The truth of what’s happening in the labor market

Name: The truth of what’s happening in the labor market
Uploaded: 2026-09-05T08:00:00+00:00
Duration: 25 min 2 s
Channel: HousingWire

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

00:16jobs report and what it means for mortgage rates, especially with the September Fed meeting coming

00:20up. Before we dive in, here are the top five trending stories on housingwire.com. First is

00:26Pulte says FHFA weighing buy merge single credit report, followed by Logan's article on today's

00:33topic, why mortgage rates barely budged after jobs report beat estimates. Then we have Vishal Garg

00:39lays out better turnaround plan amid battle with board, and NAF lays off 160 employees in consumer

00:46direct division. Finally, we have ice rates strain home builder labor, cycle times, and bank lines.

00:52We have a lot to talk about today. So, Logan, welcome back to the podcast.

00:58Oh, we survived it. We survived this crazy, crazy, crazy week. And, you know, who would have thought

01:09that we went from economic D-Day, like to sanction Iran, to we're not going to shoot anymore, to a

01:15tanker to tanker policy. We had a jobs data that beat estimates. And the 10-year yield is like flat

01:24to slightly lower on this Friday, and didn't really want to break out higher. And like we've

01:28always said, for those of you that follow me on Instagram, you know, Monday morning, when the

01:3310-year yield, I was short term, this looks very toppy, just because it's very oversold. And

01:39boy, a lot happened this week. But I think today's focus is like, what's really going on in the labor

01:45market? Because I had to go on LinkedIn and like scold people. You had to. I had to, yeah. I

01:53had to

01:53scold people. And there's an institution in the United States that appreciated that. I believe people in

01:59the mortgage industry are listening to people who might not be trained in reading economic cycle

02:06works tied to Fed policy, and how that maneuvers the 10-year yield and stuff with inflation. And I

02:13think the industry gets stuck into the negative revisions, negative revisions, negative revisions.

02:19Well, this report had positive revisions, the break-evens, and all this stuff. And this is kind

02:24of why I wanted to always highlight the labor data this year, is that last year, of course, Godzilla

02:28tariffs, government shutdown. You know, the Republicans once used to say that how could they, you know,

02:34how could businesses hire people if they don't know what the government's policies are? Well,

02:38we were very, very big last year. But usually the second year, things get to improve just because

02:45the chaotic impact of that first year goes away. So my break-evens are 78,000. If we could create

02:5278,000 jobs per month on a moving average, we should be fine. The Federal Reserve has a much lower

03:00break-evens

03:00than I do. But when I'm sitting here, it's September. The three-month job average is running at

03:0882,000. That's slightly above my... And we still have this tendency to think that we're always on

03:15the edge of a cliff because some people are saying, well, all the jobs are low-wage jobs or all

03:21these

03:21people are leaving out there. Guys, no. I was hearing those things from 2010 all the way to COVID,

03:29and we had the longest economic and job expansion ever recorded in the history of America.

03:34When the labor market is getting really, really weak in terms of like the Fed maybe being behind

03:40the curve is when growth and investments start to slow, jobless claims start to rise.

03:48And the unemployment rate does tick up because corporate profits start to go down and you just

03:53don't hire as many people and you need to start laying people off for profit margins. And that's

03:59just not the case. And I think sometimes people just revert back to that, well, the revisions,

04:06the revisions. And it's just, guys, the 10-year yield is at 477. Mortgage rates are at yearly highs.

04:12If you're still running that playbook because you're listening to somebody running that playbook,

04:16that's not how it works. It hasn't worked that way since the Peloponnesian War. So either

04:23stop listening to those people or you don't even have to listen to me. Get yourself versed with

04:29somebody who's going to call it as is. And the labor market just stabilized. It's not a re-acceleration

04:36I've talked about. It's not, I don't believe this is, this is just from a very chaotic year to this,

04:40and it's kind of normal. And the Fed is very, very hawkish because we have a conflict and inflation is

04:46above target and these things and just kind of get back in line. Well, let's talk about that.

04:54How does the Fed look at this and what does this mean for a September rate hike?

04:59I think the odds go up. I think what Christopher Waller said that, you know, we're going to wait

05:04to see the inflation report. If the inflation month to month is tame, I think they're in the back of

05:10my

05:10mind. I'm thinking the Fed is thinking this is a supply shock. And if this damn conflict could

05:17just get over with, we could, but it's September, right? This thing is going on. I mean, President

05:24Trump came out this morning and tweeted, Hey man, you better lower rates or else I'm not going to

05:30trade with anyone. You know, we'll really crash the economy or take it this way. You know, I'm not

05:36going to trade with anyone. And I was thinking everybody was saying this is an odd tactic,

05:41but what you and I said, the first day that Trump won said, if you want to do this, he

05:47needs a lower

05:48dollar. He needs lower rates and he needs lower energy prices. This is not going to work. If rates

05:54are higher, the dollar is perking up and also energy prices. So higher energy, higher rates and a dollar

06:03not going lower is problematic to him. So, um, the Trinity impact that we've talked about since Trump

06:10won has reversed. And partly is that is this conflict. And I, you can see the frustration

06:15because it is literally impossible to like have manufacturing and export exporting goods while

06:21costing more with tariffs and then have a consumer-based economy. And I go back to my December

06:27of 2016 article, manufacturing under Donald Trump. What can logistically realistically happen? If you

06:35guys go back and read that article, it's the same issues here. There are limits to what you think you

06:41can do here because we are a consumption-based economy. We're older, wealthier countries. This

06:46is what happens with older, wealthier countries. You can't reignite a manufacturing boom without the

06:51dollar being much lower. And he's running into this problem right now. So confusing to me, um,

06:58his tweet that you talk about, because he's like, is he saying the economy is doing so well,

07:03I'm going to tank the economy so rates can go lower. Or is he saying you should lower rates because

07:08the

07:08economy is doing so well? I don't understand. He wants something that cannot exist in today's world.

07:17He wants the economy to be booming. He wants inflation above target and he wants the lowest

07:24interest rates in the world. Because if you want to export stuff around the world, then you need the

07:30dollar to get weaker and you need rates to go lower. You need rates to go lower to offset some

07:35of the

07:35cost items picking up. So it just, it's like somebody coming down to an HOA meeting and saying,

07:46you know, I don't want any signs, you know, in our, in our community, except the ones I put on.

07:54And I just want my signs to be everywhere, even though it doesn't address or talk about anybody

07:59else's. I just want, I want it now. And I think that's, that's just, that's the problem. And this

08:05is why we made, we, we made that whole podcast a day after Trump won and said, the Trinity thing

08:11is

08:11what he needs. If he's going to try to pull this off, the problem is he flew too close to

08:18the sun

08:19and with the conflict was not something he could control. Right. And because now we're in month six

08:25and this is happening and the growth rate of inflation is higher. I think you can handle

08:31the growth rate of inflation higher if rates go lower, but the rates going lower needs the labor

08:35market to get softer. Labor markets not getting, you just can't, you can't, this can't work.

08:40This literally is an equation. He can't work. And how do we all know this is because he tried to

08:45take over the federal reserve and active sitting president try to overthrow the federal reserve's

08:51independence by firing people and putting his own people in. And not only did Powell stay in to

08:58protect that, not only did the Supreme court say you can't fire Lisa Cook for X reasons. Some of the

09:04other federal reserve members have now taken a hawkish stance against Kevin Walsh and now Kevin,

09:09poor Kevin Walsh now. He was just like, Hey guys, I'm casting. I'm, you know, I'm Trump's guy. He comes

09:16in

09:16and now he's got to deal with this. And, um, I don't, I don't, I know what he wants. What

09:25he wants

09:25is does not happen. Or, you know, if he's thinking about world war two inflation and how they suppressed

09:31rates and that, that, that, that was a whole different, we had 17 million people like come

09:35back to the workforce. It's a whole different. You cannot take the past and compute it to now

09:40and then have an AI boom, which so much money is going into the few sectors that's boosting stuff

09:47up. So it's complicated. You know, he, he almost had it there. It really would have been interesting

09:55if he just let the tariffs go away because of the Supreme court and never invaded Iran,

10:01you know, or attacked Iran that it would have been a very, very, very interesting backdrop.

10:06If that occurred, if he just said, Hey, the Supreme court said, no, I can't do it. And

10:10the conflict in Iran, we might've had a different, uh, environment, but this is his thing. He just

10:16loves tariffs as bully ball, right? It's like he, you take his toy away. He's going to, he's going to

10:21get mad. And, um, here we're, we're here right now. This is just the world we have in. And even

10:27with

10:27all that, the 10 year yields at what 4.77 last time I checked mortgage rates are still under 7%,

10:33you know, last time I checked. So, uh, but the labor data is just basically looking

10:40a smidge better than my break evens. And that's just all it is. We went from a chaotic year to,

10:45I mean, even though there's a lot of chaos here, that first year things get better. And here we are.

10:50And I'm pretty sure this number will get revised lower as well. So it's good enough for the federal

10:55reserve. And that's all that matters. Cause they told the bond market, we don't care unless the

10:59unemployment rate goes higher or jobless claims go higher or growth and investment slows down.

11:02Non nominal GDP is really good in this quarter too.

11:07So we talked yesterday and, um, in that podcast about can, you know, can mortgage spreads get

11:13worse? And, you know, obviously if mortgage spreads get worse, rates get worse in this environment.

11:19Does any of the, does this jobs report change the way mortgage spreads look? I mean,

11:25what does it change? No, no. Okay. It doesn't change spreads. Um, remember if the 10 year yield

11:31was starting lower and mortgage rates were lower and then the fed went hawkish and the bond market

11:36was not ready for it, that's, that's another thing. But, um, I mean, we've compressed rates so

11:42much now. And, you know, when the 10 year yield was going lower spreads got worse because this job

11:47is to compress volatility and keep things at bay, you know? So this is why I say spreads could stay

11:52here for years and years. It's very beneficial, but, uh, nothing, nothing really moves this,

11:58this, you know, something like if the fed all of a sudden got really hawkish if they said, Hey,

12:03listen, we would like the fed funds rate to be 2% above inflation or the credit markets are breaking

12:08and banks are getting stressed. So, you know, mortgage, you know, those things can move spreads,

12:12but this, this jobs data, no. Okay. So bottom line, what does this jobs data mean for rates?

12:17Then is already priced in. I mean, uh, so much is already priced. I mean, uh, uh, to think about

12:23you had all these events and the 10 year yield, you know, is not going up much higher with that

12:29oil chart looks bad and diesel prices are elevated. So, so much is already priced in right now. And

12:35again, if, if, if hypothetically, hypothetically, let's just say the war is over oil prices start to

12:42go lower. The trade war doesn't get into a next stage. You know, they, they collect less revenue

12:48from trades things. So sting things that are coming in on his, and all of a sudden the growth

12:52rate, you could get rates to come down a little bit lower. I just think it's harder and harder to

12:56get the 10 year yield toward 4% or under now when we have lost the easing bias. This is

13:02why

13:03months ago I said, listen, guys, they were the Hawks are winning here because you, they're already

13:07got the easing bias off. The market's already priced in a few rate hikes and now the labor

13:12data is not breaking. Jobless claims are still low. Job openings are still high. Unemployee

13:17rate is low. The labor force growth is slowing down. We are deporting a lot of people as well

13:22and arresting an ice. So there are things in play that can, what the fed cares about,

13:27right? All I care about is what the fed cares about. Cause that's 65 to 75% of where the

13:31slow

13:31dance. And just remember with the spreads, normal spreads in recent history is 160 to 180.

13:37Last time I checked, it was like 197. How we track it, how we track it is different. A spread

13:43number could be different with anyone else. So it could be a lot worse right now, but you're going

13:49to have to earn it now. You're going to need oil prices to come down, the growth rate of inflation

13:53to come down. There are things that have to happen for these fed hawks to move away from this and

14:00then

14:00go back to neutral. Neutral policy was 3%. So if you get three more rate cuts into the system,

14:07it's easier to get down to 380 to 420. But that obviously isn't the case this year,

14:14nor is it going to be no matter what Trump says. You can't get the lowest interest rates because you

14:19want to have a better advantage for your trade war.

14:23That's not the way things work.

14:25Nor has it worked like this since the Peloponnesian war.

14:28Let's go all the way back to the Peloponnesian war.

14:30Whatever happened in World War II does not imply to what modern day economics is. And I just think,

14:35I just see these people on social media keep on telling people, we're just going to do this.

14:38We're going to do that.

14:40The dangerous part is when people in adjacent to our industry, I don't know if they're in our

14:46industry, talk about like, Hey, rates are going to go down. Expect rates to go down. I don't know

14:51where they get that. I, I don't know where that comes from.

14:54I mean, we've had the flow of rates, right? We do ranges. That's, that's fine. But every single

15:01time that the 10 year yield got down to 4% or under is that the labor market was getting

15:05weaker. So

15:06let's hypothetical. Let's just say this report was negative 21,000. There was no positive revisions,

15:13but the labor force is growing. So the unemployment rate grows. Now the wage growth thing comes into play.

15:19And that's the next thing we're going to talk about. Like I look at the federal reserve,

15:23like wage, finally, we're getting some nerdy people talking about this wage growth at 3.1%

15:29where the 10 year yield is and stuff like that. You know, it, it looks like, you know,

15:35a deceleration in the labor market. There's no tightening in it. So the labor market, if it was

15:40re-accelerating wage growth would start to pick up, but I'm a little bit different than everyone.

15:44I always say the fed loves this, you know, it might not, they, they love the fact that wage

15:49growth is going down. Why Sarah, if people make less money, they will spend less. And if they spend

15:56less, that means the pricing power that companies have is not that strong. So the growth rate of

16:02inflation should be tame. So we've, we've had this saying now for the last few years, wage growth,

16:083% and under 1% productivity, 2% target inflation. Okay. None of my even nerdy friends want to

16:15talk

16:15about this because I think it's a controversial topic, but they're 3.1%. If you, if they get 12

16:21to 18 months of wage growth under 3%, they'll, they'll be happy because 2% inflation is their

16:27target. Then you get the conflict over and everything. You start getting a more, a more

16:33dovish fed in that environment. But on the wage growth side, even though a lot of people are

16:38saying this was very negative, it's wage growth is real way. It, the federal reserve doesn't really

16:45look at it in that way because they don't want companies having more pricing power. And they

16:50think if you can get wage growth under 3%, at least 12 to 18 months that the inflation data does

16:55improve

16:56naturally because they, you can't get rent inflation to really take off with that kind of wage

17:00growth, nor can you get pricing power on certain things. Well, and you've talked before about,

17:05um, the affordability, um, when you look at, uh, wage growth versus home price growth and, and,

17:11and the vector there. So, so talk about that when you look at the wage growth of, uh, in this

17:15report,

17:16wage growth is still, uh, going over home price growth. And, uh, that's, that's been one of the

17:21positive stories last year. It's still the same this year, uh, uh, in housing. Uh, uh, if, if,

17:26if, if we had a 2023 repeat of what, what, what happened that year to this year, it would, I,

17:33I wouldn't be saying that in 2023 mortgage rates went from six to 8% home sales didn't crash,

17:39but they didn't go anywhere, but home prices rose 6% that year. No, that's a, that's a negative

17:45advantage. So imagine if that was the case of home prices were up 6% and wage growth is now

17:503.1%. So

17:51you don't gain anything on affordability. That's what you need. This is why I'm totally 100%

17:56against the capital gains, uh, being extended from 500,000 to 1 million. I mean, look what's

18:01happening in San Francisco, San Francisco's savagely unhealthy housing market. You're getting

18:05out, you know, people are doing 1 million over bids things. Here's why you cannot allow non-taxable

18:12dollar monies in size going into a housing market. Cause those boomers are just going to outbid young

18:17people for those homes. And nobody wants to talk about it in this way because home sales are low for

18:23now the fourth year. And when you start the natives get restless and they want something

18:28and getting to say oddly enough, just getting to 6% mortgage rates alleviates that, but we don't,

18:34it's complicated in this cycle because if you needed mortgage rates to get three or four or even 5%

18:40to grow sales, that's a whole, that's a whole different problem out there. Uh, um, but that's

18:46not the case here, but here we are and it's midterms here. So I know Pulte was, uh, tweeting out,

18:51you know, we're going to go after credit reporting and make it a single merge and stuff. So get ready

18:57for more stuff to happen. They're going to start throwing everything out there, uh, to get voters

19:02happy. And, uh, my concern is a real funny thing is, you know, the Iranians, their social media game

19:09to counter Trump is, is, is actually admirable. Trump says something and they come right back and

19:15they, now, now we have meme wars between the treasury and the parliament speaker, Ron.

19:21There was discussion. I don't know if it's true. There was discussion that aides are telling Trump

19:25to just call the war off until after the midterms, because it looks like the Iranians are going to

19:30try to inflict as much pain with oil prices as much as they can. And now all of a sudden

19:35the

19:35strategic reserves falling down, that oil chart doesn't look good diesels. And we're not that far

19:40from, and then all of a sudden they start, you know, doing stuff to draw and that's right before

19:45the midterms. And they, you get that last, we're still here eight months into this, you know? So

19:53even if Trump did that, they say the Iranians go, Oh yeah, we, we're not going to, we don't care

19:57if

19:57he does that. We, we don't trust them, you know? And, uh, we're here that that's why that oil chart

20:02and diesel chart, I'm still very mindful of like, I'm worried that in a few months, you know, there,

20:07something will happen just to make the oil supply. And really China is like really holding the cards

20:14here. Uh, if China really wanted to, they could push pricing higher, but you know, they're importing

20:19less and they have reserves and they're such a big dominant player and that that's kept oil prices

20:24from going up higher. And I just, I'm just mindful of our enemies doing something to this president

20:32that can impact rates here because of the midterms, because of chaos that we have. So I'm

20:39not my wheelhouse, but I'm just, I'm trying to see, Oh boy, I could see what maybe might happen

20:45later on. And that's why that oil chart, it was in a downtrend for now. It isn't. And I'm just

20:50a little bit more cautious now that I have been in the past with that.

20:54We're recording this on the Friday before labor day, right? Which is jobs Friday. We're going to

20:58release this on Saturday instead of Monday because literally there's going to be too much

21:03happening this weekend in the past. Let's just, let's just look in the past, the Friday before

21:08labor day. Yes. You might have some companies drop some, you know, things they don't want to get a lot

21:13of press, or maybe the government would do one thing in, in this administration. And when Trump won

21:20in Trump, uh, a holiday weekend is, is a very volatile time. And, and I'm like, what is going to

21:27happen tonight? That's we're going to release this on Saturday just to try to get ahead of some of

21:31things. It is. It's very interesting at this stage because, uh, uh, treasury secretary, Scott

21:37Bessent, he, he tweeted out, you know, um, in 2015 and 2016, you know, when oil prices crash, the

21:46ruble, Russia gets hit on inflation because their currency goes down because it's countries and gas

21:52station with nuclear weapons. So obviously oil processors matter to them because the Iranians

21:57aren't flowing oil as much. Their currency is elevated, right? Inflation is very high for them

22:02right now. And that's why Bessent thinks that if you just hold this and pressure and, you know,

22:07they can't last. And you see these videos coming from Iran from soldiers that aren't getting paid

22:13as much. And they're, you know, it's, it started impacting who knows if it's true or not. Uh, but,

22:18you know, you start to see it. So I don't know. I mean, maybe, maybe this weekend, maybe less drama,

22:26you know, uh, uh, but, uh, man, we made it a little bit more complicated than we needed to,

22:34but here we are, uh, here we are. And I, we stress that just be a little bit more open

22:39to the jobs

22:39data, not being as bad as you think. And, you know, maybe eventually this conflict ends and then

22:45we don't need to have a 50 to a hundred to 200% tariff war with every country out there.

22:51Just settle things down, get things back in line. And then people can feel better, uh, on this

22:57because Trump had the right idea, lower mortgage rates, lower gas prices. Why those are two things

23:02Americans see every single day by rates for a house. I want to buy a house move. That's whole life,

23:07right? Housing is life, right? Gas prices. I got to drive every day, you know, for work. So, um,

23:14Wheeler, it is what it is. Again, I, I apologize for everyone. This is all my fault because I did

23:19the 24th thing. And then I joked with Sarah that the only thing I could ruin this is if Trump

23:26starts

23:27a war in the Middle East and eight days later, blame me. I'll take full responsibility.

23:33Well, I appreciate you keeping us up to date. I would encourage everyone to sign up for our

23:37mortgage banking summit. If you're on the mortgage side, um, Logan's going to be our keynote. We have a

23:42lot of people, um, lined up. Um, I've mentioned it before, but NBA is going to tell us like,

23:47Hey, what to expect on rates. If we have a, you know, if we do have a blue wave or

23:51if, or if, uh,

23:52the Republicans hold, uh, especially the Senate. So it's going to be very interesting. It's going to

23:58continue to be very interesting. And Logan, thank you so much.

24:01Pleasure. Wheeler. Have a wonderful, wonderful Labor Day weekend.

24:05And you too. And oh, the NFL football season is coming. You know what that means?

24:10Okay. So we are in, um, so housing wire has our fantasy football league. The draft was wild. I think

24:17I have a terrible team. We will see. We have 18 teams in this. Yeah. That's way too much. I'm

24:23like,

24:23well, you're just hoping to get like a viable starter in every position. And I'm like,

24:29like six to the bench players. It's like, I'm choosing between this person hasn't had a concussion.

24:36This person had an ACL. This person didn't start. And it's like, it was wild. It was 18 is way

24:42too

24:42long. Yeah. We, we should have split up at two, but you know, it is what it is. So it

24:46is what it

24:46is. We'll have to see. Um, all right. Thanks, Logan. Thanks everyone. Go Niners.

The truth of what’s happening in the labor market

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