September 2025 Commonly Asked Questions (FAQ)

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By Dennis Stearns, CFP^®

SFG Investment Committee, Founding Partner and Senior Wealth Advisor

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Q: Labor Day has me thinking about the recent news that job growth is slowing. Is it the economy slowing, worried employers or AI impact causing this?  

A: It’s a combination of factors. Many businesses are becoming more cautious and therefore reducing new hires. Fed Chair Powell recently acknowledged the “curious” nature of today’s labor market – resilient yet sluggish.  

KPMG’s take: The labor market is in a state of uneasy balance.  

A new survey reveals that one in five U.S. companies plan to slow down hiring in the second half of 2025 – almost double the share compared to last year. While layoffs are not increasing, the drop in job openings could limit growth and reduce opportunities for workers. According to the Federal Reserve Bank of Atlanta, job stayers have earned larger wage increases than job switchers since February. That is contributing to the lack of churn in the labor market and a hesitancy to job hop. 

Some key sector trends: 

Technology: After aggressive hiring in 2021-2022 and waves of layoffs in 2023, big tech firms are now cautious. Meta, for instance, has imposed hiring freezes in several divisions despite surging profits from AI initiatives. 

Healthcare: Hospitals and clinics face high demand but also high labor costs. Many are postponing expansion and relying more on overtime or contract staff. 

Manufacturing: With global supply chains in flux and tariffs raising costs, manufacturers are cautious about onboarding workers until demand stabilizes. 

Retail and Hospitality: These sectors are still hiring, but also at a slower pace. Seasonal hiring projections for the holidays are already lower than historical averages. 

Artificial Intelligence and robotics play a smaller but growing role in job growth. Microsoft surprised labor trend experts by announcing a restructuring of numerous jobs, trimming jobs that are less relevant in an AI-charged world and adding positions unique to the new tech-enabled world. Most labor trend experts still think material changes (versus small incremental shifts) in the labor force due to technology accelerators and force multipliers are years away.  

This recent survey highlights the productivity gains from AI expected. The majority believe the rise of AI and robots reflect a “technology as helper to humans” rather than “technology wholesale replaces humans” near term future.  

Q: I’ve tried to follow your advice and avoid behavioral finance traps and landmines, including confirmation bias and watching my portfolio too often. It’s been hard given the news and market volatility to tune out my portfolio. I find myself checking it more frequently. Does this really pose a risk?  

A: We see quite a few behavioral finance landmines affecting our clients these days. They include: 

• Overconfidence bias, 

• Comparing returns to the S&P 500 even if stocks make up only half your portfolio, 

• Loss aversion (under confidence or fear driving ill-timed sales), 

• Tuning into negative news feeds happening daily, or sometimes hourly, creating undue anxiety. Almost all TV, print and internet media plays the “crisis of the moment” card more frequently these days to keep us tuning in for more salacious details, 

• Herd mentality, including getting caught up in the AI frenzy, 

• Changing risk levels higher or lower due to the perception that living expenses will stay elevated no matter what, and 

• Watching their portfolios more frequently.  

Why is watching portfolios more frequently risky? Our friends at Dimensional Research recently shared these statistics: 

1.  From 1985-2024, if you watched daily, the U.S. stock market went up 52% daily and down 48% of the time. The stock market has created such tremendous wealth over decades because the magnitude of the daily ups outnumber the size of daily downs more frequently. As Warren Buffet likes to say, betting against U.S. companies longer term is a losing game. 

2. Over the same time period, if you watched your portfolio monthly, your anxiety would go down – your odds of experiencing up versus down times shift to 65% up / 35% down.  

3. Over this 40-year period, if you only look at your portfolio once a year, you would have anxiety about down years only about 17% of the time.  

Therefore, the more frequently you check your portfolio, the more likely you’ll see the “downs” of the market, create stress for yourself, and potentially risk making a bad move. Note the above stats assume you’re 100% invested in the stock market, mirroring our aggressive growth portfolios. Most portfolios approaching retirement or in retirement don’t have 100% stocks, so the anxiety is lessened if you feel the need to look up your portfolio more frequently.  

Also, SFG’s volatility and risk dampening strategies have edged these odds more substantially in your favor to reduce anxiety.  

SFG’s Take: Avoiding all of these behavioral finance traps dramatically improves your odds of achieving your goals and reduces your anxiety at the same time, a true win-win!  

Q: I’ve started hearing about stagflation again. It always seems scary, but you’ve coached us that it rarely happens. Is this time different?  

A: Stagflation is a combination of higher inflation and high unemployment or a sluggish economy. There are some factors lining up that could cause a short bout with stagflation. There are almost always strong forces to keep the actual (versus emotional) impact in check.  

For example, we had a period of severe stagflation in the U.S. during 1979-1984, because inflation had become entrenched in the economy and the economy went into recession, came out and went into another recession. The Federal Reserve used drastic measures, including sky-high interest rates, to tame the beast. There have been many stagflation scares since then – few have materialized into anything significant.  

Curing the post-COVID inflation + recession of 2022-2024 also required the same harsh medicine as 79-84 but not as intense or prolonged because vaccines worked better than expected and inflation had not become entrenched in the economy. The excess money pumped into the system (not needed at an intense level as it turned out to deal with pandemic economic effects) worked its way out and supply chains were mostly fixed relatively quickly. As a result, these factors in addition to the actions taken by the Federal Reserve were able to bring inflation down without inflicting high unemployment on the economy. 

There are now signs the U.S. economy is cooling, but we’re not on a severe slowdown or recession watch yet. Rolling sector recessions are already happening. For example, toy companies are among the hardest hit due to most products being sourced overseas.   

Two factors suggest 2026 will still be positive overall for the broader economy. The massive AI capital expenditures are finding their way into parts of the economy, creating more growth. The new tax law has multiple stimulative elements that should also lessen any economic stagnation.  

Inflation is bubbling higher than the Fed would like and tariff impacts are being warned from multiple CEOs as quarterly earnings reports are coming in. The impact of companies either eating tariff costs or stockpiling inventory ahead of tariffs is beginning to change. Some argue that the impact of tariffs on inflation will be “transitory” while others argue it will be prolonged. Time will tell. 

SFG’s Take: In a time of stretched stock valuations, even a short period of mild stagflation may cause bigger stock volatility and a possible 10% correction. Most analysts are already looking through short-term issues into 2026. In other words, we expect the economy to cool but not freeze.   

We also expect inflation to heat up in the next few months but not for a prolonged period, at least as far as percentage increases are concerned. Imagine Goldilocks (not too hot, not too cold) having a mild short-term anxiety attack.  

Big investors and the Fed look at percentage increases for decision making. Most of our clients just look at higher prices and care that they seem to be staying elevated. Even Walmart, the champion of low prices, is warning that their post-pandemic price rollback plan is on hold indefinitely and that some higher prices are ahead, even if they are modest increases compared to pandemic inflation.  

Sources: 

1. BBC.com, Microsoft to cut up to 9,000 more jobs as it invests in AI, as of July 3, 2025.  

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Dennis Stearns, CFP^®, ChFC, MS

Dennis is the founder of Stearns Financial Group and is nationally recognized for complex ultra-high net worth financial planning and the effect of Super Trends on clients’ investments, businesses/careers and the economy.

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