Episode summary
What does the jobs report mean for a Fed rate hike in September?
HousingWire Daily
· · 20 min · Hosts: Sarah Wheeler · Guests: Logan Mohtashami
Summary
Logan Mohtashami argued that the latest jobs report matters less for the headline payroll number than for what it says about wage growth and labor supply. He said wage growth is decelerating to a multi-year low, the labor force is falling, and the unemployment rate is lower partly because of that labor-force shrinkage rather than true strength in hiring. He also pointed to 103,000 negative revisions and said the report included one-offs in government jobs and seasonal quirks tied to schools and the World Cup.
His main macro point was that the Fed may actually welcome softer wage growth if its real target is 2% inflation. Logan said wage growth above 3% makes it harder to get inflation down when productivity is near 1%, and he argued bond traders should recalibrate if the Fed is comfortable with slower wage gains. He said the market initially shifted the odds of a September rate hike from about 60% to slightly under 40%, though he thinks the 10-year yield staying above 4.60% shows the bond market is still uneasy.
For housing, Logan said lower home-price growth relative to wage growth is still a positive for affordability, not a negative. He argued that as prices cool while wages stay above 3%, the affordability picture improves, even if only modestly month to month.
Key takeaways
- Logan Mohtashami said wage growth, not the payroll headline, is the key signal for the Fed because it affects inflation more directly.
- He said the report’s lower unemployment rate was driven in part by a smaller labor force, not by stronger job creation.
- Logan said bond markets pushed September hike odds down from about 60% to slightly under 40% after the report.
- He argued that home-price growth below wage growth is still improving affordability, even if only gradually.
- Logan said the report had one-offs in government jobs and seasonal quirks, so it should not be read as a clean rebound in labor demand.
Notable quotes
“the wage growth is decelerating. And it's uh at a multi-year low”
“if you want 2% inflation, well, you can't have wage growth because why Sarah”
“We went from a 60% rate hike uh uh uh uh uh priced in to now a slightly under 40%”
“if price growth is lower than wage growth, that is a positive. That is not a negative for affordability out here”
How the episode opens
Welcome everyone. I'm joined by lead analyst Logan Mohtashami to talk about the jobs data and how we should interpret it. Before we dive in, here are the top five trending stories on housingwire.com.
First is UWM pays up for capital as it resets leverage targets. Followed by are data centers the next constraint on affordable housing supply? Then we have a round up of Q2 earnings for publicly traded mortgage real estate and home building companies.
And NYC expands finance pool for office to residential makeovers. Finally, we have our housing market spotlight, what the national median price isn't telling you. Okay, jobs Friday.
Logan, welcome back to the podcast.
Wow, wow, wow. What a very, very, very interesting jobs report. You know, uh coming out in a very interesting time.
And you know, on our last podcast previewing jobs Friday, we said I don't the headline number is not as important as wage growth is to me. Um and the wage growth is decelerating. And it's uh at a multi-year low.
The wage growth issue now becomes more prevalent because uh what I've told people on Friday morning is that you know, the unemployment rate went down because the labor force growth. I mean, we we need to have like a authentic real-time discussion about this going out for the next 100 years. I mean, is this the end of the US job, you know, boom because we simply don't have enough labor?
We'll talk about that later on. But 103,000 negative revisions. Unemployment rate fell, but we had negative jobs.
Uh 53,000 government jobs. I kind of joke that Bill Pulte who firing all the DNA. There's there's some uh school labor uh uh seasonality in that report.
So, that will probably be taken away from any sense of Fed thinking.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- jobs report
- fed rate hike
- september rate hike
- labor market
- housing effects
Watch the episode
Watch “What does the jobs report mean for a Fed rate hike in September?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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