Federal Reserve Governor Michael Barr said there needs to be clear guardrails to prevent risks as the financial sector looks to adopt artificial intelligence in its core functions. Regulators need to get the balance right between innovation and stability to ensure that AI boosts growth and productivity over the long-term, Barr said at the Singapore […]
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The Federal Reserve Bank of New York released its quarterly report this week, finding the total household debt in the United States increased by $197 billion, up to $18.59 trillion from the previous quarter.
A WalletHub analysis of TransUnion and Fed data found that average household debt increased by $275 to $975 from the second to the third quarter, depending on the state.
Household debt is the total amount of money that members of a household owe to lenders, which may include mortgages, credit cards, auto and student loans, and other credit lines. The number shows how much people are relying on credit versus their cash income.
Voters cited affordability and the economy as top concerns in the November 4 off-year elections. Democrats notched key wins in several high-profile races, with many voters citing the difficult economic landscape today. The economy has been a key pillar of President Donald Trump’s administration, particularly in the form of tariffs.
The New York Fed’s Center for Microeconomic Data found that mortgage balances grew by $137 billion, totaling $13.07 trillion at the end of September. Credit card balances grew at a slower rate, $24 billion, to a total of $1.23 trillion, while student loan balances rose by $15 billion, with a total of $1.65 trillion by the end of the quarter.
The report also noted that student loan delinquency rates are at 9.4 percent, compared to 7.8 percent in quarter one. It found that average delinquency rates remained elevated, reporting that 4.5 percent of outstanding debt in some stage of delinquency.
According to a WalletHub analysis of TransUnion and Federal Reserve data, Hawaii saw the largest average household debt increase, rising by $975 from the second to the third quarter.
California was a close second, experiencing a $880 average household debt increase, bringing the entire state’s total household debt to roughly $3.17 trillion. Colorado, Utah, and Washington shared similar average household debt increases, $832, $831, $824, respectively.
Looking into the fourth quarter, the government shutdown has delayed Supplemental Nutrition Assistance Program (SNAP) benefits payments to 42 million Americans, which may trigger many to turn to credit cards instead to cover their food necessities, creating an uptick of debt in the process, experts say.
Donghoon Lee, economic research adviser at the New York Fed said in a November press release: “Household debt balances are growing at a moderate pace, with delinquency rates stabilizing. The relatively low mortgage delinquency rates reflect the housing market’s resilience, driven by ample home equity and tight underwriting standards.”
Kevin Thompson, CEO of 9i Capital Group and host of the 9innings podcast, told Newsweek for a story earlier in November: “When EBT cards aren’t reloaded on time, people often turn to what little credit they have left, whether that’s maxing out a credit card, taking a quick cash loan with astronomical rate, or simply going without essentials altogether.”
Ofek Lavian, CEO of San Francisco-based Forage, which helps grocers serve the 42 million Americans who rely on EBT to feed their families, told Newsweek for a different November story: “Delays in food assistance will push low-income families toward credit card debt and other predatory options, as they face the impossible choice between feeding their families in November or suffering long-term financial consequences.”
The Kobeissi Letter, a weekly commentary on global finances and markets, wrote in a November 6 X post: “US household debt surged +$197 BILLION in Q3 2025, to a record $18.59 trillion…Americans are piling on debt at a rapid pace.”
The next quarterly household debt report is likely to reflect the government shutdown’s hit to consumer spending and borrowing. The over month long closure has left hundreds of thousands of employees missing paychecks and disrupting millions of benefits.
The “K-shaped” economy, widely touted in the financial press, is the latest expression of wealth inequality. The U.S. economy is experiencing a growing gap between the highest earners and the richest corporations, who are spending and expanding their wealth, and the lowest-income households and mom-and-pop companies, who struggle to pay their bills day to day.
Following the second short-term interest rate cut on Oct. 29, Federal Reserve Chairman Jerome Powell said, “A further reduction in the policy rate at the December meeting is not a forgone conclusion — far from it.”
He cited the Fed’s ongoing concerns regarding inflation, employment, rising defaults in subprime credit, layoffs, and a “bifurcated economy.”
“If you listen to the earnings calls or the reports of big, public, consumer-facing companies, many, many of them are saying that there’s a bifurcated economy there and that consumers at the lower end are struggling and buying less and shifting to lower cost products, but that at the top, people are spending at the higher income and wealth,” Powell said.
That, in a nutshell, is the K-shaped economy.
Can a divided U.S. economy avoid a recession? And how can an economy that’s running hot on one end and cold on the other meet the needs of the millions in the middle?
Read more: The ‘K-shaped’ economy is showing up in credit scores
The K-shaped economy is characterized by robust growth, expanding wealth, and a vibrant economy in the arms at the top of the K.
The legs of the K are where lower-income earners and small businesses continue to struggle.
Cristian deRitis, senior director and deputy chief economist at Moody’s Analytics, said the separation between the two is growing.
“The top 10% of households by income account for about half of all the spending in the U.S. economy, so it’s kind of illustrating the inequality, not only of income, but of spending that’s going on in the economy,” deRitis told Yahoo Finance.
In 2019, the share of spending by the top 10% households was 44.6%. However, the wealth gap goes beyond consumer spending.
“When we think about businesses and the stock market or we think about the labor market, some industries are hiring, others are laying off,” deRitis added. “So, I see that K-shape not only in the consumer — I think that’s where it gets a lot of attention — but it’s actually in a lot of different parts of the economy where you can see that kind of bifurcation of activity.”
DeRitis believes the widening separation between the haves and have-nots goes back to the stimulus relief of the pandemic.
“Households at the bottom in particular got quite a bit of support that helped them to get their finances back in order,” deRitis said. “Delinquency rates went way down. But now that money has run out because inflation has been high, the labor market is slowing — so you don’t have as much wage growth.”
Meanwhile, the top of the K, the wealthiest households and corporations, have benefitted from a rising stock market and asset price appreciation, including housing and crypto.
While the stock market has set record highs recently, it has been on the backs of the largest companies. This is adding to the riches of the very wealthy, who have the biggest individual stake in equities.
During Ford’s Ford (F) latest earnings call, the company highlighted profit driven by its top-of-the-line models, including the F-150, Bronco, Explorer, and Expedition. “The all-new Expedition is red-hot, gaining over three points of segment share, with 75% of customers choosing high-end trims like Tremor,” the company said.
Delta Air Lines’ (DAL) premium-priced seating and iPhone 17 Pro smartphones that top $1,000 are other examples.
Chipotle (CMG) cut its full-year sales outlook for the third straight quarter, with CEO Scott Boatwright citing “persistent macroeconomic pressures” and poorer customers who aren’t eating there as often.
Read more: The Chipotle indicator: Is the economy teetering on a recession or nah?
In an analysis, Torsten Sløk, chief economist for Apollo, reveals that earnings expectations for 2026 have soared for the Magnificent 7 stocks and declined for the rest of the S&P 500 (^GSPC). (Disclosure: Yahoo Finance is owned by Apollo Global Management.)
Anthony Chan, a former economist for the Federal Reserve and JPMorgan Chase, told Yahoo Finance that a K-shaped economic recovery is the latest incarnation of wealth inequality.
“It is showing you that inequality is becoming so bad that it’s now impacting how the economy proceeds. All you have to do is look at the anecdotal evidence on food pantries. They’re getting more and more people visiting food pantries. Why? Because people at the lower end are struggling.”
He also cites the popularity of buy now, pay later.
“I can assure you that the top 1% — the top 10% of the people — are not interested in buy now and pay later. They buy it and they just pay for it and they don’t even think about it. But you’re actually seeing some of the lower-income people buying supermarket groceries with buy now and pay later.”
Read more: Buy now, pay later vs. credit cards: Which should you use for your next purchase?
Chan is not quick to predict a recession. He noted that the Atlanta Fed is projecting 4% growth in the third quarter, following the 3.8% gain in the second quarter.
“I’ve never seen a recession in my entire life where you have 3.8% growth one quarter and 4% in the other quarter,” Chan added. “Potential growth is about 2%, maybe a little bit less than that. So, if you’re growth is twice as fast as potential economic growth, I really think it’s almost economic malpractice to say that we’re entering or close to being in a recession.”
Yet, Chan and deRitis both noted there are wild cards in the economic forecast, and deRitis called out one in particular.
“I suspect that the investments in artificial intelligence are perhaps getting ahead of themselves, and they may not live up to the extreme expectations that we have,” deRitis said. “There’s likely to be some type of correction in the stock market going forward as investors come to grips with the reality.”
In an extended bear market scenario, the top tier of wealthy households might cut back on spending, and the handful of big tech firms that have been leading stock gains would suffer.
“If we have an AI setback, absolutely, it could be a recession,” he added.
Read more: What is a recession?
1. Open a high-yield savings account and watch your savings balance grow faster.
2. Consider a personal loan to pay off debt and get money quickly at the lowest rates.
3. Use a balance transfer credit card to help pay down debt without accruing more interest.
4. Open a home equity line of credit (HELOC) if you need money for a large purchase.
Two federal judges ruled that the Trump administration must use emergency funds to keep SNAP afloat during the shutdown. President Donald Trump visited Asia, striking a trade deal with China. Speculation about a Trump third term heated up again, despite its near impossibility. And judges made consequential rulings regarding federal workers and voter registration.Here are the top stories involving the U.S. government this past week.SNAP crisis as shutdown drags onTwo federal judges ruled nearly simultaneously on Friday that President Donald Trump’s administration must continue to fund the Supplemental Nutrition Assistance Program (SNAP), the nation’s biggest food aid program, using contingency funds during the government shutdown.One out of 8 households in the United States receives SNAP benefits. Here’s a closer look at the data.Pop-up food drives and “grocery buddies” are emerging around the country as SNAP hangs in the balance.Instacart, DoorDash, and Gopuff are among the companies offering discounts to SNAP recipients right now.Video below: Wisconsin bakery offers free bread to support locals facing food benefit lossTrump reaches deal with China while visiting AsiaTrump revealed plans to reduce tariffs on China and announced new trade agreements following a meeting with Chinese President Xi Jinping.Here are some takeaways from the agreement.China also said it will work with the U.S. to resolve issues related to TikTok, potentially finalizing a new ownership deal for the app. While in Asia, Trump met with Japan’s new prime minister, Sanae Takaichi, and announced roughly $500 billion in Japanese investments in the U.S.During his visit to Japan, Trump bragged about the state of the U.S. economy. However, experts say the reality for millions of Americans is not as rosy.Trump announced on social media Thursday, after meeting with the South Korean President Lee Jae Myung, that the U.S. will begin sharing nuclear submarine technology with the Asian country.Video below: President Trump delivers remarks at Yokosuka Naval Base aboard the USS George WashingtonIn other newsTrump is urging Republicans to eliminate the Senate filibuster to reopen the government, but GOP leadership is resisting the move.What is a filibuster and why does Trump want to get rid of it during the shutdown?Could Trump legally run for a third term? Experts say it’s nearly impossible. Here’s why.A federal judge in San Francisco on Tuesday indefinitely barred the Trump administration from firing federal employees during the government shutdown.A judge in D.C. blocked Trump’s proof-of-citizenship mandate for federal voter registration, calling it unconstitutional.Four Republicans joined Democrats in backing a Senate resolution to undo Trump’s tariffs around the globe.The Federal Reserve cut its key interest rate Wednesday for a second time this year as it seeks to shore up economic growth and hiring even as inflation stays elevated.Trump announced plans to begin testing nuclear weapons, raising fears of a new arms race as Russia and China respond with warnings.A Senate hearing for Trump’s surgeon general pick, Casey Means, has been postponed because she went into labor.The federal workforce grew 11% in the past decade. Here are the jobs that had the most and least growth.U.N. High Commissioner for Human Rights Volker Türk said that U.S. military strikes against boats on boats allegedly carrying illegal drugs from South America are “unacceptable” and must stop.Video below: What is the nuclear option? President Trump demands GOP end filibuster, Republicans say no
Two federal judges ruled that the Trump administration must use emergency funds to keep SNAP afloat during the shutdown. President Donald Trump visited Asia, striking a trade deal with China. Speculation about a Trump third term heated up again, despite its near impossibility. And judges made consequential rulings regarding federal workers and voter registration.
Here are the top stories involving the U.S. government this past week.
Video below: Wisconsin bakery offers free bread to support locals facing food benefit loss
Video below: President Trump delivers remarks at Yokosuka Naval Base aboard the USS George Washington
Video below: What is the nuclear option? President Trump demands GOP end filibuster, Republicans say no
new video loaded: Fed Cuts Interest Rates for Second Time This Year
transcript
transcript
My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. Although some important federal government data have been delayed due to the shutdown, the public and private sector data that have remained available suggests that the outlook for employment and inflation has not changed much since our meeting in September. You can argue these positions since it can’t be directly observed. Division, then, you’re talking about going forward. In the near term, risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation. There is no risk-free path for policy as we navigate this tension between our employment and inflation goals. Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate.
By Jamie Leventhal
October 29, 2025
Jamie Leventhal
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The U.S. Federal Reserve announced a 25-basis-point rate cut on Wednesday, but crypto prices still slumped.
A lower federal funds rate makes borrowing costs more affordable, stimulating financial activity. Rate cut announcements typically boost the prices of riskier assets.
Neither crypto nor equities followed that script on Wednesday, however. A potential reason? In a speech following the announcement, Fed Chair Jerome Powell struck a more inflation-hawkish tone than expected when discussing the possibility of future cuts.
“In the committee’s discussions at this meeting, there were strongly differing views about how to proceed in December,” Powell explained. “A further reduction in the policy rate at the December meeting is not a foregone conclusion. Far from it. Policy is not on a preset course.”
His comments undercut the expectations of traders: On Tuesday, the CME Group’s FedWatch tool, which tracks 30-Day Fed Funds futures prices, estimated there was a 90.5% chance the Federal Open Market Committee (FOMC) would slash the policy rate by another 25 basis points at its next meeting in December. That probability plunged to around 65% after Powell’s speech.
The overall crypto market cap dipped by 0.8% on Wednesday, with Bitcoin dropping by 1.3%, per data from CoinGecko. The S&P 500 tracked sideways.
In his speech, Powell said downside risks to employment had increased, justifying the FOMC’s step towards a more neutral policy stance this week. The Fed chair also noted that longer-term inflation expectations remain consistent with the Fed’s 2% goal, though he acknowledged that the Trump Administration’s tariffs could impact that trajectory.
“Higher tariffs are pushing up prices in some categories of goods, resulting in higher overall inflation,” Powell said. “A reasonable base case is that the effects on inflation will be relatively short-lived — a one-time shift in the price level. But it is also possible that the inflationary effects could instead be more persistent, and that is a risk to be assessed and managed. Our obligation is to ensure that a one-time increase in the price level does not become an ongoing inflation problem.”
Conor King Devitt
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The Federal Reserve on Wednesday lowered its benchmark interest rate by 0.25 percentage points, marking its second consecutive rate cut this year as the U.S. economy contends with a sharp slowdown in hiring.
The Fed cut lowers the federal funds rate — what banks charge each other for short-term loans — to between 3.75% and 4%, down from its prior range of 4% to 4.25%. The Fed reduced rates by the same amount in September, its first cut since December of 2024.
The central bank’s move to ease monetary policy is aimed at shoring up economic growth by lowering borrowing costs, spurring consumer spending and investment by businesses. Although the ongoing U.S. government shutdown has delayed release of the Labor Department’s September jobs report, other indicators point to a continued slowdown in hiring. The ADP National Employment Report, for instance, showed private-sector payrolls shrinking by 32,000 last month.
In its policy statement on Wednesday, the Fed said “downside risks to employment rose in recent months.”
The Federal Reserve’s so-called dual mandate requires monetary policymakers to keep both inflation and unemployment low, with Fed Chair Jerome Powell noting last month that risks to the labor market are growing.
“In resuming its rate-cutting cycle, the Fed is responding primarily to signs of weakening labor demand,” Seema Shah, chief global strategist at Principal Asset Management, said in an email. “The apparent softening in the jobs market appears to have prompted a preemptive move to prevent further deterioration, with September’s rate reduction likely marking the start of a sequence of cuts.”
Shah added that she expects an additional 0.25 percentage point cut at the Fed’s Dec. 10 meeting. The Federal Open Market Committee, or FOMC, the panel that sets the Fed’s monetary policy, isn’t scheduled to meet on interest rates in November.
The near total blackout on government economic data during the shutdown may complicate the Fed’s decision-making, experts said. Typically, Fed officials are able to draw on a host of official reports, ranging from measures of employment growth to inflation markers, as they seek to determine the best path for policy.
“While today’s rate cut and the general direction of future policy remain relatively clear, guidance on the committee’s perspective on economic conditions is more necessary than ever,” Bankrate financial analyst Stephen Kates said in an email. “A prolonged government shutdown and ongoing tariff negotiations continue to introduce significant uncertainty into the immediate monetary policy outlook.”
Ten of the 12 FOMC members voted in favor of the quarter-point cut, with two members objecting. Fed Governor Stephen Miran dissented, preferring a 0.50 percentage point cut, as he did at the September meeting. Kansas City Fed President Jeffry Schmid also dissented, saying he preferred no rate change.
While the Fed is now focused on weakness in the labor market, its battle against inflation isn’t over. The Fed cranked rates higher after consumer prices soared during the pandemic, with inflation hitting a 40-year high of 9.1% in June 2022.
Because higher interest rates make it more expensive to borrow, businesses and consumers typically react by paring spending, which dampens demand throughout the economy and cools inflation. Since mid-2022, inflation has receded to an annual rate of 3% as of September, although that remains higher than the Fed’s target of a 2% annual pace.
While the Trump administration’s wide-ranging tariffs are starting to trickle through to consumer prices, the impact has been more muted than economists had predicted earlier this year. Some businesses are eating some of the tariff costs, while others stocked up on imports earlier in the year to get ahead of the import duties.
“Though inflation is still higher than comfortable, the jobs market is holding on to signs of weakness, and their desire to stimulate the economy further is likely to continue outweighing inflation concerns,” said Steve Rick, chief economist at financial services company TruStage.
‘Everyone is doing well’: President Trump praises economy amid layoffs, potential SNAP crisis
President Trump promotes economic prosperity during his visit to Japan, while layoffs and a federal shutdown threaten millions back in the U.S.
Updated: 3:03 PM PDT Oct 28, 2025
President Donald Trump is promoting Japanese companies investing $550 billion in the United States while visiting the East Asian country. The president said the funds would be “at my direction” as part of a trade framework secured with Japan. The president also boasted about the U.S. economy, despite contrasting economic challenges.”Well, everyone in our country is now doing well. My first term, we built the greatest economy in the history of the world. We had an economy like nobody has seen before now. We’re doing it again, but this time, actually, it’s going to be much bigger, much stronger,” Trump said.The president highlighted the stock market reaching all-time highs, but economists point to other indicators that tell a different story. Amazon announced it is cutting 14,000 jobs, UPS is eliminating roughly 48,000 positions and closing more than 90 buildings as part of a turnaround plan, and Target, Ford, and GM have also announced layoffs amid slowing demand. Additionally, the federal government shutdown threatens food aid benefits for more than 40 million Americans as soon as Nov. 1, and September’s CPI data showed prices are rising again just as the Federal Reserve has cut interest rates to support the economy.”I don’t really understand the optimism to be perfectly honest, and I’m a very optimistic, very little of a ‘doomer’ person. We’ve had seven months in a row of contractions and manufacturing output. The labor market cooled to such an extent that it forced the Fed to cut rates in September,” said Jai Kedia from the Cato Institute.President Trump is preparing to meet with Chinese President Xi Jinping amid the ongoing U.S.–China trade war. Treasury Secretary Scott Bessent said the two countries have reached a “very successful framework” ahead of their summit, covering tariffs, rare-earth exports and large U.S. agricultural purchases.Meanwhile, 26 states and Washington, D.C., are suing the USDA, arguing the agency has contingency funds that could be used to maintain SNAP benefits during the shutdown. In a memo, the USDA stated that those funds can only be used for a natural disaster or other emergency, not to operate during a shutdown, and placed the blame on Senate Democrats, saying, “We are approaching an inflection point for Senate Democrats. Continue to hold out for the Far-Left wing of the party or reopen the government so mothers, babies, and the most vulnerable among us can receive timely WIC and SNAP allotments.” The states argue the law requires the USDA to issue benefits as long as money is available.It comes after another failed vote occurred today in the Senate. A federal judge in San Francisco has issued a preliminary injunction blocking the Trump administration from firing federal workers during the government shutdown. This move comes as a lawsuit challenges recent job cuts in education, health, and other areas.For more coverage from the Washington News Bureau here:
President Donald Trump is promoting Japanese companies investing $550 billion in the United States while visiting the East Asian country. The president said the funds would be “at my direction” as part of a trade framework secured with Japan.
The president also boasted about the U.S. economy, despite contrasting economic challenges.
“Well, everyone in our country is now doing well. My first term, we built the greatest economy in the history of the world. We had an economy like nobody has seen before now. We’re doing it again, but this time, actually, it’s going to be much bigger, much stronger,” Trump said.
The president highlighted the stock market reaching all-time highs, but economists point to other indicators that tell a different story.
Amazon announced it is cutting 14,000 jobs, UPS is eliminating roughly 48,000 positions and closing more than 90 buildings as part of a turnaround plan, and Target, Ford, and GM have also announced layoffs amid slowing demand.
Additionally, the federal government shutdown threatens food aid benefits for more than 40 million Americans as soon as Nov. 1, and September’s CPI data showed prices are rising again just as the Federal Reserve has cut interest rates to support the economy.
“I don’t really understand the optimism to be perfectly honest, and I’m a very optimistic, very little of a ‘doomer’ person. We’ve had seven months in a row of contractions and manufacturing output. The labor market cooled to such an extent that it forced the Fed to cut rates in September,” said Jai Kedia from the Cato Institute.
President Trump is preparing to meet with Chinese President Xi Jinping amid the ongoing U.S.–China trade war. Treasury Secretary Scott Bessent said the two countries have reached a “very successful framework” ahead of their summit, covering tariffs, rare-earth exports and large U.S. agricultural purchases.
Meanwhile, 26 states and Washington, D.C., are suing the USDA, arguing the agency has contingency funds that could be used to maintain SNAP benefits during the shutdown.
In a memo, the USDA stated that those funds can only be used for a natural disaster or other emergency, not to operate during a shutdown, and placed the blame on Senate Democrats, saying, “We are approaching an inflection point for Senate Democrats. Continue to hold out for the Far-Left wing of the party or reopen the government so mothers, babies, and the most vulnerable among us can receive timely WIC and SNAP allotments.”
The states argue the law requires the USDA to issue benefits as long as money is available.
It comes after another failed vote occurred today in the Senate. A federal judge in San Francisco has issued a preliminary injunction blocking the Trump administration from firing federal workers during the government shutdown. This move comes as a lawsuit challenges recent job cuts in education, health, and other areas.
For more coverage from the Washington News Bureau here:
The Federal Reserve is set to make its next interest rate decision on Wednesday, even as a near-total blackout of federal economic data continues amid the government shutdown.
The Labor Department, however, on Friday released one key report ahead of its meeting: the Consumer Price Index. That report showed that the inflation rate rose at a pace of 3% last month, cooler than expected, as the impact of President Trump’s wide-ranging tariffs have so far been more muted than economists have forecast.
Economists say the softer inflation report likely opens the door to a rate cut on Wednesday.
“Concerns about tariffs driving prices higher are still not showing up in most categories,” Scott Helfstein, Global X’s head of investment strategy, said Friday in an email. “Nothing in the inflation print should stop the Fed from cutting rates next week. Yes, prices are higher, but not enough to keep them from helping the economy,” he added.
There’s a 96.7% probability that the Fed will cut its benchmark rate by 0.25 percentage points on Wednesday, according to CME FedWatch, which bases its predictions on 30-Day Fed Funds futures prices.
A quarter-point cut would bring down the benchmark rate to a range of between 3.75% to 4%, down from its current range of between 4% to 4.25%, and mark the Fed’s second rate cut this year.
The Federal Reserve has a so-called dual mandate to keep both inflation and unemployment low. When inflation is soaring — such as when it hit a 40-year high of 9.1% in June 2022 — the Fed ratchets rates higher to make borrowing more expensive, which in turn dissuades consumers and businesses from spending, tempering inflation.
But a weak labor market can be bolstered by lower interest rates, because it’s easier for businesses to expand and hire more workers if it’s less expensive to borrow money.
When Powell last month announced the Fed’s first rate cut of 2025, he signaled the central bank was growing increasingly concerned about a sharp slowdown in the labor market. “In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen,” he said in September.
However, the monthly jobs report for September wasn’t released earlier this month due to the federal shutdown. In an Oct. 14 speech, Powell acknowledged the data halt, yet added that the central bank has access to “a wide variety of public- and private-sector data that have remained available.”
According to those sources of information, “the outlook for employment and inflation does not appear to have changed much since our September meeting,” Powell noted.
Friday’s CPI report “should keep the Fed focused on the labor market in terms of the near-term policy trajectory. In the absence of the September jobs report, an October cut appears to be a done deal,” Bank of America economists noted in a Friday research report.
While a quarter-point rate cut is relatively small, it would come after September’s reduction — and economists are also expecting the Fed to usher in a third cut at its December meeting. Together, that means the benchmark rate by year-end could sit 0.75 percentage points lower than it was in January.
That would help reduce rates for credit cards and loans such as home equity lines of credit, or HELOCs. Those types of credit products are based on the prime rate, or the interest rate that banks charge each other, and which in turn is based on the Fed’s benchmark rate.
Mortgage rates, meanwhile, have already dipped ahead of the Fed’s rate decision. While mortgage rates aren’t set by the Fed, they’re heavily influenced by its policy moves, as well as bond market investors’ expectations for economic growth and inflation.
The average 30-year fixed-rate mortgage dropped to 6.19% as of Oct. 23, marking their lowest level in a year, according to Freddie Mac. Homebuyers might not see much more of a break, at least in the near-term, economists said.
“Mortgage rates have moved down notably in advance of the Fed’s meeting, hitting their lowest level in more than a year, but further declines will depend on new developments,” noted Realtor.com’s chief economist Danielle Hale in an email. “The Fed’s decisions are anticipated by the market, which means that the upcoming rate cut and several more over the next few months are already largely priced in.”
Dow Jones futures will open Sunday evening, along with S&P 500 and Nasdaq futures after the stock market rally hit record highs Friday. Now get ready for a huge week of earnings, another Fed rate cut and a Trump-Xi meeting A “comprehensive” U.S.-China trade deal is close after weekend talks, setting the stage for President Donald Trump and Chinese President…
The Federal Reserve faces an unprecedented challenge as it prepares to set interest rates next week—making its decision with almost no economic data available.
The government shutdown has halted the release of most U.S. economic statistics, including the monthly jobs report. However, the Fed also recently lost access to one of its main private sources of backup data.
Payroll-processing giant ADP quietly stopped sharing its internal data with the central bank in late August, leaving Fed economists without a real-time measure that had covered about one-fifth of the nation’s private workforce. For years, the feed had served as a real-time check on job-market conditions between the Bureau of Labor Statistics’ monthly reports. Its sudden disappearance, first reported by the Wall Street Journal, could leave the Fed “flying blind,” former Bureau of Labor Statistics commissioner Erica Groshen said.
Groshen told Fortune that, in her decades working at the BLS and inside the Fed, the loss of ADP data is “very concerning for monetary policy.”
The economist warned that at a moment when policymakers are already navigating a fragile economy—Fed Chair Jerome Powell has said multiple times that there is no current “risk-free path” to avoid recession or stagflation—the data blackout raises the risk of serious missteps.
“The Fed could overtighten or under-tighten,” Groshen said. “Those actions are often taken too little and too late, but with less information, they’d be even more likely to be taken too little too late.”
Since at least 2018, ADP has provided anonymized payroll and earnings data to the Fed for free, allowing staff economists to construct a weekly measure of employment trends. The partnership is well-known to both Fed insiders and casual market watchers. However, according to The American Prospect, ADP suspended access shortly after Fed Governor Christopher Waller cited the data in an Aug. 28 speech about the cooling labor market.
Powell has since asked ADP to restore the arrangement, according to The American Prospect.
Representatives at ADP did not respond to Fortune’s request for comment. The Fed declined to comment.
Groshen said there are several plausible reasons why ADP might have pulled the plug. One possibility, she said, is that the company found a methodological issue in its data and wanted to fix it before continuing to share information used in monetary policy.
“That would actually be a responsible decision,” she told Fortune, noting that private firms have more flexibility than federal agencies but less institutional obligation to be transparent about errors.
Another explanation, Groshen said, could be internal or reputational pressure. After Waller mentioned the collaboration publicly, ADP may have worried about how it looked to clients or shareholders.
“You could imagine investors saying, ‘Why are we giving this away for free? The Fed has money,’” she said. The company might also have wanted to avoid being seen as influencing central-bank decisions, especially in a politically charged environment.
Whatever the motivation, Groshen said the episode underscores how fragile public-private data relationships remain. Without clear frameworks or long-term agreements, companies can withdraw at any time.
“If policymakers build systems around data that can vanish overnight,” she said, “that’s a real vulnerability for economic governance.”
The timing could hardly be worse.
On Thursday next week, the Federal Open Market Committee meets to decide whether to lower interest rates again, following a long-awaited quarter-point cut in September. With the BLS pausing most releases under its shutdown contingency plan, official figures on employment, joblessness, and wages have been delayed—starting with the September report and possibly extending into October.
In the absence of real-time data, Fed economists are relying on a patchwork of alternatives: state unemployment filings, regional bank surveys, and anecdotal reports from business contacts. Groshen called those “useful but incomplete,” adding that the lack of consistent statistical baselines makes monetary policy far more error-prone.
She advocated for the BLS to receive “multiyear funding” from Congress so that it could stay open even during government shutdowns.
“I hope that one silver lining to all these difficulties will be a realization on the part of all the stakeholders, including Congress and the public, that our statistical system is essential infrastructure that needs some loving care at the moment,” Groshen said.
Eva Roytburg
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The Federal Reserve is widely expected to lower interest rates by a quarter of a percentage point when policymakers meet next week, but concerns are mounting over the lack of reliable employment figures.
Since the start of the federal government shutdown three weeks ago, the central bank has been cut off from vital economic data that the Fed typically relies on to guide its policy decisions. Analysts have compared the situation to a pilot attempting to land a plane blind.
Financial markets are all but certain that the Fed’s Board of Governors will lower its benchmark rate to the 3.75%–4% range during the Federal Open Market Committee meeting scheduled for Oct. 28-29.
Fed Gov. Stephen Miran, recently appointed to the board by President Donald Trump, has been advocating for a larger half-point cut, echoing the president’s calls for more aggressive action.
But Fed Chair Jerome Powell so far has taken a more moderate approach, referring to reductions as “risk management” measures.
Looking ahead, opinions are divided on what the central bank will do come December.
A recent poll of 117 economists conducted by Reuters found that fewer than three-quarters expect another cut before the end of the year.
The Federal Reserve has a dual congressional mandate to promote maximum employment and keep inflation as close to its 2% target as possible.
But since the nonessential parts of the federal government ceased operations on Oct. 1, official jobs numbers from the U.S. Bureau of Labor Statistics have not been released since early September, leaving the Fed with a murky view of economic risks.
The latest available data indicates that the labor market has softened over the summer, with just 22,000 jobs added in August and the unemployment rate ticking up to 4.3% from 4.2% the previous month.
Figures coming out of the private sector suggest that the job market remains mostly in a holding pattern, with no major fluctuations in either layoffs or hiring.
Meanwhile, the Bureau of Labor Statistics is scheduled to release the consumer price index for September on Thursday, after some furloughed staffers were ordered back to work to compile the latest inflation data.
Economists polled by Reuters expect the report to show that consumer inflation inched up to 3.1% in September from 2.9% in August, injecting uncertainty into the prospect of an additional Fed rate cut at the end of 2025.
Typically, if the Fed observes a sharp slowdown in hiring, it would be inclined to cut the federal funds rate, while rising inflation would make it more likely to delay another rate reduction.
It’s important to remember that the Fed does not directly set mortgage rates, but rather influences them in a more roundabout way by setting the federal funds rate.
However, the information vacuum created by the government shutdown that’s clouding the Fed’s decision-making process could negatively influence the housing market in different ways.
Jobs data informs Fed policy decisions, which anchor the 10-year Treasury and, by extension, mortgage rates. Without that benchmark, it is harder to predict exactly what the central bank will do during its upcoming meetings.
Additionally, not knowing the true state of the labor market compounds the uncertainty already weighing on would-be homebuyers and sapping demand.
Snejana Farberov
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Federal Reserve Chair Jerome Powell on Tuesday emphasized that a sharp slowdown in hiring poses a growing risk to the U.S. economy, a sign that the central bank will likely cut its key interest rate twice more this year.
Powell, who spoke today before the National Association of Business Economics in Philadelphia, said that despite the federal government shutdown cutting off official economic data, “the outlook for employment and inflation does not appear to have changed much since our September meeting,” when the Fed reduced its key rate for the first time this year.
Fed officials at the September meeting also forecast that the central bank would reduce its rate twice more this year and once in 2026. Lower rates from the Fed could reduce borrowing costs for consumer and business loans, making it cheaper for businesses to expand operations and hire new workers, and for Americans to buy houses, autos and other items.
“Holding rates higher presents risks to the job market. Job creation is below trend given the pace of economic growth,” noted Scott Helfstein, head of investment strategy at investment firm Global X, in an emailed response to Powell’s comments. “The Fed is still likely to cut rates in October and December, but investors should be prepared for a range of outcomes as Powell is trying to leave all options open.”
The Fed’s next rate decision will be made at its Oct. 29 meeting. Following that, the central bank has one more rate decision meeting scheduled in 2025, set for Dec. 10.
Powell reiterated a message he first delivered after the September meeting, when he signaled that the Fed is slightly more worried about the job market than its other congressional mandate, which is to keep prices stable. Tariffs have lifted the Fed’s preferred measure of inflation to 2.9%, he said, but outside the duties there aren’t “broader inflationary pressures” that will keep prices high.
“Rising downside risks to employment have shifted our assessment of the balance of risks,” he said.
Powell also said that the central bank may soon stop shrinking its roughly $6.6 trillion balance sheet. The Fed has been allowing roughly $40 billion of Treasuries and mortgage-backed securities to mature each month without replacing them. The shift could weigh on longer-term Treasury interest rates.
Separately, Powell spent most of his speech defending the Fed’s practice of buying longer-term Treasury bonds and mortgage-backed securities in 2020 and 2021, which were intended to lower longer-term interest rates and support the economy during the pandemic.
Yet those purchases have come under a torrent of criticism from Treasury Secretary Scott Bessent, as well as some of the candidates floated by the Trump administration to replace Powell when his term as Chair ends next May.
Bessent said in an extended critique published earlier this year that the huge purchases of bonds during the pandemic worsened inequality by boosting the stock market, without providing noticeable benefits to the economy.
Other critics have long argued that the Fed kept implementing the purchases for too long, keeping interest rates low even as inflation began to spike in late 2021. The Fed beginning in 2021 stopped the purchases and then sharply boosted borrowing costs to combat inflation.
“With the clarity of hindsight, we could have—and perhaps should have—stopped asset purchases sooner,” Powell said. “Our real-time decisions were intended to serve as insurance against downside risk.”
Powell also said the purchases were intended to avoid a breakdown in the market for Treasury securities, which could have sent interest rates much higher.
The jobs report, which usually comes out on the first Friday of every month, will not be released today. Two private surveys that came out this week show *** wide range of numbers. The payroll provider ADP issued its monthly employment data, which does not include government agencies, showing the economy lost 32,000 jobs in September, while another survey by FactSet suggests 50,000 jobs were created at an already uncertain time in the economy. This is making things even more unclear. If the official government jobs report is delayed for several weeks, it could create *** Challenge for the Federal Reserve as they decide to change key interest rates which impact mortgages, loans, and credit cards. We’ve seen jobs reports delayed before during other government shutdowns in 2013 and 1995, the release of the jobs report was paused, but during the longest government shutdown in US history from 2018 to 2019, the jobs report was released, and that was during President Trump’s first term in office at the White House. I’m Rachel Herzheimer.
Federal government shutdown delays jobs report release, adding economic uncertainty
The ongoing federal government shutdown postponed the release of the monthly jobs report, adding to economic uncertainty.
Updated: 4:35 AM PDT Oct 3, 2025
The federal government shutdown has reached its third day, with senators preparing to vote again on short-term budget proposals from both parties, which have failed multiple times.Bipartisan talks continue, but Republicans remain firm in their demand that the government reopen before addressing Democratic health care demands, which include extending credits for cheaper private health care and reversing Medicaid cuts. The jobs report, usually released on the first Friday of every month, will not be published today due to the shutdown. Two private surveys released this week show differing data: payroll provider ADP reported a loss of 32,000 jobs in September, while FactSet suggested 50,000 jobs were created.The delayed report adds to the uncertainty in an already unclear economic situation and could pose a challenge to the Federal Reserve in deciding interest rate changes, which impact mortgages, loans, and credit cards.Previous shutdowns in 2013 and 1995 also saw delays in jobs reports, although the report was released during the longest shutdown in U.S. history, under President Donald Trump’s first term.Keep watching for the latest from the Washington News Bureau:
The federal government shutdown has reached its third day, with senators preparing to vote again on short-term budget proposals from both parties, which have failed multiple times.
Bipartisan talks continue, but Republicans remain firm in their demand that the government reopen before addressing Democratic health care demands, which include extending credits for cheaper private health care and reversing Medicaid cuts.
The jobs report, usually released on the first Friday of every month, will not be published today due to the shutdown.
Two private surveys released this week show differing data: payroll provider ADP reported a loss of 32,000 jobs in September, while FactSet suggested 50,000 jobs were created.
The delayed report adds to the uncertainty in an already unclear economic situation and could pose a challenge to the Federal Reserve in deciding interest rate changes, which impact mortgages, loans, and credit cards.
Previous shutdowns in 2013 and 1995 also saw delays in jobs reports, although the report was released during the longest shutdown in U.S. history, under President Donald Trump’s first term.
Keep watching for the latest from the Washington News Bureau:
The government shutdown that began Wednesday will deprive policymakers and investors of economic data vital to their decision-making at a time of unusual uncertainty about the direction of the U.S. economy.The absence will be felt almost immediately, as the government’s monthly jobs report scheduled for release Friday will likely be delayed. A weekly report on the number of Americans seeking unemployment benefits — a proxy for layoffs that is typically published on Thursdays — will also be postponed.If the shutdown is short-lived, it won’t be very disruptive. But if the release of economic data is delayed for several weeks or longer, it could pose challenges, particularly for the Federal Reserve. The Fed is grappling with where to set a key interest rate at a time of conflicting signals, with inflation running above its 2% target and hiring nearly ground to a halt, driving the unemployment rate higher in August.The Fed typically cuts this rate when unemployment rises, but raises it — or at least leaves it unchanged — when inflation is rising too quickly. It’s possible the Fed will have little new federal economic data to analyze by its next meeting on Oct. 28-29, when it is widely expected to reduce its rate again.“The job market had been a source of real strength in the economy but has been slowing down considerably the past few months,” said Michael Linden, senior policy fellow at the left-leaning Washington Center for Equitable Growth. “It would be very good to know if that slowdown was continuing, accelerating, or reversing.”The Fed cut its rate by a quarter-point earlier this month and signaled it was likely to do so twice more this year. Fed officials said they would keep a close eye on how inflation and unemployment evolve, but that depends on the data being available.A key inflation report is scheduled for Oct. 15 and the government’s monthly retail sales report is slated for release the next day.“We’re in a meeting-by-meeting situation, and we’re going to be looking at the data,” Fed Chair Jerome Powell said during a news conference earlier this month.The economic picture has recently gotten cloudier. Despite slower hiring, there are signs that overall economic growth may be picking up. Consumers have stepped up their shopping and the Federal Reserve Bank of Atlanta estimates the economy likely expanded at a healthy clip in the July-September quarter, after a large gain in the April-June period.A key question for the Fed is whether that growth can revive the job market, which this Friday’s report might have helped illustrate. Economists had forecast another month of weak hiring, with just 50,000 new positions added, according to a survey by FactSet. The unemployment rate was projected to stay at a still-low 4.3%.On Wall Street, investors obsess over the monthly jobs reports, typically issued the first Friday of every month. It’s a crucial indicator of the economy’s health and provides insights into how the Fed might adjust interest rates, which affects the cost of borrowing and influences how investors allocate their money.So far, investors don’t seem fazed by the shutdown. The broad S&P 500 stock index rose slightly Wednesday to an all-time high.Many businesses also rely on government data to gauge how the economy is faring. The Commerce Department’s monthly report on retail sales, for example, is a comprehensive look at the health of U.S. consumers and can influence whether companies make plans to expand or shrink their operations and workforces.For the time being, the Fed, economists, and investors will likely focus more on private data.On Wednesday, the payroll provider ADP issued its monthly employment data, which showed that businesses cut 32,000 jobs in September — a signal the economy is slowing. Still, ADP chief economist Nela Richardson said her firm’s report “was not intended to be a replacement” for government statistics.The ADP data does not capture what’s happening at government agencies, for example — an area of the economy that could be significantly affected by a lengthy shutdown.“Using a portfolio of private sector and government data gives you a better chance of capturing a very complicated economy in a complex world,” she said.The Fed will remain open no matter how long the shutdown lasts, because it funds itself from earnings on the government bonds and other securities it owns. It will continue to provide its monthly snapshots of industrial production, which includes mining, manufacturing, and utility output. The next industrial production report will be released Oct. 17.
The government shutdown that began Wednesday will deprive policymakers and investors of economic data vital to their decision-making at a time of unusual uncertainty about the direction of the U.S. economy.
The absence will be felt almost immediately, as the government’s monthly jobs report scheduled for release Friday will likely be delayed. A weekly report on the number of Americans seeking unemployment benefits — a proxy for layoffs that is typically published on Thursdays — will also be postponed.
If the shutdown is short-lived, it won’t be very disruptive. But if the release of economic data is delayed for several weeks or longer, it could pose challenges, particularly for the Federal Reserve. The Fed is grappling with where to set a key interest rate at a time of conflicting signals, with inflation running above its 2% target and hiring nearly ground to a halt, driving the unemployment rate higher in August.
The Fed typically cuts this rate when unemployment rises, but raises it — or at least leaves it unchanged — when inflation is rising too quickly. It’s possible the Fed will have little new federal economic data to analyze by its next meeting on Oct. 28-29, when it is widely expected to reduce its rate again.
“The job market had been a source of real strength in the economy but has been slowing down considerably the past few months,” said Michael Linden, senior policy fellow at the left-leaning Washington Center for Equitable Growth. “It would be very good to know if that slowdown was continuing, accelerating, or reversing.”
The Fed cut its rate by a quarter-point earlier this month and signaled it was likely to do so twice more this year. Fed officials said they would keep a close eye on how inflation and unemployment evolve, but that depends on the data being available.
A key inflation report is scheduled for Oct. 15 and the government’s monthly retail sales report is slated for release the next day.
“We’re in a meeting-by-meeting situation, and we’re going to be looking at the data,” Fed Chair Jerome Powell said during a news conference earlier this month.
The economic picture has recently gotten cloudier. Despite slower hiring, there are signs that overall economic growth may be picking up. Consumers have stepped up their shopping and the Federal Reserve Bank of Atlanta estimates the economy likely expanded at a healthy clip in the July-September quarter, after a large gain in the April-June period.
A key question for the Fed is whether that growth can revive the job market, which this Friday’s report might have helped illustrate. Economists had forecast another month of weak hiring, with just 50,000 new positions added, according to a survey by FactSet. The unemployment rate was projected to stay at a still-low 4.3%.
On Wall Street, investors obsess over the monthly jobs reports, typically issued the first Friday of every month. It’s a crucial indicator of the economy’s health and provides insights into how the Fed might adjust interest rates, which affects the cost of borrowing and influences how investors allocate their money.
So far, investors don’t seem fazed by the shutdown. The broad S&P 500 stock index rose slightly Wednesday to an all-time high.
Many businesses also rely on government data to gauge how the economy is faring. The Commerce Department’s monthly report on retail sales, for example, is a comprehensive look at the health of U.S. consumers and can influence whether companies make plans to expand or shrink their operations and workforces.
For the time being, the Fed, economists, and investors will likely focus more on private data.
On Wednesday, the payroll provider ADP issued its monthly employment data, which showed that businesses cut 32,000 jobs in September — a signal the economy is slowing. Still, ADP chief economist Nela Richardson said her firm’s report “was not intended to be a replacement” for government statistics.
The ADP data does not capture what’s happening at government agencies, for example — an area of the economy that could be significantly affected by a lengthy shutdown.
“Using a portfolio of private sector and government data gives you a better chance of capturing a very complicated economy in a complex world,” she said.
The Fed will remain open no matter how long the shutdown lasts, because it funds itself from earnings on the government bonds and other securities it owns. It will continue to provide its monthly snapshots of industrial production, which includes mining, manufacturing, and utility output. The next industrial production report will be released Oct. 17.
Even an institution as steeped in tradition as the Federal Reserve is exploring use cases for gen AI. “Generative AI has all the earmarks of emerging technology that could be very important in our economy and in our society,” Fed Chair Jerome Powell said during a panel at the Greater Providence Chamber of Commerce in […]
Vaidik Trivedi
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