Big Revision, The Lower Rates are Coming, Mixed Inflation Numbers, and Grief

September 14, 2025

THE LABOR MARKET HAS BEEN WORSE THAN WE WERE LED TO BELIEVE: Every August or September, the U.S. Bureau of Labor Statistics publishes a set of revisions to its payroll growth numbers. The revisions are more comprehensive and accurate because they are based on state unemployment insurance tax records, not surveys. Last week, the BLS issued a revision to its numbers for the year that ended March 2025. It adjusted the number of new jobs downward during that period by 911,000. Instead of 1.8 million new jobs, the new figure is 847,000, or about 71,000 per month, a much more anemic figure. This is the largest downward revision since 2009, and the second largest since 1979 when they started keeping these records. While in the short term, investors will like this because it creates a greater likelihood of a Fed interest rate reduction next week, it will add to fears that the "slowing but still growing" theme of this economy may struggle to hold.

INVESTORS ANTICIPATING AN INTEREST RATE DECREASE: U.S. stocks rose this week, with the NASDAQ closing at a record high and the S&P 500 rising by 1.6%. Investors were trading with optimism that the Federal Reserve will cut its key interest rate next week. The combined performance of the Magnificent Seven stocks rose to new heights as continued signs of AI growth are seen. Of the eleven sectors in the S&P 500, the technology sector led the rally last week, rising 3.1%.

LONGER-TERM PERFORMANCE: Below are the annualized three-year and five-year numbers for these same indices.

HOW ARE INVESTORS FEELING ABOUT THIS MARKET?: According to a weekly survey by the American Association of Individual Investors, 50% of investors are bearish about the stock market performance for the next six months. 23% are neutral. 28% are bullish (33% were bullish last week).

INFLATION FOR AUGUST COMES IN A LITTLE HOTTER THAN EXPECTED: The Consumer Price Index (CPI) rose 0.4% in August, and year over year it rose by 2.9%. "Core" CPI, which strips out the more volatile categories of energy and food, rose 0.3%, as expected. The annual Core CPI stood pat at 3.1%. Energy prices rose by 0.7%. But the big contributor was airline fares, which jumped 5.9% after rising 4.0% the month before.

WHOLESALE INFLATION NUMBERS WERE MORE ENCOURAGING: The Producer Price Index numbers came in last week, a measure of prices paid by consumers and often a leading indicator of where the CPI will go. In August, the PPI declined by 0.1%. The Fed has been concerned that tariffs are going to push prices higher. So far, this has not happened. Goods prices are up 0.5% (annualized) in the past six months. Service prices are up 1.4% annualized over the same period.

RUSSIA CUTS ITS KEY INTEREST RATE: Meanwhile, Russia cut its key interest rate for the third consecutive meeting. The rate was cut from 18% to 17%.

ENDOWMENTS: Over the past two to three years, the largest tech company stocks have created some anomalies and distortions in the markets. There has been growing data supporting the general proposition that anyone who has been broadly diversified over the last few years has found it difficult to keep up with market indexes. These indices are highly influenced by these large tech companies that have been outperforming. We took a look at endowment data that came out for the fiscal year 2024 recently. During that year that ended June 30, 2024, the S&P 500 was up 24.56%. Below are the returns of the top 15-sized endowments in the country.

Harvard 5%

University of Texas System 5.5%

Yale 1.7%

Stanford 3.1%

Princeton -0.02%

MIT 4.8%

U. Penn 6.6%

Texas A&M 5.7%

U. Michigan 7.2%

U. California 8%

Notre Dame 7.7%

Columbia 8.3%

Northwestern 3.7%

Johns Hopkins 23.9%

Washington University 4.5%

IS "WARMING UP" NO LONGER A THING?: This weekend, my wife and I visited a new coffee shop. I saw that they only had one size of coffee, and so I ordered a cup of black coffee. The woman behind the counter told me that I could get free refills. So, I sat down with Deb and drank my coffee. When there was just a little bit of coffee at the bottom, I took my mug up to the counter and asked if I could get my cup warmed up. "What?" she said. "Can you please warm up my coffee?" She just stared at me in confusion. So I said, "Can I get a refill?" She said, "Oh, sure!" Do Gen Z's not know the term "warm up?"

GRIEF: In my line of work, I deal with people in grief. I deal with husbands who have lost their wives and, more often, wives who have lost their husbands. We have clients who have lost siblings. We have clients who have lost children. I have been through sudden and devastating grief myself, as have many of you. With the risk of hitting a political nerve, this week, when I heard the news of the assassination of a young, 31-year-old husband and father of two little children, my mind and heart went immediately to that young family, and the dark, dark times they are enduring right now, and it made me sad. Whether you love or hate the ideas this young man espoused, I think we can all unite on that, and if you are a praying person, to pray for them. Have a great week!

Our purpose is to honor God by helping our clients see the objective, find the path, and navigate past the obstacles to a more prosperous future.

Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545

dmacgray@stonecropadvisors.com

"People talk as if grief were just a feeling -- as if it weren't the continually renewed shock of setting out again and again on familiar roads and being brought up short by the grim frontier post that now blocks them." C.S. Lewis

"But to you who are listening, I say: Love your enemies, do good to those who hate you, bless those who curse you; pray for those who mistreat you. If someone slaps you on one cheek, turn to them the other also. If someone takes your coat, do not withhold your shirt from them. Give to everyone who asks you, and if anyone takes what belongs to you, do not demand it back. Do to others as you would have them do to you." Luke 6:27-31

SOURCES:

INFLATION FOR AUGUST COMES IN A LITTLE HOTTER THAN EXPECTED: https://www.ftportfolios.com/retail/blogs/economics/index.aspx

THE LABOR MARKET HAS BEEN WORSE, MUCH WORSE, THAN WE WERE LED TO BELIEVE: https://www.ftportfolios.com/Commentary/EconomicResearch/2025/9/11/bls-payroll-revisions-slash-job-gains-by-nearly-a-million

WHOLESALE INFLATION NUMBERS WERE MORE ENCOURAGING: https://www.ftportfolios.com/retail/blogs/economics/index.aspx

RUSSIA CUTS ITS KEY INTEREST RATE: https://www.wsj.com/articles/russias-central-bank-cuts-key-rate-for-third-consecutive-meeting-138f48e7?mod=economy_lead_pos2

HOW ARE INVESTORS FEELING ABOUT THIS MARKET?: https://myweeklystock.substack.com/p/weekly-market-recap-sep-8-12-markets?utm_campaign=email-half-post&r=s86er&utm_source=substack&utm_medium=email

ENDOWMENTS: https://www.insidehighered.com/news/business/financial-health/2025/02/12/endowment-returns-climb-amid-fiscal-uncertainty

(c) 2025 Anno Domini, Stonecrop Wealth Advisors, LLC, All Rights Reserved

Investment advisory services offered through Stonecrop Wealth Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission.

SDG

*S&P 500: This is a measure of the performance of the 500 largest companies in the United States, and it a common index to track the performance of U.S. equity markets, especially the large cap markets.

*MSCI All Country World Index X US: This is a broad measure of the performance of worldwide equity markets excluding the United States.

*Bloomberg U.S. Aggregate: This is a measure of the U.S. bond markets.