- 2 days ago
On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the jobs report and how it could affect who becomes the next Fed chair.
Related to this episode:
Why the Fed isn’t worried about the jobs data
https://www.housingwire.com/articles/why-the-fed-isnt-worried-about-the-jobs-data/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will visit trustandwill.com
Related to this episode:
Why the Fed isn’t worried about the jobs data
https://www.housingwire.com/articles/why-the-fed-isnt-worried-about-the-jobs-data/
HousingWire | YouTube
https://www.youtube.com/channel/UCXDD_3y3LvU60vac7eki-6Q
More info about HousingWire
https://lnk.bio/housingwire
To learn more about Trust & Will visit trustandwill.com
Category
🗞
NewsTranscript
00:00Welcome, everyone. My guest today is lead analyst Logan Motoshami to talk about the jobs report
00:11and how it could affect who becomes the next Fed chair. Before we dive in, I want to thank our
00:16sponsor, Tristan Will, for making this episode possible. Logan, welcome back to the podcast on
00:22this jobs Friday. That's actually a Tuesday. Yes, jobs Tuesday. And hmm, you know, the interesting
00:30aspect of what happened this morning is yesterday, Nick Tamaris, who's the Wall Street Journal reporter
00:37for the Federal Reserve, his job is to kind of leak stuff out with the Federal Reserve wants the
00:41market to hear whether positive or negative. But he went on one of my friends show and they were
00:49talking about, you know, the labor market and everything like that. And they said that the
00:53Federal Reserve said, you know, next year, maybe the peak is 4.6%. And I remember seeing that and
01:00retweeting him and said, man, if the labor force grows, we're already there. Today, we're already
01:08there, you know. So, you know, the article that we wrote was kind of saying, you know, that's probably
01:17okay with this. I know it seems weird. 17,000 jobs on average created for the last six months. If we
01:27take the year to date, it's about 55,000 jobs created. That's the lowest levels in the 21st century
01:33if you exclude a recession out of the equation. Really, it's healthcare. I mean, if healthcare
01:40employment wasn't boosting up, we'd have no jobs really created recently. So
01:46labor overinflation, the Fed is going to stay as restrictive as possible until the labor market
01:54breaks and jobless claims still hasn't broken for them. And, you know, in the article, I wrote that,
02:00you know, wage growth just hit a kind of a cycle low. And they're still waiting for wage growth to
02:07get to 3%. And when people hear me say 3% wage growth, 1% productivity, that gets you into 2%
02:14inflation. The Fed's fine. I think they can go up to about 5% unemployment rate without jobless
02:21claims breaking and, you know, just forced wage growth to go lower and lower. And they could,
02:27you know, have a better backdrop to get to 2% inflation. Okay, so set the stage here because
02:31we didn't get an October jobs report. We're not getting an October jobs report. This is the November
02:36jobs report. How? I mean, it just seems crazy to me. Like, how bad is it?
02:43Well, they gave the headline numbers for October and it was down 105,000. That's pretty much all
02:48government jobs are being laid off. But I mean, still, it's a trend. See, you could have one-offs
02:56in any kind of report or any week or any day. But when something's a trend, but, you know,
03:03some people say, well, the last few months jobs have picked up. I don't think anybody believes
03:09the headline numbers anymore out there. So it's just, whatever it is, something is not right.
03:17But I'm sure Beth Hammock would say, let's raise rates. Policy isn't restrictive enough. So...
03:24Wait, so wait, explain what you mean by something's not right. The numbers aren't right?
03:28No, no. The trend has been negative for some time now, right? This is not just like population growth
03:35is slowing down or anything. And we talked about this earlier in the year. If the labor force growth
03:39was, you know, normal, we're 4.85% unemployment rate. So when the Fed sets targets, and like
03:48yesterday's retweet of Nick Tamaris said, if labor force grows, we're at 4.6% now. So
03:56something's going to have to give next year. If this trend keeps on continuing, that unemployment
04:04rate is just going to tick up higher and higher. My argument is that I think the Fed is fine because
04:08in the old Fed model, 5% unemployment was full employment. You know, this is why they're okay with
04:14this. I mean, we had a lot of hawkish kind of, hey, listen, we're just going to wait and all this.
04:19But here they are. We're already at 4.6%. We already have the lowest job growth in the 21st century.
04:25And now my concern with the Fed is that if the labor force starts to pick up and the
04:32unemployment rate rise, they go, well, the unemployment rate is rising because of the
04:36labor force. You know, there are ways for them to kind of move around this, but they have stayed
04:42very, very true to what I thought they were always going to be. They're going to be as restrictive as
04:48they possibly can. I mean, they're not technically modestly restrictive anymore. They're the upper ends of
04:53neutral until the labor market breaks. And this is another good example of it, that you can have the
05:0021st century lowest job creation ever. You can have the unemployment rate rise hitting your target before
05:05the year and be okay with it. And I think this is, it's hard for people to understand this, but this is
05:12how they operate.
05:13You've defined that labor market breaking as 323,000 jobless claims on a weekly moving average. Do I
05:22have that right?
05:23Yes. Four-week moving average goes up to 323,000.
05:26And where are we right now?
05:28We're still under 240,000, really. So in their minds, they don't see the labor market breaking.
05:35They see the labor market slowing down and they quite haven't got to their 3% wage growth
05:41target yet. They're getting there. And that's another thing about, you know, if it was just
05:47population growth, wage growth wouldn't be declining like this. And this is why the whole thing's a farce
05:53anyway. But in any case, they're staying true to what I thought there would be. So it's not,
05:58they need to see the labor market break. And the data lines that they care about the most
06:04quite haven't got there yet. And I'm sure they're going to say that we're very skeptical of all the
06:10jobs data right now because of the government shutdown. So something's going to have to give
06:16next year, right? You know, you either go to neutral policy or the labor market gets weaker and,
06:22you know, you get the higher unemployment rate or we get the rebound effect of, you know,
06:27a lull in hirings and, you know, something picks up, you know, retail sales was fine. You know,
06:33some of the economic data just, it still looks like an expansion, but something's not right with
06:39the labor market that they feel like they just don't want to quite get into there yet and take
06:45that next step, which to me looks perfectly normal with how they've acted. This is not all the Fed
06:50members, right? Team Logan has Christopher Waller, Michelle Bowman, Mary Daly's in that group.
06:57So there are people that many, many months ago, right? There's all these, you know,
07:01posts that I did, you know, Team Logan, labor over-inflation room, Bowman and Waller and
07:05everybody. But now, you know, it's, if things don't reverse, you're going to get more and more
07:12pressure from maybe some of the more hawkish Fed members that go, Hey, listen, you know, I,
07:18I didn't anticipate this, but it just makes for a very interesting 2026.
07:23So let's look at some of the, you know, dive into the, which sectors are looking okay. You've
07:28talked about manufacturing jobs and construction jobs. So walk us through what we found in this
07:33report. So manufacturing jobs have been losing jobs for like five, six months now. So that's that
07:39in, when I talk about economic cycle work, I said, it's really never a good thing when manufacturing
07:45jobs and construction workers lose jobs. Now construction data picked up here. We have a lot of AI centers
07:51being built. The residential construction workers, you know, picked up from the lows of this year.
07:56What has happened when rates came down lower? What other data line has picked up recently? The
08:01builders confidence, the small builders confidence. We're not even talking about the big publicly
08:05traded builders, but we have three or four months now of a positive trend. So the residential labor is
08:12still, is still holding up, especially contractor construction jobs have been losing jobs. So
08:18there are sectors, government has been, you know, finally got hit into the data lines,
08:22but really it's healthcare. I mean, what is holding these labor datas from getting worse is the healthcare
08:30job creation out there. So that's, that's been the big driver of job growth in 2026.
08:36So you mentioned government workers, you and I talked, yeah, I was questioning you about this for
08:42months, right. As a Doge was going in and cutting jobs. So we did get the final or, or sort of like
08:48the, the ultimate, like, here's what all the jobs lost in the government this year. And it looks like
08:55about 10% because finally those people who were like put on furlough or like getting paid, but not
09:00working, whatever those dropped off. So that's sort of the, the total. What did you think about that
09:05number? You know, government jobs to me in the big aggregate term is not that important to the,
09:12to the general economy. It's more of the private sector because what it is, is private sector
09:17demand keeps that going. This is why I don't really pay attention too much to government labor
09:24because it doesn't really tie with the economic cycle as much. So in this light, it's really what,
09:31what, what, what is happening here. Construction workers are still fading a little bit. It's
09:36outside of the AI data centers, buildings, manufacturing jobs, still a, a, a, weaking
09:42transportation, mining, lodging. There, there, there's multiple sectors that are getting weak.
09:47We did have a good, good construction total report here, but mortgage rates getting lower
09:53looks like for now, as long as these revisions don't come negative again, like they've had in the past
09:59that the residential construction workers have stopped going down and have picked up a little bit
10:04out there. So again, the private sector is really what's going to drive this. We have a lot of deficit
10:10spending here also. There's so much mandatory payouts that are going out as well and retail sales held up
10:16well. So to me, it's just, the Fed is just trying to try to keep this intact. And what we, what you and
10:22I have always said, the catch up, right? When Beth Hammock says, well, if the labor market breaks,
10:26we'll play catch up. So in their minds, the closer they get to neutral policy, if something
10:32happens where they need to go, then they will change course and say, neutral policy is no longer
10:38warranted. We need to get an accommodative stance. So how many rate cuts is that below three and a
10:45quarter or 3%, wherever neutral policy is for them. So it's, it's confusing for people because,
10:51you know, the unemployment rate keeps on going higher. And the federal reserve said last year,
10:54if the unemployment rate goes above 4.3%, we'd have problems, but they just don't want to get to
11:00that next level. They want to stay as restrictive as possible. So every single day that goes by,
11:05we get closer to Trump naming a new Fed chair and then that Fed chair coming in.
11:12What does this report do to that race for the Fed chair?
11:15You know, it's both the Kevins and...
11:22Okay. Polymarket had Kevin Warsh pulling ahead yesterday, I think.
11:28You know, I'm not a drinker, Sarah, but if Warsh is going to be the head chairman, I might just,
11:34you know, you know, you know, go to a dive bar and get drunk. That's, that's how much I can't,
11:39that's just, that, that is such a repulsive thought that he's even in there, but I'm sure
11:45he made a deal with Trump to do this. I mean, if he, like Kevin Warsh, if nobody knows,
11:50Kevin Warsh is the last person you would want what his beliefs are. Like, like, this is why all of us
11:57and, you know, kind of the wall street mindset, we're thinking really him, you know, and he's had
12:03to make some deals with Trump because he's literally the last person that you would want.
12:08Are you talking about political beliefs or are you just talking about...
12:10No, just his, I mean, he was hiking rates in 2008. He wants to reduce the, he says things
12:16that doesn't make sense. And also he bashes all the Fed, you know, nobody really likes him. And
12:20now he wants to be the, is this one of those guys that you just, you know, like whatever,
12:24you know, but Hassett on the other, on the other hand this week, rumors or talking points was that
12:30there was a lot of people that came to Trump and said, listen, if the markets, if you pick Hassett,
12:35the markets aren't going to like it because you're, he's too close, you know, to him. So
12:39I'm just hoping Christmas miracle, you know, that Trump comes out and goes, Christopher Waller,
12:48you know, is a, is a Fed president. And that would be really welcomed by the marketplace of
12:54a bond traders because he's, he's an authentic Fed person. You know, he'll do what he thinks,
12:59you know, raising rates or cutting rates, but you know, he's, you can trust them. It doesn't
13:04matter who the president is. You can trust them. So I'm just hoping Christmas miracle will be team
13:10Waller, but I don't know between the two Kevins. I mean, if I had to pick one, I, I mean, it's crazy
13:15to say this. I would pick Kevin Hassett over, over Warsh, but we'll see, you know, who knows what the
13:23next two, two weeks or three weeks will, will happen. Well, Logan, thank you so much for being
13:27on. I appreciate you jumping on to talk about jobs and the Fed as always. We appreciate you.
13:33Pleasure.
Be the first to comment