A Strategic Economic Outlook for RIA, CPA, and Insurance Agency Owners - From the Desk of Rick Dennen

September 17, 2025 — Today’s 25-basis-point (bps) rate cut by the Federal Reserve signals a new phase in the economic cycle. This decision is in response to a weakening labor market with August’s non-farm payroll data falling short of expectations with only 22,000 jobs added. Additionally, unemployment rose to a nearly four-year high of 4.3%. Although still historically healthy, the current rate is well above the 3.4% we saw in 2023 and represents the second straight month of higher unemployment than the prior month. The employment slowdown was further confirmed by revisions which showed a net job loss in June for the first time since December 2020. 

Following the last FOMC meeting, Chairman Powell explained at the press conference that the unemployment rate itself is the key metric in the current circumstances. He argued that the supply of labor has weakened while demand has slackened. The unemployment rate shows the relative strength of the two factors.

Despite the Federal Reserve's rate-hiking cycle in previous years, which successfully brought inflation down from its peak in 2022, inflation remains above the Central Bank’s 2% target. The Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred gauge of inflation, was at 2.9% year-over-year in July 2025. Although the current figure is significantly lower than its post-COVID peak, recent trends have sent inflation upward. The fight against inflation is not yet over, creating a policy dilemma for the Fed as it considers cutting rates to support employment.

Looking ahead, a “soft landing” scenario is possible, but not guaranteed. Markets are pricing in two-to-three more rate cuts by year-end, which would push the Fed Funds rate lower. However, the risk of a recession remains a significant consideration. Vanguard  forecasts a modest U.S. GDP growth of just 1.4% for the year, a figure that signals a meaningful slowdown from the 3.3% pace seen in the second quarter.

This complex economic environment requires a proactive and tailored strategic response from business owners. Below are a few ways RIAs, CPAs, and insurance agency owners can adapt and thrive in this period of change:

• Reposition Talent and Training: Given the long-term shift in the job market, prioritize staff training. Focus on transitioning roles toward higher-value analytical and advisory functions, thereby addressing the skills gap.
• Strategically Implement Technology: Investigate technologies that can help improve efficiency and manage risk. Prioritize cybersecurity technology to protect your systems and client data.
• Leverage Decreasing Interest Rates: Strategically pursue acquisitions now to lock in deals, as lower interest rates will reduce the cost of these acquisitions once they close. As rates decrease more acquirers will enter the marketplace, increasing competition among buyers.

Navigating this economic shift requires both caution and an openness to new opportunities. By being proactive and strategic, businesses can turn these challenges into a competitive advantage. If you’re ready to take advantage of the benefits of an acquisition, contact us today to get flexible funding to meet your needs.

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