Fed Rate Hike, Strong Consumer, Scam Conversations, Mortgage Rates, AI Regulation, Pension Lump Sum & More

Why I’m Glad the Fed Increased Interest Rates on September 16

On Wednesday, September 16, at 2 p.m. Eastern, the Federal Reserve announced its decision to increase interest rates by 0.25% to the range of 3.75% to 4% from 3.5% to 3.75%. This was the first rate hike since July 2023.

Your initial reaction might be, “Why would you want the Fed to increase interest rates?” Generally, higher rates are viewed as bad for stocks because they can slow the economy and make bonds more attractive relative to equities.

But I think this time is a little different, and investors need to think outside the box. The new Federal Reserve Chairman, Kevin Warsh, has made it clear since taking over that he intends to be tough on inflation. We recently received the latest Consumer Price Index report, and inflation remains nowhere near the Fed’s 2% target. We also continue to see a very strong jobs market, which could be viewed by Chairman Warsh as evidence that the economy remains strong enough to handle a modest increase in interest rates.

I believe the rate hike actually sent an important message to the markets: Chairman Warsh means what he says. If he wants to establish credibility as an inflation fighter, this was an opportunity to show investors that he is willing to make the difficult decisions necessary to prevent inflation from becoming a bigger problem down the road.

The consumer remains stronger than expected

The latest retail sales numbers are another sign that the U.S. consumer remains surprisingly strong. Retail sales increased 1.2% in August and are now up 6.0% from a year ago. But what I find even more interesting is what happens when you take gasoline stations out of the equation. Gas station sales increased 21% year over year due to higher gas prices, but sales excluding gasoline stations were still up 4.9% year over year, showing that the strength in consumer spending is not simply the result of higher gas prices. Even excluding both motor vehicle and parts dealers and gasoline stations, sales were up 5.6% from a year ago.

What really stands out is how broad the annual growth has been. Electronics and appliance stores were up 7.8%, sporting goods, hobby, musical instrument and book stores were up 10.7%, miscellaneous retailers were up 14.0%, furniture and home furnishing stores were up 1.9%, clothing stores were up 4.3%, general merchandise stores were up 4.5%, building materials and garden equipment were up 5.1%, and restaurants and bars were up 5.8%. Interestingly every major category that is tracked in the report showed an annual increase.

Another factor worth mentioning is the timing of Amazon Prime Day. The promotional event occurred earlier this year, which pulled some spending forward into June and created a tougher comparison for July. As that distortion faded, nonstore retail sales rebounded sharply in August, rising 2.6% from July. The Census data show nonstore sales up 9.9% from a year earlier.

The other number I am watching is the retail “control group,” which excludes several volatile categories and is used in calculating consumer spending for GDP. That measure jumped 1.4% in August, its strongest monthly increase since September 2024.

There has been plenty of discussion about consumers becoming more cautious, inflation remaining elevated and higher gasoline and diesel prices putting pressure on household budgets. Those are legitimate concerns. But the actual spending data continue to tell us that consumers are still opening their wallets.

For now, the consumer looks much stronger than some of the economic headlines would suggest. The bigger question is whether this strength can continue if inflation and energy prices remain elevated and households continue to draw down savings. That will be something I’ll be watching closely over the next several months.

How to Talk to Your Parents When They’ve Been Scammed

Like many people, when we find out that someone we love or care about has been scammed, our first reaction is to get angry and immediately want to step in and fix the problem.

The problem is that many scammers are extremely good at what they do. Whether it’s a romance scam or one of the countless other types of scams, these people are professionals at building trust and relationships with their victims. Remember, a scammer may have spent weeks, if not months, building a relationship with the person they are scamming.

If you come in like a bull in a china shop, you could face resistance. You may hear things that make no sense to you, such as your parents saying that you don’t want them to be happy or that they know exactly what they’re doing.

That’s why you should not start by accusing them of being foolish or saying they don’t know what they’re doing. Doing that can immediately put them on the defensive and make it much harder to help them.

Instead, you need to build trust with your parents and let them know that you are on their side. Say things like, “I’m here to protect you.”

Be especially careful if you believe the scammer has driven a wedge between you and your parents. That can be an intentional tactic designed to keep you from intervening and stopping the scam.

Always talk calmly to your parents, or anyone else who is being scammed, and try to help them identify inconsistencies in the scammer’s story. If you notice something that doesn’t make sense, point it out without attacking them. For example, if money was wired to an account but the name on the account doesn’t match the name the scammer has been using, that could be an important detail to discuss.

You should also try to get other trusted people involved. A banker, accountant, financial advisor, relative, or another person your parents trust may be able to help them see the situation differently.

The goal is not to prove that you are right. The goal is to protect someone you love. If you handle the situation correctly, you may be able to prevent your parents from losing their entire nest egg. But if you come on too strong, you could push them further toward the scammer and make it even harder to help them.

There aren’t as many low-interest mortgages in the United States as you may expect

In the United States, there are roughly 86.4 million open mortgages, representing approximately $13.1 trillion in mortgage debt.

When interest rates and mortgage rates were extremely low in 2021, it seemed like almost everyone was refinancing their mortgages into rates around 3%. Apparently, that wasn’t quite the case. Some homeowners may have sold their homes and purchased new ones, taking on a higher mortgage rate in the process.

Today, homeowners with a mortgage rate below 3% account for roughly 20% of all mortgages. That’s actually less than the 22% of mortgages with rates above 6%.

The largest group, at 33%, has mortgage rates between 3% and 4%.

For years, we’ve been told that the housing market is being held back because so many homeowners are sitting on extremely low mortgage rates and don’t want to give them up. But nearly half of all mortgages have rates above 4%, which may mean that the mortgage-rate “lock-in effect” isn’t quite as widespread as we’ve been led to believe. Maybe the housing market simply wasn’t as strong as we thought.

Do we need government regulation on artificial intelligence?

I’m not, and never have been, a big fan of government regulation, but there are certain things in history that just make sense to regulate. On a smaller scale, who would think it makes sense not to have an age limit for a driver’s license? Another regulation that makes sense is having a legal drinking age. Can you imagine if it were perfectly acceptable for a 12-year-old to drink whenever they wanted? On a much bigger scale, during the arms race, the United States and the Soviet Union negotiated arms control agreements. Those agreements may have helped prevent the world from experiencing a nuclear war.

But what about AI, or artificial intelligence? It seems like it could be incredibly beneficial, but just like nuclear power can be beneficial while nuclear weapons can lead to devastating consequences, AI has the potential to be used for both tremendous good and tremendous harm.

Unfortunately, we can’t simply stop the development of artificial intelligence. There are many potential benefits including increased productivity and we also can’t afford to fall behind China in the development of AI. If the United States were to completely step away from AI while China continued to advance, we could lose significant economic and technological influence around the world.

That’s why I believe we need reasonable guardrails around artificial intelligence. Ideally, the United States and China should work toward establishing some basic rules that both sides agree to follow. The goal shouldn’t be to stop AI or prevent innovation. The goal should be to make sure we develop useful and efficient AI while reducing the risk that uncontrolled AI could cause catastrophic consequences.

Financial Planning: Should You Take Your Pension Lump Sum Sooner?

If you are approaching retirement and have a pension with a lump-sum option, it is important to understand how interest rates may affect your benefit. Traditional pensions are defined benefit plans, meaning the monthly annuity payment is generally determined by factors such as years of service and compensation. A lump-sum option, however, is calculated by determining the present value of those future pension payments using an applicable interest rate. Generally, higher interest rates result in lower lump-sum values. Therefore, if rates are expected to rise, retiring sooner could potentially result in a larger lump sum. However, every pension plan is different, including the interest rates used and how far back the plan looks when determining the applicable rate. Before making a retirement decision based on interest-rate timing, be sure to review your specific plan provisions and understand how your lump-sum benefit is calculated.

The Numbers Are In: Those Without a College Degree May Have a Better Chance of Finding a Job

Twenty years ago, getting a college degree was often viewed as almost a guarantee of improving your chances of finding a good job. Today, that may no longer be the case. With AI eliminating or changing many entry-level white-collar jobs that traditionally served as a starting point for college graduates, workers without a college degree are actually seeing some of the strongest employment numbers in years.

For workers ages 22 to 34 who never graduated from college, the unemployment rate is near its lowest level in roughly 20 years. The opposite is happening for many college graduates, who are facing one of the more difficult job markets in recent history.

Some of the lowest unemployment rates are among people working in fields such as maintenance and repair, construction, mining, and food service. Meanwhile, college graduates with degrees in areas such as science, computer and mathematics, and education are facing a much more challenging employment environment.

I think some college graduates are making a mistake by assuming the answer is simply to go back to school and get a master's degree. They may not be reading what the job market is actually telling them.

There is a shortage of people who can perform hands-on jobs that require someone to physically be there. These are jobs that AI can't easily replace. There is also a continued need for jobs that require human interaction, such as sales.

A master's degree isn't necessarily going to help someone find a job if their bachelor's degree is in a field where demand is declining. The academic world can sometimes have tunnel vision when it comes to education, treating a college degree as the primary path to a successful career. I think it's time to broaden that perspective.

We may have too many people pursuing college degrees and not enough people developing the skills needed to build, repair, operate, sell, and provide services in the real world.

The lesson isn't that college is bad. It's that education needs to match the job market. A degree by itself is no longer a guarantee of employment.

It looks like the days are numbered for LIV Golf

LIV Golf came on the scene about four years ago with big, guaranteed contracts and enormous prize money to lure big names like Jon Rahm and Dustin Johnson away from the PGA Tour. That hasn’t worked out so well, especially after Saudi Arabia’s Public Investment Fund pulled its funding this year without giving much of a reason.

The league reportedly could have as much as $1 billion in liabilities, while its assets could be valued as low as $100 million. LIV Golf filed for Chapter 11 bankruptcy protection in New Jersey last week.

LIV Golf has already canceled two tournaments, and the players who left the PGA Tour are reportedly not receiving money they are owed from LIV. Instead, they have become creditors, along with as many as 5,000 other creditors listed in the bankruptcy filing.

LIV Golf CEO Scott O’Neill is trying to turn this into a positive, saying the bankruptcy will give the league time to restructure and pursue a new transaction. He calls it moving from “LIV Golf 1.0” to “LIV Golf 2.0.”

His big idea is for the major players to give up their enormous, guaranteed checks and instead become majority owners with equity stakes in LIV 2.0.

In my opinion, Mr. O’Neill is going to have to be a very, very good salesperson to convince these players to give up millions of dollars in guaranteed compensation for ownership in a struggling venture with significant liabilities and very little cash on hand.

My prediction? I believe the players will eventually go back to the PGA Tour, and the days of LIV Golf may be coming to an end.

Poland and Romania try to avoid paying an American company the $2.2 billion they owe

During the COVID-19 pandemic in 2021, the European Union, including Poland and Romania, entered into contracts with Pfizer to purchase billions of dollars worth of vaccines. While the other European Union countries have paid what they owed Pfizer, Poland and Romania have refused to pay the remaining amount.

In April, Pfizer took both countries to court and won a ruling allowing the company to pursue the $2.2 billion it says is owed. Then, in July, Pfizer received court approval to place a lien on fees that airlines pay to access the countries’ airspace.

Poland and Romania argue that they no longer need the vaccines and therefore shouldn’t have to pay for them.

However, they entered into a contract. As part of the agreement, Pfizer also made commitments involving local production and delivery of the vaccines.

Now, both countries are arguing that Pfizer’s efforts to collect the money could interfere with their airspace and potentially affect flight safety. They also argue that it could take many years for Pfizer to collect enough money from airline fees to recover the full $2.2 billion.

In Europe, these aviation fees are collected by a regional organization just like taxes before being distributed to individual countries. In the United States, airlines generally pay aviation fees directly to the Federal Aviation Administration.

The way I see it, the countries entered into a contract during the pandemic. Just because circumstances changed and the pandemic ended doesn’t mean you can simply walk away from a contract.

Sometimes I feel that European countries take advantage of the United States and American companies in situations like this. We’ll see how this ultimately plays out, but I hope Pfizer is able to collect the $2.2 billion and that Poland and Romania fulfill their contractual obligations and pay what they owe.

Women’s income is closing the gap on men in the United States

After years of men earning more than women, the gap is now moving in the right direction for women. There’s still a long way to go for women to match men’s pay, but a recent Census report shows that women who work full-time, year-round earn 84 cents for every dollar earned by a man. That’s an increase of three cents from the 81 cents women earned for every dollar in 2024. Women also gained 765,000 jobs in 2025, while jobs for men actually declined by 6,000.

There are some other positive numbers in the Census report on income and labor. Median household income reached a new high in 2025 at $87,460, an increase of 2.6% from 2024 after adjusting for inflation.

Other data in the report showed that Black Americans had the largest income gain among all racial groups, with income increasing by 4.8%. The official poverty rate also declined to 10.2% of the population, down from 10.7% the previous year.

As we have said in other reports, for every unemployed person, there are 1.1 jobs available. In other words, if you want to work, there’s a job for you. Ultimately, the labor market still looks to be in a good place.