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Interest Rate Relief, Stocks Up, Social Security Clock Ticking, and Gators

  • Writer: Doug MacGray
    Doug MacGray
  • Sep 21
  • 5 min read

September 21, 2025


THE FED LOWERS ITS KEY INTEREST RATE: Last week, as expected by just about everyone, the Federal Reserve lowered the target range for the federal funds rate by one-quarter of a percentage point to 4 to 4.25%. The Fed stated:


"Recent indicators suggest that growth of economic activity moderated in the first half of the year. Job gains have slowed, and the unemployment rate has edged up but remains low. Inflation has moved up and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risk to both sides of its dual mandate and judges that downside risks to employment have risen."


There was only one dissenting vote, and that vote was for a larger rate cut. The Fed's forecasts show that it believes the economy will produce stronger employment in the future and that inflation remains a risk. Another rate cut in October seems highly possible.


LOWER RATES AND RECORD HIGH MARKETS: After the Fed lowered rates, stocks closed the week at record highs once again. Investors are optimistic that the cuts will keep the rally going. Smaller cap stocks jumped even more as such companies tend to have more floating-rate debt and shorter-term debt, meaning they will benefit more. The Russell 2000 was up over 2% for the week. Still, many investors remain concerned about third-quarter corporate earnings reports, worrying that tariff-related challenges may begin showing. FedEx earlier said that it expected a $1 billion hit to earnings due to tariffs. FedEx stock is down 18% for the year, but on Friday, it posted better-than-expected earnings for last quarter, and its stock rose 2.3%.


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


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RETAIL SALES UP IN AUGUST: U.S. consumers kept spending in August, with retail sales rising by 0.6%, the third consecutive monthly increase. August retail sales were 5.0% higher than one year ago.


HOUSING STARTS DECLINE: With the Fed lowering interest rates, one desired future result is a better housing market. New home construction in August fell by 8.5% from the month before. While home prices have increased in the last few years, new homes have been constructed at very healthy rates. As such, we now have the largest completed single-family home inventory since 2009. Prices remain high. Stricter immigration enforcement is making it more difficult to find or replace workers. Because new construction faces headwinds, builders have been focusing on finishing projects. Home completions were up 8.4% in August. With strong completion activity and slower growth in starts, total homes under construction have fallen 13.3% in the past year.


EUROPEAN POWER NEEDS: For fifteen years, European electricity demand has been declining. That is changing. With widespread electrification, growing demand for electric vehicles and data centers, Goldman Sachs analysts believe Europe will increase electricity generation spending by 60-100% over the next ten years. That would amount to about $3.5 trillion in power investment spending through 2035.


SOCIAL SECURITY: Social Security trust funds are projected to be depleted in 2034. Payroll taxes will cover approximately 80% of scheduled benefits, declining to 72% by the end of the century. Under current law, this would require automatic, across-the-board benefit cuts for tens of millions of Americans if the Congress does not act. What might Congress do? One option will be to dramatically increase the cap on taxable earnings. In 2025, 6.2% Social Security taxes are levied on wages up to $176,100. Senators Bernie Sanders and Elizabeth Warren advocate an increase to $250,000, claiming it will extend solvency into the 2090s. Other options are increasing the retirement age again, limiting spousal benefits for high earners, and going after waste and fraud. I know this sounds a bit cynical, but I do not believe the government will attack the problem until it is more of an emergency, so probably five or more years from now.


QUARTERLY EARNINGS REPORTS: President Trump has just recommended changing the current requirement of corporations to report earnings quarterly to semi-annually. This was the law prior to 1970 when it changed to quarterly. "This will save money and allow managers to focus on properly running their companies," said President Trump. Under the proposed law, corporations would have the option of switching to semi-annual but could still produce quarterly reports if they wished. Some experts believe that the current law forces too much short-term decision-making in running companies. A concern is a bit less transparency. China, UK, Australia and Japan maintain a semiannual mandate for publicly listed companies.


SENIOR EXCITEMENT: I remember when I was in high school, at the end of my junior year. After years of anticipation, I was now a "senior." It was very exciting. Many years later, my wife and I were visiting the U.S.S. Wisconsin Battleship in Virginia Beach. We both had just turned 55, and we qualified for their senior discount. I was happy to save a little money, but attaining the status of "senior" the second time (a status I still hold!) was nowhere near as exciting.


DIDN'T LIKE BEING THIS CLOSE: I have several clients in South Carolina. I just got back from a trip to visit with them. I took the chance to get in 18 holes. In an unplanned encounter, I met this behemoth. I really don't like gators. He had something hanging out of his mouth, something that looked like he had been chewing on (ew), but that was probably good because it meant he was likely no longer hungry.


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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.


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Douglas R. MacGray, J.D., C.F.P. ®

President

Stonecrop Wealth Advisors, LLC

Direct | Cell | Fax

(610) 628 4545



"Don't raise your voice, improve your argument." Desmond Tutu


"Don't have anything to do with foolish and stupid arguments, because you know they produce quarrels." II Timothy 2:23


SOURCES:


(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.

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