Happy Friday! Brian Manning here with the weekly update. I can’t even believe it. It’s jobs week already. That means another month has gone by. It just blows me away how fast time goes. Unbelievable! So much to talk about this week. So, let’s see. Monday this week was a quiet news day. Not much to talk about there until things really started heating up this week.
Tuesday this week, we get CoreLogic reporting on home appreciation across the country for the month of March. So, on a month-over-month basis, homes appreciated at 3.3%. On a year-over-year basis, so, homes appreciate at 21%. Since CoreLogic has been tracking housing markets across the United States, this is the highest number ever on record, which is kind of ridiculous. We’ve said this before. We would really love to see this calm down. We don’t think the 21% appreciation is sustainable. It would be great to see homes come back. We kind of predict that we’re going to see them come down into a high single digit appreciation. But right now, 21%, that’s just crazy.
Wednesday this week, we’ve got ADP. So, ADP is the largest provider of private payrolls in the US. So, the first Wednesday of every month, we get a jobs report from ADP. And this is for the month of April. So, in the month of April, there were 247,000 new jobs created. Expectations were for 400,000 new jobs. So, that was a slight miss there. Also Wednesday this week was Fed Day. So, you had conclusion of a two-day meeting. Jerome Powell speaking. Everyone expected a 50-basis point Fed rate hike, which is exactly what happened. They hiked rates 50 basis points. They did take a 75% rate hike off the table. That’s been talked about before by some other current voting Fed members. And Jerome Powell took that off the table with stock markets really liked it first on Wednesday and then Thursday, it just certainly all collapsed.
Also, they finally announced what they’re going to do with the balance sheet. So… as we went into COVID, they had this version of quantitative easing again, similar to what took place in 2007, 2008. And they were buying mortgage-backed securities in US treasuries. The Federal Reserve balance sheet got to about $9 trillion. And they’ve been talking about unwinding this balance sheet. Some people thought it would have started this meeting, but it didn’t. So, the announcement was on June 1st, the Federal Reserve will start the unwinding of their balance sheet. They’re going to reduce this by $47.5 billion on a monthly basis. So, it’s going to be $30 billion in US treasuries, $17.5 billion in mortgage-backed securities. They’re going to do this for June, July and August, and then they’re going to double that in September.
You know, at this pace, really with what they’ve already laid out for us, of the $9 trillion balance sheet, they’ll only have unwound about $550 billion of treasuries and mortgage-backed securities. And the question that we have to watch for there is if we start to see recession-like conditions if the federal reserve going to continue on this unwinding or do they have to stop or do they even have to come back as a buyer again? So, we’ll have to wait and see what happens there. February… not February.
Friday of this week, today, we get the BLS report. So, BLS is the Bureau of labor statistics. This is the government’s report comes out the first Friday of every month for employment. And the headline report said that we got 428,000 new jobs and there was, of course, an initial market reaction to that because unemployment was at 3.6%. But there’s definitely some cracks in this report. So, what happens is the headline number… it really is all based off modeling. We’ve talked about this before. It looks at what’s called the birth-death ratio. So, they look at in the month of April, how many companies were created, how many companies went out of business, based on the company that was created, what is the industry that is in? Based on the industry that is in, how many people would it hire? And if you have a company that went out of business, how many… what industry is that company in? And then based on that industry, if it goes out of business, how many people would get laid off? So, it’s called the birth-death ratio. It’s not very accurate.
That showed 428,000 new jobs. Then you got what’s called the household surveys. The household surveys when they call about 60,000 people across the US to get feedback from them on what’s happening for employment. And through that household survey, instead of an ad of jobs, there was actually 355,000 job losses in the US and you also had 363,000 people leave the labor force that are not looking for a new job. So, it’s kind of crazy. It doesn’t make sense. You have a headline number and then you have the household survey and there’s an 800,000 person swing in this report and it just doesn’t make sense. Probably, I would look more closer to the household survey because that’s actual direct content coming from people in the United States. So… the unemployment number went down when you look at this, but it’s really for all the wrong reasons if you’re really paying attention to the household survey.
I’m around all weekend. If you have any questions, let me know. If you want to go through our strategic buyer consultation, give me a call. Best way to reach me on the weekend is on my cell phone. Call me or text me. Happy Friday. Have a great day. I’ll talk with you soon.