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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.
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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.

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#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.

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#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:

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#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.

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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.

 

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Pending home sales, or signed contracts leading up to a sale, fell for the first time in nearly three months, slipping about 1% during the four weeks ending Sept. 21 compared to a year earlier, according to a Redfin report on Thursday.

That’s despite the weekly average mortgage rate sliding for nine consecutive weeks, hitting an 11-month low of 6.26% after reaching 6.8% at the start of the summer.

Meanwhile, separate data from the National Association of Realtors on Thursday showed that sales of existing homes dipped 0.2% in August from the prior month. While they were up 1.8% from a year ago, the recent trend still points to a stagnant housing market.

To be sure, lower mortgage rates have sparked a surge in at least one corner of the housing market. Redfin pointed out that mortgage applications to refinance homes jumped 58% in the second week of September from the prior week.

But mortgage-purchase applications edged up just 3%, and the anemic sales data are dashing hopes that cheaper borrowing costs will quickly jump start the housing market.

Redfin highlighted four factors weighing on housing demand: still-elevated home prices, would-be buyers waiting for mortgage rates to go below 6%, muted supply of new listings, and economic uncertainty.

Those waiting for mortgage rates to fall further may have already missed their chance, as borrowing costs have started to tick higher again.

According to Mortgage News Daily, top-tier 30-year fixed rates were in the high 6.3% range on Friday, flat from the previous Friday but up from 6.1% range in the first half of last week.

That’s as recent economic data have come in hot, lowering expectations for aggressive rate cuts from the Federal Reserve. As a result, Treasury yields have rebounded, lifting borrowing costs elsewhere, including mortgage rates.

Meanwhile, job growth hasn’t been as robust as other indicators have been, casting gloom over the housing market. In addition, uncertainty about President Donald Trump’s tariffs and recession fears still linger, according to Redfin.

“A lot of buyers are hesitating because they’re worried about potentially losing their jobs, losing money in their stock portfolio, and the economy in general,” said Josh Felder, a Redfin Premier agent in San Francisco, in a statement. “Many of the buyers who are moving forward are making offers with contingencies, and are willing to walk away during the inspection period if they don’t get the concessions they want.”

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That’s because even as home prices continue to hover around record levels, they are also edging lower and lagging behind the rate of inflation, which has heated up amid President Donald Trump’s tariffs.

“For the first time in years, home prices are failing to keep pace with broader inflation,” said Nicholas Godec, head of Fixed Income Tradables & Commodities at S&P Dow Jones Indices, in a statement on Tuesday. The last time that happened was mid-2023.

The latest S&P Cotality Case-Shiller home price data showed that the 20-city index fell 0.3% in June from the prior month, marking the fourth consecutive monthly decline.

On an annual basis, the 20-city composite was up 2.1%, down from a 2.8% increase in the previous month, and the national index saw a 1.9% yearly gain, down from 2.3%. Meanwhile, the consumer price index rose 2.7% in June from a year ago.

“This reversal is historically significant: During the pandemic surge, home values were climbing at double-digit annual rates that far exceeded inflation, building substantial real wealth for homeowners,” Godec added. “Now, American housing wealth has actually declined in inflation-adjusted terms over the past year—a notable erosion that reflects the market’s new equilibrium.”

Weak prices suggest underlying housing demand remains muted, he said, despite the spring and summer historically being the peak period for homebuying.

In fact, this year’s selling season has been a bust. While sales of existing homes have ticked up recently, they are still subdued and prices are flat. In addition, sales of new homes are slumping with prices down.

Conditions have been so dire that Moody’s Analytics chief economist Mark Zandi sounded the alarm on the housing market even louder last month.

In Godec’s view, the recent shift in the housing market could represent a new normal—but one that also has a positive angle.

“Looking ahead, this housing cycle’s maturation appears to be settling around inflation-parity growth rather than the wealth-building engine of recent years,” he said.

That’s as pandemic-era hot spots in the Sun Belt have cooled off with demand increasingly tilting toward established industrial centers that enjoy sustainable fundamentals like employment growth, greater affordability, and favorable demographics.

“While this represents a loss of the extraordinary gains homeowners enjoyed from 2020-2022, it may signal a healthier long-term trajectory where housing appreciation aligns more closely with broader economic fundamentals rather than speculative excess,” Godec added.

Meanwhile, analysts at EY-Parthenon sounded gloomier about the housing market in a report that also came out on Tuesday, predicting that home prices will turn negative on an annual basis by year-end due to low demand and rising inventories.

Home listings are up 25% from a year ago, and inventories have risen for 21 consecutive months. Homebuilders are also cautious given that demand is under pressure and construction costs are still elevated.

“Looking forward, the housing market is expected to stay stagnant, as slowing income growth and persistently high borrowing costs continue to limit demand,” the EY report said. “While proposed changes to the regulatory environment can help improve builder sentiment, elevated construction costs due to higher tariffs along with ample inventories will continue to constrain construction activity.”

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Interesting observations about the current housing market, meme stocks (again), GDP, Fed Meeting, Stock Market, and the latest Jobs Report updates. 

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. 

00:00 Introduction to Economic Turmoil 

01:21 Jobs Report According to the BLS 

09:23 Impact of Tariff Negotiations 

12:36 The Broader Trade Landscape 

16:04 Stock Market Reactions 

24:11 GDP and Inflation Insights 

31:52 The Fed’s Steady Hand (Interest Rates) 

39:55 Housing Market Dynamics 

39:40 Affordability Crisis in Real Estate 

50:23 The Return of Meme Stocks 

Resource mentioned: 
The GameStop Revolution, One Year Later  | Podcast Episode 

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Next-generation real estate company Opendoor Technologies (OPEN 6.00%) wasn’t exactly looking like the wave of the future in the first summer month of this year.

June saw the company’s stock lose more than 18% of its value, which wasn’t all that surprising given a piece of financial engineering it announced toward the start of the month. An analyst’s recommendation downgrade also dampened investor sentiment.

Splitsville

On June 6, the company revealed that it had filed the initial regulatory paperwork to prepare for a reverse stock split. It intends to bring the matter to a vote in a special meeting for its investors.

A reverse stock split is a measure in which a company reduces its total number of shares outstanding. In its press release divulging the news, Opendoor quoted CFO Selim Freiha as saying that the move “is intended to support long-term shareholder value and give us optionality in preserving our listing on Nasdaq.”

The company said it aimed to reverse-split its stock at a ratio of one share for every 10, up to 1-for-50.

I should stress here that neither a standard nor a reverse stock split changes the market cap of a stock; only the amount of shares outstanding and the price are modified. The fewer shares, the higher the price in the case of reverses.

Opendoor had intended to hold the special shareholder meeting on Monday, July 28.

The company is vulnerable to downturns in the housing market, as it is essentially a reseller that buys homes, then spruces them up in order to “flip” them on the market and pocket a profit. This is a juicy business model when housing is on an upswing, but it can produce major headaches if the market is stagnant or heading south.

An analyst became more bearish

As June worked its way to a finish, a new analyst report threw a bit of a shadow on Opendoor stock. CItizens JMP’s Andrew Boone re-evaluated his take on the company and elected to downgrade his recommendation on the shares. Now Boone believes Opendoor only rates a market perform (i.e., hold) instead of a market outperform (buy).

According to reports, the basis for Boone’s new view is his belief that Opendoor seems to be functioning more as a backup option for people trying to sell their homes, rather than as their primary means of sale. He also mentioned the company’s high level of debt, which has become expensive to service.

On a brighter note, he said that Key Connections, a new program that connects partner real estate agents with sellers, could help Opendoor improve its fortunes.

To me, Opendoor is a company that has some interesting ideas for how to profit from real estate. It hasn’t yet turned these concepts into a viable business, however, so I would give its stock a pass until more signs of potential success emerge.