Hey friends - enjoy the long weekend! Go ahead and head out now. No one’s watching.

🌎 The Big Picture

The last week of August is the calm before the storm. People are usually putting off all of their concerns until after Labor Day. September is historically the worst month of the year for the market.

Let’s catch up on things:

The stock market: at record highs, feeling really confident.

Why?

Corporate Profits: Strong, and profits are only expected to surge more for America’s biggest companies over the next year or two.

Interest Rates: High, but investors expect them to start coming down. The Chairman of the Federal Reserve strongly hinted last week that they would cut baseline short-term interest rates in their September meeting. Though I wouldn’t get your hopes up for a fast and steep reduction in borrowing costs, especially not for long-term borrowing like mortgages. Chairman Powell doesn’t seem eager to bring rates down a lot, and they only directly control short-term borrowing rates. The Fed’s influence over those longer rates that affect mortgages has been weaker amidst concerns about America’s broader financial irresponsibility.

How about the real economy?

Small businesses: Doing better. They haven’t felt a major hit from tariff-driven cost increases yet, and confidence is high for deregulation and lower taxes, but they still can’t find quality workers they can afford.

Average Americans: Doing better. It’s hard to find a new job, but most sectors are holding onto their workers for now. Wages have been gaining ground on the cost of living, but there’s still a ways to go. Budgets are still strained, savings rates are low, and people are falling behind on their credit card payments at a concerning pace. If prices pick up again, it won’t be good.

Real estate: It depends on the market you’re in, but broadly, the market is on ice. Sales activity is very low, even though the supply of homes coming to market has finally picked up. Mortgage costs are still very high compared to what most existing homeowners have locked in. There’s no good reason to change homes and double your monthly payment. Homeowners (mostly boomers) aren’t motivated to sell or lower prices, so affordable homes are still hard to find.

Overall, the economy was trending better before all this shakeup. Some of the shakeup could be good, but the real wild card is how much tariffs will drive prices higher and for how long. Corporate America has the profit margins to manage through it, which means stocks should be OK. But, small businesses don’t, and people may not be able to handle another big bout of inflation. Consumer spending powers the economy.

More to come.

Get the full breakdown of all the trends affecting your home, wallet, and career in the new Weekend Scoop on the Scoops app!

🏭 The Companies Everyone’s Talking About

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❔ The Big Question of the Week

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