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Fed rate cut is attempt to prevent recession without sending prices soaring

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Fed rate cut
The Fed’s job can seem like a balancing act.
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Fed rate cut is attempt to prevent recession without sending prices soaring

Ryan Herzog, Gonzaga University

The Federal Reserve on Sept. 17, 2025, cut its target interest rate as it shifts focus from fighting inflation to supporting the choppy labor market.

As financial markets expected, the Fed lowered rates a quarter point to a range of 4% to 4.25%, its first cut since December 2024.

The Fed’s decision to begin cutting rates comes as evidence mounts that the U.S. labor market is losing momentum. The headline unemployment rate has stayed steady at near record lows, but the underlying trends are more concerning.

At the same time, the fight against inflation is not over yet. While a cooling jobs market could lead to a recession, cutting rates too much could drive inflation higher.

So if you’re the Fed, what do you do?

I’m an economist who tracks labor market data and monetary policy, examining how changes in hiring, wages and unemployment influence the Federal Reserve’s efforts to steer the economy. There’s an incredibly large amount of data the Fed, investors, economists like me and many others use to understand the state of the economy – and much of it often tells conflicting stories.

Here are some the data points I’ve been following most closely to better understand where the U.S. economy might go from here – and the tough choices the Fed has to make.

a bespectacled white man in a suit stands before a podium with a micrphone
Fed Chairman Jerome Powell speaks during a news conference after the rate-cut decision.
AP Photo/Jacquelyn Martin

Underlying trouble in the labor market

The labor market looks stable on the surface, but more granular data tells a different story.

The unemployment rate has remained close to historic lows at 4.3% as of August 2025, according to the U.S. Bureau of Labor Statistics.

But the number of long-term unemployed – people out of work for 27 weeks or longer – rose to 1.9 million in August, up 385,000 from a year earlier. These workers now make up 25.7% of all unemployed people, the highest share since February 2022. Persistent long-term joblessness often signals deeper cracks forming in the labor market.

At the same time, new claims for unemployment benefits are spiking. Initial claims for unemployment insurance – a leading indicator of labor market stress – jumped by 27,000 to 263,000 for the week ending Sept. 6, according to the U.S. Department of Labor. That’s the sharpest increase in months and well above economists’ forecasts. It suggests layoffs are becoming more common.

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We also got news that past payroll growth was overstated. In a process the Bureau of Labor Statistics undertakes annually to double-check its data, the bureau recently revised its jobs data downward from April 2024 through March 2025 by 911,000. In other words, the economy created roughly 75,000 fewer jobs per month than previously reported. This implies the labor market was weaker than it appeared all along.

Finally, workers are losing confidence. The Federal Reserve Bank of New York reported in August that the confidence of people who lost their jobs in finding another fell to its lowest level – 44.9% – since it started surveying consumers in June 2013. That’s another sign workers are feeling less secure about their prospects.

Taken together, these data points paint a clear picture: The labor market is not collapsing, but it is softening. That helps explain why the Fed is beginning to cut rates now – hoping to stimulate spending – before the job market breaks more sharply.

packages of bacon and other meat are on display in a grocery store
Prices of meat and other groceries have been on the rise recently.
Scott Olson/Getty Images

Tariffs are complicating the inflation data

Even as the labor market softens, tariffs are pushing certain prices higher than they otherwise would be, complicating the Federal Reserve’s effort to bring inflation down.

Government data shows that businesses have begun passing the costs of President Donald Trump’s new import tariffs to consumers. In August, clothing prices rose 0.5% and grocery prices rose 0.6%, with especially strong gains for tariff-sensitive items such as coffee.

Lower-income households are getting hit hardest because they spend more of their budget on imported goods, which tend to be the lower-cost items most affected by tariffs. A report from the Yale Budget Lab found that core goods prices are about 1.9% above pre-2025 trends as tariffs raise costs for basic items such as appliances and electronics.

Phillip Swagel, director of the Congressional Budget Office, said recently that Trump’s tariffs have pushed inflation higher than CBO analysts had expected, even as overall economic activity has weakened since January.

Typically, a slowdown in the labor market is met with slower inflation. But while the CBO now projects that the tariffs will reduce the federal budget deficit by about US$4 trillion over the next decade – roughly $3.3 trillion in new revenue and $700 billion in lower debt service costs – but it will come at the cost of near-term upward pressure on prices.

This creates a difficult balancing act for the Fed: Cut rates too quickly, and tariff-driven price pressures could reignite inflation; move too slowly, and the softening labor market could tip into recession.

a bespectacled white man in a vest look on as a tv screen shows news of fed rate cut behind him
Traders react to the Fed news.
AP Photo/Richard Drew

A narrow path to a soft landing

As it resumes cutting rates, the Federal Reserve is trying to thread a narrow needle – easing policy enough to keep the labor market from cracking while not reigniting inflation, which is proving stickier in part because of tariffs.

Markets are betting the Fed will keep cutting. The futures market is betting the Fed will cut rates by another half point by the end of the year. And the one-year Treasury yield has dropped about 150 basis points (1.5%) since June, signaling that investors expect a series of rate cuts through 2025 and into 2026.

At its latest meeting, the Fed signaled two more rate cuts in 2025 and at least one rate cut in 2026.

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Such cuts would ultimately bring the federal funds rate closer to 3% and hopefully reduce 30-year mortgage rates to around 5% – from an average of 6.35% as of Sept. 11. If the labor market continues to weaken – with jobless claims climbing, payrolls revised down and more workers stuck in long-term unemployment – that expectation will likely harden into consensus.

But the path is far from certain. Cutting rates too quickly could cause inflation to spike, while going too slow could lead to further deterioration in the labor market. Either outcome would jeopardize the Fed’s credibility – whether by appearing unable to control prices or by allowing unemployment to rise unnecessarily. That would undermine its ability to influence markets and enforce its dual mandate of maximum employment and stable prices.

Another tricky issue is Trump’s public campaign to push the Fed to cut rates – appearing to do his bidding could also undercut Fed credibility. For what it’s worth, the Sept. 17 rate cut appears driven less by politics than by economic data. The Fed itself was projecting a year ago that rates would be much lower today than they actually are, suggesting it’s been following the data.

The economy appears to be slowing but remains resilient, which is why the Fed is likely to move gradually. The risk is that the window for a soft landing is closing. The coming months will determine whether the Fed can ease early enough to avoid recession, or whether it has already waited too long.

Ryan Herzog, Associate Professor of Economics, Gonzaga University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Economy

Bridging the Gap Between Military Experience and Civilian Careers: 5 Tips for Veterans

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Bridging the Gap Between Military Experience and Civilian Careers: 5 Tips for Veterans

(Feature Impact) Every year, approximately 200,000 service men and women transition from military life to corporate America. Finding the right civilian career is a transition, but it’s an opportunity to leverage military leadership and mission-driven talent.

Traditional hiring processes often focus on conventional resumes, but forward-thinking organizations recognize military experience as a competitive advantage in today’s workforce. The resilience, integrity and adaptability of America’s veterans and military families make them uniquely positioned to drive growth and innovation in their communities.

“Veterans bring unmatched discipline, adaptability and a results-driven mindset that directly translates to high-impact corporate careers,” said Drew Matheson, senior director at Capital One’s Commercial Bank and retired U.S. Army infantry officer. “While military experience doesn’t always fit perfectly on a traditional paper resume, employers like Capital One who know how to decode these unique leadership skills are able to unlock an incredible pipeline of proven performers.”

To help transitioning service members successfully navigate this career pivot, military community leaders at Capital One offer these five essential tips for service members entering the civilian workforce:18007 B detail embed2

Start With What You’ve Already Earned

Opportunity starts with preparation. Beyond the well-known Post-9/11 GI Bill, which can cover tuition, housing and books, transitioning service members can look into vocational rehab or the SkillBridge program, which allows them to do civilian internships during the last 180 days of service. Many employers also offer internal tuition reimbursement programs. Taking the time to proactively map out these benefits ensures you aren’t leaving valuable opportunities or money on the table.

Find Employers with Veteran Support Structures

With almost half of veterans leaving their first post-military job within a year, according to research published by the Institute for Veterans and Military Families and VetAdvisor, finding the right culture and community is key to a successful transition. Look for employers with active veteran networks and dedicated mentorship.

For example, Capital One’s Salute Business Resource Group serves as a thriving internal community of more than 6,000 members, offering peer support, year-round professional development and mentorship for veterans, reservists and military spouses. Additionally, partner organizations like Hiring Our Heroes provide career workshops, fellowships and job fairs to ensure you’re employment-ready from day one.

Lean Into and Translate Your Soft Skills

Veterans bring a distinct competitive advantage to the applicant pool. You should confidently lean into the cross-functional “soft skills” learned in the line of duty such as risk management, crisis resolution and building trust under high-pressure scenarios.

The trick is translating these capabilities out of military jargon on your resume. Swap military terms like “NCOIC” for “Operations Manager” or “commanded” for “directed.” To make this easier, look for military-friendly employers that employ dedicated military recruiters who specialize in decoding military resumes to align skills with the right roles.

Prioritize Support for the Whole Family

Military service is a family commitment, and the transition out of uniform affects everyone. Military spouses often face unique career hurdles, including frequent relocations and employment gaps. When evaluating employers, look for companies that offer holistic benefits and flexible structures.

For example, Capital One, recognized by “U.S. Veterans Magazine” as a Top Veteran Employer and Top Military Spouse Employer, actively supports military spouses and families through dedicated spouse hiring initiatives and internal support mechanisms. Furthermore, look for organizations that support continued military training and active-duty leave, ensuring military associates never have to choose between their service and their careers.

Build Your Civilian Network Early

In the military, your network is built in. In the civilian world, you have to cultivate it. Long before your terminal leave begins, connect with veterans who work at companies you admire. Reach out for brief, 15-minute informational interviews to learn about their transition journeys rather than simply asking for a job. With more than 70% of civilian jobs filled through networking, according to estimates from Career Horizons, making organic connections early is a powerful tool for getting your foot in the door.

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To find additional resources and learn more about how to support the hiring of veterans and military spouses, visit CapitalOneCareers.com/Military.

Photo courtesy of Shutterstock collect?v=1&tid=UA 482330 7&cid=1955551e 1975 5e52 0cdb 8516071094cd&sc=start&t=pageview&dl=http%3A%2F%2Ftrack.familyfeatures track

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Economy

U.S. Consumer Confidence Slips as Americans Grow More Cautious About the Future

U.S. consumer confidence edged lower in August as Americans became more pessimistic about jobs, income and business conditions over the next six months, despite improved views of the current economy.

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NEW YORK — U.S. consumer confidence edged lower in August as Americans expressed greater concern about future business conditions, jobs and household income, even as their assessment of the current economy improved.

U.S. consumer confidence slipped in August 2026 as Americans grew more concerned about jobs, income and future business conditions.

The Conference Board reported that its Consumer Confidence Index fell 0.8 points to 89.4 in August, down from 90.2 in July.

The relatively small decline, however, masks a widening gap between how consumers view conditions today and what they expect in the months ahead.

The Present Situation Index, which measures consumers’ assessment of current business and labor market conditions, climbed 6.8 points to 121.2, reversing three consecutive months of declines.

Meanwhile, the Expectations Index, which measures the short-term outlook for income, business and employment conditions, dropped 5.8 points to 68.2.

“Consumer confidence moderated slightly in August for a second consecutive month,” Dana M. Peterson, chief economist at The Conference Board, said in the organization’s Aug. 25 release.

Jobs Look Better Today — But Consumers Worry About Tomorrow

Americans’ perceptions of the current labor market improved considerably during August. About 27% said jobs were plentiful, up from 24.4% in July, while 19.5% said jobs were hard to get, down from 21.7%.

The outlook for the next six months was considerably weaker.

Only 14.6% expected more jobs to become available, compared with 16.4% in July. At the same time, 26.1% expected fewer jobs.

Consumers were also less optimistic about their incomes. About 17.6% expected their income to increase, down from 19.5% in July, while 13.8% expected their income to decline.

Prices Remain on Consumers’ Minds

Inflation continues to influence how Americans feel about the economy. According to The Conference Board, consumers’ written responses frequently mentioned prices, oil and gasoline, food and groceries, trade, jobs, and war or conflict.

Average and median expectations for inflation over the next 12 months also increased slightly.

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Interest rates remain another concern. More than six in 10 consumers — 61.3% — expected interest rates to rise over the next year, although that was slightly lower than the 62% recorded in July.

Consumers Are Still Planning to Spend

The softer outlook hasn’t eliminated Americans’ willingness to make purchases.

Auto-buying expectations remained strong on a six-month moving-average basis, while homebuying expectations declined slightly in August but remained on a longer-term upward trend after hitting decade lows in early 2024.

Restaurants, bars and takeout; utilities; and streaming, internet and mobile services ranked among consumers’ leading planned service expenses.

Consumers were less enthusiastic about discretionary activities including movies, personal-travel hotels, airfare, amusement parks, museums and historical sites.

Why It Matters

The August numbers paint a mixed picture of the American consumer.

People are seeing some improvement in the economy they are experiencing today, particularly in the labor market. But their expectations for the next six months are becoming noticeably more cautious.

That divide matters because consumer spending represents a major part of U.S. economic activity. If concerns about employment, inflation and household income begin translating into reduced spending, weakening confidence could eventually become more significant for the broader economy.

For now, the August survey suggests Americans haven’t stopped spending — but they’re increasingly keeping an eye on what may be coming next.

The preliminary August Consumer Confidence Survey was conducted online for The Conference Board by Toluna. The survey period was Aug. 3–16, 2026.

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Source: The Conference Board, August 2026 Consumer Confidence Survey®, released Aug. 25, 2026.

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How new SNAP restrictions could hit Greater Pittsburgh’s food access and economy

New SNAP work requirements and retailer rules could reduce food assistance across Greater Pittsburgh, increasing food insecurity while hurting families, independent grocers and the regional economy.

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A blue sign above boxes of fruit reads SNAP
New rules are changing SNAP eligibility and how retailers can accept benefits. Justin Sullivan/Getty Images News

Amelia B. Finaret, Allegheny College

Food assistance is one of the most effective tools for fighting poverty in America. New federal rules are testing that reputation.

The Supplemental Nutrition Assistance Program, better known as SNAP, helps low-income people afford groceries. The program’s benefits reach far beyond the grocery bill, with research linking the program to better outcomes for K-12 students and improved overall health among participants.

However, new federal policy changes are making the program harder for many families to use, and participation is shrinking.

In Pennsylvania’s Allegheny County, the number of people who get SNAP benefits has decreased by about 12% since 2025. SNAP enrollment rates vary widely across the Greater Pittsburgh metropolitan area – from 31% of residents in Fayette County to just 13% in Butler County.

In Allegheny County, where Pittsburgh is located, approximately 17,000 people have already lost their benefits. That’s the second-highest total of any county in Pennsylvania. Roughly 162,000 Allegheny County residents receive SNAP, or about 14% of the county’s population.

Across the country, states like Arizona and Florida are seeing similar effects from these SNAP changes. The specifics vary by state, but the underlying pressures on food assistance are shared nationwide.

As a food economist and clinical dietition working in western Pennsylvania, I have seen how SNAP policy changes affect real people firsthand. Many of my patients are having more trouble making ends meet over the past few years, especially as grocery prices have risen roughly 25% in nominal terms since 2022 – a jump that has outpaced wage growth for many low-income households.

New SNAP work requirements

In November 2025, Pennsylvania began implementing the federal government’s expanded work requirements. The rules previously applied to adults ages 18 to 54 without a disability or dependent children, but they now reach up to age 64. Under these rules, these adults must work, volunteer or take part in education or training programs for at least 20 hours a week to keep receiving SNAP benefits.

Certain groups are especially likely to be affected by this rule change, including early retirees, first-time moms, children and people with disabilities who haven’t applied or been approved for disability benefits.

A woman in a yellow shirt packs food into boxes.
New SNAP restrictions could push more families toward food pantries. Anadolu/Anadolu Collection via Getty Images

Stricter and more expansive work requirements increase SNAP benefit denials and reduce the number of people who get benefits, including among women who may become pregnant.

The new work requirements could also worsen food insecurity, which occurs when people cannot obtain enough safe and nutritionally adequate food for an active and healthy life.

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Up to 5.4 million people nationwide could lose some or all of their SNAP benefits under the expanded work requirements, including 1.5 million children.

In Allegheny County, 43% of food-insecure children were likely ineligible for SNAP and similar benefits in 2025 because their household incomes exceeded 185% of the federal poverty line – US$61,050 for a family of four in 2026.

Stricter rules for SNAP retailers

Supermarkets and other stores that sell food must be certified to accept SNAP benefits for payment. Beyond helping individual households, SNAP spending boosts local economies, as those benefits get spent at grocery stores and other retailers.

Retailers that sell food are now required to offer seven varieties of foods in each of four staple food categories: grains, vegetables and fruits, dairy, and protein. Stores could meet the new requirements for grains, for example, by offering corn tortillas, whole wheat bread, white bread, brown rice, white rice, oats and infant cereal for sale.

Rows of juice and fresh produce packaged on a convenience store shelf.
Convenience stores are often a main source for groceries for rural residents without reliable transportation to larger stores. Jeff Greenberg/Universal Images Group via Getty Images

In the 12th and 17th congressional districts that make up Allegheny County, 10.4% and 8.7% of people, respectively, live in areas where it is difficult to get healthy foods. According to data from the Institute for Local Self-Reliance, there are 191 grocery stores in these districts, about 28% of which are either small chains or independent stores that may have a harder time complying with the new requirements.

Between 2017 and 2023, the number of SNAP-authorized stores in Allegheny County increased by 13%, but this trend could reverse under the new rules.

While the stated goal of the new rules is to increase the availability of healthier foods, simply requiring stores to stock them doesn’t mean that customers will eat a better diet. Whether these new retailer policies ultimately improve diets is an open question.

Additional restrictions on purchases

Some states are placing additional restrictions on what people can buy with benefits. Purchasing hot prepared foods, alcohol, vitamins or diapers with SNAP benefits was already prohibited, but 23 states are now restricting the use of benefits to buy sugar-sweetened beverages and some other items that contribute to nutritionally inadequate diets.

While Pennsylvania has not adopted those additional restrictions, some of its neighboring states, such as Ohio and West Virginia, have.

A man pushes a grocery cart outside a Giant Eagle grocery store.
Almost 14,000 people in Allegheny County were projected to lose SNAP benefits under the new work requirements. Tony Dejak/AP

SNAP helps people pay for groceries, but the benefit amount is typically less than what a household would spend on food. SNAP covers some of what a family would’ve spent on groceries anyway, leaving that money for other needs – rent, diapers, utility bills and the like. As a result, research shows the program doesn’t significantly change what or how much people eat, on average.

In my view, as food insecurity remains high in Allegheny County, policies that make it harder for local residents to get SNAP benefits risk weakening one of the nation’s most effective economic support programs.

Read more of our stories about Pittsburgh and Pennsylvania.

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Amelia B. Finaret, Associate Professor of Business and Economics and Nutrition, Allegheny College

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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