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Macro Minute: Week of September 15, 2025

Written by Wes Johnson on . Posted in Macro Minute.

Today I wanted to bring you a chart from Callie Cox’s excellent newsletter. It is a chart from Chart Kid Matt. 

As we are likely to begin a Federal Reserve rate cutting cycle this week, I thought it would be good to look at how the S&P 500 typically does for the year after the first cut. This chart shows that typically the next year is pretty good for the stock index. It is important to remember this as you will be hearing that the Federal Reserve is cutting because the economy is weak and likely in a recession. We must also keep in mind that the current Citi Economic Surprise index is in a positive positioning, meaning that the economic data is currently surprisingly stronger than feared.  

In keeping it short this week I will end with this thought. Could we be entering a rate cutting cycle with: 

  • inflation stable, even if higher than the 2% target 
  • the economy staying resilient 
  • the labor force shrinking due to continued Baby Boomer retirement and no immigration 

If these things prove to be true, it will give the Federal Reserve plenty of room to ease policy and possibly further accelerate economic expansion. 

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