Laura J. from Columbus, OH asks: Hi Mitch, I saw that there was a really weak jobs report from August, which makes it seem like interest rates will be coming down finally. Is this also what you’re anticipating?
Mitch’s Response:
Let’s start with the jobs report, then I’ll weigh in on rates.
The August employment report was indeed weak, which essentially locks in a Fed rate cut this month. So far in 2025, the U.S. has added fewer than 600,000 jobs, making this the slowest start to a year for job growth (outside the pandemic) since 2009. Private-sector hiring has averaged just 74,000 jobs per month, down from about 130,000 last year. And if you strip out health services, healthcare and social assistance, the picture looks even weaker. That sector has been adding roughly 64,000 jobs monthly this year. Without it, the rest of the private sector would be contributing only about 9,000 jobs per month, and the private sector would have actually lost jobs in August.1
Outside of healthcare, the slowdown is broad-based. Manufacturing and construction both showed sharp declines in August. Businesses have also been hesitant to expand payrolls while they sort through policy uncertainty from new tariffs, to changes in immigration, and federal spending. That hesitation is a big reason job growth has slowed so abruptly since the spring.
Retirement Strategies for a Shifting Rate Environment
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This weakening backdrop is why the Fed is expected to cut again in September. Chair Jerome Powell has already indicated that officials are more concerned about employment than inflation at this stage. Markets now price in the equivalent of three straight quarter-point cuts by year-end, though the exact pace will depend on how the next inflation and jobs reports look.
One important point of clarification with regards to your question about rates coming down. Remember, the Federal Reserve sets the federal funds rate, which is a very short-term interest rate that banks charge each other. That doesn’t mean mortgage rates, car loan rates, or long-term bond yields will necessarily follow. Longer-term interest rates are driven by a different mix of factors, especially expectations for future inflation. If investors believe inflation will stay stubborn, 10- and 30-year Treasury yields could remain high even as the Fed trims its short-term policy rate. That disconnect is one reason mortgage rates don’t always fall during Fed cutting cycles.
For investors, I’d make two observations. First, the September cut is no surprise, so I wouldn’t expect a big immediate reaction in markets, since these moves are already priced in. Second, the bigger story is the Fed’s balancing act: trying to cushion a softening job market without reigniting inflation. Whether we end up with two cuts this year or three, the long-term driver of market returns will remain the same: earnings, investment, and consumer resilience, not the quarter-point moves at the Fed.
The Fed’s next moves may dominate headlines, but for retirees, the real question is how to keep portfolios resilient through shifting policy, inflation pressures, and market swings. That’s why we’re offering our free guide, How Solid Is Your Retirement Strategy?3
This resource shows you how to strengthen your retirement plan so it can hold up in an environment of changing rates and economic uncertainty. You’ll learn:
- The importance of flexible portfolio allocation
- Why keeping some liquid assets can potentially help you preserve more wealth
- Understanding your risk tolerance in case of a market downturn
- Plus, more strategies to help you protect your retirement assets
If you have $500,000 or more to invest, download our free guide today!
Disclosure
1 Wall Street Journal. September 5, 2025. https://www.wsj.com/economy/central-banking/jobs-report-fed-interest-rate-cuts-65a8a169?mod=economy_feat3_central-banking_pos1
2 ZIM may amend or rescind the guide “How Solid Is Your Retirement Strategy?” for any reason and at ZIM’s discretion.
3 ZIM may amend or rescind the guide “How Solid Is Your Retirement Strategy?” for any reason and at ZIM’s discretion.
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