Everyone knows the expression “if it seems too good to be true, it probably is.” My experience has been that you can substitute the word “always” for probably. There seems to be no shortage of hidden fees, additional taxes, blackout dates, limited availability, minimum purchase sizes, must-attend sales pitches, ambiguous start and end dates and a host of other less-than-desirable things.
You know, the sort of stuff that makes a “too good to be true” deal decidedly less so.
For instance, there is a well-known restaurant chain that frequently advertises what it calls a “never-ending pasta bowl.” Some years ago, there was an outlet kind of close to the house, and we would go there on occasion.
Unfortunately, I was never able to time this promotion correctly.
No matter when I went, the deal had always ended the nebulous “a couple of days ago.” Hey, no one needs an endless supply of ultra-processed complex carbs, especially yours truly. However, would just once have been too much to ask?
Perhaps the servers would take one look at me and make an impromptu executive decision to end the promotion for our table only. Maybe I looked like I meant serious business of the eating kind. A real threat to their profit margins. Who knows?
It is kind of a moot point now. That particular location has long since closed, and I couldn’t tell you off the top of my head where another one is even located.
With this in mind, last week, the Bureau of Labor Statistics (BLS) released “The Employment Situation – September 2025.” Yes, it was off-cycle and late. However, since the overall health of the labor market is currently a serious question mark, investors wanted to know what the BLS was seeing back in September.
At first blush, the headline was pretty good. In fact, all things considered, it was very good. After all, the BLS estimated the U.S. economy created 119K net, new payroll jobs in September. Trust me, it was almost a sigh of relief.
The economy created jobs, just not as many as it had been. The Unemployment Rate ticked up slightly to 4.4%, but that, too, wasn’t the end of the world. Far from it. Historically speaking, 4.4% is almost beyond “full employment.”
In fact, in a lot of ways, the report was perfect. It suggested a labor market strong enough to keep the economy out of red territory. However, the data was soft enough to allow the Federal Reserve to cut the overnight rate in December, should it so desire.
In essence, it was both strong and weak, all rolled up into a nice, tidy ball. Again, it was perfect in some ways, almost a little too much so.
I will cut to the quick.
Despite the headlines, this was far from a perfect report. If I had to grade it, I would give it a C+. Maybe even just a C. It just wasn’t good.
First off, the BLS made even more “2-month net revisions to nonfarm payrolls.”
- For September, the revision was (33K)
- In August, it was (21K)
- July was (258K)
All told, this portion of the report, which is separate from the annual restatement of (911K) this year, according to the BLS data, has initially overreported the headline payroll number by about (399K) thus far in 2025.
In a lot of ways, this report seems to be becoming even more of a guess.
Also, of the 97K jobs the BLS estimated the private sector created in September, 19.6K were in “social assistance for individual and family services,” and another 47.0K in “leisure and hospitality.” Combined, those two segments of the report accounted for a whopping 68.7% of all private sector job growth.
While any job is better than no job, these economic sectors are historically on the lower end of the pay scale. Intuitively, they aren’t the sort which would suggest, or otherwise portend, a significant surge in consumer spending in the near future.
This is a problem.
As anyone who reads economic newsletters should know, consumption drives the U.S. economy. Without either a significant increase in either consumers or paychecks, preferably both, the domestic economy will struggle to grow significantly. It really is that simple.
Therefore, when I see reports such as this one, I get a little worried. Simply put, we need to be creating more and better jobs. Period. If we aren’t, it would suggest employers aren’t as confident about the future as we would like for them to be. Otherwise, they would be looking to expand their capacity, which an increase in employee headcount would imply.
That should make sense.
So, a report like this? Since it was both strong and soft, it might seem perfect to some people, particularly those who want the Fed to keep cutting rates.
Admittedly, this makes me sound like a “glass is half-empty type of person.” No argument. However, as much I want to be sanguine, positive, ebullient and blindly optimistic about the near-term strength of the economy… I just can’t seem to get past meh. There is absolutely nothing in the old crystal ball which would suggest growth is going to sharply accelerate from this point and at this time.
Fortunately, there is so nothing to imply a sharp reversal in fortunate, either. As such, based on the current data trends, if you like how your business has performed in the last, say, two months, it would not be a surprise if you like the next two months…at least somewhat
So, how is that for economic forecast? It is certainly far from “too good to be true,” isn’t it? And if “too good to be true” is almost always wrong, perhaps the opposite is more apt to be right. You think?
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this and every day. Also, please be sure to tune into our podcast, Trading Perspectives.
Chief Economist/Chief Investment Officer, Oakworth Asset Management
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