The final week of September saw a flurry of economic data releases, painting a mixed but generally resilient picture of the U.S. economy. While some indicators pointed to a continued cooling in certain sectors, others affirmed a still-strong underlying economic base. On the political front, the threat of a government shutdown loomed, and the administration announced new tariffs, adding a layer of uncertainty to the market.¹

Key Economic Takeaways

• GDP & PCE: The U.S. Bureau of Economic Analysis released its third and final estimate for Q2 2025 GDP, showing an annualized growth rate of 3.8%, a slight upward revision from the previous estimate.¹  This confirms a robust economic expansion in the spring and summer months. However, the August Personal Consumption Expenditures (PCE) index, the Federal Reserve’s preferred measure of inflation, showed that both headline and core inflation remained sticky.²  The year-over-year headline PCE was 2.74%, while core PCE, which excludes volatile food and energy prices, was 2.91%—both still above the Fed's 2% target.²
• Housing & Labor: The housing market continues to show signs of softening. The July S&P CoreLogic Case-Shiller Home Price Index, released on September 30, indicated that national home price growth slowed, with a year-over-year increase of 1.7%.³  This deceleration is a likely response to elevated mortgage rates and cooling buyer demand. In the labor market, the August JOLTS (Job Openings and Labor Turnover Survey) report revealed that job openings were largely unchanged at 7.2 million.⁴  This figure, while still elevated, suggests a slow but steady decline in labor demand from its peak.

The Political & Policy Watch

• Tariffs: On Monday,, President Trump announced new tariffs on imported goods, citing national security concerns.⁵  The new duties include a 10% tariff on softwood timber and lumber and a 25% tariff on imported kitchen cabinets, bathroom vanities, and upholstered furniture.⁵  These new tariffs, which take effect on October 14, are the latest in a series of protectionist measures and could have ripple effects on industries like housing construction and home goods retail. The administration also reiterated its intention to impose new tariffs on heavy trucks and patented pharmaceuticals.
• Government Shutdown: With the fiscal year-end on September 30, the U.S. government faced the possibility of a shutdown as Congress failed to pass a spending bill.⁶  While a shutdown is a disruptive event, history shows its market impact is often temporary and short-lived. In previous instances, the S&P 500 has had a mixed reaction, but a prolonged shutdown could affect economic data releases and consumer confidence, leading to heightened volatility. It is important to note that essential services and most financial payments, such as Social Security benefits, would continue, but non-essential government functions would cease.⁶

Our Perspective:

The economic data released this week confirms the ongoing battle between a resilient, but potentially slowing, economy and persistent inflationary pressures. The solid GDP growth figure provides a strong foundation, while the sticky PCE data keeps the pressure on the Fed to maintain its restrictive stance. The labor market, as indicated by the JOLTS report, seems to be normalizing, which is a positive sign for the Fed's efforts to cool the economy without causing a severe downturn.14 The political landscape, however, adds a layer of uncertainty. The new tariffs could complicate global supply chains and potentially increase costs for consumers and businesses, while a government shutdown, if it occurs, could create short-term market noise. We will continue to monitor these developments closely, but for now, we maintain our focus on high-quality, long-term investments that are positioned to weather these macroeconomic shifts.

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Footnotes

¹ U.S. Bureau of Economic Analysis. "Gross Domestic Product, 2nd Quarter 2025 (Third Estimate)." Released September 25, 2025.

² U.S. Congress Joint Economic Committee. "Inflation Remains Above Fed Target." Released September 26, 2025.

³ S&P Dow Jones Indices. "S&P Case-Shiller Index Records Annual Gain in July 2025." Released September 30, 2025.

⁴ U.S. Bureau of Labor Statistics. "Job Openings and Labor Turnover Survey (JOLTS) – August 2025." Released September 30, 2025.

⁵ Thompson Hine LLP. "President Trump Issues Proclamation Adjusting Tariffs on Imports of Timber, Lumber and their Derivative Products." SmarTrade, September 29, 2025.

⁶ CRFB.org. "Government Shutdowns Q&A: Everything You Should Know." September 16, 2025.

Researched and compiled with the assistance of Gemini 2.5. This newsletter represents our opined general assessment of the market environment at a specific time and is not intended to be a forecast or guarantee of future performance or results. The opinions and statements expressed are intended for information purposes only, and does not constitute investment advice, a recommendation or an offer or solicitation to purchase or sell any securities or investment strategies to any person in any jurisdiction in which an offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. This material may contain estimates and forward-looking statements, which may include forecasts and do not represent a guarantee of future performance. This information is not intended to be complete or exhaustive and no representations or warranties, either express or implied, are made regarding the accuracy or completeness of the information contained herein. The opinions expressed are as of September 30, 2025, and are subject to change without notice. Investing involves risks. Past performance is not a reliable indicator of current or future results, and index returns do not account for fees. It is not possible to invest directly in an index.