What does the jobs report mean for a Fed rate hike in September?

HousingWire

On today’s episode, Editor in Chief Sarah Wheeler talks with Lead Analyst Logan Mohtashami about the jobs data and how it could affect a Fed rate hike.  Related to this episode:  U.S. loses 23K jobs in July, economists detail housing effects  HousingWire | YouTube⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠  HousingWire AI Summit – August 11  HousingWire Mortgage Banking Summit – October 1  More info about HousingWire  Top 5 Trending:  UWM pays up for capital as it resets leverage targets  Are data centers the next constraint on affordable housing supply?  Q2 2026 earnings for publicly traded mortgage, real estate and homebuilder companies  NYC expands finance pool for office-to-residential makeovers  Housing Market Spotlight: What the national median price isn’t telling you  Want more from Sarah? Don’t forget to subscribe!  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.

Transcript

00:10Welcome, everyone. I'm joined by lead analyst Logan Motoshami to talk about the jobs data and

00:16how we should interpret it. Before we dive in, here are the top five trending stories on

00:20housingwire.com. First is, UWM pays up for capital as it resets leverage targets, followed by,

00:27our data centers, the next constraint on affordable housing supply. Then we have a roundup of Q2

00:33earnings for publicly traded mortgage, real estate, and home building companies. And NYC

00:38expands finance pool for office to residential makeovers. Finally, we have our housing market

00:43spotlight, what the national median price isn't telling you. Okay, Jobs Friday. Logan, welcome

00:49back to the podcast. Wow, wow, wow. What a very, very, very interesting jobs report.

00:56You know, coming out in a very interesting time. And, you know, on our last podcast,

01:03previewing Jobs Friday, we said, I don't, the headline number is not as important as wage growth

01:08is to me. And the wage growth is decelerating. And it's at a multi-year low. The wage growth issue

01:18now

01:19becomes more prevalent because of what I've told people on Friday morning is that, you know, the

01:26unemployment rate went down because of labor force growth. I mean, we need to have like an authentic

01:31real-time discussion about this going out for the next hundred years. I mean, is this the end of the

01:36U.S. job, you know, boom, because we simply don't have enough labor? We'll talk about that later on. But

01:44103,000 negative revisions. Unemployee rate fell, but we had negative jobs. 53,000 government jobs.

01:53I kind of joke that Bill Pulte was firing all the DNA. There's some school labor seasonality in that

02:00report. So that will probably be taken away from any sense of Fed thinking. We also, you and I have

02:07talked about the World Cup, you know, that eventually, you know, you're getting some hirings from it. And then,

02:11you know, the layoffs of it. So you can't use that excuse anymore going out for the future. This,

02:17you know, because so much of leisure and hospitality was laid off. But wage growth going lower with the

02:23labor force growing lower as well, that is not a tighter labor market. So we go to our original

02:32premise that the first year of every trade war is problematic for labor. And we had some negative

02:39job support. But when that kind of dissipates, things will rebound. That rebound should not be

02:45looked at as an acceleration. So you need to give it some time. We've given it some time.

02:50And there's been a clear downtrend in the jobs data. But is this what Beth Hammock always talks about?

02:58I don't care because the unemployment rate is low and we're at full employment. But the wage growth issue

03:03now, that becomes front and center on this battle between the Federal Reserve hawks and doves,

03:10Kevin Warsh, Trump and the United States of America right now.

03:14I mean, surely, surely this looks like, hey, let's slow all the talk about three rate hikes or even a

03:21rate hike in September. What do you think?

03:24So I gave this hypothesis to everyone on Twitter. I said, isn't this what the Fed really wants,

03:32though? If you are targeting 2% inflation, and you and I, it sounds like a joke, but it is

03:41true.

03:42If wage growth is above 3%, how do you target 2% inflation if productivity is really running at 1

03:50%?

03:50And what I am saying is what the Federal Reserve has constantly told people for decades, really,

03:55that if you want 2% inflation, you can't have wage growth. Because why, Sarah?

04:01If people make more money, they're going to buy more stuff.

04:04The Federal Reserve controls the cost of money. So mortgages, right? If more, if, oh my God,

04:10if housing actually started to grow again, people will buy more stuff. And if their wages are up,

04:15and their wage growth is picking up, they'll have more capacity to buy more stuff. So

04:20I said, isn't this what they wanted, though? This is why if I, President Trump should just have me

04:26get Beth Hammock, Lori Logan, Neil Kashkari, and the smirk of Austin Goolsbee in a full panel

04:36in front of everyone in America, not these reporters, but have me so I can try to convince

04:43people. I'm going to say, is this what you wanted? Attacking the labor supply to get wage growth under?

04:48Because nobody knows this model. I keep on bringing it up. What are you talking about? But

04:54some people could say this is exactly what the Federal Reserve wants. And this is their way of

05:00getting to 2% inflation is, you know, they don't care as long as the unemployment rate is low and

05:04jobless claims are low. So the 10-year yield fell, you know, but it's still above 460. It was like

05:11462, 463 before this. So it's a screwy Jobs Friday in a screwy time with the Federal Reserve

05:20and Warsh and everything. So I'm like, wow, this is exciting if you're a nerd. Like, you know,

05:26everyone's throwing their own stuff out here. But we stick with the principle that I believe the

05:32Federal Reserve might interpret the reacceleration in jobs as like a reacceleration in the economy.

05:39The growth data, investment data roughly stayed the same always, but the labor data was getting

05:44softer, trade war, it rebounded. If it's getting softer with wage growth again, they have to make

05:50it clear to everybody, if this is what you want, tell people that you need to attack the labor supply

05:56and wage worth going lower. But with a 4.1% unemployment rate and the labor force really,

06:01really falling down. You know, there's, you know, ICE is revamping, you know, arresting more people.

06:08There's some immigration law with Venezuela, especially in the state of Florida that we're in.

06:13So there's stuff like that that could really impact the labor force data. But

06:16man, this just made things a little bit more complicated. And when we see Beth Hammock and Lori

06:22Logan get in a complicated situation and Neil Kashkari and Austin Goolsbee, that their job just got a

06:28little bit harder. We smile on this one. So it's one thing if wage growth was accelerating and the

06:35unemployment rate is falling, that's a whole different story. But the employment cost index

06:40was down to 3.1%. The wage growth is, these are not things that supposedly the Fed, if they wanted

06:46full

06:46employment or a tighter labor market or saying, these are not things they'd want to see. But my argument is

06:51maybe they do want that. We just got to get them in public. Just give me those Fed presidents.

06:56I'll take them. I'll make sure that everyone knows what they, what they really want. And then

07:00everybody gets cleared up because if they say, no, no, no, we don't really want this. Then the bond

07:04traders are like, okay, okay. Then we're, we're, we're not pricing in rate hikes then if that's,

07:10if that's not what you want.

07:11So can you tell from the bond market's reaction if they think, okay, like, like for instance,

07:16is a September rate hike off the table because of this?

07:21So what do we always say? Paper, rock, scissors, labor over inflation. We went from a 60% rate hike

07:33priced in to now a slightly under 40%. That's just the first reaction. So why is that? Because the

07:39labor market, whatever bond traders want to say, it makes it a little bit harder for the Fed to do

07:44this.

07:45Um, the 10 year yield is still above 460, right? So to me, that means it's not Kevin Warsh's Fed.

07:54It's Beth Hammack and Lori Logan's Fed. And I don't think this report changes their mindset

08:00because the unemployment rate is low. Jobless claims are low. Population growth is really,

08:07labor force is really, uh, drawing down that brought the unemployment rate low in their minds.

08:13They don't see the stress in the labor market. Remember Beth Hammack was a person last year saying

08:17the labor market is robust. She said 4.3% is full on unemployment. So the unemployment going lower.

08:23So I'm trying to get, I'm not trying to defend Beth Hammack or Lori Logan here, but, but this report

08:29had some screwy one-offs and to the Hawks who are running the show. Remember Kevin Warsh wants to make

08:35balloons at parties and not talk. So the market still is taking them, uh, uh, at their words.

08:43Uh, so it'll be, it'll be interesting with the inflation report coming out, uh, next, uh, uh,

08:48next week, but man, that, that just threw a wrench. But again, for us, wage growth is key.

08:53Uh, uh, uh, if wage growth was growth, if wage growth went up today, let's say wage growth was

09:00at 3.8%. You know, uh, then it, that's just, they're fed to say, Hey, listen, wage growth is

09:07too strong. They can make that case. But now that wage growth is lower, boy, you reporters, any

09:13reporters out there, please contact Beth Hammack and Lori Logan, force them to address this,

09:19this question. It'll clear up a lot of things for bond traders if that's the case.

09:24Okay. So in your, um, housing market tracker, uh, last week, so this, this will be coming out on

09:30Monday. So a week ago, you talked about why housing demand has held up. And one of the things you

09:35talked about is that affordability has actually gotten better. If you look at wage growth, you

09:42know, relative to other things, right. To, to the price of, uh, home price growth, which home prices have

09:47been growing, but it's been slowing down. Wage growth has been going up. I know this is just

09:51one month, but what does this do to affordability and, and that calculation?

09:57Not much, just because if home prices are running at one, one to 2% of wage growth is still

10:02above 3%,

10:03it's a, it's a positive curve, you know? So, uh, again, it's the duration curve of 12 months running

10:10in. Uh, so, uh, again, if, if home prices were up five or 6%, you know, we, I had this

10:16discussion and I

10:17was like, people are like saying, but, but, you know, taxes are homies. I'm only talking about

10:22prices. Everyone talks about prices accelerating out of control in 2020 and 2021, a well above wage

10:28growth. You don't get to change the rules and say, when price growth is now slowing down, that's not

10:34that, that's not a good thing for affordable. No, no, no, no, no, no, no. It's just people have like

10:39some screwy takes on, on economics. But if, if price growth is lower than wage growth, that is a

10:46positive. That is not a negative for affordability out here. And I always stress to people, we have

10:52near 5 million total home sales in the peak of 2010 to 2019, the peak, I'm not even taking the

10:59average. I'm taking the peak when we had three and a quarter and 5% mortgage rates for a decade

11:03and

11:04affordability was, we had around 6 million was the peak. So that curve of demand is still there. Why?

11:11Because wages rose household formation, a dual household incomes come in and you put the dual

11:17household incomes, it, it offsets the housing inflation story. Cause that's enough income to

11:22buy a house out there. Let's say, uh, depending on who you read between 95,000, 105, 110,000.

11:29I always say this, if one makes 90, the other makes 70. There you go. That I can explain the

11:34near

11:355 million total home sales. I can explain why new home sales are at 2019 levels, which would be

11:40about one to 1.3 million more existing homes. And we're nobody's talking about housing. If that's

11:45the case, but affordability got stressed, stretched. And then, uh, uh, um, now that price growth is

11:52cooling down in some parts of the country, it's negative. That is a positive for affordability

11:57guys, a positive, not a negative. So you talk about how different, um, different reports can have

12:04a one, you know, we can see extremes on one side or the other. In your opinion, does this,

12:09does this report fall under that? Or is you like, no, this, this is good data. Like, like we can

12:14take

12:14things off of this report. It's not, it's not just a rebound from something. It's not a,

12:18a reaction to something.

12:20So there, there are two one-offs in this report. Um, the government jobs, I think to me, I mean,

12:26I, I joke that Pulte did this, but, uh, the DNI fires, but, um, uh, there is a school component

12:34into that. So that's kind of a core. This happens every year, actually. Um, the world cup is you

12:40can't use that excuse anymore. So that's gone. So, uh, in other words, for, for people for seeing

12:46that drop off. Yes. The, the, the hospitality drop-offs and the, the, the increase in drop-offs

12:52to me, look world cup related. And we, we talked about this three, three months ago that there's

12:57going to be some screwy things. And, but that's it. There's no more, you can't use that. The federal

13:02reserve can't use that as an excuse. The labor force growth really tanked in this report,

13:07but because wage growth is falling, um, uh, I, I, I implore all reporters in the United States of

13:16America. I implore anybody working for the white house. Okay. Or FHFA. Somebody needs

13:22to get Beth hammock and Lori Logan and Neil Kashkari and Austin Goolsby on camera for the entire

13:28country and have them verbally say, we want lower wage growth, because if they say that,

13:35then they would be happy with this report. They'd be like, this is, this is how we get to our

13:402%

13:40inflation, people making less money. But if that's not the case, then bond traders have to start

13:47recalibrating because this is a trend now. This is not just one report. This is a multi-month

13:52trend. And I would just say that, you know, I, I think the, the break-even stories become more

13:58because if you take the world's cup and, and, uh, uh, uh, government jobs out of the equation,

14:05then you got your 33,000, you know, construction was up, manufacturing was up and all that stuff.

14:11But man, it is, it is complicated. Thankfully I have no life and I track economic cycles for his

14:19housing second. And we, we, we made this a big theme, but, uh, uh, it gets a little bit more

14:24complicated. This is why reporters need to talk to Beth hammock and Lori Logan because Kevin Warsh is

14:30not running the Fed. They are. So you've got to get them. You've got to get the United States of

14:35America,

14:35all American citizen to get what they think here, because then you can get bond traders

14:40in line. If wage growth, cause you're, if you're a bond trader, your first reaction should be,

14:45they're not hiking rates in September because of this 103,000 negative revisions, uh, wage growth

14:51a lower. And the only reason the unemployment rate fell is because of the labor force. These,

14:55what happened to Neil Kashkari is I don't want to slow the economy. Homies, it's, it's, it's three,

15:01four months now. Neil Kashkari.

15:10I've got questions, man. I've got questions. See y'all need to just put me in front of the,

15:16some of the Fed presidents. None of this Mickey Mouse reporter questions. Let, let me go to work.

15:21Y'all see how the chart daddy handles the doomers out here. Go, go back to YouTube and look at

15:26how I

15:27trick those people into admitting that they're not housing people, but, but the Fed would be more

15:31complicated. There are, there are ways to get them to admit what they're really thinking.

15:36And reporters don't ask the question that way. Get me in front of them. Let me do what I do

15:42best,

15:43you know, uh, oral debate arguments. I can do this, but I need them on stage.

15:48And then I could show, but hopefully, hopefully a little bit of a wake up call. But again, I can

15:54say

15:55that Beth Hammock is smiling. Lori Logan is smiling. Austin Goolsby with his smirk is giving a bigger

16:01smirk and Neil Kashkari might be smiling because if wage growth needs to go under 3%, they are getting

16:08what they want. If you want to target 2% inflation, but, uh, oh boy, the next Fed meeting. Oh,

16:16Sarah

16:16Wheeler. That is going to be a show. Get your popcorns out. Get your 3d glasses, man. Go on IMAX.

16:23Get that. That is going to be, I hope Kevin Walsh doesn't have no more, no more press things.

16:27Cause that, that is going to be, uh, uh, a festival of drama. All right. Okay. Coming up on the

16:35weekend,

16:36which we know weekends are for war or who knows weekends could be for peace and then war and then

16:40peace again. We, we, we don't know what's going to happen, but let's talk about the tracker for this

16:43weekend. What are you looking for? Well, I just want to say that the president of the United States

16:48thought he had better hair than me. Oh, yes, you, you did. We had, so we're at this, uh, amazing

16:56conference and they had a president Trump impersonator who was actually very good. I mean, like this guy,

17:02he's, he's dedicated his life to this. So yeah, he, uh, you got a video with him. Lots of people

17:07thought

17:07it was AI. Cause you do, they thought it was AI, but then I was like, first of all, Trump's

17:11six,

17:11two, I'm five, 10. So that's, that's, that should have been your first clue. But, uh, but he went

17:16straight for the hair, you know, and then he says, he's got the second best hair. That's not going to

17:20work. I wanted to say, homie, take your hat off and let's, let's, let's show everyone right now.

17:25He's got the best, but, um, for the tracker again, same thing as always, um, housing demand tends to

17:31slow down when rates are above 6.64%. We've seen that in the data, the growth rate has really

17:37slowed down. We haven't had quite a negative curve, but we've only had four negative purchase

17:41application data prints all year. Two of them have happened in recent weeks. So I see the growth

17:46slowing. That question is, are we going to go to the negative side now that we've been above 6.64

17:51with duration? We always say lower rates with duration matters, higher rates with duration

17:56matters because rates haven't gone above seven, seven mortgage spreads, man. Give that, give that

18:03mortgage spread a huge hug. Cause imagine if rates were seven and a half and 8% and the residential

18:08construction employment data is fading away now, multiple months of it going down, you know, that

18:14it's never a good sign for the economy on that construction labor, but so much of it residential

18:20is the big money being spent out there. But you do see that AI built out holding this. It's really

18:25interesting. You could really make a case that rates are elevated because AI, the whole capex spending

18:29and construction labor and electricity costs. And we, we, we can say this with, with pride because the

18:35federal reserve talks about this every, every time they always go, Oh, AI is really creating

18:39inflation. So boy, they are not getting fan favorites out there, uh, in 2026. But I just

18:46want to see, uh, how they, how the data looks with rates now above 6.64 for another week. Uh,

18:53and again,

18:53that's always been our line in the sand. So that's what I'm focusing on, on, on the tracker data more

18:57than, more than anything else at this stage compared to what it was earlier in the year. Now, no

19:01qualification. The only thing that, uh, that, uh, that created negative demand was actually the

19:05snowstorm. You take that out of the equation, purchase application data, weekly sales, pending

19:10sales, everything up out there. And by the way, I just want to re reemphasize red fins, the greatest

19:16seller chart of all time. That thing doesn't need to go up anymore, but there I go. Pending sales are

19:22out of five months low, but home prices are up 2.9%. This is why they don't put that data

19:27line. So a

19:28victory for the data nerds out here. If the chart wars, like the dragon wars, the chart

19:33daddy wrote his big, big dragon into that one. Burn that castle down. They ain't coming back.

19:40You're hilarious. Okay. We will look for the tracker. Also wanted to let our listeners know

19:44we are hosting our AI summit this week. Um, here in Dallas, we are sold out. We have a waiting

19:49list. If you can't be in there in person, we do have an amazing streaming option. So a virtual

19:54option. So check that out and Logan, we will talk again soon. Thank you. Pleasure.

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