A weakening labor market, rising doubts about near-term rate cuts and ongoing housing affordability challenges are reshaping the economic outlook.
- The U.S. economy added 57,000 jobs in June, roughly half of economists’ expectations, while the unemployment rate declined largely because workers exited the labor force.
- Labor market activity remains sluggish despite job openings reaching a two-year high, as hiring continues to decline and worker mobility remains limited.
- Quits are near cycle lows and layoffs remain rare, creating a labor market where employers are holding onto workers and employees are reluctant to change jobs.
- Reduced job switching is affecting apartment demand, with renewals playing a larger role than household formation driven by relocations.
- Federal Reserve officials unanimously voted to hold interest rates steady in June, but internal discussions revealed growing disagreement about the future path of policy.
- Some Fed policymakers considered the possibility of raising rates rather than cutting them, reflecting ongoing concerns about persistent inflation.
- Elevated interest rates continue to pressure commercial real estate financing, making acquisitions, development and refinancing more challenging.
- Consumers have benefited from lower oil prices and cheaper gasoline in recent weeks, which has helped improve confidence, but perceptions of job availability have deteriorated to the weakest level in more than five years.
- Existing-home sales declined in June as affordability challenges persisted and the median home price reached a new record high.
- Inflation-adjusted home values have been falling for nearly a year, and with mortgage rates remaining in the mid-6% range, many prospective first-time buyers are delaying homeownership and remaining renters longer.
For more information on the state of the U.S. Economy, including forecasts, watch all the episodes of the Economy Express series.
