Cash information this week:
What comes after a fee lower?
A lower within the Fed Charge subsequent week appears to be like all however locked in.
A modest trim of 25 foundation factors is likeliest, based on consensus by the futures markets CME Group’s FedWatch Software.
The Fed hasn’t touched charges since 2024, when it made three cuts late within the yr to finish a 14-month streak with out motion. Since then the federal funds fee has been parked at 4.25% to 4.5%. If policymakers make an anticipated quarter-point lower subsequent week, the speed would drop to a variety of 4.0% to 4.25%.
So why now? NerdWallet’s senior economist Elizabeth Renter says the choice displays a troublesome balancing act for the central financial institution. “The labor market is weakening however inflation continues to be elevated, so the committee is tasked with judging which of the 2 priorities are most urgent, and this isn’t a simple name to make. They’re not simply wanting on the headline figures, however what’s driving the information and the place it could be headed subsequent. It is a lot to type out underneath the present atmosphere, when the near- to mid-term financial future is much from predictable.”
Renter’s name: A 25 foundation level lower appears probably. “Underlying inflation appears to be on secure footing, if a bit elevated, whereas the labor market trajectory appears extra decidedly in-motion: cool and getting cooler.”
If the Federal Open Markets Committee (FOMC) opts for a fee lower subsequent week, the consequences wouldn’t occur in a single day.
The Fed’s future path — what number of cuts and the way rapidly — is unclear and, as Fed Chair Jerome Powell has usually stated, will likely be guided by information studies together with inflation, jobs and financial development. For now, the Fed Watch software reveals excessive possibilities for added 0.25 foundation level fee cuts on the remaining two conferences of the yr: Oct. 28-29 and Dec. 9-10.
It’s a tricky time to be a carnivore
Beef costs have hit new file highs.
We’ve been typing that sentence rather a lot these days. Sirloin steak has reached a brand new file each month since Might, whereas floor beef is on an unbroken run that dates again to January.
Data had been damaged once more with this week’s launch of the August client worth index (CPI). Steak costs jumped 4.1% from July, an enormous month-over-month improve, and are up 16.6% yr over yr. That’s towards an annual inflation fee of three.2% throughout all meals.
Floor beef, in the meantime, was up 2.3% from the earlier month and 12.8% for the complete yr. Beef costs have basically doubled since 2014.
Why are beef costs rising?
There are quite a few causes for excessive beef costs, however at base it’s a easy financial equation: Demand stays excessive whereas provides have been constrained. Among the underlying points are long-term challenges.
Herd sizes are at historic lows: Beef cattle herd sizes hit their lowest level since 1951 final yr, and have continued to say no this yr. Causes given are many: Farmer populations are getting old. Cattle nation has been hit by persistent droughts lately, whereas the altering local weather has additionally elevated feed prices. The pandemic additionally rattled the availability chain as meatpacking vegetation had been typically closed for prolonged durations.
It takes time to rebuild herd sizes. Paradoxically, excessive costs make that course of tougher. For ranchers now, it usually makes extra sense to promote calves for fast money circulate relatively than maintain onto them as breeding inventory — a self-perpetuating cycle.
There are newer challenges as effectively.
Tariffs: In 2024, imports accounted for about 16% of U.S. beef consumption. Main international locations importing beef to the U.S. embrace Canada, Mexico, Australia, New Zealand and Brazil. Tariffs that went into impact over the past six months have hit all our commerce companions, with Brazil being an excessive outlier: On Aug. 6, it was hit with a 50% blanket tariff on high of an current 26% beef tariff.
The consequence for Brazilian imports in 2025? A surge within the first three months of the yr, as importers constructed stock forward of the primary wave of tariffs, then a collapse, from 47,800 tons in April to lower than 10,000 in July — earlier than the steeper tariff even went into impact.
Due to a pre-existing commerce settlement, beef imports from Canada and Mexico are presently tariff-free. However the cattle trade in Mexico has been hit by an outbreak of screwworm earlier this yr, and cattle imports from that nation are presently blocked.
Backside line: There’s no fast aid in sight for spiraling beef costs.
What’s a meat-lover to do?
To this point, U.S. demand for beef has been resilient at the same time as costs have risen. However grocery customers may think about various their eating regimen with these protein alternate options:
Pork stays comparatively inexpensive. General, pork costs are up simply 1.2% larger since final August, and ham costs truly dropped 4.9% in August and are down 1.9% over the complete yr.
Egg costs are effectively off their latest highs, with costs dropping 7.4% in June and three.9% in July (whereas staying flat in August).
Is the AI inventory increase actually a bubble?
Funding in AI corporations is working so sizzling proper now it has some specialists speculating that the spike in curiosity could also be a bubble. If that bubble burst — because the dotcom bubble of the late ‘90s did — it might spell bother for AI corporations and their buyers.
Final month, in an interview with The Verge, OpenAI CEO Sam Altman stated, “Are we in a section the place buyers as an entire are overexcited about AI? My opinion is sure. Is AI crucial factor to occur in a really very long time? My opinion can also be sure.”
Within the newest episode of NerdWallet’s Good Cash podcast, investing author Sam Taube breaks down what it means to be in a bubble, how chances are you’ll be uncovered to the market dynamics of AI shares (even in case you’re not a direct investor) and easy methods to shield your portfolio.
We’re holding onto our jobs, thanks
Bear in mind the Nice Resignation, when the rebound within the job market after the preliminary shock of pandemic lockdowns meant staff had been quitting en masse? Now, with a tighter labor market and basic financial uncertainty, we’re typically staying put in a development known as job hugging.
The most recent Survey of Client Expectations from the New York Fed, launched Monday, underlines the development. The survey discovered respondents had been extra pessimistic about job-hunting, with the “imply perceived chance of discovering a job if one’s present job was misplaced” dropping 5.8% from the earlier month — to the bottom stage since they began asking the query in 2013.
Pondering of switching jobs? Look earlier than you leap.
ICYMI: Is the iPhone 17 well worth the splurge?
NerdWallet private finance author Thomas Tindall watched the Apple Occasion this week so that you don’t must, and he’s cautious of dropping money on the brand new sizzling factor.
Tindall writes, “My iPhone 13 Professional Max, which I purchased new in 2022, continues to be as snappy because it was the day I peeled off the plastic movie. So how can I justify the price of a brand new one? Properly, I personally can’t proper now, however issues could be completely different for you.”
Right here’s what else you will have missed
Survey: Most suppose they’d by no means fall for a cash rip-off
Almost 7 in 10 Individuals (69%) say they might by no means fall for a monetary rip-off, based on a brand new NerdWallet survey, carried out on-line by The Harris Ballot. However scams are getting extra refined, and even the savviest folks could be vulnerable.
About three-quarters of Individuals (74%) say they’re extra involved a few pal or member of the family falling for a monetary rip-off than they’re about themselves, based on the survey. Maintain your family members abreast of present scams and indicators to search for, and in the event that they (otherwise you) are a sufferer of a monetary rip-off, report it.
