October Economic Update

Market Summary

In spite of economic warning signs, a government shutdown, new tariffs being implemented, and stock valuations approaching highs not seen since just before the Dot-Com bust 25 years ago, the market shrugged off all of these concerns and moved high last month. The S&P 500 gained 3.49%, the Nasdaq 100 added 5.37%, and the Russell 2000 rose 2.99%. (1)

Labor Market

The looming federal government shutdown in late September forced suspension or delay of key economic releases (CPI, nonfarm payrolls). In light of the delays, the Labor Department recalled BLS workers to ensure the September CPI report is published (critical for Social Security COLA) despite the shutdown. With official data delayed by a government shutdown, the Carlyle Group issued a “shadow” jobs report estimating just 17,000 net jobs added in September (vs. consensus ~54,000). Consumer confidence slid as inflation and job concerns weighed on households. (2,3,4)

Tariffs

On September 26th, the Trump Administration released new industry-specific tariffs to begin on October 1st. These include a 100% tariff on any branded or patented pharmaceutical products, 25% on imported heavy trucks, 50% for kitchen cabinets and bathroom vanities, and 30% for upholstered furniture. It was also announced that the Administration is considering tariffs on foreign electronic devices based on the number of chips in each device as a means to encourage companies to shift their manufacturing to the United States. They are also targeting a wade range of consumer products from toothbrushes to laptop computers. (5)

Tariffs have been impacting farmers significantly as China has shifted their importing of soybeans from the US to Brazil in a retaliatorily move. Farmers have now found themselves with a significant supply with no one to sell their product. President Trump has indicated he may implement an aid package worth $10-$15 billion, a move critics argue that is far closer to socialism than capitalism. (6)

The biggest tariff news happened on the day of writing this newsletter when President Trump announced a warning of a “massive increase” in China tariffs which jolted Wall Street at the close of an already turbulent week marked by growing concern over a potential bubble in artificial intelligence companies. Several hours later and after the stock market closed, Trump announced there will be a 100% tariff imposed on every product made in China beginning November 1^st. This all comes on the heels of China announcing stricter export controls over rare earth metals which are essential for the production of many US goods including chip manufacturing used for artificial intelligence. (7)

A summit with China’s President Xi Jinping was scheduled for later this month, but Trump stated he saw “no reason” to meet, citing “hostile” export controls. His social-media post followed a string of actions by both Washington and Beijing aimed at restricting the flow of technology and materials between the two nations. Many believed the worst of the trade wars with China were behind us until this escalation proved otherwise. (7)

Looking Forward…

Tariffs will once again be at the forefront as we enter into a historically soft part of the year for the market. Both China and the EU have been pressing back firmly against the White House’s trade policies. Concerns over sky-high valuations, soft consumer data, and a rapidly weakening job market will also be closely watched. We may see a more volatile market over the next couple of months.

---

Monthly Financial Tip:

Investing too conservatively in retirement could mean losing the chance to grow your money faster than the rate of inflation. Some fixed-income investments are earning less than 3% annually.

---

Citations:

1. Ycharts, Invesco, Rueters

2. Wall Street Journal, Oct 09, 2025

3. Reuters, Oct 07, 2025

4. Associated Press, Sept 30, 2025

5. CNBC, Sept 26, 2025

6. Financial 26, 2025

7. Financial Juice, Oct 10, 2025

Disclaimers:

This post has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. Bob Lawson is not engaged in rendering legal or accounting services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.