The Labor Market Is Cracking — And the Fed Is Finally Being Forced to Notice
Happy Thursday! Brian Manning here with the Weekly Update. Let’s get right to it.
Super stoked to be back at this again. It’s been a little while; took some time off and went on vacation with the family in December. Had an amazing time. Came back, and January was just chaos. The amount of buyers that are out there getting pre-approved—we’re certainly seeing a lot of momentum in the market and a substantial increase of buyer interest, probably because rates are lower. So that’s great to see.
But let’s talk about the news. What’s been happening?
Let’s first catch up on the Fed President. It was announced that Kevin Warsh would be the new Fed chair. I wouldn’t say I’m upset about this. I think he could be a good Fed chair; he seems like he’s very forward-thinking based on the comments that he has made. We’ll have to pay attention to those and see how it is going forward, but it seems like he’s paying attention to inflation and what’s happening with the labor market. The current Fed is very much always looking in reverse—we’ve talked about this for a long time, it’s almost like driving a car looking in the rearview mirror. So, I would say I am cautiously optimistic. High hopes, and for Kevin Warsh, we will have to wait and see what happens.
Monday this week was a quiet news day; not a lot to talk about there. Tuesday this week was a quiet news day as well.
And then Wednesday—so, we had a semi-partial government shutdown. All eyes were on the employment report this week for Wednesday. That’s the ADP report. For the month of January, we had an expectation of fifty thousand jobs that would be created. Instead, we only got 22,000.
So, yet here we are again. The employment report, which we talked about so much last year, is not looking strong. If we really break this down, small businesses added zero jobs in the month of January. Then we look at large businesses; they actually lost eighteen thousand jobs. So, mid-size saw very small hiring, but 22,000 jobs in the month of January is very anemic. We also look at 2025 overall, which just ended up being a very weak labor market. Unfortunately, 2026 is following suit.
Then today, we get some feedback from the BLS. Because of this partial semi-government shutdown—whatever you want to call it—we should have gotten a BLS report that would come out tomorrow, but that’s going to get pushed to next week. So, we’ll have to revisit that next week.
But if we look at more information that came out today on employment, we look at the JOLTS report (Job Openings and Labor Turnover) for the month of December. There was an expectation that there were seven million job openings in the month of December. This report shows that there were only 6.5 million. So, it’s a pretty big miss—a five hundred thousand miss in the openings from the expectation. Then we go back to the prior month, and it was actually revised three hundred thousand jobs lower.
All last year, the media and the Fed were talking about, “Oh my gosh, we have such a strong job market”. I don’t know where it is. I just see weakness every time we look at these job numbers, unfortunately. And I couldn’t say that I see a tremendously strong U.S. economy out there just based off of the jobs data. We’ll have to wait and see what happens.
I’m around all weekend. I’m available 7 days a week, 8 a.m. to 8 p.m. If you have any questions, give me a call. If you want to learn how we’re closing purchase transactions in ten days—that’s right, ten days start to finish—give me a call.
Happy Thursday. So good to be back. Hope you have a great day.
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