as it would be harder to brush inflation off as a transitory "one off."

What's interesting is that investors are not only pricing a rate cut in September. Markets are pricing in three cuts in 2025 (for a total of 0.75%-points), and several more in 2026, taking the Fed policy rate from 4.4% to 2.8% by the end of 2026. This is way beyond what would be priced in if you just expected an “insurance” cut from the Fed (to protect the labor market). It looks like markets expect President Trump to get his people into the Fed by next year, and they well then push through the rate cuts he's been asking for, although probably not as deep as the president's social media-friendly talking points. But as mentioned above, this is in the face of inflation remaining above the Fed's target and moving in the wrong direction.

What will markets care more about, the downside from rising inflation risk or the upside from rate cuts? It does depend on which markets we're talking about, but generally, the big problem with inflation isn't when it builds up as much as the cost of bringing it back under control. In the near term, cuts mean lower borrowing costs, more liquidity in the system, and looser financial conditions. Add that to stimulus from the “One Big Better Bill Act” (offset partially by one of the largest Republican tax hikes in history via tariffs) and the on-going AI spend, and you have conditions for a market sugar high—if the labor market can avoid serious deterioration.

How Many New Jobs Does the U.S. Need to Keep Unemployment Low?

Over the past two decades, the unemployment rate in the United States has varied greatly. It spiked following the 2008 financial crisis (rising to 10 percent in October 2009) and again during the Covid-19 pandemic (rising to 14.8 percent in April 2020).

Unemployment rate (%)
August 2025
August 2023
August 2021
August 2019
August 2017
August 2015
August 2013

August 2011 9.0 August 2009 9.6 August 2007 4.6 August 2005 4.9

Since late 2021, though, the unemployment rate has remained relatively low – hovering around four percent. From an economic perspective, that puts the U.S. at or near maximum employment.

The number of new jobs needed to keep employment steady is called the “breakeven employment growth rate". In January, Victoria Gregory and Alexander Bick of the Federal Reserve Bank of St. Louis estimated that about 150,000 new jobs were needed each month to maintain a stable employment rate.

Since the start of this year, immigration has fallen dramatically – and so has the estimate of the number of new jobs needed to keep the employment rate steady. That's because “...the biggest swing factor in the breakeven growth rate is the population growth rate.” With population numbers falling, just 32,000 to 82,000 jobs are needed each month to keep employment at the current level.

A Reminder About Scams

Scams usually start with a phone call, email, text, or another form of communication. The person typically claims to be from an agency or organization you know or one that sounds like it might benefit you, such as the National Sweepstakes Bureau or a lottery.

The person may know your name and address. They may give you their official title or an identification number. No matter how official they seem, you can be confident it is a scam if the person contacting you:

• Indicates there is a problem with your benefits.
• Asks you to pay to receive a prize.
• Suggests that paying will increase the chance of winning.
• Requests financial information, such as a bank account or credit card number.
• Pressures you to act immediately.
• Tells you to pay using a specific method, such as a gift card or cryptocurrency.

If this happens, remember that the Social Security Administration, the Internal Revenue Service, Medicare, and your bank do not call, email, or text to ask for money or personal information. They do not demand that you pay immediately, and they do not accept payment by gift card, prepaid debit card, cryptocurrency, or another untraceable form of money transfer.

When you suspect a scam:

• Hang up or close the message. Do not respond in any way.
• Remain calm.
• Think back over the call. Write down any personal information you may have inadvertently shared.
• Report the scam. Contact the Federal Trade Commission at ReportFraud.ftc.gov. You may also want to report the incident to your state's attorney general or your local consumer protection agency.
• Share your knowledge. Talk with family, friends, and neighbors about your experience so they know what to look out for.

When you receive a digital message, no matter how official it seems, do not click on any links. Do not give or confirm any personal information, including your name, birth date, phone number, address, email address, place of birth, driver's license, passport, or Social Security numbers, bank or other account numbers, and PIN numbers.

Being skeptical can keep you safe. Remove yourself from the situation. Do not share information. If you feel anxious and need to confirm that it was a scam, contact the organization using a method provided on their official website.

IRS Shifts to Electronic Payments

On March 25, 2025, President Trump signed Executive Order 14247—Modernizing Payments to and From America's Bank Account. The order requires all payments made from or to the IRS to be conducted via electronic funds transfer (EFT).

The purpose of the Executive Order is to combat unnecessary costs, delays, risk of fraud, lost payments, theft and inefficiencies. For Fiscal year 2024 issuing paper checks was estimated to cost taxpayers more than $657 million.

The phaseout of paper check disbursements and receipts is scheduled for Sept. 30, 2025. Payments such as fees, fines, loans and taxes must be made electronically where permissible under existing law.

A few exceptions will remain at the discretion of the Treasury secretary:

1. Individuals without access to banking services or electronic payment systems;
2. Emergency payments where electronic disbursement would cause undue hardship;
3. National security- or law enforcement activities where non-EFT transactions are necessary or preferred;
4. Other circumstances as deemed necessary by the secretary.

Heads of federal agencies must submit implementation plans within 90 days of the order. Treasury Secretary Scott Bessent has 180 days to submit an implementation report detailing progress under the order.

Taxpayers should prepare for the shift to electronic payments ahead of the Oct. 15 filing deadline.

Did you Know? This Week in History

September 9, 1776: Congress Renames the Nation “United States of America

On September 9, 1776, the Continental Congress formally declared the name of the new nation to be the "United States” of America. This replaced the term “United Colonies,” which had been in general use.

In the Congressional declaration dated September 9, 1776, the delegates wrote, “That in all continental commissions, and other instruments, where, heretofore, the words ‘United Colonies' have been used, the stile be altered for the future to the “United States.”

A resolution by Richard Henry Lee, which had been presented to Congress on June 7 and approved on July 2, 1776, issued the resolve, “That these United Colonies are, and of right ought to be, free and independent States....” As a result, John Adams thought July 2 would be celebrated as “the most memorable epoch in the history of America.” Instead, the day has been largely forgotten in favor of July 4, when Jefferson's edited Declaration of Independence was adopted. That document also states, “That these United Colonies are, and of Right ought to be FREE AND INDEPENDENT STATES.” However, Lee began with the line, while Jefferson saved it for the middle of his closing paragraph.

By September, the Declaration of Independence had been drafted, signed, printed and sent to Great Britain. What Congress had declared to be true on paper in July was clearly the case in practice, as Patriot blood was spilled against the British on the battlefields of Boston, Montreal, Quebec and New York. Congress had created a country from a cluster of colonies and the nation's new name reflected that reality.

Weekly Focus

"We forget all too soon the things we thought we could never forget."

Joan Didion, American Writer and Journalist

"A desk is a dangerous place to view the world.”

John le Carre, British Author