September 12, 2025 – It’s astounding that even in this age of breathtaking technological innovation, our ability to understand the state of the economy in real time remains limited. Economists and investors worldwide rely on government data that is released with significant delays and often revised. You almost have to wonder, where’s AI when you really need it?
Nowhere have the vicissitudes of data collection been more evident than in the turmoil surrounding employment data at the usually quiet Bureau of Labor Statistics (BLS). In August, the agency released a disappointing jobs report that revised down the May and June numbers. In the aftermath, the Administration dismissed BLS Commissioner Dr. Erika McEntarfer, an unusually visible move for what is typically a low-profile agency. Then, in early September, the BLS reported that hiring stalled in August, with the economy adding only 22,000 jobs. That same release further revised June’s figures to show the economy actually lost 13,000 jobs—the first month of negative job growth since 2020.
Adding to the pressure, the BLS’ annual benchmark revision, which incorporates more complete state tax records, revealed that the economy added 911,000 fewer jobs than previously reported in the 12 months ending in March 2025. That brings the average monthly job creation during that period down from 147,000 to just 70,000.
In other words, the 2024-2025 economy was not exactly what we thought it was. Rather, it’s becoming increasingly clear that the labor market is weakening, a clear sign of an economy under stress. Full employment is one of the two Federal Reserve’s mandates, and many economists now expect the Fed to cut interest rates at its upcoming meeting next week.
But the other half of the Fed’s mandate is price stability, and Thursday’s BLS report showed inflation running at 2.9% over the past year, well above the Fed’s 2% target. The Fed deserves credit for bringing inflation down sharply from its 2021 peak, but the “last mile” is proving difficult, in part due to new tariffs. That leaves the Fed caught between the rock of inflation and the hard place of political pressure.
A Governmental Storm
The growing political pressure on both the Fed and the BLS has raised concerns about their independence. It’s hard to overstate how essential that independence is. Investors, policymakers, and businesses rely on BLS data as the chief measure of the labor market, inflation, and other economic data. The Fed, meanwhile, regulates the supply of money, and history offers plenty of examples where politically controlled central banks failed to contain inflation. Let’s hope these institutions remain strong and independent.
If clouds are hovering over U.S. growth, tempests are already breaking in other advanced economies. Last week, the French prime minister was ousted by parliament over an unpopular austerity plan, complicating efforts to reduce deficits and debt. In the U.K., rising borrowing costs will likely force tax hikes after another year of disappointing growth. And in Japan—the developed world’s most indebted country—rising bond yields, pressure for tax cuts, and the prime minister’s resignation have unsettled investors.
It’s hard to watch these struggles and not think of America’s own precarious fiscal situation. As I’ve written before, a debt reckoning is likely, sooner or later, and history suggests it won’t be painless.
No One Told the Stock Market
Anyone relying on the stock market for economic news might have missed all this. Last week, equities hit an all-time high on expectations of Fed rate cuts, before pulling back as concerns over the economy took hold. Still, U.S. and international stocks remain at or above their 20-year average price-to-earnings ratios, suggesting they are far from cheap.
This disconnect between markets and the economy is hardly unusual. Markets are inherently forward-looking, and in that future lies continued AI investment and innovation, Fed rate cuts, and (hopefully) only a gradual slowdown. But a miss on any of these points could send markets reeling, and investors should be prepared for volatility.
Looking Ahead
While stock market performance remains strong, economic warning signs are flashing both at home and abroad. We won’t be surprised if the chill of autumn brings a cooling in investor sentiment as well. Remember: volatility is a feature of the stock market, not a bug, and your portfolios are built not only to weather it but to take advantage of the opportunities it creates.
Wishing everyone a crisp and peaceful Fall.
– AMD