Fed Raises Rates for the First Time in 3yrs & What Happened to Ed Sheeran’s Tour

0:01This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome? That's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required, compatibility and availability varies 18+. Good Morning Brew Daily Show. I'm Neal Freyman. And I'm Toby Howell. Today, Japan hits an unthinkable age threshold.

0:34Neal Freyman:Then, for the first time in three years, the Fed has hiked interest rates. It's Thursday, September 17th. Let's ride.

0:49They're calling it one of the best takes of all time, an idea that will forever change the way you order food at a diner. On a podcast yesterday, Big Cat from Barstool noted how when you're having breakfast out, you always want to eat pancakes, but you never want to order pancakes for yourself because you don't want to just do pancakes. How to solve this dilemma? Pancakes for the table. It alleviates pancake anxiety for everyone, unlocking them to order something more substantive like eggs while also having one or two pancakes placed in the middle of the table. Toby, how have we not heard about this before?

1:26Neal Freyman:I would expand it too to include pretty much any sweet breakfast dish. Be the guy who orders the cinnamon roll that everyone is eyeing or the French toast or the waffle. And actually, now that I'm saying that, expand it to include any appetizer, not even just at breakfast. There's always something on the menu like a pigs in a blanket or a fried pickles that you don't want to be the person caught ordering for yourself, but you would definitely eat it if it arrived at the table. So maybe take it upon yourself. Be the table captain. take the plunge, order the pancakes, order the pigs in the blanket, make everyone happy.

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2:42Neal Freyman:Sign up for their free rewards program and start earning on every work stay at hotels.com slash morningbrew. That's hotels.com slash morningbrew. Loyalty members 18 plus. Kevin Warsh, the quarterback of the economy, said, hut, hut, hike, yesterday. Going into the Fed's meeting, the combination of hotter than expected inflation and skyrocketing oil prices meant it was all but certain a rate hike was coming. Markets priced it at a 90 % chance and Warsh delivered. The 25 basis point increase in the federal funds rate was the first time the Fed had raised rates since the Biden administration. The decision will not go over well with President Trump, who has loudly called for lower rates in a bid to stimulate the economy.

3:25Neal Freyman:Interest rates in the United States should be 1 % or less, he posted on Truth Social. After starting his tenure without a clear plan for addressing rising prices, Warsh and the Fed calmed fears that under pressure from the president, he would be too soft on inflation. Yesterday's hike was a 12 to 0 unanimous decision. the first unanimous Fed decision since May of 2025. The plain fact is that inflation is too high, Warsh said at his press conference. So where does this leave us now? Well, nearly back to where we started when Trump took office in 2025 with decade high interest rates. The economy has held up well under the strain of those higher rates, but there are significantly more questions now, namely a war in the Middle East putting pressure on prices.

4:09Neal Freyman:At the beginning of the year, oil was$60 a barrel and markets were pricing in three rate cuts. Now oil prices are above$100 a barrel and the Fed's dot plot is showing the possibility of more hikes to come. It is amazing how quickly things can change. And it's amazing how things can change not just from the beginning of the year, but from July, which was the last Federal Reserve meeting. At that press conference, Kevin Warsh tried to explain why the Fed didn't cut interest rates and he didn't do a very good job of it. He didn't provide many explanations. There were three dissents at that meeting.

4:45Three Fed governors did want to hike rates. Warsh got up there at the press conference, didn't really say much. Markets puked after this time, though, however, he did explain what he saw that led the Fed to raise interest rates. It was a completely unanimous decision. So at least from analysts' perspective, they're looking at Warsh's performance and they're saying, wow, that is, You learned a lot, buddy, from July to September. Thank you. And the big thing to know is that the Fed usually doesn't hike interest rates once or cut interest rates once. When it makes a decision that it needs to lower interest rates or hike interest rates, it usually happens at least twice.

5:22So we're entering a regime now of higher interest rates for a while.

5:27Neal Freyman:So why is the Fed hiking now? Well, it's essentially made no progress towards one of its core mandates, which is keeping inflation around its 2 % target. It has been above that since mid 2025. Last year's rate cuts were in insurance actually against the other part of the Fed's mandate. They didn't want the labor market to break down, but that downturn in the labor market never really fully materialized. Unemployment has remained pretty low. Hiring has remained strong. So essentially they've looked at the economy and said it can take higher rates for now. And then on the inflation side of things, It has been very complicated because there are three big things that have happened.

6:07Neal Freyman:One, tariffs, the tariff regime rolled out, which kind of throws sand into the gears of the global economy and just raises prices. Two, the Iran war broke out and crossed in energy shock. That's probably the biggest thing. And then actually three, the enormous AI investment boom that has been propping up the economy has actually been working against the Fed a little bit because it is adding this big supply and this big injection of activity to the economy, causing it to run a little bit hotter than it would had the AI boom not happened. So those three headed monster is the thing that is keeping inflation higher than the Fed wants it to be.

6:45Yeah. And Warsh spoke about that. He said this summer's inflation readings do not tell me that underlying trends have meaningfully improved. He noted that too many categories are still posting increases above 3 % on both a 6 to 12 month basis. And I found these anecdotes about how oil prices seep into broader inflation, really revealing. We've talked about how oil prices are now above$100 a barrel, but that really does influence everything in the economy and raises prices across the board. A bunch of business owners talked to the Wall Street Journal about how oil prices does create higher prices and costs for their business.

7:22And these are a wide array of industries. There's this company, Ambix Manufacturing in New Hampshire that sells plastic components to power distribution companies. The thing is, their resin that is used to make this chemical substance that goes into their products is created through crude oil. So this summer, they've had to increase prices 10 % to 21 % on all of their products. Then there's this farmer in rural Pennsylvania. The cost of trucking hay from three counties away is now up 15%. Campbell's is raising prices on more than half of its portfolio. And Clorox, because their Glad trash bags are also made from resin, is increasing the cost of their Glad trash bags that you buy either on Amazon or at your local convenience store or supermarket.

8:10So all of these things are influenced by crude oil prices, which is why the run-up from 60 to 100 is influencing everything across the economy and why you're seeing Kevin Warr say inflation is much too hot. I need to raise interest rates, and it's not going to be the last time they do it. Moving on to news that might help cushion the blow of that rate hike. Americans are richer than ever. According to the annual census report on financial well-being, median household income rose 2.6 % last year to 87 ,460, a new record and eclipsing the high watermark from right before COVID. Meanwhile, the official poverty rate fell for the second consecutive year to reach a new all-time low.

8:4810.2 % of the population was in poverty, down 0.5 percentage points from the previous year and the lowest level on record. Wells Fargo economist Shannon Green told the Wall Street Journal, this is a signal that the economy may be finally finding its groove coming out of the pandemic. There is a but, of course, a big but, don't laugh. These income gains were not spread evenly, exacerbating the gap between the have and the have-nots. Income for the wealthiest 10 % of Americans increased 1.7%, but income for the bottom 10 % didn't budge at all. That means the top 10 % earned just over 13 times the poorest households, up from 12.7 times in 2024, and just shy of the record 13.5 in 2021.

9:31Toby, are you feeling flush?

9:33Neal Freyman:I actually think this is a good example of how statistics can lie a little bit, not lie, or just basically portray a picture that a lot of people may not be experiencing themselves. Because for a long time, higher earners have been responsible for bigger and bigger amounts of consumer spending. We see this across lots of industries. The airline industry has focused all its attention on the front of the plane and the more wealthy passengers. So that means we can see these aggregate and median figures go up, but they can also coexist with a lot more financial pressure the further down you go on the income distribution.

10:10Neal Freyman:So if that feels like there's a split-screen economy or a K-shaped economy, whatever you want to put it, that absolutely can be the case even though you are seeing the big number go up when it comes to wealth building for a lot of American households. And we're not seeing just a split-screen economy between higher-income households and lower-income households, but also between men and women. This was a great report for women. Women median earnings for the full-time, for the full year, for full-time work in 2025, grew 3.2 % from 2024. Men didn't see a statistically significant change at all. When you look at the labor market, women have gained 70, 765 ,000 jobs since December 2024.

10:54Men have lost 6 ,000 in the same time span. And we also saw that on the most previous, the most recent job report in which women gained 98 % of all the jobs added. So perhaps this is a more structural reformation of the economy where we've talked about this, where women focus jobs like health care are gaining. They're accounting for the vast majority of the job gains where jobs where men are more prominent are not gaining at all or even losing jobs.

11:21Neal Freyman:And just zooming out, 2025 is a particularly interesting year because it really is the last baseline number we got before the economic effects of the U.S.-Iran war start to seep into the economy. So it also comes before a lot of the federal safety net changes that the Trump administration has put forth came into effect. So we will have a pretty nice A and B test to see how the economy reacts, both to higher oil prices, but also to things like SNAP benefits being cut and the rest of kind of what the administration has stripped away from whatever you want to call it, the welfare state or the federal safety net.

12:02Neal Freyman:This will be a literal, we can see what happened in 2025 with record median household income and see if that changes now that a lot of these things have been stripped away. Moving on, if your iPhone was connected to Wi-Fi as you slept, you likely woke up this week with a brand new set of features thanks to iOS 27, most notably a Siri that is actually helpful. The off-delayed revamp of Siri is finally here with Apple promising it will deliver a lot of the AI-powered features it's been lacking. Amongst them, unlike your date last night, it can actually hold an ongoing conversation. So when you ask it, what's the weather?

12:38Neal Freyman:The follow-up question of, should I wear a sweater or a cardigan, isn't met with stunned silence. In addition to chatting, Siri can now draft emails, handle more complex queries, and even take actions in certain iPhone apps. And worry not, it can still set one heck of a kitchen timer. New CEO John Turnus has taken to calling the iPhone an intelligent personal hub where you can run your life through a combination of Apple hardware and software. Early reviews of the new Siri do find it a lot more capable than the series of old, but as Apple was getting its house in order, it may have already been surpassed by even more capable AI agents that can do everything Siri can and more.

13:17Neal Freyman:Outside of Siri, there were a couple of new updates, including a better spell check powered by AI, as well as a way better search across photos, email messages and more. Neil, we just got a new hardware update from Apple with the release of its first foldable iPhone. But this software update might be even more important for the company's plans going forward. Yeah, Macworld said iOS 27 is Apple's best update in years, fixing nearly every issue we had with iOS 26. faster, cleaner, more responsive, and the new Siri AI is actually useful. So it's getting a lot of great reviews. The thing is Apple's notorious for putting things on our phone by default, like that U2 album, but not Siri AI.

13:58So if you just downloaded iOS 27 like I did last night, you will not see Siri AI just pop up on your phone magically. You have to go into settings and select Apple Intelligence Siri, then apply for a wait list. This is like applying to college again. I'm getting PTSD. And then you will get on this wait list. And then a few hours later, you will get Siri AI to try Siri AI. And there are a few guardrails as well. Perhaps you don't even see that on your phone. Well, you need an iPhone 16 model or later or an iPhone 15 Pro or iPhone 15 Pro Max language. It only serves English right now. And it's coming to a few more languages later on.

14:39And also, if you're in the European Union listening to this a little later in the day, you will also not see Siri AI because there's a tussle between the EU and an Apple over the Digital Markets Act that they haven't quite resolved. So this is for kind of iPhone 16 model or later Americans who are operating their iPhone in English. If you have that, go into your settings app and you can download Siri AI to Siri AI to see what all the hype is about. So does this get them back in the game?

15:07Neal Freyman:That's the big question. Are they finally not just the worst chatbot on the market? And yes, Apple did improve it. They made it so it shifted from a really like static voice assistant to a chatbot that you can actually chat with. That was their goal. And yet, if you look at what's going on at kind of the cutting edge of the AI market, people have already moved from chatbots onto agents. These are things that can book and change travel for you. They can fill out online forums. They can cancel appointments. They can get reservations on your behalf. Basically, they're functioning like a personal secretary for your entire digital life.

15:43Neal Freyman:And we've talked about Instinct. This is a startup that was founded with 11 people. It has been valued at$2.5 billion, might get up to an$11 billion, basically doing what Siri is trying to do within iMessage. And then you look at Meta, too. They are coming. Their Muse assistant was downloaded 600 ,000 times in its first five days. That is ChatGPT-esque trajectory right there. So Apple does the thing that it does where it shows up late to a lot of these technology parties and says that, hey, we are the mature option. Our software is very polished. You have privacy within our ecosystem. But a lot of people are saying maybe you're too late to the game already because we've moved on from chatbots to AI agents.

16:27I want to talk about one other feature that is in iOS 27 that may prove useful to some of you. Well, now you can temporarily hide your location from someone without sending them an alert. So if you wanted to turn off, if you didn't want your parents or your kids, we talked about kids tracking their parents, to see where you are, but you don't want to send an alert because this is what would happen. Previously, you can just turn it off for that particular person, and it'll say they'll have to search for you within the Find My app. And if they do see you, they won't see your location. It'll just simply say no location found off network.

17:05So it's kind of that sneaky thing. So this might be useful. Apple says it'll be useful when planning a surprise party. But also I have to say that this did pop off on our adultery, the subreddit for adultery. They said this is the most exciting thing I've read since they unveiled hidden apps three years ago.

17:26Neal Freyman:Reading this story was the first time I learned there was an our adultery subreddit. But another one said, now if I can get my car to do the same thing, apparently they're trading tips over there on our adultery. All right, we're going to take a quick break and come back with Neil's numbers right after this. Every day, shareholders meet to discuss important matters about the companies you invest in. Now you can easily make your voice heard too. Vanguard Investor Choice makes it easy to set your proxy voting preference for your eligible Vanguard index funds. In just a few clicks, you can have a say on important shareholder topics like executive pay and director elections.

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18:23Neal Freyman:I'm just excited for what a howling good time families can have at any of Great Wolf Lodge's 22 locations across the country. Splash away in the indoor water park where it is always 84 degrees. There's a massive wave pool, a lazy river, and tons of water slides. There's also a bunch of great dining options, spacious suites, and complimentary daily events like nightly dance parties all under one roof. Book your stay at greatwolf.com. That's greatwolf.com. Neil, welcome to my podcasting command center. Toby, this is a podcast studio. Yeah, but I always wanted a command center. Then you should check out Perplexity Computer.

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19:11Neal Freyman:Before you wake up, it can pull together your revenue, ad spend, margin, inventory, email performance, and more. For a limited time, try Perplexity Computer for free at pplx.ai slash brew. That's pplx.ai slash brew to try computer today. Welcome to Neil's Numbers, the segment where I share three stats in the week's news that will make you feel like you just got updated to a new operating system. My first number is zero, which is how many Atlantic hurricanes have formed so far this year, nearly four months into the season. This hasn't happened in a very, very long time. The most recent year, the first Atlantic hurricane came this late was in 1941, when one formed on this day, September 17th.

19:56Forecasters don't expect a hurricane to magically appear today or at least for the next week, so we are in virtually unprecedented territory here. The eerie quiet owes itself to one main factor, El Nino. The weather pattern, which is unusually powerful this year, heats up water in the Pacific Ocean. And while that creates a tempest of stormy conditions over there, it tends to put a damper on hurricane activity in the Atlantic. For example, there's been this strong vertical wind shear over the tropical Atlantic this summer that's acting like a guard dog and smashed up many storms before they can grow into hurricanes.

20:28Toby, if you extend this to last hurricane season, it's now been nearly two years since a hurricane made landfall in the continental United States. But I'm going to stop there because I don't want to jinx anything.

20:40Neal Freyman:We are living through a history right now. So the accumulated cyclone energy, it's ACE, and measures the overall tropical cyclone activity during a season. Right now, 2026 ACE is running at just 7 % of normal. That puts 2026 at 77 out of 77 seasons since ACE began being tracked since 1950. So we are quite literally living through an anomaly as we speak. And no one's really complaining because obviously hurricanes can be very destructive when they make landfall. And specifically, they can be very destructive in the Gulf region where a lot of America's oil refineries lie. so in a year where refineries are at the utmost premium that you want to keep every single one you can up and running the fact that no gulf refinery has been disrupted by a hurricane or a tropical storm it's kind of a blessing in disguise not even in disguise it's just a blessing for that industry that they don't have to deal with these destructive storms would be crazy if we got to the end of hurricane season which ends in november without a single atlantic hurricane I know everyone in Florida listening right now is like, Neil, you just jinxed it.

21:56But could happen. El Nino is so strong. Out in the Pacific, there's a ton of storms. Out in the Atlantic, there's just calm. For my next number, Japan has more than 100 ,000 people who are at least 100 years old, breaching the mark for the first time ever. According to the latest health ministry data, there are now 107 ,677 centenarians in Japan, up 8 ,000 from last year. In 1963, there were just 153 people aged 100 or older, 1 ,000 in 1981, and 10 ,000 in 1998. What stood out to me is the gender breakdown. Women account for 88 % of Japan's centenarians. That's due to a variety of reasons. One, women simply live longer than men.