September 30, 2025
We started the year off with a strong, but slowing economy. In 2024 the Gross Domestic Product showed a growth rate of approximately 2.5%, which was a decent showing. Though with higher interest rates and the pandemic recovery behind us, it makes sense that the economy would slow a bit from here. What we were not expecting was a negative growth rate for the first quarter, but together with a 3.8% growth rate for the second quarter, the combined growth rate for the first half of the year was slower—but still positive at approximately 1.65%.
Granted, the implementation of tariffs most likely skewed the numbers in ways we probably will never understand, as companies rushed to beef up inventory to beat tariff implementation and others may have been reticent to make major moves in light of tariff uncertainty. Regardless of these details, what we were not prepared for was the steep drop in employment creation. Again, there were various factors that influenced the results such as layoffs within the government sector. But there were also unexpected contributions by negative adjustments in previously announced results. What were these adjustments?
Nearly one million fewer jobs were added in the 12 months ending March 2025. And the April and May 2025 figures were adjusted downward by just over a quarter of a million jobs. For years, the economy has continued to grow because the economy was adding enough jobs to keep consumers spending – save a short period of time during the pandemic. Thus far this year the economy is on track to add less than one million jobs, though we still have five months of numbers to bring the averages up. This is why the employment report to be released this Friday is so important. We are interested not only in September’s numbers, but the revision of the previous two months. The good news is that interest rates are finally reacting to the news by coming off their highs of the past few years. Lower rates can prompt consumers to increase their spending so we can create more jobs.
Source: Origination Pro
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