© 2025 Fortune Media IP Limited. All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use and Privacy Policy | CA Notice at Collection and Privacy Notice | Do Not Sell/Share My Personal Information
FORTUNE is a trademark of Fortune Media IP Limited, registered in the U.S. and other countries. FORTUNE may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.

Hey everyone. Sooo … the Fed cut interest rates on Sept. 17.

You’re probably thinking:

Yep. Yep.

Fair point.

But here’s the thing:

Sometimes there’s value in pausing, taking a breath, and actually assessing the landscape before rushing to commentary.

I know — that’s a shocking concept in this 24-hour news cycle. It’s counterculture to the way mainstream media operates.
​
But it means we get the benefit of zooming out, taking a wider perspective, and discovering — after pausing and assessing the landscape — what actually mattered versus what was just noise.

Sometimes the best analysis comes after the headlines fade.

The day after the Fed cut rates, headlines screamed about the fact that mortgage rates ticked up slightly. People were confused, and that became the dominant conversation on financial social media on Sept 18.

Now that the dust has settled, we can see the bigger picture.

So let me give you a wide-lens October economic update — where we stand right now, and what it means for you.

---

#1: “Buy the Rumor, Sell the News”

On Sept 17, the Fed cut rates by a quarter point. This was so widely expected that the markets had already priced in a 100 percent probability it would happen.

In fact, prior to the Fed meeting, futures markets were betting 91 percent on a quarter-point cut and 9 percent on a half-point cut.

Here’s what’s interesting:

The day after the cut, mortgage rates actually ticked up slightly. People freaked out. “Wait, the Fed cut rates but my mortgage rate went up? What’s happening?”

The reason is simple: markets had already adjusted for the cut before it happened.

This is what former Fed economist Karsten Jeske (“Big ERN”) refers to as “buy the rumor, sell the news.”

When everyone knows something is coming, the market moves in anticipation. Then when it actually happens, there’s no new information to react to.

Therefore, if you want to capitalize on a Fed rate cut, the best time to do it is before it happens.

Fortunately, there’s still time for that. The Fed is widely expected to announce two more cuts this year, on Oct 29 and Dec 10.

“It seems that the market is pricing in back-to-back rate cuts for the rest of this year,” Karsten told me in our recent podcast interview. “One in this [September] meeting, one in October and one in December.”

He and I sat down together in Portland, Oregon last month for a livestream interview about what the anticipated series of rate cuts might mean for you.

If a person is thinking about buying, selling or refinancing their home, but they have the benefit of flexibility, when is the ideal time?, I asked.

He answered using a stock market analogy.

In other words, now. October through December.

But if you can’t make a move right away, that’s fine. Because the markets are anticipating future cuts in 2026 as well.

So where do we stand now?

As of the week of Oct 5th, the weekly national average for a 30-year fixed-rate mortgage was 6.37 percent, according to Bankrate. That’s pretty close to the 52-week low of 6.26 percent.

Here are two pieces of context that matter:

First, 6.37 percent is actually pretty average when you zoom out to a 40-year view. These rates just feel high because we got spoiled by the 2008 to 2020 era, when rates were historically low. That period was the exception, not the rule.

Second, the bigger story is the lock-in effect. According to National Mortgage Professional, 80 percent of existing homeowners have a mortgage rate below 6 percent. More than half — 52.5 percent — have a rate below 4 percent. And one in five homeowners has a rate below 3 percent.

This means most homeowners don’t want to sell, because they’d be trading their low rate for a higher one.

And that’s why there are very few buyers on the market.

— Existing homeowners, who have the benefit of equity — and therefore could qualify as buyers — are trapped by “golden handcuffs.”

— Aspiring first-time homeowners feel frozen out through the one-two punch of surging home prices (relative to 2020) and high interest rates.

Result: A lack of buyers on the market, which makes it a (low competition!) fantastic buyer’s market for the people who qualify.

This window won’t last forever, but it will likely stay in place for the rest of 2025 and at least the early part of 2026.

---

#2: The Jobs Picture (What We Think We Know)

Here’s where things get weird.

There’s no official jobs report this month. The government shutdown means the Bureau of Labor Statistics hasn’t published its usual First Friday report.

​This is the first time I’ve ever had to say that.

But we do have data from ADP, which is a private payroll processor covering about 26 million U.S. workers. According to ADP, we lost 32,000 jobs in September.

The pattern is striking: the smaller the company, the harder it got hit.

 Companies with 500+ employees actually added 33,000 jobs

 Companies with 250-499 employees lost 9,000 jobs

 Companies with 50-249 employees lost 11,000 jobs

 Companies with 20-49 employees lost 21,000 jobs

 Companies with 1-19 employees lost 19,000 jobs

So big companies are doing fine. Small companies are struggling.

The big reveal is coming in early November.

Federal employees who resigned earlier this year and received severance packages — those packages mostly expired at the end of September.

This means October will be the first month when those former federal workers are officially counted as unemployed.

So tune into my November First Friday episode (Apple | Spotify) (air date: Friday, Nov 7) for what’s sure to be one of the most anticipated jobs reports in a while.

What does all this mean for you?

Short answer: The labor market is softening, but it’s not collapsing.

If you have a job, you’re probably fine.

If you’re job hunting, it might take longer than it used to.

If you’re a small business owner, you’re navigating a tougher environment than big companies are.

And if you’re wondering, “How can the economy be strong, if we’re losing jobs?” —

Here’s the answer in one graph:

---

#3: Maybe 70 is the new 67

Here’s something that got a lot of attention recently:

The Social Security Commissioner suggested that the full retirement age might go up to 70.

Right now, full retirement age is 67 for anyone born in 1960 or later.

But Social Security is heading toward insolvency. The trust fund that pays most benefits (OASI — Old Age and Survivors Insurance) is projected to run out of money in 2033.

What happens then?

Benefits don’t go to zero, but they get cut. If nothing changes, beneficiaries will receive 77 percent of scheduled benefits.

If OASI merges with Social Security’s Disability Insurance trust fund (which is another proposal that’s on the table), then it won’t become insolvent until 2034 and beneficiaries will receive 81 percent of scheduled benefits.

So basically, we’d kick the can down the road by a year. And improve things long term by 4 percentage points.

That’s not really a solution.

So what are the options to fix this?

One option: raise the full retirement age to 70.

According to the Congressional Budget Office, this would solve about half of the shortfall.

Half.

That means we’d still need other measures — like raising payroll taxes or increasing the income cap on Social Security taxes — to close the gap.

(This is why I like Roth accounts so much. I’m a big fan of locking in today’s tax rates.)

The last time Congress raised the retirement age was in 1983. They phased it in gradually over 33 years, increasing it by two months per birth year.

If they do it again, it would likely be a similar slow rollout, giving people decades to plan.

Here’s what you need to know:

If you’re currently in your 40s or younger, plan as if Social Security will give you less than you expect — or that you’ll need to work longer to get full benefits.

If you’re in your 50s or 60s, you’re more likely to be grandfathered in under current rules, since any changes will likely be phased in gradually.

Either way, this is why building other income streams matters.

One more thing: regardless of when you plan to claim Social Security, apply for Medicare within three months of turning 65.

If you don’t, you could face higher premiums for life. The penalties for delaying Medicare are permanent and unforgiving.

---

So where does all this leave us?

Between Fed rate cuts that are priced in before they happen, a softening (but still strong) job market, and potential Social Security changes ahead, the economy is in a weird in-between phase.

It’s a recipe for being cautiously optimistic.

And that’s the opposite of how most people say they feel.

According to the University of Michigan, consumers say they’re pessimistic — consumer sentiment in September fell to its lowest level since May — but they’re still spending at increasing rates.

​Consumer spending rose by 0.6 percent in August, following increases of 0.5 percent in both July and June.

That disconnect between how people feel and how people act is one of the more fascinating economic stories right now.

My philosophy?

Focus on what I can control: building income streams, staying informed, and making moves when opportunities appear.

 

Want to receive newsletters like this? Click here.

It wasn’t a big surprise that Federal Reserve Chairman Jerome Powell cut interest rates at the Fed’s September meeting on Wednesday. In July, he implied in no uncertain terms that a rate cut was coming, and the likelihood was that it was going be a quarter of a point. That’s what has happened. The governing body also signaled that two more cuts would come at its next two meetings, in October and December.

Powell noted that there are mixed signals in the economy, which made it a difficult decision. Normally, the Fed keeps rates high until inflation backs down, and right now, inflation is higher than the Fed wants it to be. Nonetheless, the once-strong job market is beginning to falter, and a reduction in interest rates should stimulate the economy and employment opportunities.

A more active economy with more jobs and money flowing is great news for most businesses, and some companies will feel the change more acutely. Visa (V 1.19%), SoFi Technologies (SOFI 4.96%), and Carnival (CCL -2.96%) (CUK -2.67%), are three stocks that should benefit in a big way.

1. Visa: The best indicator of spending habits

Visa is the largest credit card company in the world, and its performance tells the story of the economy to some degree. Because it’s a credit card network, its processed volume is a strong indication of how people are spending. And because it targets a wide range of demographics, its message is fairly universal.

The purpose of cutting interest rates is to boost the economy, and Visa is a major beneficiary of higher spending. Visa’s core business is providing the network, or infrastructure, that moves money from a customer’s partnering bank to a merchant, taking a small cut of each transaction. Although it has branched out to other services, they mostly center around different ways of moving money. More money flowing means more money for Visa.

It has been performing well despite the higher interest rates. In the 2025 fiscal third quarter (ended June 30), revenue increased 14% year over year, and payments volume was up 8%. It’s highly profitable, since it has a simple, low-cost model, and net income increased 8% over last year in the quarter.

Lower interest rates should further boost Visa’s earnings, benefiting this Warren Buffett-backed stock. Visa is a solid long-term investment, offering value to most portfolios.

2. SoFi: A young bank disruptor

Banks have a two-sided relationship with interest rates. They make more money on net interest income when rates are higher, but they also suffer from higher default rates because consumers struggle to pay back loans. They also take out loans at lower rates for that reason, and altogether, banks usually do better with lower rates.

That goes for the industry as a whole, but I’m picking SoFi in particular partly because of its large lending segment, and partly because it’s growing much faster than almost any other bank, which means it stands to gain a lot from an improving economy.

SoFi is a neobank, a cadre of digital banks that have no physical branches and offer a modern take on financial management. In addition to student, personal, and home loans, it offers a broad array of standard banking services and typically beats out national averages on savings rates for deposits.

It also offers non-standard services like cryptocurrency trading on its app, and it recently said it would offer international money transfers on a Blockchain network. That could offer real value, since sending money internationally is often a complicated, expensive, and long process.

SoFi’s lending segment struggled last year when interest rates were at a high, and it has already benefited from lower rates with accelerated revenue growth and better credit metrics. Even lower rates should help all of its segments, which, aside from lending, include financial services, like bank accounts and investing, and tech platform, which is a business-to-business financial infrastructure.

As it becomes a larger and more formidable player in finance, it should be able to weather future uncertainty even better.

3. Carnival: Great performance, high debt

Carnival is sailing through smooth seas as customers continue to sign up for its cruises. Demand is at historical highs, operating income is at a record, and the company is ordering new ships and launching new destinations to meet all of this demand.

There’s only one kink in the business: it has massive debt. It’s been paying it off responsibly, but it’s still more than $27 billion. This year, it has refinanced $7 billion at better rates, saving millions on interest. It will now be able to refinance more of its debt at lower rates.

Outside of the debt, the investment thesis for Carnival is strong. It’s the largest global cruise operator, and demand has stayed healthy despite high inflation. That’s resiliency.

Carnival stock is still cheap today due to the concerns about the debt, but as it pays it down and becomes more profitable, expect the stock to keep climbing.

Picture this: you’re at the Federal Reserve years ago. The chairman literally hangs up a conference call, waits 30 minutes, then calls back — suddenly everyone agrees on the rate decision. 

That’s the kind of insider story Karsten Jeske (“Big ERN”) shares when he joins us to break down what’s happening with the economy right now.

Karsten worked at the Federal Reserve Bank of Atlanta for eight years, then spent a decade on Wall Street at Bank of New York Mellon. 

Today he runs the popular Early Retirement Now website, where he applies his economist background to help people understand money and markets.

You’ll hear Karsten explain why the Fed is about to start cutting interest rates. The futures markets are pricing in a 90 percent chance of a quarter-point cut, with more cuts likely through the end of the year. 

But why? After all, inflation just ticked up in the latest CPI report, yet the Fed is still planning to lower rates.

We dive into how this affects real people. If you’re thinking about buying or selling a house, Karsten suggests acting sooner rather than later. 

He explains the “buy the rumor, sell the news” principle – the bond market may have already priced in the good news about rate cuts, so waiting might not help you.

The conversation covers some surprising economics too. Did you know that high interest rates can actually cause housing inflation? 

When mortgage rates are expensive, fewer people build new homes, which drives up prices. It’s the opposite of what most people think happens.

Karsten walks through the recent jobs report revisions that caught everyone off guard. The government had to subtract nearly a million jobs from their previous estimates. He explains how this happens – it’s not that officials are making up numbers, but tracking new businesses is genuinely hard to do in real time.

You’ll also learn about two Fed tools most people haven’t heard of: the dot plot and R-star. The dot plot shows where Fed officials think interest rates should go over time. R-star represents the theoretical perfect interest rate when the economy has no problems — currently around 3 percent.

The interview wraps up with Carsten’s take on Fed culture. The consensus-building era under Greenspan is giving way to more dissenting votes, which actually makes the central bank more like it was decades ago under Paul Volcker.

Enjoy!

 

Timestamps:

Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.

(0:00) Podcast introduction and guest background

(1:04) Carsten’s career path from Fed to Wall Street

(1:57) Current economic growth limbo state

(4:04) GDP formula and tariff impacts

(5:10) Trade efficiency and comparative advantage

(6:04) Supply chain threats from protectionism

(8:20) Fed meeting and rate cut expectations

(9:35) Market pricing in multiple rate cuts

(12:19) Real estate timing and mortgage rates

(13:55) How Fed rates affect treasury yields

(18:50) Buy the rumor, sell the news strategy

(22:13) Fed transparency and decision telegraphing

(25:56) Fed consensus culture versus dissent

(30:48) CPI data shows inflation ticking up

(34:32) Transitory versus persistent inflation confusion

(38:56) Fed behind the curve on rate cuts

(40:00) Major jobs report revisions explained

(44:24) Methodological issues with new business tracking

(46:00) Dot plot and R-star concepts explained

(52:29) Bond allocation strategies by age

(57:25) Current bond yields look attractive

 

Check out our previous interview with Dr. Jeske here.

---

Thanks to our sponsors!

Mint Mobile
Get this new customer offer and your 3-month Unlimited wireless plan for just 15 bucks a month at mintmobile.com/paula

---

Wayfair
“Cozify” your space with Wayfair’s curated collection of easy, affordable fall updates. Find it all for way less at wayfair.com

---

Shopify
Sign up for your one month, one dollar per month trial period and start selling today at shopify.com/paula

---

Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.

The Federal Reserve is expected to cut rates. Inflation data is sending mixed signals. Social Security faces insolvency warnings. And the stock market looks both unstoppable and precarious.

What should investors and everyday savers do in this moment of uncertainty?

In this special bonus episode, we sit down with Rob Berger — former attorney, Forbes deputy editor, founder of the Dough Roller blog, host of the Rob Berger Show on YouTube, and author of Retire Before Mom and Dad. With more than a quarter-million subscribers, Rob is known for his clear, kind, and fact-driven financial insights.

Together, we unpack today’s shifting economic landscape — from Fed policy to retirement strategies across generations.

What You’ll Learn in This Episode

• Why the Fed is caught between fighting inflation and protecting jobs — and what a rate cut could signal. 
• The risks of stagflation and why markets remain richly valued despite economic uncertainty. 
• How “the Magnificent 7” tech giants skew the S&P 500 — and what true diversification looks like. 
• Smart asset allocation rules of thumb for different life stages. 
• What Social Security insolvency really means, and how to plan for possible benefit cuts. 

Key Takeaways

• Expect uncertainty. Predictions about rate cuts and inflation are shaky at best — plan for volatility. 
• Diversify beyond the S&P 500. International funds, small caps, REITs, and bonds can balance your portfolio. 
• Social Security isn’t disappearing — but benefits could shrink. Build contingency plans now. 
• If you’re underfunded near retirement, act quickly. Spend less, save more, and prepare for difficult tradeoffs. 
• Young investors should focus on control. Education, savings rate, and priorities matter more than macro conditions. 

Resources & Links

Glossary

• CPI (Consumer Price Index): A measure of inflation tracking the average change in prices for goods and services. 
• Stagflation: A rare economic condition where inflation remains high while economic growth stalls. 
• Basis Points: One-hundredth of a percentage point (0.01%). A 25-basis-point rate cut = 0.25%. 
• S&P 500: A stock market index tracking 500 large U.S. companies, often used as a benchmark for U.S. equities. 
• TIPS (Treasury Inflation-Protected Securities): Bonds that adjust with inflation to preserve purchasing power. 

Chapters 

• 00:00 – 02:40 Introduction and why this is a bonus episode 
• 02:40 – 04:00 Rob Berger’s background and credentials 
• 07:27 – 13:00 Fed rate cuts, inflation, and stagflation risk 
• 13:00 – 18:00 Market valuations, diversification, and the “Magnificent 7” 
• 18:00 – 22:00 Social Security’s solvency and retirement planning in your 50s and 60s 
• 22:00 – 25:00 Gen Z financial challenges and what’s still within their control 
• 25:00 – 27:00 Predictions (and why predictions usually fail) 
• 27:00 – End Where to find Rob Berger and closing thoughts 

Final Thoughts

Economic uncertainty doesn’t mean financial paralysis. As Rob Berger reminds us, we should focus on what we can control: how much we save, how we diversify, and what priorities we choose.

Tune in to this timely episode, share it with friends, and subscribe so you never miss our smart, approachable conversations on money and freedom.

---

Thanks to our sponsors!

Mint Mobile
Get this new customer offer and your 3-month Unlimited wireless plan for just 15 bucks a month at mintmobile.com/paula

---

Wayfair
“Cozify” your space with Wayfair’s curated collection of easy, affordable fall updates. Find it all for way less at wayfair.com

---

Shopify
Sign up for your one month, one dollar per month trial period and start selling today at shopify.com/paula

---

Indeed
If you’re looking for amazing talent to bolster your team, you need Indeed. Go to indeed.com/paula and start hiring with a seventy-five dollar sponsored job credit.

In an interview with CNBC on Thursday, Moody’s Analytics chief economist Mark Zandi said recent job numbers have been so dismal that it’s possible the U.S. may already be in a recession.

“I think the Federal Reserve desperately wants to avoid that kind of outcome,” he added. “Obviously nobody wants a recession. But also in the context of Fed independence, they really don’t want to get blamed for going into a downturn because that would impair their ability.”

Wharton finance professor Jeremy Siegel laid out just such a scenario in July, when he told CNBC that Fed Chairman Jerome Powell may need to resign in order to preserve the central bank’s long-term independence. 

His reasoning: If the economy stumbles with Powell still at the helm, then Trump can point to him as the “perfect scapegoat” and ask Congress to give the White House more power over the Fed.

“That is a threat. Don’t forget, our Federal Reserve is not at all a part of our Constitution. It’s a creature of the U.S. Congress, created by the Federal Reserve Act 1913. All its powers devolve from Congress,” Siegel explained. “Congress has amended the Federal Reserve Act many times. It could do it again. It could give powers. It could take away powers.”

Meanwhile, Stephen Miran is set to join the Fed—without resigning as chair of the White House’s Council of Economic Advisers—after previously calling for changes that would erode its independence before he joined the Trump administration.

In a note last month, JPMorgan said Miran’s appointment to the Fed “fuels an existential threat as the administration looks likely to take aim at the Federal Reserve Act to permanently alter U.S. monetary and regulatory authority.”

Fed rate cut

Despite the enormous pressure Trump has put on the Fed to lower rates, even trying to fire Governor Lisa Cook, central bankers have largely resisted his calls so far. But the sudden deterioration in the job market has made a rate cut a virtual certainty.

The Fed meets Tuesday and Wednesday, and the only question on Wall Street is whether rates will come down by 25 basis points or 50 basis points from the current level of 4.25%-4.5%.

In a note on Friday, JPMorgan chief U.S. economist Michael Feroli said he expects two or three dissents for a larger cut and no dissents in favor of keeping rates unchanged.

At the Fed’s last meeting Fed governors Christopher Waller and Michelle Bowman dissented from other policymakers by calling for a quarter-point cut. It’s possible they could dissent again by voting for a half-point cut, Feroli said, with Miran expected to “dutifully dissent for a larger cut” as well.

On Thursday, Zandi said the bar is high for a half-point cut, but “there’s a possibility we could get over that.” He added that a JPMorgan forecast for six cuts by the end of 2026 is reasonable, assuming a neutral level for the fed funds rate is about 3%.

“It’s possible if the economy is weaker and recession risk higher and concerns about Fed independence greater that we get something a little lower than that, 2.5% to 3%,” Zandi said.

Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of business. Apply for an invitation.