Bob’s Journal 9/11

The Fed Might Not Be Able to Fix Slow Job Growth

The labor market slowed considerably in 2025, increasing pressure on the Federal Reserve to reduce interest rates.

But lower rates might not be as effective at increasing employment as they were in the past. In the 2025 monthly government jobs reports to date, an average of about 74,000 private sector jobs were created each month. In 2024, an average of 130,000 jobs were created each month. In the immediate post-pandemic period, job growth was even higher.

In the latest reports, the three-month average of new jobs created was at a 15-year low, excluding the pandemic period.

Further, most of the job growth in 2025 was due to the health care sector, according to an analysis in The Wall Street Journal. About 64,000 health care jobs were created monthly so far in 2025. That leaves only 9,400 jobs created in the rest of the economy each month.

That raises the question of whether weaker job growth has been due to a weak economy. If so, job growth probably can be increased by monetary stimulus, such as cutting interest rates.

But that might not be the situation this time. Job growth might be lower because the labor force is smaller and shrinking instead of growing. The baby boom generation has been steadily retiring for years.

The middle and largest part of that generation began turning 65 last year, at a rate of about 12,000 people per day. They are steadily leaving the labor force and there aren’t enough younger workers to replace many of them.

In addition, the changes in federal immigration policy caused a sharp decline in net immigration to the United States. Immigrants have been a major source of labor force growth for years and filled many jobs.

Among Americans of working age, the labor force participation rate is lower than in the past. The number of people in the labor force has steadily declined since the pandemic.

In short, there might be less economic activity because fewer people are working. Jobs that were done by people who are now retired or living outside the United States simply aren’t being done.

That could be why, despite a recent decline, the number of unfilled jobs remains stubbornly high and small business owners report that their biggest problem is finding qualified workers for open jobs.

Other data indicate that retail sales and personal consumption expenditures continue to increase, though at slower rates. That is another indication that lower job growth might not be due to the traditional reason of falling demand for goods and services.

If that’s the case, significant interest rate reductions by the Fed might not improve the labor market and might increase longer-term interest rates and inflation.

Murdoch Family Makes Expensive Update to Estate Plan

The estate plan of Rupert Murdoch has been in the courts and headlines for about a year. Recently, the family resolved their differences and agreed on a new plan.

Years ago, Murdoch created an irrevocable trust that held most of his stock in the Murdoch media empire. The trust gave equal shares and votes to each of his children after he passed away. The children were from more than one marriage.

Murdoch has had rocky relationships with several of the children. In recent years, he determined that one of his sons, Lachlan, should assume control of the business and the trust.

But several of his other children objected. They said the trust gave them influence over the trust and the media companies. In fact, three of them could form a voting block to override whatever Lachlan wanted to do.

Murdoch didn’t like this, because those three children made clear that their political philosophies and other views are different from their father’s. They indicated they intended to change key aspects of the media businesses.

In response, Murdoch asked a Nevada court to allow changes in the irrevocable trust. The court denied the request, and Murdoch appealed.

This week, the Murdoch companies announced that a settlement had been reached. It will be expensive for Murdoch and the companies.

Three of the children from Murdoch’s first marriage agreed to relinquish their interests in the trust and its assets. The companies will sell millions of new shares to the public for an estimated $3.3 billion and give the cash to those children.

The assets in the current trust will be transferred to a new trust that benefits Lachlan and the two children from Murdoch’s current marriage.

Lachlan will have sole control of the trust and its assets through 2050. That means he also will control the family’s media companies. The other three children from Murdoch’s first marriage won’t have any say in the companies.

The senior Murdoch eventually obtained the estate plan and legacy he wanted. But it came only after a public spectacle and at a high cost to the companies.

Murdoch’s initial estate plan made a mistake common in the plans of many business owners.

The plan gave equal shares and votes in the business to each of the children and did so through an irrevocable trust that couldn’t be changed. The plan didn’t consider factors such as which children would work in the business.

The trust also was created years ago when the children were younger. It didn’t consider that the children would grow apart both in their relationships and in their views of the family business.

Some reports indicated that Murdoch created this estate plan as a condition of the divorce from his first wife.

Parents need to think carefully about the division of a family business or other assets that must be managed jointly. Few family businesses survive past the second generation. Often, that’s because the children inherit equal shares of the business and don’t agree on how to manage it.

Vanguard Hit with Large Fines for Transgressions

The Vanguard Group historically is known for low fees and giving individual investors a better deal than other financial services firms.

But recent fines against the company indicate it might not be following the path of founder Jack Bogle. Most recently, the Securities and Exchange Commission (SEC) announced that Vanguard Advisors, the firm’s investment advisory business, agreed to pay a fine of $19.5 million.

The fine was imposed because the advisory business failed to adequately disclose that it gave employees financial incentives to guide clients and prospects to use the firm’s Personal Advisory Services unit. That unit is a proprietary, fee-based investment services program.

In 2023, Vanguard’s website removed a statement that its advisors “received no outside incentives, so they’ll always put your interests first.”  The SEC said that statement was incorrect and there were other indications of undisclosed conflicts.

In January 2025, the SEC announced that Vanguard Group agreed to pay $106.41 million to settle charges of making misleading statements related to capital gains distributions and their tax consequences for retail investors who held Vanguard Investor Target Retirement Funds in taxable accounts. The settlement amount was distributed to investors who were harmed.

This settlement arose from a December 2020 decision by Vanguard to reduce the minimum initial investment for Vanguard Institutional Target Retirement Funds to $5 million from $100 million.

In the following months, a substantial number of investors redeemed their Investor shares that were held in retirement accounts and bought the Institutional shares to obtain their lower expenses.

The target date funds had to sell underlying assets at gains to meet the large number of redemptions. As a result, retail investors who held Investor shares of target date funds in taxable accounts and redeem them to buy the Institutional shares received historically large capital gains distributions and the tax liabilities that come with them.

Vanguard failed to disclose the potential for this series of events in its prospectus or other disclosures.

The company previously agreed to pay $40 million to settle an investor class action suit over the same actions.

The Data

The Small Business Optimism Index, from the National Federation of Independent Businesses, ticked higher in August to 100.8 from 100.3 in July. The August level is the highest since January.

Business owners reported that sales were higher but also stated they had raised or expected to raise compensation. Finding quality labor remained the top problem of business owners.

The ISM Services Index rose to 52.0 in August, the highest level since February, from 50.1 in July. Business activity and inventories increased, indicating that businesses accelerated activity to avoid future price increases due to tariffs.

The PMI Services Index fell to 54.5 at the end of August from 55.7 at the end of July (the highest level of 2025) and 55.4 in mid-July.

The PMI Composite Index at the end of August was 54.6, a decline from 55.1 at the end of July (the highest month-end level since December) and 55.4 in mid-July.

The Producer Price Index (PPI) declined 0.1% in August after soaring 0.7% in July. The PPI rose 2.6% for the 12 months ending in August, down from the 3.1% increase for the 12 months ending in July.

After excluding prices for food, energy and trade services, the PPI increased 0.3% in August and 0.6% in July. The 12-month increase in that measure of PPI was 2.8% through August and 2.7% through July.

Productivity increased at an annualized rate of 3.3% in the second quarter, according to the final estimate, an improvement from a 1.8% decline in the first quarter.

Hours worked in the second quarter increased 1.1%, compared to a 1.2% rise in the first quarter. But output jumped by 4.4% in the second quarter after falling 0.6% in the first quarter.

Because of the productivity increase, unit labor costs rose only 1.0% in the second quarter, down from a 6.9% jump in the first quarter.

Consumer credit outstanding increased at an annualized rate of 3.8% in July. Revolving credit, which is mostly credit card balances, increased at a 9.7% rate. Nonrevolving credit, which is mostly vehicle and student loans, rose at a 1.8% rate.

The private sector created 54,000 new jobs in August compared to 106,000 in July, according to the ADP Employment Report.

Last week’s government weekly Employment Situation reports estimated that only 22,000 new jobs were created in August.

That’s the third-lowest level in the last 12 months and a fall from 79,000 jobs created in July, which was revised higher from last month’s original estimate.

The unemployment rate increased to 4.3% to 4.2%.

Average hourly earnings increased 0.3% in both August and July. The 12-month increase in average hourly earnings was 3.7% through August and 3.9% through July.

New unemployment claims increased by 8,000 to 236,000 in the latest week.

Continuing claims, which lag a week behind new claims, declined to 1.940 million from 1.944 million.

The Markets

The S&P 500 rose 1.57% for the week ended with Tuesday’s close. The Dow Jones Industrial Average gained 0.97%. The Russell 2000 increased 1.26%. The All-Country World Index (excluding U.S. stocks) added 2.10%. Emerging market equities advanced 2.75%.

Long-term treasuries gained 4.20% for the week. Investment-grade bonds increased 2.12%. Treasury Inflation-Protected Securities (TIP) added 0.83%. High-yield bonds gained 0.49%.

In the currency sector, the U.S. dollar declined 0.47%.

Energy-based commodities fell 1.82%. Broader-based commodities lost 0.63%. Gold advanced 2.64%.

Bob’s News & Updates

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If you’re interested in my books, check my amazon.com author’s page.

I’m a senior contributor to the Forbes.com blog. You can view my contributor page here.

Bob Carlson

Editor, Retirement Watch