This week's economic data revealed massive job revisions, declining wholesale prices, and accelerating inflation. As markets bet on a September 17 rate cut, the contradictory signals raise a critical question: can monetary policy fix what trade uncertainty broke?"
Friday's employment report delivered a shock: just 22,000 jobs added in August, far below the 75,000 economists expected. The unemployment rate ticked up to 4.3%, the highest since October 2021, while job openings fell to a 10-month low.
This week's economic data revealed an economy pulling in different directions. Durable goods orders fell 2.8%, but excluding volatile transportation equipment, orders actually rose 1.1%. Consumer sentiment dropped sharply, yet spending remained robust. Housing prices cooled but didn't crash. The consistent theme across all indicators: gradual cooling rather than dramatic collapse.
Fed Chair Jerome Powell delivered his highly anticipated speech at Jackson Hole this Friday, and the result was a masterclass in strategic ambiguity. While Powell acknowledged that job growth has slowed and inflation remains above the Fed's target, he carefully avoided making any concrete promises about September rate cuts. Yet markets heard exactly what they wanted to hear. Traders are now betting heavily on a quarter-point rate cut next month, essentially reading between the lines of Powell's diplomatic Fed-speak. This disconnect between what was actually said and what markets interpreted reveals something important about how financial markets operate—and what it means for your portfolio and financial planning decisions. The real question isn't what Powell said, but whether he'll deliver on what markets think they heard.
This week's economic data revealed a fascinating disconnect: while markets rallied on expectations of Federal Reserve rate cuts, the underlying fundamentals tell a more complex story. The headline grabber was the U.S.-China tariff truce extension, but the real news was the unprecedented side deal requiring Nvidia and AMD to pay the government 15% of their China chip revenues—marking a shift from pure trade warfare to what experts call "monetized trade policy." Meanwhile, inflation data delivered mixed signals that challenge the case for aggressive monetary easing, with producer prices surging 0.9% monthly as businesses finally began passing tariff costs to consumers after months of absorption.
The S&P 500 rebounded this week, but markets remain stuck in a range as consumers grow more cautious. Spending is still happening — just at a slower pace — while inflation expectations are creeping higher and household debt delinquencies tick up. Add in new tariffs, mixed signals from the services sector, and a “no fire, no hire” job market, and the picture is one of an economy that’s stable for now, but facing cross-currents worth watching.