We are forecasting that US GDP growth accelerates from 2.7% in 2025 to 3.2% in 2026  as US growth returns to normal levels due to the dramatic reduction in mortgage rates that had caused a recession in the residential and construction industries.   Many forecasters. such as the CBO which assumes a 1.8% long term growth rate, are consistently pessimistic about US economic growth, but the average post WWII US GDP growth rate is 3.15%.  Consequently, our forecast of 3.2% is in line with...

The employment survey showed ongoing weakness in the job market with only 50k jobs created vs. expectations of 70k.  The net two-month revision was also negative with a revision down of 76k.  The household survey, however, showed that the unemployment rate declined to 4.4% from 4.6% last month.    The most important number was the unemployment rate which is the key factor the Fed focuses on.  Consequently, rates moved up slightly and Fed Funds futures priced in less Fed easing at the margin. ...

We continue to believe that the labor market is weakening due to tight Fed policy which has caused a recession in housing and construction.  Expectations are for 59k private payrolls growth so we see risk to the downside but the labor report is very unreliable with huge revisions over time and the shutdown has made this worse, creating a great deal of uncertainty around the Friday announcement.