September 11, 2025
We got a double whammy of not so great economic news today.
First – the latest inflation gauge is showing inflation is going up and second – more people are filing for unemployment. In fact – new unemployment claims hit a level we haven’t seen since 2021. I’m going to explain each of these things in more detail in this video.
Let’s start with the August consumer price index report. Which found inflation heated up between July and August – increasing 0.4%. We haven’t seen an month over month increase like that since January of this year. And even more concerning – according to this report inflation is up 2.9% between August of this year and august of last year. Let me be clear – these numbers prove inflation is going in the wrong direction – up!
And you’re feeling it because the biggest increases were seen in the basic necessities of life. Food was up 0.5% between July and August of this year and up 3.2% year over year. Shelter was up almost half a percent between July and August and it was up more than 3.5% between this August and last August. And gasoline for your car also jumped up almost 2% between July and August (1.9%) of this year – but it is lower than last year (-6.6%). Natural gas for your home is up almost 14% year over year (-1.6% mom) and electricity for your home is up more than 6% year over year (+6.2%yoy/+0.2%mom). And just because I know you guys care about it – eggs were almost 11% more expensive in August of this year than they were in August of last year (+10.9% yoy/0.0%mom) and coffee was up dramatically – almost 21% year over year (20.9% yoy/3.6% mom).
On top of that as I mentioned more people are filing new unemployment claims. According to the Department of Labor for the week ending on September 6th – 263,000 people filed for unemployment – that’s the highest level for initial claims we’ve seen since October of 2021. The labor department says as of August 30th, the number of people receiving unemployment benefits almost 2 million (1,930,000 seasonally adjusted).
So let’s put these numbers into context. The job of the Federal Reserve is to ensure price stability and maximum employment. Right now – neither of those things are happening. Literally – both are going in the wrong direction. But the Fed doesn’t control everything. The president and congress are responsible for coming up with the economic policy that impacts both jobs and prices. Like the president’s policy on tariffs. The Fed can only react to those policies and the way they react is by either increasing or cutting interest rates. Cutting rates makes it easier to borrow money for you and me and American businesses and increasing rates makes it harder. The conundrum the federal reserve has with this current economic situation is if they lower interest rates to try and stop the bleeding in the jobs market they will risk inflation going up even more. And if they keep the interest rate steady or increase it – it may get inflation to come down, but it would also likely make the job market worse and leave more people out of work.
Most experts believe the fed will cut interest rates when they meet next week. The question is – by how much.
Read the CPI report here.
Read the unemployment report here.
