- 2 months ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the labor market on a day without a federal jobs report.
To learn more about Trust & Will, click here.
Related to this episode:
What we know about the labor market, even without Jobs Friday data | HousingWire
https://www.housingwire.com/articles/what-we-know-about-the-labor-market-even-without-jobs-friday-data/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stor
To learn more about Trust & Will, click here.
Related to this episode:
What we know about the labor market, even without Jobs Friday data | HousingWire
https://www.housingwire.com/articles/what-we-know-about-the-labor-market-even-without-jobs-friday-data/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
The HousingWire Daily podcast brings the full picture of the most compelling stories in the housing market reported across HousingWire. Each morning, listen to editor in chief Sarah Wheeler talk to leading industry voices and get a deeper look behind the scenes of the top mortgage and real estate stor
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NewsTranscript
00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about Jobs Friday
00:11when we don't have any jobs data. We're going to jump into that. But first, I want to say thank
00:17you to our sponsor, Trust & Will, for making this episode possible. Logan, welcome back to
00:22the podcast and you're all in your 49ers gear. Dump City! Niners win at SoFi! Sorry, I'm a huge
00:31Niner fan. That was just great last night. For those that follow my social media, you can know
00:34I'm just constantly watching the game and posting videos. So anytime you can beat the Rams, it's a
00:39great thing. But when you can beat the Rams without your starters, and I couldn't even name some of the
00:46people that were on the field, that was wonderful, right? And to win it on fourth down, just
00:51good stuff. No, it was hilarious. You and I were talking before the game, and I was like,
00:58they're going to call you in, Logan. They're going to be like, you're going to be like,
01:00coach, put me in. Because like, literally, who are those people on the field?
01:04Hey, listen, I could play DB and strong safety, and I could play the slot wide receiver. So
01:10they were losing a lot. Three of their starter wide receivers weren't there. So I could have caught
01:16those underneath patterns against the Rams defense. Listen, you're going to be next. You're
01:21definitely going to be called out there. Oh, my gosh. Okay, well, let's talk about jobs and the lack
01:27of Jobs Friday data. Has that ever happened before? Oh, yeah, we've had we've had shutdowns where
01:34there's no there's no data available. So, you know, it's interesting, because this week,
01:43everyone's so focused on labor because of monetary policy, right? Because it looks like the entire
01:49country is now labor over inflation, right? You know, and, and so there's a there's a there's a
01:57particular look now into all the data, because the the jobs data has gotten noticeably worse in 2025.
02:06And I think some of that needs to be explained. But the article that I wrote was just basically
02:13showcasing everything that you could possibly think of without this report, because a lot of us
02:19were trying to figure out what what would Jobs Friday be with all the data that we have, we've
02:25even gone to other private sector labor data, and it looked like possibly could have been 45 to 55,000
02:32jobs created in that report will know whenever, who knows by Monday morning, you know, we might even
02:40get the jobs report. But in any case, there needs to be an explanation of this because I because of,
02:47you know, Trump's demand for lower interest rates, Powell saying the labor market was solid and then
02:53saying it isn't anymore. What happened here out there? But it's been the same story that, you know,
02:59you and I have been talking about for some time now. It has, it's so weird. Like, I know you were
03:05looking at different data sources. So let's talk through some of the things that you're looking at. So one of
03:10the things that you looked at was like, the GDP, like some of the larger economic factors that could
03:16affect the labor market. I mean, things are still kind of good. And when you look at like consumer,
03:21what people are buying and things like that, correct? GDP is above 3%. The domestic consumption
03:29expenditures or the final sales of GDP, which the Fed really likes to focus on, isn't spectacular,
03:37but it's good enough to keep things going. So if you just looked at GDP, and some of the consumption
03:44data line, and then the stock market, you're thinking, okay, there's nothing's wrong. But
03:50the labor market has been softening since 2023. Now, last year, what happened was that the labor
03:59market was egregiously beating my estimates last year. And I thought, okay, I'm just going to wait
04:04for the revisions to see. But last year, even though the jobs data was revising lower and coming in
04:10lower, it looked right to me. You know, I was just looking for 140 to 160,000, you know, jobs per
04:18month, based on population growth, the labor market slowing down everything. So we got everything that
04:23I thought last year. This year is not the case. Early in the year, we even talked about, you know
04:30what, this is the first time, you know, the labor data is noticeably under my estimates. So there's
04:38your first trigger, something went wrong in the data. And then the Federal Reserve kept on saying
04:44solid labor market, solid labor market, labor market's fine, everything. And then all of a sudden,
04:49you know, it got to a point where they couldn't come out in public and say that anymore. Even Beth
04:55Hammock, who I questioned a lot of things about Beth Hammock, but in any case, she even had to say
05:01that there's some fragility in the labor market. And I think so much of what the Fed is doing is they're
05:06they're putting way too much of the blame on population growth slowing down and not looking
05:12at the aggregate data for some time right now. I think this is the weird thing about this.
05:17Everything's weird about this year. Okay, I'll just say that. But like in a normal year, we would
05:22look at like, you know, you have a model, I'm sure for like, okay, this, you know, this is the kind of
05:27the slope of the curve, if we will, this is what's declining or increasing on the jobs. And so
05:33you'd be like, okay, now this month, but we had those pretty big, you know, misses this summer.
05:39And then we have all those other variables. So from your perspective, is it much harder right now
05:44to even say what this could be? No. Okay. It's the same story since 2023. The labor market is
05:52softening, but it's not breaking. And the whole concept, the whole concept of labor overinflation
05:58is that the Federal Reserve needs the labor market to break. And breaking has certain parameters out
06:03there. But I would say this, we have sectors of the economy that are losing jobs that are very,
06:14are what we consider to be late cycle labor data. And when you have, I mean, it's not shocking to me
06:20that job growth is this low when the two sectors that I focus on are losing jobs. And for the
06:28Federal Reserve to keep on saying solid labor markets, solid, oh boy, you know, when you start
06:32getting negative ADP reports and really big misses on, on the BLS reports, then you have to, you have
06:40to kind of look and see, okay, what's going on here? Well, we have weak hiring. Well, also the trade war
06:44itself, you know, same thing in 2018 and 19. Can businesses make decisions, you know, when they don't
06:52know what the rules are? You know, that was one of the things we talked about this year.
06:55Okay, so I think you've just made my point, which is, you did not know, no one predicted the kind of
07:01jobs numbers that we got in July.
07:05No, I think it's the it's the revisions that are everyone is getting worried about. And then now we're
07:12having headline numbers come in as misses, right? So this has been happening since the start of the year.
07:19Um, but again, I go back to that one jobs report where the government federal estate hires actually
07:26blew out the number. And I said, we wasted an entire year because Jerome Powell is old and slow and put
07:33way too much emphasis on one jobs data that was state and federal, uh, hires and, and list just
07:40ignored it. And now he can't. And the beauty of it is that his arrogance two meetings ago, when he
07:48dismissed everyone's concern about the labor market. And even today, we're still seeing Austin
07:54Goolsby say, well, you know, are we, we should, we're not going to front row rate cuts, you know,
07:58the labor data, you know, we're still intact and our unemployment rate is for, they need to get the
08:04labor market to break. Right. And once it's broken, then all of a sudden you're going to start to hear
08:10different things, but they will hold things as tight as possible until that happens. So as the
08:17labor data was deteriorating, they purposely chose to know that to the point where you cannot come on
08:24TV and say, it's no longer a solid labor market. And that's what Jerome Powell did. Even though a lot
08:31of us were talking about this, that the aggregate data doesn't look like a solid, the man said it all
08:38the way to the very end. Right. So that's, that, that, that is something that the institution has
08:43to revise something and go, well, if we think this is, or that is, you know, if that's deteriorating
08:49and a lot of this is housing, it's only now that they're going, it appears to be the housing market
08:57is, you know, struggling, you know, uh, in that now, thankfully the long end of the bond market is
09:02doing a lot of their heavy lifting and bringing yields down and mortgages. But imagine if mortgage rates
09:07are still at seven and a quarter, they'll still go, Hey, listen, every, the unemployment rate is low,
09:12you know, consumption is fine. So it's an awkward year in that. But part of that is that they kept
09:18on saying the labor market is solid. And when you use that term, it just becomes, you know, what,
09:24what, what happened in such a short amount of time that you have to reverse that?
09:29I think the other thing is, I mean, since 2022, I mean, you have been the one calling out, like,
09:34they do not care about housing. Housing is not part of their mandate. They don't care about housing
09:38and they're fine. It went into a recession. It's been in a recession since then. And that's fine
09:44with them. The existing home sales market doesn't go into their mandate of price stability or
09:50employment, right? There's just not enough. There's not enough people employed in that sector to really
09:55move the needle. But because it's, you know, existing home sales is more of what we call a transfer of
10:01commissions. You know, that's how people make the money. In terms of GDP and construction jobs and
10:08big ticket item purchases and those need, that would be, you know, the new home sales sector.
10:13So finally, even some of the more hawkish Fed presidents are noting that, well, it appears to
10:19be that supply is high and labor is being hit and it's weak in that sense. So there's finally some
10:27acknowledgements, but I think that, you know, we show that chart how many, how many years now we
10:33said, usually residential construction tends to fade before recession, but you never want to see
10:38residential and manufacturing start to fade together. Well, manufacturing jobs have been lost
10:42since late 2022, which I did not know. Not a lot of people knew that was happening, but since late
10:472022, that's been falling. Nothing spectacularly big or anything, but still declining. Now,
10:52specialty contractor trade, now residential. Now, thankfully, again, mortgage rates have got towards
10:586%, you know, the demand is starting to pick up. And that's really, I mean, it's just this back and
11:06forth all the time. But the problem with the residential side is it was a supply issue. This
11:10is why we talked about that in the beginning of, or at the end of last year, that the builders are
11:15going to be in trouble because there's the supply that matters to them actually is picking up. And that
11:21hasn't been the case for the last 14 years. You know, it's, it's actually, um, a testament to how
11:27strong the economy is. You talked about GDP. If you think about all of the things that have happened,
11:32um, you know, okay, we have manufacturing jobs being lost. We've got some, uh, construction jobs
11:38being lost. We're going to have, uh, these government jobs being lost. Although we don't know how many
11:43that we have had tariff impacts and still it's not like, it's not like we're in terrible shape.
11:49Household balance sheets go all the way back to 10 years ago. And to this day, still people don't
12:01understand how well household balance sheets, because they see the credit card data, they see
12:06delinquencies and they, the, the scale of it is, you know, five to 10% delinquencies on X, but they
12:13don't, they don't realize that that 90% that's still doing everything is held up well. So you have
12:19good household balance sheets for homeowners. You have, uh, deficit spending still mandatory payouts
12:26are much more just because we're older as a country and you have the AI boom. So there's a lot
12:31of capex from just from that you put those together. That's very formidable. So even with everything we
12:36have, the labor market isn't breaking, right? Breaking. We always said jobless claims, 323,000
12:43four week movement average. Don't go into the recession. If that was the case, it's a whole
12:49different story because the bond market would basically get well ahead of the federal reserve,
12:54which it's tried to do a few times in the last few years. And then the federal reserve has to make a
12:58decision at that point. Do we ignore rising jobs? You see, that's why I've always wanted to highlight
13:04that 323,000 four week, there's going to be a point in the future where they have to make that
13:09decision. Right. And for now, you know, that, that data line is still, uh, uh, low enough where they
13:15feel comfortable with everything. This is why you get a lot of pushback lately from a lot of Fed
13:20presidents there. I mean, Lori Logan, the Dallas Fed was like, we, you know, we, we better not cut rates
13:25a lot because then, you know, we might have to raise them again. And again, they just can't get to that
13:31next stage until they see Americans losing jobs in a bigger fashion. Listen, um, I think it's, uh,
13:37pretty interesting and brave for, uh, Fed governors to be talking about how they're not planning on
13:43cutting rates because that does sort of put a target on their back at this point. Well, it really depends
13:48on voting, not voting, you know, uh, uh, Stefan Meyer, when he, when he, when he's talking about
13:54disinflationary factors, he's, he's saying that, well, we are going to, uh, uh, force a lot of
14:01people to leave this country and not allow a lot of people in. So the disinflation policies of
14:07president Trump is creating more supply for housing and that will be disinflationary. Now, of course,
14:15that also means that demand for future construction, uh, starts to go away because if your rental supply
14:22is picking up, right. And then your rents might not be there, you really need the numbers to work.
14:29So I, the, the cost to do business has to really be, uh, beneficial in that environment. So there,
14:35there's two fronts on that, that, you know, you'll get the disinflation from having more rental supply
14:40out there, but also that's, you know, do the builders go, Hey, listen, there's, there's enough
14:45supply. We're not going to build. So it's not a, it's, it's never such a clean and easy choice,
14:51uh, with that. But, uh, that war is just starting with the federal reserve and Trump and who's going
14:58to be the next fair chairman. And that's going to be a popcorn event in 2026 for sure. But, but for
15:04now, um, everything is still somewhat intact. We just have sectors of the economy that, that haven't
15:10done well, uh, in terms of creating jobs. And those are things that in previous cycles, they'd be
15:16really flagging, uh, red flags, but consumption is still there as long as Americans are consuming.
15:21This is why the, the early recession calls, uh, because of Godzilla tariffs, a lot of people
15:27thought there's no way if we did Godzilla tariffs and kept them as is, you know, eventually when
15:32the prices come down, the consumer couldn't handle it. You know, it's never so clear and easy. That's
15:38why you have to take all the data one day at a time and move forward. Obviously there's been a lot
15:41things out there that are different. Uh, president Trump talked about checks again, giving one to
15:47$2,000 checks, uh, to households. You're you're now you're going into the, should we give checks out
15:54lower rates? You know, we have to give 10 to $12 billion to farmers. It gets a little bit murky
16:01out there on what's really happening or how we can mitigate damages for the trade one, all that stuff.
16:06But for right now, consumption is still holding up, uh, uh, in general terms and you still have the,
16:13you know, AI CapEx boom, and it's a lot of money being thrown into the system and household
16:18balances are still flush and stocks are at all time highs basically. So, uh, uh, we could still keep
16:24this going now that the 10 year yield is lower and mortgage rates are lower. Housing demand picks up a
16:29little. Maybe we could get to construction and go, maybe we'll get housing permits growing again in
16:33this country, but, uh, we'll see. Okay. So, um, we are recording this on Friday. This is going to go
16:40live on Monday, assuming that nothing happens over the weekend for the shutdown, which I think is pretty
16:45safe assumption, but what do I know? Um, what data would normally come out next week that we're not
16:51going to have? Uh, CPI inflation. Okay. So we won't have that either. Um, now again, there's a lot of
16:59private sector data that gives us an idea. I mean, I even looked at a brand new labor sector, uh, uh,
17:06and you know, it had jobs growing this month. You know, it's interesting because, because as long as
17:12it's above one job created, Jerome Powell will be happy because it's now the zero to 50,000, you know,
17:18so that that's, that's okay now with population growth, by the way, the whole population growth
17:23thing is, you know, the labor data was getting softer with good enough labor force growth, but
17:29manufacturing jobs were being lost during that whole time. So don't put all the eggs into the
17:35population growth story, right? Because that that's not the case. Housing permits are at recession
17:40level. So yes, construction gets hit. Manufacturing jobs were being lost late 2022. So there are sectors
17:46of the economy that can't, aren't growing jobs, but they're shedding jobs. So it's, it's different,
17:51right? We have 162 million people still working, right? Consumption is our game. Uh, if you get a
17:57lot of AI CapEx spending, I mean, my God, data centers that need to be built, electrical grids,
18:02as long as they can consume. This is why, um, Trump wants lower rates, right? He, he needs consumers
18:09to keep spending, uh, uh, even if prices go up some goods inflation out there and that'll keep things,
18:15uh, going. And remember inflation means prices go up, right? So corporate earnings,
18:21have the ability to, to, to grow their earnings to a degree, as long as, uh, demand doesn't get hit.
18:28Amazing. Well, Logan, thank you so much for being with us today on this jobless jobs Friday,
18:33or, uh, at least job, what, what should we say? Data-less jobs Friday?
18:38Let's say celebrating the Rams lost to the Niners. And when the Rams running back gets a little bit
18:44lippy, you know, he reminded me of the housing crash people, right? He scored a touchdown. He started
18:50bragging and everything. And then he fumbled at the one yard line. And then on a fourth and one,
18:55when the team needed him, too small, can't get a job left. It's like our little live presentations we do
19:02about foreclosure data. Wow. The Rams and the housing bubble, uh, crash people kind of have
19:08something in common. Yeah, no, that's right. And, uh, speaking of which, when, uh, you're coming in
19:14town next week, um, well, when this, when this airs like the next day for our mortgage banking summit,
19:19which will be amazing. And, um, you are going to talk about what the bleep is going on in the housing
19:25market, something we desperately need to hear. So Logan, thank you again for being on.
19:29My pleasure. Go Niners!
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