August 19, 2025
One week after discussing the importance of the Chairman of the Federal Reserve’s tenuous position, the economy received somewhat of an “aftershock.” Rarely do we use the word aftershock when discussing the economy. It is quite often that we are subjected to economic shocks, many of which are surprises such as natural disasters, pandemics and more. But aftershocks are more reserved for earthquake activity – not economic shocks.
The last jobs report was quite shocking. Not the increase of just over 70,000 jobs in July. This was a weak number, but certainly not out of the question. On the other hand, the downward revision of the previous two months of data by a whopping 258,000 jobs was downright shocking. This revision single handily turned a moderately strong jobs market into a market which is gasping for air. Then here came the after-shock – the head statistician was fired. We will not get into the reasons why, but certainly such a revision called for an explanation. In essence, the messenger was shot.
Again, we will not debate the pros and cons of shooting the messenger. But we will return to the question of the day. If this revision was indeed accurate and the Fed had access to the data when they met, they were much more likely to lower short term rates last month. Unfortunately, the data came in a few days after the meeting. Last week the consumer inflation report came in up 0.2% monthly and 2.7% annually, but a bit higher at the core level excluding food and energy. At the wholesale level, the numbers were much higher than expected, which does not bode well for future consumer inflation readings. Overall, the markets are betting on an interest rate decrease at the next Fed meeting in September. However, these new inflation numbers complicate the issue of future Fed moves.
Source: Origination Pro
Quick Online Mortgage Quote
Quick Quote
Click above to complete a 30 second form to receive a no obligation home mortgage consultation from Ameriutual Mortgage in Astoria, Queens, New York. We will analyze your situation and determine the best solution.
