Roundup: Fed Countdown, AI Stock Bubble, Job Hugging and More

A cut in the Fed Rate next week looks all but locked in.

A modest trim of 25 basis points is likeliest, according to consensus by the futures markets CME Group’s FedWatch Tool.

The Fed hasn’t touched rates since 2024, when it made three cuts late in the year to end a 14-month streak without action. Since then the federal funds rate has been parked at 4.25% to 4.5%. If policymakers make an expected quarter-point cut next week, the rate would drop to a range of 4.0% to 4.25%.

So why now? NerdWallet’s senior economist Elizabeth Renter says the decision reflects a difficult balancing act for the central bank. “The labor market is weakening but inflation is still elevated, so the committee is tasked with judging which of the two priorities are most pressing, and this isn’t an easy call to make. They’re not just looking at the headline figures, but what’s driving the data and where it may be headed next. This is a lot to sort out under the current environment, when the near- to mid-term economic future is far from predictable.”

Renter’s call: A 25 basis point cut seems likely. “Underlying inflation seems to be on stable footing, if a bit elevated, whereas the labor market trajectory seems more decidedly in-motion: cool and getting cooler.”

If the Federal Open Markets Committee (FOMC) opts for a rate cut next week, the effects wouldn’t happen overnight.

The Fed’s future path — how many cuts and how quickly — is unclear and, as Fed Chair Jerome Powell has often said, will be guided by data reports including inflation, jobs and economic growth. For now, the Fed Watch tool shows high chances for additional 0.25 basis point rate cuts at the remaining two meetings of the year: Oct. 28-29 and Dec. 9-10.

Beef prices have hit new record highs.

We’ve been typing that sentence a lot lately. Sirloin steak has reached a new record every month since May, while ground beef is on an unbroken run that dates back to January.

Records were broken again with this week’s release of the August consumer price index (CPI). Steak prices jumped 4.1% from July, a giant month-over-month increase, and are up 16.6% year over year. That’s against an annual inflation rate of 3.2% across all foods.

Ground beef, meanwhile, was up 2.3% from the previous month and 12.8% for the full year. Beef prices have essentially doubled since 2014.

Why are beef prices rising?

There are numerous reasons for high beef prices, but at base it’s a simple economic equation: Demand remains high while supplies have been constrained. Some of the underlying issues are long-term challenges.

Herd sizes are at historic lows: Beef cattle herd sizes hit their lowest point since 1951 last year, and have continued to decline this year. Reasons given are many: Farmer populations are aging. Cattle country has been hit by persistent droughts in recent years, while the changing climate has also increased feed costs. The pandemic also rattled the supply chain as meatpacking plants were sometimes closed for extended periods.

It takes time to rebuild herd sizes. Ironically, high prices make that process harder. For ranchers now, it often makes more sense to sell calves for immediate cash flow rather than hold onto them as breeding stock — a self-perpetuating cycle.

There are newer challenges as well.

Tariffs: In 2024, imports accounted for about 16% of U.S. beef consumption. Leading countries importing beef to the U.S. include Canada, Mexico, Australia, New Zealand and Brazil. Tariffs that went into effect over the last six months have hit all our trade partners, with Brazil being an extreme outlier: On Aug. 6, it was hit with a 50% blanket tariff on top of an existing 26% beef tariff.

The result for Brazilian imports in 2025? A surge in the first three months of the year, as importers built inventory ahead of the first wave of tariffs, then a collapse, from 47,800 tons in April to less than 10,000 in July — before the steeper tariff even went into effect.

Because of a pre-existing trade agreement, beef imports from Canada and Mexico are currently tariff-free. But the cattle industry in Mexico has been hit by an outbreak of screwworm earlier this year, and cattle imports from that country are currently blocked.

Bottom line: There’s no immediate relief in sight for spiraling beef prices.

What’s a meat-lover to do?

So far, U.S. demand for beef has been resilient even as prices have risen. But grocery shoppers might consider varying their diet with these protein alternatives:

• Pork remains relatively affordable. Overall, pork prices are up just 1.2% higher since last August, and ham prices actually dropped 4.9% in August and are down 1.9% over the full year.

• Egg prices are well off their recent highs, with prices dropping 7.4% in June and 3.9% in July (while staying flat in August). 

Investment in AI companies is running so hot right now it has some experts speculating that the spike in interest may be a bubble. If that bubble burst — as the dotcom bubble of the late ‘90s did — it could spell trouble for AI companies and their investors.

Last month, in an interview with The Verge, OpenAI CEO Sam Altman said, “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes. Is AI the most important thing to happen in a very long time? My opinion is also yes.”

In the latest episode of NerdWallet’s Smart Money podcast, investing writer Sam Taube breaks down what it means to be in a bubble, how you may be exposed to the market dynamics of AI stocks (even if you’re not a direct investor) and how to protect your portfolio.

Remember the Great Resignation, when the rebound in the job market after the initial shock of pandemic lockdowns meant workers were quitting en masse? Now, with a tighter labor market and general economic uncertainty, we’re generally staying put in a trend called job hugging.

The latest Survey of Consumer Expectations from the New York Fed, released Monday, underlines the trend. The survey found respondents were more pessimistic about job-hunting, with the “mean perceived probability of finding a job if one’s current job was lost” dropping 5.8% from the previous month — to the lowest level since they started asking the question in 2013.

Thinking of switching jobs? Look before you leap.

NerdWallet personal finance writer Thomas Tindall watched the Apple Event this week so you don’t have to, and he’s wary of dropping cash on the new hot thing.

Tindall writes, “My iPhone 13 Pro Max, which I bought new in 2022, is still as snappy as it was the day I peeled off the plastic film. So how can I justify the cost of a new one? Well, I personally can’t right now, but things might be different for you.”

Here’s what else you may have missed

Nearly 7 in 10 Americans (69%) say they would never fall for a financial scam, according to a new NerdWallet survey, conducted online by The Harris Poll. But scams are getting more sophisticated, and even the savviest people can be susceptible.

About three-quarters of Americans (74%) say they’re more concerned about a friend or family member falling for a financial scam than they are about themselves, according to the survey. Keep your loved ones abreast of current scams and signs to look for, and if they (or you) are a victim of a financial scam, report it.