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The Fed’s recent rate hikes have pushed the real interest rate, adjusted for core CPI inflation, to 2.33%, its highest level since October 2007. Over the past two years, real rates have surged by nearly 8 percentage points, surpassing pre-pandemic levels. Historically, when rates become this restrictive, the U.S. economy has often experienced a downturn shortly afterward. This is why the Fed waited too long. Powell should have used the term “softer” landing instead of soft. Because even a softer punch from Mike Tyson hurts.

The June and July job reports have been revised downward by a total of 86,000 jobs. June’s figures were reduced by 61,000, dropping from 179,000 to 118,000. July’s numbers were lowered by 25,000, from 114,000 to 89,000. As a result, the July report now marks the weakest job growth since December 2020, during the pandemic.

The U.S. economy added 142,000 jobs in August, falling short of the expected 164,000. The unemployment rate remained steady at 4.2%, matching forecasts. Despite the drop in unemployment, signs of strain are emerging in the labor market. Note: Almost every month is revised down as well. So this number of 142k is most likely sub 100k

Expectations for tomorrow’s August jobs report have dropped by 26,000 in the past 24 hours. Just a day ago, prediction markets anticipated 174,000 jobs would be added in August. Now, that number has fallen to 159,000, according to @Kalshi. This shift follows the release of private payroll data showing the smallest increase since 2021 earlier today. Additionally, last month’s job numbers were revised down by 11,000. Will the Fed cut by .5 in September and in October? Will that cause/realize the recession?

August private payrolls in the US rose by 99,000, well below expectations of 144,000. This marks the smallest gain since 2021. Remarkably flat. But this does mean lower mortgage rates are most likely coming. Fed needs to cut by .5 this month. Home prices are adjusting in most areas as well but not drastically, when rates go even lower and buyer demand kicks back up, I’d expect to see home values continue to rise. If homes outpaced affordability even with lower rates we could see a stagnant market where corrections to price continue as sellers who need to sell start incentivizing with price drops. The Fed waited too long imo.

Government hiring is inflating jobs numbers. Private sector jobs growth as % of total payroll growth fell to 38% in July, the lowest since the 2020 pandemic. Historically, every time the private payroll growth share fell below 40%, the US economy was in a recession. Fed Rate Cuts need to be deep imo. With inventory growing and lower rates on the horizon, make sure you are partnered with the right mortgage company for the influx in business that will be coming our way.