Powell Takes Wait-And-See Approach With Trunp Policy Changes

3/3-3/7 Headline: Labor Market Looks Rough

Another good week for homebuyers as the job data that came pouring in showed a cooler than expected labor market.

Trump's on again off again relationship with tariff's isn't doing anyone any good as the economy doesn't know how to act and the paralysis by analysis effect has some concerned for the economy's growth in 2025.

The average rate on a 30-year fixed rate conventional loan stayed flat 6.60%? - but our clients are still securing rates as low as 5.99%! Sign up for our weekly Friday rate texts to stay in the know on where rates are week by week! It's a must for anyone planning to buy or refinance in 2025!?

JOBS JOBS JOBS

?The first full month of jobs data from Trump's second term released last week. Only 2 out of 3 of the big labor reports came in (Job Openings data was delayed until tomorrow). The big takeaway is that the Trump plans for the US (government spending cuts + tariffs) has many on a hiring freeze.

Private employers added just 77,000 new jobs in February far below the 148k that was expected. The total was the smallest increase since July 2024 and added to the rising concern economic growth is slowing. “Policy uncertainty and a slowdown in consumer spending might have led to layoffs or a slowdown in hiring last month,” said ADP’s chief economist, Nela Richardson. “Our data, combined with other recent indicators, suggests a hiring hesitancy among employers as they assess the economic climate ahead.”?

The February Jobs Report also reported worse than expected. The U.S Economy added just 151,000 jobs (worse than the 171k expected). The unemployment rate, however, edged up to 4.1% from 4% the month before. The labor force participation rate also slipped. Important to note that the federal government, who normally adds a large amount of jobs every month, posted a loss of 10,000 jobs for the month, with 3,500 of those losses coming from the US Postal Service.

While these reports aren't great signs for the overall US economy, they are much needed for those looking for interest rate relief. The Fed continues to cite the labor market as a reason for stubborn inflation AND their hesitation to cut rates. The unemployment rate is still below a historical average (and even below where we saw it in mid-2024), so while unemployment might be ticking up, it's good to keep it in perspective.

Powell Needs Clarity

?Last Friday, Fed Chairman Jerome Powell?said that the central bank is going to wait to see how President Donald Trump’s aggressive policy actions play out before it moves again on interest rates.

The White House “is in the process of implementing significant policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation,” he said in a speech for the U.S. Monetary Policy Forum. “It is the net effect of these policy changes that will matter for the economy and for the path of monetary policy.”

Noting that “uncertainty around the changes and their likely effects remains high” Powell said the Fed is “focused on separating the signal from the noise as the outlook evolves. We do not need to be in a hurry, and are well positioned to wait for greater clarity.”

The Fed's continued shit to a wait and see approach from a rate cutting approach is not good for mortgage rates. I'm hopeful that this won't last too long though as data continues to pour in supporting more cuts.

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Rate Cut Predictions

After last week's data, June 18th is still the near certain date for the first rate cut, but still no word from Fed members on how much certainty they need to start cutting.

?With more jobs data out tomorrow and BIG inflation data with CPI and PPI coming out this week, ANYTHING is still possible.??

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Key reporting dates this week:?

Mon, 3/10: None Scheduled

Tues, 3/11: ?Job openings

Wed, 3/12: Consumer price index, Core CPI, Monthly U.S. federal budget

Thurs, 3/13: Initial jobless claims, Producer price index, Core PPI

Fri, 3/14: Consumer sentiment (prelim)

Don't forget - County Assessed Property Values will start rolling out soon. Whether or not you see a big increase in your assessed values, make sure you're prepared to contest the value before the deadline. You can save hundreds (or even thousands) of dollars contesting your taxes. I always recommend hiring a professional services firm to do it. You'll only be charged based on a percentage of the savings. If you have any questions, please don't hesitate to reach out!

If I can be of any assistance, I'm always here to help so if you have any questions or just want to learn more, feel free to email or call/text me at 512-701-1819.?

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Best,

Eric