Below are the economic and market highlights for the week:
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A weaker than expected August jobs report sparked worries of a slowing economy on Friday. Businesses added 22K jobs on the month. That was far below the consensus estimate of 75K. August’s print was a marked slowdown from July’s payroll report which showed an increase of 79K, a 6K upward revision. The unemployment rate also ticked higher, increasing to 4.30%. Meanwhile, wages rose 0.30% on the month, bringing the annual gain to 3.70%. Although August’s print may be disappointing; revisions are expected as the Bureau of Labor Statistics (BLS) has reported difficulties in tabulating the nation’s jobs growth (and “turnover” at the BLS itself). Next month’s payroll report could very well show strong upward revisions.
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The services side of the U.S. economy bucked the gloomy economic outlook. It grew at its fastest pace in six months in August as businesses prepared for the holiday shopping season. The ISM Services Index rose to 52, up from 50.1 in July. Numbers above 50 indicate expansion while those below signal contraction. New orders helped lead the index higher, increasing 5.7 points to a 10-month high of 56. Prices, however, remain a thorn in consumers’ sides. The prices-paid index, a measure of inflation, was little changed at 69.2. Meanwhile, the ISM Manufacturing Index remained in contraction in August. The index increased slightly to 48.7 from 48 in July. The rise was driven by the sub-component index for orders, a sign of future sales, which increased 4.3 points to 51.4. That was its first positive reading for that particular metric in seven months. Prices remained elevated as the cost of raw materials and supplies continued to rise in August, though at a somewhat slower rate.
Jobs Report Seals Rate Cut, Limits Market Sell-Off
Bulls were back to shattering records during a shortened trading week. The S&P 500 notched a fresh record high on Thursday, its 21st record close so far this year. However, Friday’s weaker-than-expected BLS release handed investors a mixed bag. A mere 22K new hires were added to the payrolls in August, far below the consensus estimate of 75K. While July’s numbers were revised higher, June’s revisions showed an actual net loss of -13K positions–the first decline since December 2020. Downward revisions for the spring and summer months now mean that less than 600K jobs have been added thus far in 2025–the lowest number recorded since 2009 when the economy was mired in the Great Financial Crisis as the Wall Street Journal recently observed. At present, multiple forces are weighing on the labor market. These forces include slowing immigration and an aging workforce but most importantly an extremely cautious outlook from Corporate America. Businesses are trying to preserve their bottom lines by curtailing hiring and squeezing efficiency from their existing workforce. While many measures of the economy still remain favorable, Fed Chair Powell’s comments at Jackson Hole last month, where he stated that “the balance of risk appears to be shifting”, appears, in retrospect, to be a gross understatement with the labor market appearing to have fallen off a cliff since May. As bad as the labor print was, markets managed to still find a silver lining. A rate cut is virtually a foregone conclusion when the Fed meets later this month, which helped considerably in containing the report’s fallout.
The first trading week of September pretty much picked up where we left off last month with markets breaking records. The S&P 500 rose 2% in August, climbing above 6,500 for the first time. It also added five new all-time highs during the month. At a pricey 22x 12-month forward earnings, the S&P 500 is trading at a valuation level, reached just 5% of the time since 1985 while its price-to-sales ratio is the highest since the Dot.com crash. Couple that with softening jobs data, litigation over the constitutionality of the recently implemented tariffs, and recent civil servant dismissals-along with September and October being historically volatile in their own right–and this fall is shaping up to be a rocky one.
The Week Ahead
Key reports include Consumer Price Index, Producer Price Index, and Consumer Sentiment.
U.S. Government Goes Digital
This September marks a landmark shift: the U.S. government is phasing out paper-based transactions for most federal payments beginning September 30, 2025. For the vast majority of Americans who already receive payments such as tax refunds and Social Security benefits electronically, no action is required. However, those who receive a paper check will need to take steps to prepare for this change.
President Trump signed an executive order on March 25, 2025, called Modernizing Payments to and from America’s Bank Account in an effort to improve the financial operations of the federal government. The directive mandates a transition to electronic funds transfer for nearly all financial transactions involving government agencies, including the IRS, with the goal of reducing costs, minimizing fraud, and improving efficiency. The Social Security Administration estimates this transition will save more than $650 million per year. Paper checks are not only more expensive and slower to process, but they are also more vulnerable to theft or fraud. The U.S. Treasury has reported that fraud rates for paper checks are more than 15 times higher than for electronic payments.
The IRS already offers several options for making electronic payments, including the following:
- Direct Pay: For individuals making a payment directly from their bank account.
- Electronic Federal Tax Payment System (EFTPS): For businesses and individuals, EFTPS allows taxpayers to make income, employment, estimated and excise federal tax payments online as well as schedule tax payments up to 365 days in advance.
- IRS Online Account: View balances and make payments
- Debit or credit card: Available through IRS-approved payment processors (note: fees may apply).
- ACH transfers or wire transfers: For certain high-dollar transactions.
Very limited exceptions apply to the executive order requiring all transactions to be electronic, such as for individuals without banking access, emergencies, national security, or other Secretary-of-the-Treasury–
- Register or update your direct deposit information and your bank details anywhere you receive or pay federal funds. Confirm that your bank routing and account numbers are current and accurate on your tax return or updated in your IRS Online Account. A wrong or closed account can lead to delays or a failed refund.
- Set up or confirm your IRS Online Account to receive electronic communications, make or modify payments, and respond to notices.
- For paying taxes, options include IRS Direct Pay, EFTPS (electronic payments), credit/debit cards, or digital wallets (through authorized processors), and IRS2Go (mobile app).
- Spread the word—help vulnerable friends or family members who may need assistance with the switch.
Be aware that fraud has been reported in relation to the IRS going electronic. This may include a variety of scams, such as phishing attempts where impersonators send emails or texts claiming to be from the IRS to collect personal information. The IRS doesn’t initiate contact with taxpayers by email, text messages, or social media channels to request PIN numbers, passwords, or similar access information for credit cards, banks, or other financial accounts.