Is the Fed Ready to Cut Rates?

Summary

Jill on Money with Jill Schlesinger

Episode: Is the Fed Ready to Cut Rates?

Date: September 16, 2025
Host: Jill Schlesinger, CFP®
Special Segment: Jill’s CBS Face the Nation Interview with Major Garrett

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Episode Overview

On this timely episode, Jill Schlesinger explores the impending Federal Reserve rate decision, dissecting what’s at stake as the Fed prepares for its first rate move of 2025. Setting the context with recent policy shifts, inflation challenges, a cooling labor market, and the impact of tariffs, Jill shares her recent appearance on CBS’s Face the Nation with Major Garrett. The discussion translates complex macroeconomic forces into practical implications for job seekers, workers, and everyday consumers.

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Key Discussion Points & Insights

1. State of the Federal Reserve and Interest Rate Cuts

[00:52–02:32]

• Jill recaps the Fed’s recent rate history: last year’s three cuts amounted to a full percentage point, followed by a period of pause amid economic and political disturbances.
• Anticipation is high for a new rate cut, either 0.25% or 0.50%, at the current two-day meeting.

"It's the first day of a two day Federal Reserve policy meeting and for the first time since last December, we are going to likely see rate cuts." – Jill Schlesinger [00:52]

2. Balancing Growth and Inflation in a Murky Economy

[02:32–03:41]

• The Fed faces dual mandates: stable prices and maximum employment.
• Recent data shows a weakening labor market alongside re-accelerating inflation, though not to post-pandemic extremes.

"The job market is weakening at the same time that inflation is re accelerating ... but it's the job market that is getting slower, faster. We've got to concentrate on that." – Jill Schlesinger [02:46]

• The quarter-point cut seems more likely to “get things restarted” without overreacting.

3. The Challenge of Data Dependency

[03:41–05:25]

• Fed Chair Jerome Powell’s mantra of “data dependency” is tough in this environment due to noisy, sometimes conflicting reports.
• The pandemic’s disruptive effect on both the economy and statistical tracking leads to extraordinary uncertainty.

"There are so many different aspects to what's going on in the economy right now. The cross currents are really difficult ... the most difficult time to judge the next steps of the economy in the last 40 years." – Jill Schlesinger [04:39]

4. Labor Market Realities: “No Fire, No Hire”

[05:25–06:47]

• Current job climate is stable but not robust—firings are low, but so is new hiring in many sectors.
• Jill’s advice: stay put if you’re employed, be adaptable if you’re job searching. Sectors like healthcare are still growing.

"Anyone who has a job right now ... Tell people to stay where they are. Don't fly off the handle ... The adaptable candidate is going to be the one that wins in this economy." – Jill Schlesinger [05:39]

5. The Unfinished Story of Tariffs

[06:47–08:58]

• The U.S. and global economies are still bracing for the full impact of recent tariffs.
• Tariff uncertainty has stifled hiring in affected industries and contributed to recent price increases, but economists expect this to be a short-term bump rather than a sustained surge.

"Prices are set to rise over the next, say, six months ... Once those prices go up, we'll switch and make different choices." – Jill Schlesinger [07:17]

• Concern especially for middle and lower-income consumers as higher prices become the new normal.

6. Energy Prices and The Cost of AI

[08:58–10:45]

• Gasoline prices have eased, but electricity bills are climbing—driven in part by surging demand from artificial intelligence infrastructure.
• Despite market highs in stocks, consumers feel squeezed—a paradox that may define the coming year.

"That electricity story is a story of artificial intelligence ... That's why you are seeing those prices go up." – Jill Schlesinger [09:20]
"We are seeing the S&P 500, NASDAQ, the Dow, all at all time highs ... but consumers feel burdened." [09:47]

7. The Big Takeaway

[10:45–10:58]

• Economy remains in a “murky transitional period.”
• Jobs, prices, and global conditions are in flux, making this an unusually challenging time for forecasting or decision-making.

"We are in this murky transitional period." – Jill Schlesinger [10:55]

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Notable Quotes & Memorable Moments

• "This is the most difficult time to judge the next steps of the economy in the last 40 years."
  — Jill Schlesinger [04:39]

• "We're not going back to scary post pandemic inflationary surge, but inflation is starting to move in the wrong direction."
  — Jill Schlesinger [02:55]

• "The adaptable candidate is going to be the one that wins in this economy."
  — Jill Schlesinger [06:31]

• "Prices are set to rise over the next, say, six months or so. Not great for holiday shopping, I know."
  — Jill Schlesinger [07:37]

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Timestamps for Important Segments

• 00:52 – Jill introduces the episode’s focus and Fed history recap
• 02:32–03:41 – Balancing Fed mandates: growth vs. inflation
• 04:00 – “Data dependency” in uncertain economic times
• 05:25 – Labor market overview; “No Fire, No Hire” explained
• 06:47 – Tariffs' ongoing effects on jobs and inflation
• 08:58 – Energy price duality: gas down, electricity up (AI’s role)
• 10:45 – Wrapping up: the present “murky transitional period”

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Episode Flow & Takeaways

The episode breaks down the complexities of the current U.S. economy, demystifying the Fed’s impending interest rate decision and providing clear, actionable insight for everyday listeners. Jill’s signature, practical tone pervades the conversation, emphasizing job market realities, the evolving story on tariffs and inflation, and the surprising impact of AI on utility bills.

Bottom Line:
The U.S. economy in September 2025 is marked by uncertainty and contradictions: labor markets cool but don’t collapse, prices edge up but aren’t spiraling, and the Fed must stay nimble amid crosswinds. Jill advises caution, adaptability, and an eye on the job market as the best defense for individuals in uncertain times.

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Connect and Participate:
Listeners with questions about their own financial situations are encouraged to reach out at jillonmoney.com, and to sign up for newsletters and live events.

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(Ads, intro, and sponsor content omitted.)

Transcript

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[Jill Schlesinger]

Welcome to the Jill on Money show. It's Tuesday, September 16th, and it's a momentous day. It is the first day of a two day Federal Reserve policy meeting and for the first time since last December, we are going to likely see rate cuts. And you probably don't remember this, but it was just around a year ago, last year, 2024, September, when the Fed began cutting interest rates. I had to look this up, Mark, but they had a half a point. That first cut was a half a point in September. Two subsequent quarter points, one in October, one in December. So one full percentage point, 100 basis points of cuts between September and December of last year. Then the Fed went on pause and then we know what happened next. There were a lot of policy announcements. There were immigration announcements, there were tariff announcements. All of those really pushed the Fed to the sidelines for a while. But now it looks like the Fed is ready to get up and start playing again. I was on Face the Nation on Sunday and I was in a nice long interview with Major Garrett who was sitting in for Margaret Brennan. And I think it's a good way to think about where we are in the economy, especially at this moment where we are expecting the Fed to cut interest rates. So I thought I would air this and if anyone has a question about anything mentioned in the interview, of course, get in touch with us. But I think it kind of sets the table for what's about to happen over the next two days. So here's here is my interview on Face the Nation with CBS News.

[Mark]

Major Garrett, Everyone expects the Federal Reserve to cut rates this coming week. That's not a mystery. I guess the only mystery is, is it 25 basis points or 50 basis points? And if it's 50, how much more of a difference might that make?

[Major Garrett]

Well, I think it's more likely to be a quarter of a percentage point, at least for this meeting. And remember, what is the Fed's job? They've got to keep into balance two big priorities, and these are big. One is to make sure the economy grow enough to create jobs for anyone who wants a job. And the other priority is to kind of keep a lid on prices to control inflation or deflation. Right now if you look at the Fed's job, it's a real tough one because the job market is weakening at the same time that inflation is re accelerating. Now remember, we are not going back to scary post pandemic inflationary surge, but inflation is starting to move in the wrong direction. But, but I think the Fed's outlook is, hey, it's the job market that is getting slower, faster. We've gotta concentrate on that. I think they go a quarter of a percentage point rather than a half of a percentage point at least to get things restarted.

[Mark]

Jill, the Federal Reserve chair Jerome Powell frequently says the Fed and he are data dependent. That's probably a virtue, except when the data is messy and cloudy and full of conflicting signals. That seems to be prevalent right now.

[Major Garrett]

Well, I think there is a real problem in that. If you look at the last five years, our data is all over the place. The pandemic really did create a doozy of a problem on the economy, but also the way we track the economy and you know, I know people got really freaked out about those preliminary estimates to the revisions to all that data for 12 months through March of this year. That preliminary revision showed 911,000 fewer jobs than we originally originally thought. Now this is always part of an annual process. We'll get the final number in February. But what I guess is important is there are so many different aspects to what's going on in the economy right now. The cross currents are really difficult. So yes, we know the labor market is weakening, but we're not seeing widespread job losses. Thank goodness. There is no evidence that we are in a recession currently. The economy is growing. But we do have that niggling problem of prices starting to rise again. And I think that that price increase because of those tariffs, because of certain aspects, even the service economy, I think that's a real cross current. To be clear, the Fed, the amazing people who work there, the amazing economists that are out there doing the research, so many of them say to me, you know what? This is the most difficult time to judge the next steps of the economy in the last 40 years.

[Mark]

Jill, as you know, there's a phrase going around describing the job market and it goes as follows. No fire, no Hire. What does that mean practically for somebody in the job market or just graduating from college, trying to break in?

[Major Garrett]

Yeah, this is a very difficult labor market. I mean, granted, we are, again, we are not like we are in a recession. We are not seeing widespread layoffs. Thank goodness there are pockets of layoffs that are happening in different sectors. We are seeing contractions. We're seeing people who are retiring and those jobs not being, being refilled. But I think that anyone who has a job right now, when I talk to HR people, they basically say to me, hey, you know what? Tell people to stay where they are. Don't fly off the handle the job hugging. Staying engaged with your boss, engage with the company. Very important right now. If you are seeking a job, you know where the jobs are. Right now we see the most activity in healthcare, health services. So if you're somebody who is trained to do one job, try to find a job in the sector, at least that is adding positions. I might be a programmer and I might not have an ability to get a job at a big tech company. Maybe I go to a big hospital chain. These are the kinds of things we have to kind of get outside of ourselves. The adaptable candidate is going to be the one that wins in this economy.

[Mark]

Jill, let's talk about tariffs because it is a conversation and a way of trying to assess that. This country has no recent experience with at least 50 or 60 years of trying to assess what a tariff does when it is widespread throughout the global economy. So a lot of us are trying to get used to this. Economists are trying to get used to it. Policymakers are trying to get used to it. Our trading partners are trying to get used to it. What is the story of tariffs so far and has it been fully written?

[Major Garrett]

Nothing fully written. So very important here because when those tariffs were announced in April and then they were moved higher and then they were frozen for a while, the tariff story was an uncertain one. I think it's that cloud of uncertainty that was really hanging over the labor market over the past four months. But right now, what we do know is that the industries most directly impacted by tariffs are not hiring as much. We know that. We know that they are losing some jobs. We also know that tariffs are creeping into the economy and not in a huge way yet. But what we are clear about is that prices are set to rise over the next, say, six months or so. Not great for holiday shopping, I know. But what we also know is that we consumers, we are very canny. Once those prices go up, we'll switch and make different choices. So that is why economists believe that this kind of tariff regime is one where we'll see prices rise but not keep rising. Now, that doesn't really help you if you're going out and shopping. I understand that. But maybe the best news that I can have is that you're not going to feel like you did from the year 2021 to 2022 where it just felt like prices were going up, up, up, up, up. It is likely to be that prices and the Consumer Price Index, from the, from the way that the Fed looks at this, the PC Index, these measures of inflation will start to rise over the next few few months. Then they'll kind of steady. But the problem major is that consumers are going to be stuck with price levels that are higher. And I think that is going to be very hard to swallow for anyone who's in the lower to middle earning.

[Mark]

Joe, one other part of the economic scenario I want to discuss with you because when people talk about inflation, they say just tell me what energy cost is and I'll tell you what inflation is going to be. But yet there's a dual reality there. Natural gas and prices at the pump are down, but electricity paid for by consumers, either businesses or at home, are up.

[Major Garrett]

Yeah, I mean the great news is that prices at the pumps. Okay, totally happy with that. Everyone's good. The price of crude oil sort of in the low 60s, no problem. That electric, the electricity story is a story of artificial intelligence because to build artificial intelligence it needs a lot of energy in terms of electricity or in the form of electricity. That's why you were seeing those prices go up. But again, what I have come back to over this process of the last few years, the last five years of all these different impacts on the economy, we've never been here before. And so what I want to try to emphasize is that we can't hang our hat on what has happened in the past. Right now I can look at a lot of different companies and say, wow, these companies are making a ton of money. Big technology companies. We are seeing the s and P500, the NASDAQ, the Dow, all at all time highs. And you have to reckon that with, with the problem. The other side of that, which is consumers feel burdened. And, and I think that's going to be the story of this year and next. How will consumers get out of this if the labor market weakens from here? I think that's a problem. If we see a resumption of growth and the labor market starts to strengthen the average worker will be able to afford what's going on in the economy. But it does come down to that labor market.

[Jill Schlesinger]

Okay, so we'll see what they do. I think it's a quarter, could be a half, I guess. But it's going to be a lot of commentary. Now you have the basic outlines of what I think is going on in the economy. And if you can quibble with that, you may have a different opinion. You may agree with it doesn't matter. We're just going to have a lot of conversations about what's going on in the economy because we are in this murky transitional period. If you would like to get in touch with us about the segment or about something going on in the economy, but more likely something going on in your financial life, get in touch with us. Go to jillonmoney.com click the contact us button, write us a note. And of course, if you'd like to join us on the air, check the box. Mark will do. Everything else. Don't forget to sign up for the free weekly newsletter comes out on Fridays. And check out our subscription service. It's called Jill on Money Live. That's where you have access to quarterly live webinars, the back catalog of those webinars, including our most recent webinar on estate planning. We've got bonus audio and video content. It will cost you 45 bucks for the next 12 months so you can check that out. All right. Don't forget to lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

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