Rate Cuts? Employment? Here’s the Scoop
Market insights and what they mean for your goals.
Join me in our ‘Weekly Market Update’ to decipher what to expect in the coming weeks & months.
Happy Friday! Brian Manning here with the weekly update. Let’s get right to it!
Monday of this week was a relatively quiet news day.
Tuesday this week though, we had Fed Governor Waller talking about rate cuts. He is a very influential person and a voting member of the Federal Reserve. Waller said he’s in favor of a rate cut in December. We’ll have to keep an eye out for that. The next Federal Reserve meeting will be significant for all of us. This takes place on December 17th and 18th. At the end of the meeting, Fed President Jerome Powell will have a scripted speech that he’ll deliver which will discuss what they’ve decided to do with interest rates, and whether they’re going to cut them, keep them the same, or increase them. This impacts all of us as far as the economy is concerned. So we will want to pay very close attention to what’s going to happen at December 18th’s press conference.
We also got some feedback from apartment lists. This looks at rents across the country. This report showed that new rents were down eight-tenths of a percent. I bring this up because when we look at the inflation readings that we have received, specifically PCE (personal consumption expenditure), there’s a fairly big disconnect. I’ve talked about this for quite a long time, saying that the actual rental numbers that we’re seeing in the marketplace and the declines that we’re seeing are very different from what inflation readings are reflecting. We are seeing faster declines in the rental markets than what the inflation readings are showing. Hopefully, this catches up sooner rather than later. We’re going to have to wait and see, but it’s important to note we’re still experiencing a little bit of softness in the rental market.
The first week of every month brings us the ADP report on Wednesday and the BLS report on Friday. I can’t believe we are already in the first week of December! ADP reported an expectation of 163, 000 new jobs to be created. The actual number we had was 146, 000. So a little bit of a miss, but fairly in line with expectations. Jerome Powell spoke on Thursday stating he sees strength in the U S economy and a downside risk in the labor market. Powell predicts continued strength in the labor market and sees strong economic growth for us. We’ll have to take note of what his comments are going forward because if you continue to have downside risk in labor markets and strong economic growth, unfortunately, that doesn’t bode well for rate cuts in the future.
Today we got the BLS report, which stands for Bureau of Labor Statistics. Both the ADP and the BLS reports were for November. In November, 214, 000 new jobs were expected to be created. We got 227, 000. So, a little bit better than expected. The unemployment rate did move from 4.1% to 4.2%. The first reading we got was the establishment survey. A lot of modeling goes into this to come up with what they call the birth-death ratio. They look at how many companies were “born”, or how many were opened, what industry are they in, and, based on that industry, how many people they plan to hire. Then they look at how many companies closed based on their industries, and how many people they plan to lay off. That’s how you get the birth-death ratio. Then we have the household number. This is interesting because it reports a loss of 355, 000 jobs. That is a big difference from what we’re seeing when talking to actual people vs using predictive modeling. As we always say, there is often a big disconnect which is challenging because it does move the markets. I do think the bond markets are smartening up as they see underlying weakness in the labor market even though Jerome Powell says he sees a downside risk in the labor market. The household survey said there were 355, 000 jobs lost in November. Again showing disconnected information there.
I’m around all weekend. If you have any questions, let me know. If you want to learn how we’re closing purchase transactions in 10 days start to finish reach out to me.
Realtors, we’ve got a whole new series of classes coming up that we’re getting ready to release. They’ll start in January. I’m super excited for these. Take a look at the email that we’re sending out for information on where the classes are taking place. We’re doing Boulder, Denver, Fort Collins, and Colorado Springs. We hope to see everybody there.
Happy Friday. I hope you have a great day!
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