Macro4Micro: Economic Indicators

Housing Starts April 2026: Soft Starts in Single Family 5-22-26

D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26

Employment May 2026: Big Rebound, Low Multiplier Bias

Glenn Reynolds, CFA — Fri, 05 Jun 2026 17:13:12 GMT

Not the prime-time economic multiplier effects? OK for now.

The massive “beat” vs. consensus on job adds weighed in at +172K for May. The release includes major upward revisions in March (+29K to +214K) and April (+64K to +179K). The unemployment rate was flat at 4.3%.
The payroll additions are dominated by Leisure and Hospitality at +70K, Local Government at +55K, and Health Care and Social Assistance of +47.2K for a total of over +172K just on those three occupation lines. Those are not in the high “economic multiplier effect” category but more paychecks are intrinsically positive.
“Goods” payroll additions of +28K included +17K in Construction, +7 in Manufacturing, and +4 in “Mining and Logging” (primarily E&P). An important note is that Manufacturing was lower YoY by -46K, which for now means the Golden Age onset for manufacturing has not arrived yet. Services rose by +92K, and Government by +52K for the Establishment Survey total payroll additions of +172K (92 Services + 52 Government + 28 Goods).
The average hourly earnings increase of 3.4% is not stacking up well vs. the 3.8% CPI in April. Real earnings are also looking grim vs. recent PCE inflation numbers including +3.8% headline PCE and core PCE of 3.3% (see PCE Inflation: Income and Outlays April 2026 5-28-26). The 1Q26 GDP release posted a headline PCE price index for 1Q26 at +4.5% while the core PCE price index ticked slightly higher to +4.4% from +4.3% (see GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26). The story is ugly for real earnings.
In the Household Survey, the report details a decline of -66K unemployed for a total of 7,307K (7.31 million) and a 4.3% unemployment rate (7.31 unemployed/170.1 mn labor force). The number of total employed rose by 149K to 162.77 million.

The JOLTS openings as detailed earlier this week show more of those openings getting filled as we move closer to the summer (see JOLTS April 2026: A Modestly Positive Turn 6-2-26). That is good news for the “paycheck count.” One can make qualitative assessments on the mix of occupations reporting increases in payrolls, but the reported number meet the “MO jobs, MO money” rule to support consumer spending volumes.

Consumer sentiment/confidence has been very low, but the material decline in savings rates can mean a range of things with either (or both) a desire to spend or “a need to borrow” on the list (See PCE Inflation: Income and Outlays April 2026 5-28-26). More jobs always help the backdrop. As of now, inflation exceeds wage growth. That is by definition bad.

The monthly payroll adds/declines chart above starts in March 2022 with the end of ZIRP and the start of the tightening cycle. The bar chart tells an objective data story. The revised +214K for March, revised +179K for April and May print of 172K along with the 4.3% unemployment rate are not only “not easing friendly” for the FOMC but the direction of oil and Iran and Gulf chaos could determine whether the backdrop is “hike friendly.”

As we go to print, the odds of 1 hike by the Dec 2026 FOMC meeting is 43.3% vs. 28.7% for no change. The odds of 2 hikes are up to 22.4%. The odds of 1 cut are +0.8%.

The payroll addition numbers in 2025 and 2026 include the only negative deltas on the chart since March 2022 with 6 months in the red during Trump 2.0. We are now at least seeing some numbers above the post-Jan 2009 median of 170K. That long-term median of +170K includes a slice of the longest recession since the Great Depression, so it is not a high bar to clear.

A glance back at the 2022 numbers offer a reminder of what a high rate of job adds looks like. Of course, the labor backdrop and immigration issues change the overriding variables.

The above chart plots the running job adds/declines since Jan 2009 against the unemployment rate, which at 4.3% would be considered full employment in past cycles. In the chart, we isolate the worst months of the COVID dislocations in the box for better visuals to capture the other periods.

The 4.3% U-3 is below the long-term median from Jan 2009 of 4.9%. Payroll has been struggling somewhat in relative terms, but history is very kind to 4.3%. If the 2025-2026 frame of reference for payroll additions is 2024 (not a good jobs year) then the 2025-2026 numbers are solid (not great). If we compare 2025-2026 monthly adds to the 2022-2023 period, the current job add run rates are weak.

The above chart updates the time series for the U-3 unemployment rate and U-6 structural underemployment rate across the years from 1994.

As a reminder, the U-6 metric is defined with the numerator as “total unemployed + persons marginally attached to the labor force + total employed part time for economic reasons.” The denominator is “civilian labor force + workers marginally attached to the labor force.”

The U-6 is the structural underemployment metric that is always useful to watch. To start 2025, the U-6 rose sharply in Feb 2025 to 8.0% from 7.5% in Jan 2025. The U-6 jumped to 8.7% in Nov 2025 from 8.1% in Sept 2025.

The current 8.1% marks a decline from 8.2% in April but an increase from 7.9% YoY vs. May 2025. The U-6 is well above the 6% handles seen in spring of 2023. The U-6 is still below the median from 1994 of +9.3%, which notably includes the post-crisis shock and the longest recession since the Great Depression.

The time series above updates the U-6 minus U-3 differential as a measure of relative employment quality and to flag risks of major dislocations in large swaths of the economy (think oil patch collapse in the late 1980s, tech bubble imploding into a weak 2001-2003, and financial services and automotive meltdown in 2009).

The current 3.8% differential is just below the long-term median of 4.0%. The job ranks are still vulnerable now with the Iran war effects flowing into hiring decisions, industry fundamentals, and FOMC policy planning. The recent rising rate of adds is clearly favorable but do feature some of the occupations in services where major swings come easily. The AI wildcard will remain a critical X-factor on where payrolls head in Services especially.

The above chart updates total payroll vs. the unemployment rate. The trend needle has not moved much in 2026 and has been in a narrow range. More bodies with more paychecks are always a good thing. The trick from here is how the consumer deploys that paycheck and whether the zero-sum realities of household budgets undercut spending. The PCE line in the GDP accounts is a critical driver of growth and negative real wage reality a soft leading indicator either on spending or on wage demand pressure.

The above chart updates the total payroll number vs. job openings. JOLTS data had been recovering with banner job openings this past week even though hires were weak. We see some of those openings being filled in the May payrolls (see JOLTS April 2026: A Modestly Positive Turn 6-2-26).

Management teams have a lot of moving parts to factor into planning whether quantitative or qualitative. The final IEEPA decision from SCOTUS came in against Trump, but he was prepared to start slapping on tariffs under Section 122, 232, and 301. That is well underway on Section 301 tariffs with a range of announcements this week. Those tariff actions will create more trade partner strife with the EU and Asia.

The USMCA is up for review and that is already starting out ugly with Trump bringing out his “51^st state” trash talking even as MAGA stokes the fires for Alberta secession. The EU diplomatic setbacks and trade relations are downright ugly at this point after Iran. NATO appears to be in the crosshairs.

The trade flows have been looked at in many past commentaries (see Meanwhile…Back in Economics and Tariffs 3-2-26, US Trade with the World: Import-Export Mix 2-25-26). The US has a goods trade surplus with Canada ex-oil. Canada is also the leading export market for almost 3 dozen US states.

The FOMC and the market both have much to digest, and Trump is making it clear to the domestic audience that there is a ceasefire and the “war is over.” This is hard to reconcile with a full blockade (an act of war by international law) and ongoing Iranian actions against both the US and Gulf nations.

The headlines around multiple supplier chains have been covered in other research, but fertilizer is one that aims directly at food while oil aims at just about everything from the gas pump to delivery costs, raw materials, and leisure and travel (airfare). The headlines highlighted the threat to semiconductor production while some customers could see IT budgets slammed. With so many bad headlines in private credit, the idea of financial stress and the need to be cautious on spending/capex will be an issue to be played out. That means the consumer sector is likely to be facing more risk ahead even with these good payroll numbers. Inflation and the lowest savings rate since the inflation peak of 2022 is a metric that needs to be watched over the summer.

The overall economic impact of tariffs had been far less than feared given the reality that most trade partners backed down in 2025. That still could change in 2026 with the latest wave of Section 301 attacks on supplier chains and trading partners.

Retail Signal Read Part Deux 6-1-26

Market Commentary: Asset Returns 5-31-26

New Home Sales April 2026: Slow Start to Spring 5-28-26

PCE Inflation: Income and Outlays April 2026 5-28-26

GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26

Housing Starts April 2026: Soft Starts in Single Family 5-22-26

D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26

Taiwan: Stakes are High, US Awareness is Low 5-17-26

Industrial Production April 2026: Bringing a Lift 5-15-26

Existing Home Sales April 2026: Steady or Clinging? 5-14-26

Producer Price Index April 2026: Heat Rising on Cost Inputs 5-13-26

CPI April 2026: 4.1% All Items Less Shelter, 30Y UST 5% 5-12-26

JOLTS April 2026: A Modestly Positive Turn

Glenn Reynolds, CFA — Wed, 03 Jun 2026 01:18:52 GMT

What’s behind door #1 (Iran deal?), #2 (skies-the-limit tech boom?), or #3 (escalation + Houthis + Red Sea?)

The +731K (+10.3%) rise in openings MoM (+7.3% YoY) was dominated by the “Professional and business services” with a +668K increase. Notable declines included “Finance and Insurance” at -135K.
Hires decreased by -419K or by -7.6% and that takes a little luster off the job openings optimism. Manufacturing as a recurring focal point in the new tariff regime saw hires move modestly lower by -20K. Retail trade was lower by -81K and “Transportation, warehousing and utilities” lower by -41K. “Professional and business services” hires were down by -131K , Financial activities down by -30K, “Private education and health services” was down by -67K.
On a positive note, “layoffs and discharges” declined by -192K or by -10.2% MoM and by -6.9% YoY. Retail trade layoffs declined by -88K, “Professional and business services” dropped by -112K. Manufacturing layoffs rose slightly but construction layoffs declined.
A big question from here is where Iran and the consumer cycle go next and what will happen to Services hiring/firing in the age of AI. For now, it is still “low hire/low fire” but job openings offer hope.

The above time series plots job openings across the timeline from 2007 to current. This month brought a very sharp rebound in openings that starts to claw back some of the material downward trends from the end of ZIRP and the start of the tightening cycle in March 2022.

The high of 12.2 million off the lows of 4.6 million at the peak of the COVID panic are pretty dramatic, but recent periods had been soft before the April 2026 bounce of +731K back to 7.6 million. Openings are running well above the long-term median (5.92 million).

The 10.6% increase YoY job openings for April 2026 was good news and the questions from here will be how quickly (or not) those translate into actual hiring with the Iran X-factor playing a big role. The AI economic effects in terms of productivity and payroll needs also will be up in the air in a services economy.

The above chart plots Hires vs. Layoff/Discharges on a SAAR basis. Note: we remove the COVID numbers from several charts to support the visual value for “normal” periods. We comment on COVID history at the end of the note.

Hires declined by -419K sequentially from March 2026 while layoffs/discharges declined by -192K. The hires YoY declined by -275K or by 5.1%. While we are in an expanding economy, the annual GDP growth of 2.1% in 2025 had lagged 2024’s 2.8%. The hires rate is still tentative even if the openings are there. Layoffs were down -126K YoY or by -6.9%

The 1Q26 GDP as revised in the second estimate is off to an unimpressive start at 1.6%, which was revised down from +2.0% in the advance estimate (see GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26). That is not much of a tailwind. We get payroll numbers later this week.

The above chart updates the ratio of Hires to Layoffs/Discharges. The relationship stands at 3.02x, above the long-term median of 2.91x from 2007. The post-2007 period includes the effects of the longest recession since the Great Depression (Dec 2007 – June 2009) followed by the longest expansion in history from June 2009 to COVID (Feb 2020), which brought a very brief 2-month recession wrapped around a wild swing in pandemic employment.

The above chart plots Hires vs. Total Separations on a SAAR basis. Separations include Quits, Layoffs/Discharges, and “Other Separations.” Total Separations declined by -399K in April 2026 vs. March 2026 and were lower by -292K YoY.

We typically do not find “Total Separations” particularly interesting as a multi-line net number. The decline in Separations can be attributed to a decline in layoffs as noted earlier and to a -183K MoM decline in “Quits.” One theory is that quits signal relative confidence in finding a job on the other side of quitting. That theory implies some nervousness right now.

The Hires minus Total Separations differential is plotted above. As covered, the decline in Hires is material while Separations declined on lower Layoffs and lower Quits.

The net number above has moved notably lower in recent months and dipped into the negative range in Feb 2026 before bouncing back into positive range in March and April. The differential is below the long-term median of +174K.

The time series for Total Quits as a % of Separations (SAAR basis) was 59.8%, slightly above the long-term median of 58.0%. The classic “Quits Rate” is measured by Total Quits as a % Total Employment, and that metric moved slightly lower on the month to +1.9%, down from 2.0% in March 2026. The Quits rate is also down YoY from 2.0% to 1.9%.

The bottom line on the JOLTS numbers for April is that it was one that UST bulls cannot use to make a case for easing, which is pretty much impossible now anyway unless you are Hassett and threw out your facts and concepts book.

The long-suffering bull flattener advocates who are already worried about oil will remain worried about oil until Iran is cleared up and the effects of the massive inventory drawdown are clear (or not) this summer.

NOTE ON COVID DISTORTIONS

The Hires vs. Separations time series make for interesting numbers but tough charts to plot visually given how much the spike in Separations/Hiring during COVID distorted the numbers from March 2020 to June 2020. The swings literally were off the charts. For presentation purposes, we adjust the charts above to exclude the raw data for those months to get a better vantage point on somewhat more normal times. Compared to COVID, the credit crisis seems “normal” in terms of the job count moves.

For disclosure purposes, Separations across March 2020 (16.3 million), April 2020 (11.6 million), May (4.7 million), and June (5.2 million) were running against Hires in March (5.2 million), April (4.0 million), May (8.1 million), and June (7.4 million). We remove those from the charts to get better scale visuals on the periods that precede and follow as the market saw 50-year lows in unemployment in 2022. Wild swings were experienced by all as industries saw shutdowns and layoffs in the COVID recession. The long-term medians from 2007 to 2022 for Hires and Separations were very close.

Almost 28 million Separations combined in March-April 2020 as a brutal reminder of that period.

See also:

Retail Signal Read Part Deux 6-1-26

Market Commentary: Asset Returns 5-31-26

New Home Sales April 2026: Slow Start to Spring 5-28-26

PCE Inflation: Income and Outlays April 2026 5-28-26

GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26

Housing Starts April 2026: Soft Starts in Single Family 5-22-26

D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26

Taiwan: Stakes are High, US Awareness is Low 5-17-26

Industrial Production April 2026: Bringing a Lift 5-15-26

Existing Home Sales April 2026: Steady or Clinging? 5-14-26

Producer Price Index April 2026: Heat Rising on Cost Inputs 5-13-26

CPI April 2026: 4.1% All Items Less Shelter, 30Y UST 5% 5-12-26

New Home Sales April 2026: Slow Start to Spring

Glenn Reynolds, CFA — Fri, 29 May 2026 02:10:19 GMT

The new home sales data show declines on a SAAR basis MoM (-6.2%) and YoY (-11.3%) volume declines even as the spring season is rolling in. The market saw another one of those “higher prices with high inventory” backdrops. Total inventory was up +1.7% MoM and down -2.2% YoY. On a Not Seasonally adjusted basis, the YTD 2026 sales decline stands at -6.5%.
The volumes show 3 of 4 regions down MoM and YoY with only the West higher. The South region at 59% of total sales was down -9.8% MoM and -14.7% YoY. That mix shift by region presumably explains the higher median prices with the pricier West being the region that saw material increases in sales.
The $422.5K median price bucks the trend seen in the 1Q26 reporting season with numerous major builders reporting lower ASPs.

The above chart updates the new single family home sales series from 1963, and the current 622K (SAAR) still marks a healthy rebound relative to the grim Jan 2026 number (576K revised). That said, the 622K is still weak in the context of 2025. The volumes are in the range of the long-term median but well below the 1980s/1990s.

The median of 989K in the housing boom/bust cycle from 2001-2009 is almost 60% higher. As we look back to the peak of the housing bubble, we see 1389K in July 2005 at over 2x the April 2026 volume. The COVID panic buying and relocation spree in Aug 2020 saw sales of 1036K as a wild period for new home sales and home starts in a ZIRP market with very low mortgage rates.

The above chart plots the share of total home sales (new + existing) that were captured by the “new home” builders. We see the share is now at 13.4% vs. the long-term median of 11.6%. When inventory is scarce, the right home at the right price wins. The challenge overall for new home sales has been mixed for builders by region. Major buyers generally report gross margin compression in 2026 and guided to similar expectations.

The market edge favors builders vs. existing home sales (note: existing is still the vast majority of volume). The homebuilder has the ability to use incentives and financing support (see Existing Home Sales April 2026: Steady or Clinging? 5-14-26).

Given the headwinds for volume in the existing home sales market in mortgage refinancing (golden handcuffs,” etc.), the shortage of existing housing inventory at economic all-in costs (price and mortgage rates) has been a recurring drag (see Existing Home Sales March 2026: New Beginnings or New Ends? 4-15-26).

D.R. Horton as the #1 US homebuilder offers a useful microcosm of the new home challenges (see D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26). The 6% handle mortgage rates have been a struggle and had moved briefly as high as 6.75% before easing back to 6.6%.

The new home sales volumes are softer overall, and that can vary by region and product tier. On the other hand, the higher prices posted this month are not consistent with some of the color we hear from major builders on prices and narrowing gross margins.

Incentives are still a material part of the builders’ selling strategies, but the bias on ASPs should be downward extrapolating from some of the major builders. For example, the average selling prices in the recent quarter for DR Horton, Lennar, Pulte, and NVR among the biggest names all posted lower average selling prices. The census release points in the other direction for April.

The mid 6% handle mortgage rates are not offering relief on monthly payment pressures and affordability. The past week shows the 6.6% area in surveys as reported by Mortgage News Daily. The 10Y UST is the key benchmark for the direction of 30Y mortgages.

The median price time series above tells a simple story that prices had been under modest pressure after a period of record highs and a long stretch over the $400K threshold with a few dips below the $400K line.

As noted above, the move higher to $422.5K in April 2026 is bucking the trend after $391.1K last month. Lower average selling prices have been seen in the first quarter for a sampling of major builders. The trend could be explained as a matter of geographic mix with the volume declines in such regions as the South with its lower ASP mix. Meanwhile, the West rose with its traditionally higher ASP mix.

The above chart gives a different visual angle on the median new home sales prices from early 2022. That is a lot of $400K handles with some sub-$400K outliers. The current $422.5K posted a sharp rebound from $391.1K. The price metrics can shift with regional mix as well as home price tiers and related supply issues. The affordability question is still intertwined with the monthly payment pressures from mortgages. It is about more than price.

The time series above updates the new single family home sales across the cycles since 1973 for the #1 and #2 regions of the South and the West. The 370K for the South is around 59% of the total of all single-family new home sales (SAAR) and marks a sequential decline of -9.8% from March 2026 and is down by -14.7% YoY. The West at 159K is 26% of the total. For the month, the West was +18.7% sequentially and +4.6% YoY.

The timeline for new home sales for the smaller Midwest and much smaller Northeast market is detailed above. The Midwest (11% of total) was -25% sequentially and -21.4% YoY. The Northeast market (4% of total) was -12.9% sequentially and -12.9% YoY.

GDP 1Q26 Second Estimate: Shrunk in the Dryer 5-28-26

Market Commentary: Asset Returns 5-26-26

Housing Starts April 2026: Soft Starts in Single Family 5-22-26

D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26

Taiwan: Stakes are High, US Awareness is Low 5-17-26

Industrial Production April 2026: Bringing a Lift 5-15-26

Existing Home Sales April 2026: Steady or Clinging? 5-14-26

Producer Price Index April 2026: Heat Rising on Cost Inputs 5-13-26

CPI April 2026: 4.1% All Items Less Shelter, 30Y UST 5% 5-12-26

JOLTS March 2026: Openings Down, Hires Up, Layoffs/Discharges Up 5-5-26

Synchrony Financial: Favorable Consumer Credit Signals 4-24-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts April 2026: Soft Starts in Single Family

Glenn Reynolds, CFA — Fri, 22 May 2026 18:36:22 GMT

The headline starts number is mixed across single family vs. multifamily with single family starts declining by -9.0% MoM from March and -2.4% YoY. All four regions saw starts decline MoM. On a “not seasonally adjusted basis,” we see single family YTD at -5.1%.
Multifamily had a good month on starts with +14.3% MoM and +23.3% YoY on a SAAR basis. On a “not seasonally adjusted basis, the YTD change for multifamily is +22.7%. The West region posted a major increase in multifamily YoY with total starts at +49% YoY but only +7.3% YoY in singe family.
Permits were up in total MoM by +5.8% and down slightly YoY at -0.2%. Permits were down -2.6% in single family MoM and -5.5% YoY.
The housing headwinds are only in part about mortgage rates since the 6.51% for Freddie Mac 30Y this week is worse sequentially but is still framed against 6.86% this time last year for that benchmark rate. The Mortgage news Daily survey today is 6.65%.
We looked at industry leader D.R. Horton (DHI) this week as a good bellwether indicator of what is going on in the housing markets. DHI is the perennial #1 in units sold and occasionally the #1 in dollar terms as well (including the most recent quarter). With the lowest average selling prices of the major homebuilders, DHI offers a good angle on the “real world” in homebuilding volumes and prices across regions (see D.R. Horton: Financial Powerhouse Despite Cyclical Softening 5-20-26).

The above chart offers a clear reminder of the wild single family residential construction cycles across the decades. With favorable demographics for housing demand, the current starts run rate of 930K is still well below the long-term median and below all the timeline medians posted. The exception is the current median for the “post-crisis” period (crisis = housing sector bubble, RMBS shock, and near meltdown of the bank system).

The current backdrop includes mortgage rate pressures on the affordability of monthly payments that are likely to get worse from here. That comes after seeing mortgage rates flirt very briefly with crossing below the 6.0% line on Feb 26, just before the Iran War. This past week hit the 6.75% area before the modest rally of the UST curve.

Even if the FOMC shifts its policy back toward easing under Warsh (good luck with that FOMC vote count), the potential for a UST curve steepening would remain a material risk factor as the inflation variables work their way through the system. The bear steepening risk is alive and well as is the case with an upward shift of the curve.

As we go to print today, the “Vegas line” (i.e. FedWatch) shows a 0% chance of a cut by the Dec 2026 FOMC meeting. In a major setback for “easing bulls,” the odds of 1 hike is at 42.5% and now greater than the “no change” odds at 30.7%. For 2 cuts, we see a 21.5% probability. Those odds will jump around but are signaling a drag on the housing sector as Iran effects play out.

As noted in the bullets, single family starts were soft in relative terms vs. headline total starts with multifamily starts rolling along favorably (detailed further below).

The above chart plots total permits and total starts on a Not Seasonally Adjusted (NSA) basis. NSA is viewed as closer to what is going on in the trenches without the SAAR model assumptions.

For April 2026, we see NSA total permits essentially flat YoY and single family permits down by -5.5% YoY. For MoM, total permits were +7.7% with single family permits up +1.7% MoM.

For total starts and single family starts on an NSA basis, we see total starts up by +5.5% MoM and single family NSA starts lower by -2.5% MoM.

The above plots the single family starts by region (NSA). On a MoM basis, the critical South region (totals almost 49% of total NSA starts and over 57% of single family starts) was down slightly in single family by -1.2% MoM and up by +2.2% YoY. The West as the #2 single family market was down MoM by -15.1%. The Midwest region MoM in single family was +23.1% with the small Northeast market at -13.2% MoM. The YoY NSA starts were mixed with the South and West both higher among the big two regions. The Midwest and Northeast were lower YoY.

The above chart updates running multifamily starts. At +529K (SAAR), April 2026 rose by +14.3% MoM and by +23.3% YoY. The 529K is well above the long-term median of 339K, above the median from Jan 2009 to current (345K), and above the median from 2000 to 2008 (296K). April 2026 even exceeded the median of the 1960s boom (487K).

The 1960s was a period of explosive growth for multifamily with the back end of the baby boom, the postwar rise of urbanization, and the high racial migration from the South to the North all part of the multifamily tailwinds. Immigration also played an important role.

The above chart updates Multifamily permits (SAAR). The 514K in April 2026 multifamily permits rose by +22.7% MoM and by 11.5% YoY.

The bottom line on home starts as we wade into the peak selling season is that 2026 is shaping up as a mediocre year for homebuilders. This is consistent with the guidance we are getting from the major homebuilders.

Industrial Production April 2026: Bringing a Lift

Glenn Reynolds, CFA — Fri, 15 May 2026 21:40:19 GMT

After some very mixed industrial production and capacity utilization metrics booked in March in the aftermath of the Iran War shock, April sequential trends show a recovery (see Industrial Production March 2026: Mixed Picture, Big Questions Ahead 4-16-26).
We see MoM industrial production move +0.7% higher (+1.4% YoY) for the highest sequential move to date in 2026 and up from -0.3% in March 2026. Across industry categories, Final Products production bounced back to +1.1% from a weak March that saw -0.6% with Business Equipment in April being the best performing category in that mix at +1.5% MoM and +6.0% YoY.
Total Industry and Total Manufacturing capacity utilization moved higher after a soft March overall. Durables capacity utilization moved up along with the largest manufacturing industry groups as most logged YTD highs (including Motor vehicles and parts, Aerospace, Computers and electronic products, and Fabricated metals). Nondurables ticked slightly lower as Utilities rose and Mining was essentially sideways.
The good news of an uptick in manufacturing capacity utilization is tempered by the reality that the long-term average from 1972 is 2.4 points higher, with the shortfall being a common feature across the durables industry groups.
As we have covered in past research (see Industrial Production March 2026: Mixed Picture, Big Questions Ahead 4-16-26), there have been a half dozen recession periods with higher utilization levels than what we see today. The ability to generate acceptable margins at lower utilization rates is part of the breakeven volume story lines and how unit costs (including supplier chain tariff effects) along with pricing and product mix trends unfold across various industries.

The above chart is somewhat of a regular replay of the history of the industrial production cycles across time from 1967 through today. We have covered much of this in the past, but we roll the historical recap forward for convenience.

The current 75.8% is well below the long-term median of 78.5% and below the post-COVID median of 76.2%. That is one of many metrics that take the label of “greatest economy in history” off the table. Whether GDP growth or payroll trends, the current economy is a bottom quartile economy when the growth of the 1980s and 1990s are factored in (see Presidential GDP Dance Off: Clinton vs. Trump 7-27-24, Presidential GDP Dance Off: Reagan vs. Trump 7-27-24).

The wildcard for this current cycle is the scale of the fixed investment that is now ramping up. The consumer sector and PCE have been unimpressive but fixed investment is now soaring (see 1Q26 GDP Advance Estimate: Consumer Fade, Investment Boom 4-30-26).

If you like comparing numbers (not a Washington thing), Trump 1.0 did not even frame up all that well vs. Carter and Biden – let alone the 1980s and 1990s (Gut Checking Trump GDP Record 3-5-25, Trump’s “Greatest Economy in History”: Not Even Close 3-5-25).

A brief cyclical lookback on replay…

The chart shows the material swings across expansion booms and busts. That includes the aftermath of some highly damaging oil spikes that brought on cyclical weakness and later saw capacity utilization plunge. There were a lot more structural changes underway in those cycles than just oil and gas price pressures. That was notably the case in the 1980-1982 double dip as well as the recession of late 1973 to early 1975 when the Arab Oil Embargo set off chain reactions that turned the post-1973 period into an ebb-and-flow of macro nightmares for inflation and the consumer.

The May 1975 low of 71.6% was the first bout of severe stagflation that unfolded after the Arab Oil Embargo. The 1980-1982 double dip recession came after the 1979 inflation spike took off with the Iranian oil crisis.

Capacity utilization saw a 68.7% low in Dec 1982 as the economy was just coming off the recession trough. The first Gulf War came after the August 1990 invasion of Kuwait with capacity utilization hitting a low in March 1991 at 77.2%, which is comfortably above where capacity utilization stands now in 2026.

The age of tech and credit excess in the late 1990s brought some new swoons with 71.8% in Nov 2001 after the TMT meltdown and HY default wave rolled in. The Utilities and Power sector and Telecom capex all took a beating in that time frame.

Then came the post-credit crisis low of 63.4% at the recession trough in June 2009. Mortgages and derivative excess caused a very real systemic panic and deep risk aversion from the Lehman Sept 2008 period and well into 2009. That period was famous for the bankruptcy and bailout of GM and Chrysler. The credit contraction was very real, and the recovery in payrolls was slow to unfold with the consumer hammered by housing sector pain.

COVID edged out the June 2009 utilization bottom with a record low of 62.6 in April 2020 and a 2-month recession. That pandemic period saw ZIRP, supply-demand imbalances and later the Russian invasion of Ukraine and ensuing oil spike that set off inflation and a tightening cycle that still did not trigger a 2022 recession.

As we detail below in the recession histories, the idea of what is low or high for capacity utilization in the context of corporate sector profitability is not as direct as one might think. Breakeven volumes, cost structures and pricing power are key drivers of profits. The tariff excess as a core Trump policy only makes that unit cost analysis more complicated as we head into a new round of energy related cost pressures in 2026. Material costs, operating costs for companies, and consumer discretionary household cash flow headwinds make for a tricky set of moving parts shaped by erratic geopolitical decisions.

The AI fallout and related fears is also a new variable in the mix that cuts across both the services and goods sectors. What AI will mean for productivity improvement vs. payroll fallout will be an ongoing test of theories. Even if AI proves true to the valuation promises and brings a “revolution” of the economy, many will also pay the price. We have been getting a taste in the recent SaaS services panic. Those markets consume a lot of goods.

The above table breaks out the high-level groupings with total industry and total manufacturing posting favorable variances in April 2026. We include a “delta column” on the right. Mining and Utilities were mixed for the month, but a rational expectation is that utilities will see more capacity added and more demand.

We see Durables and Nondurables as the main events to track, and durables showed notable strength this month. The durables sector is especially important with all of the supplier-to-OEM multiplier effects. That also is the sector more meaningfully tagged by the Trump tariff policies. The IEEPA setbacks and recent attempts by Trump to counterattack by creatively using existing tariff legislation is struggling in the courts also as Trump goes to “Plan B” in his attempts to cut Congress out of the tariff decisions.

Looking back from 2025 into early 2026, we see Manufacturing in a relatively narrow range and the same for Durables. Tariffs have not moved the production needle much at all so far, but that does not tell the profitability story on the tariff cost impact. Most people (outside the White House) know that buyers/importers write the check for the tariff, so that implies a higher breakeven volume or some offsetting action on other costs or pricing. Those impacts will only play out over time across working capital cycles. Pricing decisions were more likely to come at a lag given the White House pressures, so there is a lot more to play out in 2026 earnings seasons and company color.

The inflation story has turned negative for the macro picture at this point (see Producer Price Index April 2026: Heat Rising on Cost Inputs 5-13-26, CPI April 2026: 4.1% All Items Less Shelter, 30Y UST 5% 5-12-26). The “good news, bad news” aspect of a resilient industrial sector is that higher input costs can lead to the exercise of pricing power that flows into inflation. That beats the stagflation alternative but will keep life challenging for the FOMC and “Team Warsh” (if he can assemble a supportive voting team).

The above table breaks out the details for the top 5 Durables lines and the two largest Nondurables lines. We include the capacity utilization deltas in the column on the right. We see positive moves across these major durables industries with Motor Vehicles and Parts and Aerospace making notable moves. The two major Nondurable lines were mixed with Chemicals lower and Food & Beverage higher.

The consumer story and the corporate sector capex optimism will be important to watch in coming weeks and months as guidance gets updated and the Iran fallout starts to flow into strategies from global players to small and midsized enterprises. The PPI numbers released this past week were daunting.

Low-cost supplier chains are getting undermined by tariffs and are now facing supply chain headwinds from the Iran War energy effects and the supply-demand imbalances. The demands to improve efficiency as tariff mitigation measures need to be monitored. We are also seeing important low-cost suppliers in the Gulf outside of oil and gas roiling some industries (e.g. aluminum).

The “AI story” and what it all means for productivity and headcount will be a big part of that theme. The natural outcome will be less jobs in a service intensive economy such as the US. The irony is that most immediate impacts on jobs has been in tech, but that can easily spread.

The above chart details economic expansion and recession averages and lines them up by height as a frame of reference. We see the current level on the left at 75.8%. The fact that the current capacity utilization is below numerous recession averages posted on the right side of the chart also scoffs at the recurring “Golden Age” and “hottest country” rhetoric.

In the context of the tariff priorities and reshoring ambitions, the slack capacity implied by the chart underscores that the analysis is a lot more complicated than just “build more plants” and “keep tariffs high” to force reshoring. That is a story told on an industry-by-industry basis.

The multiplier effects are important, but the relocation of supplier chains and OEM relocation is by definition very slow to unfold given intrinsic lag times, tooling equipment and contracts in place. Manufacturing jobs were lower this month – not higher – on a MoM basis and even worse YoY (see Employment Situation: April 2026 5-8-26).

There is also the fact that the cost of relocation has also risen with all the tariff effects for materials, components, and qualified labor. Autos are the main relocation stories, but that is generally going to be tied to existing infrastructure and not a strategy of all-new greenfield plants. In the end, many companies can just wait for Trump to “move on.”

Producer Price Index April 2026: Heat Rising on Cost Inputs 5-13-26

CPI April 2026: 4.1% All Items Less Shelter, 30Y UST 5% 5-12-26

Market Commentary: Asset Returns 5-10-26

JOLTS March 2026: Openings Down, Hires Up, Layoffs/Discharges Up 5-5-26

New Home Sales March 2026: Favorable Volume, Weaker Prices 5-5-26

PCE Inflation, Income & Outlays March 2026: Inflation Anxiety Level? 5-3-26

1Q26 GDP Advance Estimate: Consumer Fade, Investment Boom 4-30-26

Synchrony Financial: Favorable Consumer Credit Signals 4-24-26

Industrial Production March 2026: Mixed Picture, Big Questions Ahead 4-16-26

Existing Home Sales March 2026: New Beginnings or New Ends? 4-15-26

Producer Price Index March 2026: Heater or Curve Ball? 4-14-26

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Existing Home Sales April 2026: Steady or Clinging?

Glenn Reynolds, CFA — Thu, 14 May 2026 17:35:13 GMT

The mortgage rate backdrop with 30Y rates closer to 6.6% than 6.5% at last night’s close brings a combination of monthly payment pressures and an uncertain economic outlook for many households.
The low 4 million rates on existing home sales are going sideways in 2026 with April’s 4.02 million staying within a tight band reflecting stretched affordability for those at the margins. Mortgage eligibility is a hurdle for many with median existing home prices continuing to rise.
In theory, new homes and homebuilders with a wide range of incentives and financing tools have the edge, but new homes are a much smaller share of the housing market than existing units.
The CPI and PPI news this past week is not bringing good omens for mortgages with an oil price spike still tied to an uncertain timeline with the Strait of Hormuz shut and some very damaging lag effects ahead. The plunge in global oil inventory promises sustained supply stress. Caution around spiraling oil prices is one variable that has become gospel to the Fed after the experience of 1973-1975 and the double dip stagflation of 1980-1982 following the Iranian oil crisis of 1979.

The above chart details existing home sales SAAR run rates by month from January 2023 to April 2026, which was essentially flat to March. The more-or-less sideways move in existing home sales this week was not as interesting as the CPI and PPI details (see Producer Price Index April 2026: Heat Rising on Cost Inputs 5-13-26, CPI April 2026: 4.1% All Items Less Shelter, 30Y UST 5% 5-12-26). Those two metrics spell trouble even if the markets are not reacting much and even rising in equities.

Consumers getting dented and rising input costs matter to home sales volumes and the ability of the existing home sales buyer to get a mortgage while paying higher prices. With new home prices lower across many of the builders and incentives readily available, existing homes sales face some competition (see New Home Sales March 2026: Favorable Volume, Weaker Prices 5-5-26).

The inflation metrics and Iran War fallout remain important in terms of what it means for UST and mortgage yields and consumer (and homebuyer) confidence. Trying to handicap UST levels and shapeshifting has been a challenge when we started the year with a lot of focus on easing and the new FOMC regime. Mortgage rates have been a headwind, and gauging what the FOMC might do is important even if the 10Y UST is what drives mortgage rates.

We moved the historical monthly chart to the top of the commentary as a reminder that the recent numbers look more like the late 2023 period when mortgages had peaked (see Existing Home Sales Dec 2023: Rerun of Multi-Decade Low 1-19-24). The 30Y mortgage rates have moved within a 200 bps range since the Oct 2023 peak when Freddie Mac 30Y hit 7.8% and many mortgage offerings were near 8%.

In the interest of visual quality, we delete the 2022 months when the market was posting 6 million and 5 million handle sales volumes in the first half of that year. The early read on peak selling season ahead is off to a guarded start with mid-6% handle 30Y mortgage rates remaining a headwind, and the consumer sector shaky and less confident this year than last spring as inflation and payroll anxiety remain factors in 2026.

The April 2026 existing home sales number of 4.02 million can be framed against the 3.85 million during the peak mortgage rates in Oct 2023 (see UST Deltas: Elevation Realities 3-29-26). The Freddie Mac 30Y is set on Thursdays. We got an update today with the rate barely moving to 6.36% from 6.37% last week. One year ago, the Freddie rate was 6.81%. The Mortgage News Daily Survey 30Y, which is a different mix than the Freddie survey, posted a close of 6.57%.

The above chart shows the sales volume delta by price tier for April 2026, and we see 4 of the 6 price tiers posting positive growth with only the two lowest price tiers posting declines. That was the same mix of deltas as last month. Note: We use “not seasonally adjusted data” for this chart.

The volatility and disruption of the Iran War has undermined the earlier UST rally we had seen in the mortgage markets with an uptick again in the post-Iran period. The range had been a tight one, but the recent pop above 6.5% after an earlier, brief drop below 6.0% reminds us that high oil prices are something the UST curve and the FOMC do not like. That is true of the bond market broadly.

For existing home sales, the monthly payment math is still not working well for those looking to cash out, move up, or simply relocate. Expectations for a bull flattener in the UST market that would translate into low to mid 5% mortgage rates have been thwarted so far as we cover in other commentaries. It is a very challenging leap of faith to see that probability getting better from here. That would require a macro backdrop that hits payrolls and homebuyer confidence to make the FOMC move to aggressively ease. Such a move by the Fed could also drive a UST steepener subject to the underlying reasons used by the FOMC. The oil spike and inflation pressures will make life a challenge for Warsh.

The three Fed cuts in the fall of 2025 (-75 bps) followed 3 actions (-50, -25, -25) in the fall of 2024. That in turn translated into UST curve steepening along the way. Back in the fall of 2024, the UST rally along the curve saw mortgage rates fall. At that time, the 10Y UST dropped down to around 3.6% (current 4.45%) and mortgages were around 6.0% (currently over 6.5%). That Sept 2024 rally soon gave way to a steepening and tough road for mortgages into 2025 and now 2026.

Those expecting the 10Y UST to follow fed funds lower had been relatively disappointed since the easing cycle got underway, so the latest debates on how FOMC actions will play out under Warsh do not come with a sense of automatic bull flattening and lower mortgage rates. If anything, FedWatch odds favor hikes over easing for the forward 1-year. The highest probabilities favor no change (see Producer Price Index April 2026: Heat Rising on Cost Inputs 5-13-26).

The above chart shows the geographic mix of volumes and details on price mix by region. The South is the main event in single family volumes whether new or existing at almost 47%.

For the bar chart, we break out the mix for each region by price tier. For example, the South shows almost 50% of its existing home sales volume in the $250K to $500K range and over 18% of its sales in the $100K to $250K bucket.

The high cost of homes in the West (notably California) is clear enough just by glancing at the bar chart with over 16% at prices over $1 million. The second highest in the $1 million club is the Northeast at over 10%.

We see a major concentration across the regions in the $250K to $500K although the $100K to $250K bracket for the Midwest stands at over 30%. The West shows a high share of 28% in the $500 to $750K bracket, which again underscores how expensive the West region price tags remain in national context.

The map explains what states are in each Census region. There is a very wide range of home price profiles in the West and Midwest states.

Inventory for total existing homes ticked higher MoM (as revised) to 1.47million units for +5.8% MoM and +1.4% higher YoY. Current inventory is well below longer term medians including 2.06 million for the post-1998 median. The median from Jan 2011 (homebuilding low) to current times is 1.67 million. In other words, existing home sales inventory remains low even if the level is materially higher than the stunning low of 850K of Feb 2022 ahead of the end of ZIRP and start of the tightening cycle in March 2022.

The above chart breaks out the timeline for existing single family alone of 3.64 million vs. total existing home sales of 4.02 million. The 4.02 million total is well below the long-term median (from Jan 1999) of 5.22 million. The total of 3.64 million for single family is well below the long-term median of 4.63 million.

Existing single family growth was 0% sequentially and -0.3% YoY (SAAR). The lower line is ex-condo/ex-coops. We saw 380K in condo and coop sales in April 2026, up from 370K YoY and up from 370K MoM.

The above chart updates the median price for existing single-family homes at $422.3K (vs. $417.7K total) after June 2025 hit a record $438.6K. The median price in April 2026 is dramatically above the $308K level back in Jan 2021 and $277K in Dec 2019 when mortgage rates were in a different zip code and closer to 3.7% for 30Y Freddie Mac.

CPI April 2026: 4.1% All Items Less Shelter, 30Y UST 5% 5-12-26

Market Commentary: Asset Returns 5-10-26

JOLTS March 2026: Openings Down, Hires Up, Layoffs/Discharges Up 5-5-26

New Home Sales March 2026: Favorable Volume, Weaker Prices 5-5-26

PCE Inflation, Income & Outlays March 2026: Inflation Anxiety Level? 5-3-26

1Q26 GDP Advance Estimate: Consumer Fade, Investment Boom 4-30-26

Synchrony Financial: Favorable Consumer Credit Signals 4-24-26

Industrial Production March 2026: Mixed Picture, Big Questions Ahead 4-16-26

Existing Home Sales March 2026: New Beginnings or New Ends? 4-15-26

Producer Price Index March 2026: Heater or Curve Ball? 4-14-26

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

JOLTS March 2026: Openings Down, Hires Up, Layoffs/Discharges Up 5-5-26

Employment Situation: April 2026

Glenn Reynolds, CFA — Sat, 09 May 2026 02:06:07 GMT

Technically, it is still a ceasefire.

The better-than-expected payrolls in the Establishment Data show a status quo waiting game for higher value-added and multiplier effect industries that are at the core of the Trump tariff strategy. Manufacturing was down again MoM and even more in the negative delta range YoY.
The payroll additions show a services-heavy concentration posting a +113K MoM increase with goods-producing at +10K and government at -8K, adding up to the +115K payroll adds in April. The fact that Manufacturing was -66K YoY with both durables and nondurables lower does not send great signals that the golden age of reshoring or onshoring is at hand.
Looking back over the trailing year, total additions to total payroll of +251K YoY is materially lower than the additions to the “health care and social assistance” line, where over +656K were added YoY. If we add in the “leisure and hospitality” payroll additions of +142K, that means those two lines alone (health care + leisure) are 3x the total additions to payroll YoY.
In the Household Survey, the report details an additional +134K unemployed for a total of 7.37 million and a 4.3% unemployment rate (7.37 unemployed/170 mn labor force). The number employed declined by -226K to 162.6 million.
The average hourly earnings increase of 3.6% is not stacking up well vs. the 3.3% CPI in March (April CPI release this coming week).Real earnings are looking even worse vs. PCE inflation of 3.5% for March (3.2% Core) and 4.5% for headline PCE for 1Q26 (4.3% Core PCE).

The monthly payroll adds/declines chart above starts in March 2022 with the end of ZIRP and the start of the tightening cycle. The bar chart tells an objective data story. The +185K as revised for March and +115K for April along with the 4.3% unemployment rate are not “easing friendly” for the FOMC and especially with inflation rising. This coming week we get April CPI and PPI.

The numbers in 2025 and 2026 above include the only negative deltas on the chart with 6 months in the red during Trump 2.0. Furthermore, the 2025-2026 months were all below the post-Jan 2009 median of 170K until March 2026 when it moved above the median with +185K. April’s +115K is back below it.

That long-term median of +170K includes a slice of the longest recession since the Great Depression, so it is not a high bar to clear.

The 4.3% U-3 is below the long-term median of 4.9%. Payroll has been struggling somewhat in relative terms, but history is very kind to 4.3%. If the 2025-2026 frame of reference for payroll addition is 2024 (not a good jobs year) then the 2025-2026 numbers are not so bad. If we compare 2025-2026 monthly adds to the 2022-2023 period, the current job adds run rates are grim.

The above chart updates the time series for the U-3 unemployment rate and U-6 structural underemployment rate across the years from 1994.

The current 8.2% marks an increase from 8.0% in March and 7.9% in Feb and is well above the 6% handles seen in spring of 2023. The U-6 is still below the median from 1994 of +9.3%, which notably includes the post-crisis shock and the longest recession since the Great Depression.

The time series above updates the U-6 minus U-3 differential as a measure of relative employment quality and to flag risks of major dislocations in large swaths of the economy (think oil patch collapse in the late 1980s, tech bubble imploding into a weak 2001-2003, financial services and automotive meltdown in 2009).

The current 3.9% differential is just below the long-term median of 4.0%. The job ranks are still vulnerable now with the Iran war effects flowing into hiring decisions, industry fundamentals, and FOMC policy planning.

Many questions will be getting answers with respect to how tariffs and the oil spike will flow into hiring, investment, working capital cycles, and new capacity planning. The wide range of potential outcomes is clear enough in that “boots on the ground” cannot be ruled out until those boots and bodies return home.

There is every reason to assume that Trump desperately wants to extricate himself and US troops from the currently untenable stalemate. That in theory would send oil prices dramatically lower. That could also arm Warsh to fulfill his FOMC easing bias if he can convince a very skeptical Fed voting group. Another bad CPI and PPI print next week will not help the situation.

The need for defensive spending habits in light of impaired household discretionary cash flow could become a bigger headwind in the aftermath of the Iran fallout. As noted in the bullets at the top, the total employed in April 2026 moved lower from March 2026 by -226K and show a decline of -1.28 million YoY vs. April 2025 (household survey). That flunks the “more bodies, more paychecks” rule.

The above chart updates the total payroll number vs. job openings. JOLTS data analysis had been slowly recovering from the shutdown and is now back into the lineup with its usual 1-month lag (see JOLTS March 2026: Openings Down, Hires Up, Layoffs/Discharges Up 5-5-26).

Management teams have a lot of moving parts to factor into planning whether quantitative or qualitative. The final IEEPA decision from SCOTUS came in against Trump, but he was prepared to start slapping on tariffs under Section 122, 232, and 301. They will create more trade partner strife. Trump just faced more setbacks in court this week, but his pledge is to get tariff revenue even higher than it was.

The USMCA review is up for midyear while the EU diplomatic setbacks and trade relations are downright ugly at this point. The trade flows have been looked at in many past commentaries (see Meanwhile…Back in Economics and Tariffs 3-2-26, US Trade with the World: Import-Export Mix 2-25-26).

The latest trade disruptions from the Gulf and the related supply chain problems (oil, LNG, helium, aluminum, etc.) have been getting a lot of headline time. The disruption could get much worse via the Red Sea if the Iran War escalates and the Houthis pile on. There are also the contingent threats of Iraqi Shiite militia.

The FOMC and the market both have much to digest, and Trump is making it clear to the domestic audience that there is a ceasefire and the “war is over.” This is hard to reconcile with a full blockade (an act of war by international law) and recurring bombing threats that do not lack for extremist, violent rhetoric.

The fallout in consumer spending from health care premium increases now are joined by energy price stress and $4.55+ regular gasoline (per AAA as of 5-8-26) as peak driving season approaches in the summer. Home heating oil bills could get much worse later in the year if the crisis has lag effects and remains a challenge.

The retrenchments in SNAP spending and eligibility criteria challenge promise household stress and could signal trouble ahead in the lower part of the “K” household mix. Trump’s latest budget plan offers little relief to the lower part of the K recovery and in fact piles on with cuts to many programs. Health care costs are rising alongside myriad CPI lines and borrowing costs.

Inflation reports had generally brought good news relative to expectations given the scale of the forward threat from tariffs and lagging effects to be seen across working capital cycles. That just changed in dramatic fashion and threatens to get worse on Iran War effects (see PCE Inflation, Income & Outlays March 2026: Inflation Anxiety Level? 5-3-26).

The headlines around multiple supplier chains have been more than amply covered but fertilizer is one that aims directly at food while oil aims at just about everything from the gas pump to delivery costs, raw materials, and leisure and travel (airfare). The headlines highlight the threat to semiconductor production while customers could see IT budgets slammed. So that means the consumer sector and tech market both have their share of risks.

The overall economic impact of tariffs had been far less than feared given the reality that most trade partners backed down in 2025. That could change in 2026 with many more battles on the table such as a threatened embargo of Spain that would pull in the EU (Anti-Coercion bazooka?) and the USMCA review.

The USMCA review will inevitably create a lot of tension with Canada despite the US goods trade surplus the US posts ex-crude oil. Trump needs a cheat sheet on who are the best export markets with around 3 dozen states seeing Canada as the #1 export market.

Trump is back again talking about “taking money in” when he talks about his threatened increase of EU tariffs. The buyer writes the check. It is not “money taken in.” It is money transferred within the US. He has even gone so far as to accuse SCOTUS and their IEEPA decision as allowing sellers and selling nations to get refunds. It was in one of his “Truth” Social rants, and he may have forgotten it by his next Big Mac. “Refunds to sellers” is just the flip side of his “seller pays” nonsense. Refunds go to US based importers.

Stay tuned for EU trade and USMCA review fallout.

Market Commentary: Asset Returns 5-4-26

PCE Inflation, Income & Outlays March 2026: Inflation Anxiety Level? 5-3-26

1Q26 GDP Advance Estimate: Consumer Fade, Investment Boom 4-30-26

Market Commentary: Asset Returns 4-26-26

Synchrony Financial: Favorable Consumer Credit Signals 4-24-26

Industrial Production March 2026: Mixed Picture, Big Questions Ahead 4-16-26

Existing Home Sales March 2026: New Beginnings or New Ends? 4-15-26

Producer Price Index March 2026: Heater or Curve Ball? 4-14-26

CPI March 2026: The CPI Cycle Could Prove Maddening 4-12-26

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

PCE Inflation, Income & Outlays March 2026: Inflation Anxiety Level? 5-3-26

New Home Sales March 2026: Favorable Volume, Weaker Prices

Glenn Reynolds, CFA — Wed, 06 May 2026 01:13:48 GMT

New home sales are generating an uphill rally with volumes higher sequentially and YoY but prices are softening. The lower prices saw the new home sales median price break below the $400K line to $387.
The critical South region at 65% of total sales (SAAR basis) did the heavy lifting at +8.1% YoY for March 2026. We see 3 of 4 regions up YoY with the West down by -12.7% YoY for a national level increase of +3.3%. That includes the Midwest at +11.8% and Northeast at +3.8%.
Sequentially from Feb 2026, the higher and lower mix by region was a split decision with the South higher (+11.1%) from Feb along with the tiny Northeast market (+80%). The West was -3.5% and Midwest at -5.0%.
Median price for March 2026 was $387.4K vs. $409K in Feb 2026 and YoY was down from $412.9K. As frames of reference, calendar 2025 posted a median price of $417.4K and 2024 at $420.3K.

The above chart updates the new single family home sales series from 1963, and the current 682K (SAAR) marks a healthy rebound relative to the grim Jan 2026 number (583K) but still weak in the context of 2H25. The volumes now are in the zone of the 1980s/1990s median but well below the median of the housing boom/bust cycle from 2001-2009 as noted in the chart.

As we look back to the peak of the housing bubble, we see 1389K in July 2005 or 2x the March 2026 volume. The COVID panic buying and relocation spree in Aug 2020 of 1016K was a wild period for new home sales and home starts in a ZIRP market with very low mortgage rates. For March 2026, the 682K is stronger than less than half the 2025 months.

The above chart plots the share of total home sales (new + existing) that were captured by the “new home” builders. We see the share is now at 14.6% vs. the long-term median of 11.6%. When inventory is scarce, the right home at the right price wins. That has favored builders. That is especially the case with financing incentives. Given the hurdles to exit in the existing home sales market in mortgage refinancing (“golden handcuffs,” etc.) that we routinely discuss in our housing commentary, the shortage of existing housing inventory at economic all-in costs remains a major headwind for existing home sales (see Existing Home Sales March 2026: New Beginnings or New Ends? 4-15-26).

The volumes are steady, but the weaker prices are consistent with some of the color we hear from major builders on prices and narrowing gross margins with incentives still a material part of their selling strategies. The two giants of the homebuilders (DR Horton and Lennar) are both seeing material gross margin pressure from their earlier cyclical peaks. The 6% handle mortgage rates are not offering relief on monthly payments and affordability with the past week showing 6.5% handle surveys as reported by Mortgage News Daily.

The median price time series above tells a simple story that prices are under pressure after a period of record highs and a long stretch over the $400K threshold with a few dips below the $400K line.

The above chart gives a different visual angle on the median new home sales prices from early 2022. That is a lot of $400K handles with some sub-$400K outliers. The current $387.4K is a sign of the pressure on housing. The price metrics can shift with regional mix as well as home price tiers and related supply issues. The affordability question is still intertwined with the monthly payment pressures from mortgages. It is about more than price.

The time series above updates the new single family home sales across the cycles since 1973 for the #1 and #2 regions of the South and the West. The 441K for the South is around 65% of the total of all single family new home sales (SAAR) and marks a sequential rise of +11.1% from Feb 2026 and is up by 8.1% YoY. The West at 138K is 20% of the total. For the month, the West was -3.5% sequentially and -12.7% YoY.

The timeline for new home sales for the smaller Midwest and much smaller Northeast market is detailed above. The Midwest (over 11% of total) was +5.0% sequentially and +11.8% YoY. The Northeast market (4% of total) was +80% sequentially and +3.8% YoY.

Market Commentary: Asset Returns 5-4-26

1Q26 GDP Advance Estimate: Consumer Fade, Investment Boom 4-30-26

Market Commentary: Asset Returns 4-26-26

Synchrony Financial: Favorable Consumer Credit Signals 4-24-26

Industrial Production March 2026: Mixed Picture, Big Questions Ahead 4-16-26

Existing Home Sales March 2026: New Beginnings or New Ends? 4-15-26

Producer Price Index March 2026: Heater or Curve Ball? 4-14-26

CPI March 2026: The CPI Cycle Could Prove Maddening 4-12-26

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

PCE Inflation, Income & Outlays March 2026: Inflation Anxiety Level? 5-3-26

JOLTS March 2026: Openings Down, Hires Up, Layoffs/Discharges Up

Glenn Reynolds, CFA — Tue, 05 May 2026 23:14:59 GMT

Tough payroll battles in JOLTS in 2026. March is a draw.

JOLTS saw a +655K increase in hires for March vs. Feb 2026 and +221K incremental hires YoY vs. March 2025. Professional and Business Services, Accommodation/Food, and Transportation, Warehousing and Utilities shared the leaderboard in terms of increased Hires. Manufacturing was only up by 28K sequentially in that 655K total but manufacturing was essentially flat YoY.
Job Openings tailed off by -56K sequentially from Feb 2026 and declined by -86K YoY vs. March 2025 with the biggest decline of -318K in Professional and Business Services. Manufacturing was only 19K higher sequentially but was +73K higher YoY in what could be a good sign if the openings get filled with all the Iran macro noise, the energy spike, and fear of rising rates.
Layoffs were up sequentially by +153K and up by 272K YoY with Professional and Business Services rising the most. Construction and Manufacturing were only down slightly in layoffs.

The high of 12.2 million off the lows of 4.6 million at the peak of the COVID panic are pretty dramatic, but recent periods are soft. Openings are at least running above the long-term median (5.92 million) with high 6 million handle prints. The 1.2% decline YoY job openings for March 2026 and less than 1% sequentially is not moving the needle much at all considering so many companies are in new budget years and staring at some material moving parts in the macro picture.

The conversations will continue to focus on how many new job openings can be avoided through the deployment of AI tools and technology. As we have been seeing at Meta and Amazon of late, the downsizing of major tech payrolls are also underway to fund capex and streamline costs. That AI fallout is also spreading to the SaaS-based services providers whose stocks have been getting slaughtered (see Market Commentary: Asset Returns 5-4-26). Many of the services providers are worried about their business models. Meanwhile, the tariff cost mitigation strategies also do not help in budgeting for higher headcount.

Hires rose by +655K sequentially from Feb 2026 while layoffs/discharges rose by 153K. The hires YoY rose by 221K or by 4.1%. While we are in an expanding economy, the annual GDP growth of 2.1% lagged 2024’s 2.8% while the 1Q26 GDP is off to a better start vs. the weak 4Q25 numbers (see 1Q26 GDP Advance Estimate: Consumer Fade, Investment Boom 4-30-26, 4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26).

The above chart updates the ratio of Hires to Layoffs/Discharges. The relationship stands at 2.97x, above the long-term median of 2.91x from 2007. The post-2007 period includes the effects of the longest recession since the Great Depression (Dec 2007 – June 2009) followed by the longest expansion in history from June 2009 to COVID (Feb 2020), which brought a very brief 2-month recession wrapped around a wild swing in pandemic employment.

The above chart plots Hires vs. Total Separations on a SAAR basis. Separations include Quits, Layoffs/Discharges, and “Other Separations.” Total Separations moved higher by +356K in March 2026 vs. Feb 2026 and were higher by 90K YoY.

We typically do not find “Total Separations” particularly interesting as a multi-line net number. The increase in Separations can be attributed to a rise in layoffs as noted earlier and to a 125K increase in “Quits.” One theory is quits signal relative confidence in finding a job on the other side of quitting.

The Hires minus Total Separations differential is plotted above. We recently had some major revisions. As covered above, the sharp rise in Hires was the main event in this month’s JOLTS report. Separations increased on higher layoffs and higher Quits.

The net number above has moved notably lower in recent months and dipped into the negative range in Feb 2026 before bouncing back into positive range in March. The differential is now on top of the long-term median of +175K.

The time series for Total Quits as a % of Separations (SAAR basis) was 59.0%, slightly above the long-term median of 58.0%. The classic “Quits Rate” is measured by Total Quits as a % Total Employment, and that metric moved slightly higher on the month to +2.0%, up from 1.9% in Feb 2026. The Quits rate is also down YoY from 2.2% to 2.0%.

The bottom line on the JOLTS numbers for March is that it was one that UST bulls cannot grasp onto for hopes of easing and the same for the long-suffering bull flattener advocates who are already worried about oil.

While the US is a powerhouse in energy (oil, natural gas, and LNG) and has Canada as a neighbor (as badly as Trump treats them) with Canada the largest oil importer into the US by far, that backdrop takes useful comparisons to 1974 off the table. The Arab Oil Embargo of late 1973 and “odd-even license plate” rationing in the recession is being experienced by many nations at this point. Just not the US. That impacts global growth. Asia is especially vulnerable.

NOTE ON COVID DISTORTIONS

The Hires vs. Separations time series make for interesting numbers but tough charts to plot visually given how much the spike in Separations/Hiring during COVID distorted the numbers from March 2020 to June 2020. The swings literally were off the charts. For presentation purposes, we adjust the charts above to exclude the raw data for those months to get a better vantage point on somewhat more normal times. Compared to COVID, the credit crisis seems “normal” in terms of the job count moves.

For disclosure purposes, Separations across March 2020 (16.3 million), April 2020 (11.6 million), May (4.7 million), and June (5.2 million) were running against Hires in March (5.2 million), April (4.0 million), May (8.1 million), and June (7.4 million). We remove those from the charts to get better scale visuals on the periods that precede and follow as the market saw 50-year lows in unemployment in 2022. Wild swings were experienced by all as industries saw shutdowns and layoffs in the COVID recession. The long-term medians from 2007 to 2022 for Hires and Separations were very close.

Almost 28 million Separations combined in March-April 2020 as a brutal reminder of that period.

See also:

Market Commentary: Asset Returns 5-4-26

1Q26 GDP Advance Estimate: Consumer Fade, Investment Boom 4-30-26

Market Commentary: Asset Returns 4-26-26

Synchrony Financial: Favorable Consumer Credit Signals 4-24-26

Industrial Production March 2026: Mixed Picture, Big Questions Ahead 4-16-26

Existing Home Sales March 2026: New Beginnings or New Ends? 4-15-26

Producer Price Index March 2026: Heater or Curve Ball? 4-14-26

CPI March 2026: The CPI Cycle Could Prove Maddening 4-12-26

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

Industrial Production March 2026: Mixed Picture, Big Questions Ahead

Glenn Reynolds, CFA — Thu, 16 Apr 2026 18:57:43 GMT

Automotive chain sputtering a bit with EV upheaval and tariffs

The modest decline in Industrial Production saw a -0.5% drop, but 1Q26 grew at +2.4% ahead of the March fade. Capacity Utilization ticked slightly lower for March in Manufacturing, Durables, and Nondurables.
Manufacturing capacity utilization for 1Q26 ticked up from 4Q25 but was below 3Q25 as the industrial sector waffles. Manufacturing is struggling to show a clear trend in the midst of tariff pressures and the Iran War fallout. We have seen inflation in goods and some pricing power, so we know the demand side has not taken too much pain yet. Earnings expectations broadly for 1Q26 are also solid.
The market saw more notable sequential MoM weakness for Capacity Utilization in Mining and Utilities. The YoY numbers for Utilities come with the asterisk of +4.0% capacity growth while Mining capacity shrunk by -0.5%.
With respect to Industrial Production trends across Manufacturing “Market Groups,” we see Consumer Durables down by -3.4% YoY for March with Automotive products at -5.6% YoY. Business equipment showed strength at +4.6% YoY while Defense and Space Equipment posted +3.2%
Across “Industry Groups” (vs. “Market Groups”), “Aerospace and miscellaneous transportation equipment” generated a +6.2% increase with “Computer and electronics, electrical equipment, appliances, components” at +3.6%.

The above chart updates the running capacity utilization for manufacturing since 1967. The current 75.3% is well below the long-term median of 78.5% and below the post-COVID median of 76.3%. That is one of many metrics that take the label of “greatest economy in history” off the table.

We see the material swings across expansion booms and busts. That includes the aftermath of some highly damaging oil spikes that brought on cyclical weakness and later saw capacity utilization plunge. There were a lot more structural changes underway in those cycles than just oil and gas price pressures. That was notably the case in the 1980-1982 double dip as well as the recession of late 1973 to early 1975 when the Arab Oil Embargo set off chain reactions that turned the post-1973 period into an ebb-and-flow of macro nightmares for inflation and the consumer.

The above table breaks out the high-level groupings with total industry and total manufacturing declining. We include a “delta column” on the right. Mining and Utilities were down sharply for the month. We see Durables and Nondurables as the main events to track, and both are down. The Durables sector is especially important with all of the supplier-to-OEM multiplier effects. That also is the sector more meaningfully tagged by the Trump tariff policies.

The above table breaks out the details for the top 5 Durables lines and the two largest Nondurables lines. We include the capacity utilization deltas in the column on the right. We see a mixed picture across these major industries with only Motor Vehicles and Parts making a notable move lower. We see 2 of 5 Durables lines tick lower with Machinery slightly lower and Motor Vehicles and Parts taking a bigger hit. The two major Nondurables lines also declined with Chemicals and Food & Beverage.

Low-cost supplier chains are getting undermined by tariffs, so the demands to improve efficiency as tariff mitigation measures need to be monitored. We are also seeing some important low-cost suppliers in the Gulf, and that area is essentially in a multi-tiered blockade. The “AI story” and what it all means for productivity and headcount will be a big part of that theme.

The weakness in the dollar is not going to help supplier chain costs from offshore, and a weaker dollar has the effect of inflating the tariff cost in dollar terms depending on the import nation.

The above chart details economic expansion and recession averages and lines them up by height as a frame of reference. We see the current level on the left at 75.3%. The fact that the current capacity utilization is below numerous recession averages posted on the right side of the chart also scoffs at the recurring “Golden Age” and “hottest country” rhetoric.

In the context of the tariff priorities and reshoring ambitions, the slack capacity implied by the chart underscores the analysis is a lot more complicated than just “build more plants” and “keep tariffs high” to force reshoring. That is a story told on an industry-by-industry basis, and the weakness seen in auto sector production and utilization numbers is a sea level example of where an industry has arguably been hit the hardest by tariffs.

The multiplier effects are important, but the relocation of supplier chains and OEM relocation is by definition very slow to unfold given intrinsic lag times, tooling equipment and contracts in place. There is also the fact that the cost of relocation has also risen with all the tariff effects for materials, components, and qualified labor. Autos are the main relocation stories, but that is generally going to be tied to existing infrastructure and not a strategy of all-new greenfield plants. In the end, many companies can just wait for Trump to “move on.”

Producer Price Index March 2026: Heater or Curve Ball? 4-14-26

Market Commentary: Asset Returns 4-12-26

CPI March 2026: The CPI Cycle Could Prove Maddening 4-12-26

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26

Market Commentary: Asset Returns 3-30-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

The US as an Aspiring Emerging Market: Fiscal SNAFU, Political FUBAR 4-6-26

Existing Home Sales March 2026: New Beginnings or New Ends?

Glenn Reynolds, CFA — Wed, 15 Apr 2026 17:25:51 GMT

Existing Home Sales volumes declined by -3.6% MoM and by -1.0% YoY as the bad news for sales volumes continues. The absolute volume level is more like what we saw in the fall of 2023 when mortgage rates peaked in the high 7% range. Oct 2023 saw the Freddie Mac 30Y benchmark hit a cyclical high of 7.8% with a range of other mortgage surveys and 30Y product offerings around 8%. Freddie is currently 6.37%. The median home price increases YoY have not helped the monthly payment math. The March median existing home sales price edged higher YoY to $408.8K
The mix of household variables in this economy have taken a turn for the worse with weak payroll performance and rising inflation that further eats into real wage growth. Consumer sentiment plunged this past month to an all-time low.
While economists can debate recurring inflation risk, there is no question that “purchasing power” for a given “household basket” has taken a beating and discretionary household cash flow feels the price pressure including at the gas pump and in goods pricing broadly with tariffs (see Producer Price Index March 2026: Heater or Curve Ball? 4-14-26, CPI March 2026: The CPI Cycle Could Prove Maddening 4-12-26).

For this month, we moved the historical monthly chart to the top of the commentary as a reminder that the March numbers look more like the late 2023 period when mortgages had peaked (see Existing Home Sales Dec 2023: Rerun of Multi-Decade Low 1-19-24). The 30Y mortgage rates have moved within a 200 bps range since the Oct 2023 peak when Freddie Mac 30Y hit 7.8% and many mortgage offerings were near 8%.

The above chart updates the monthly existing home sales volume across the timeline from Jan 2023 through March 2026. In the interest of visual quality, we deleted the 2022 months when the market was posting 6 million and 5 million handle sales volumes in the first half of that year.

The March 2026 existing home sales number of 3.98 million is an obviously grim number and can be framed against the 3.85 million during the peak mortgage rates in Oct 2023 (see UST Deltas: Elevation Realities 3-29-26). The Freddie Mac 30Y is set on Thursday and posted 6.37% last week. We get an update tomorrow. The Mortgage News Daily Survey 30Y as of the latest close was 6.31%.

The above chart shows the sales volume delta by price tier for March 2026, and we see 4 of the 6 price tiers posting positive growth with only the two lowest price tiers posting declines. That was the same mix of deltas as last week. Note: We use “not seasonally adjusted data” for this chart so it clashes with the declines of overall sales discussed elsewhere in this commentary that use SAAR data (seasonally adjusted annual rate)

The volatility and disruption of the Iran War is undermining the rally we had seen in the mortgage markets with an uptick again in the post-Iran period. After a brief move below the 6.0% line into 5% handle range, the setbacks along the UST curve sent mortgages to 6.31% for the Mortgage News Daily survey as of the latest close. The range has been a tight one, but the recent pop above 6.4% after a brief drop below 6.0% reminds us that high oil prices are something the UST curve and the FOMC do not like. That is true of the bond market broadly. The current rates are still a relief from the 6.6% handles of March 2025 a year ago.

The three Fed cuts in the fall of 2025 (-75 bps) followed 3 actions (50, 25, 25) in the fall of 2024, in turn translated into UST curve steepening along the way. Back in the fall of 2024, the UST rally along the curve saw mortgage rates right around today’s level after easing. At that time, the 10Y UST dropped down to around 3.6% (current 4.27%) and mortgages were around 6.0% (current 6.3%). That Sept 2024 rally soon gave way to a steepening and tough road for mortgages into 2025 and now 2026.

Those expecting the 10Y UST to follow fed funds lower have been relatively disappointed since the easing cycle got underway, so the latest debates on how FOMC actions will play out under Warsh do not come with a sense of automatic bull flattening and lower mortgage rates.

Trump was also back on the rage fest today threatening to fire Powell and not supportive of dropping Pirro’s investigation (which Trump demanded). The theory on who could get dropped into a senior Fed role besides Warsh has included Miran, who never met a cut (or multiple cuts) he did not like. The effects of Iran as the dominant variable and the politics of rate bias have left the FedWatch handicapping all over the place in recent weeks as we have covered along the way.

The Iran oil spike and all the knock-on effects for CPI and PCE inflation that will come with energy pressure could make for a lot of frustration in the White House. We have seen the odds of cuts evaporate and hikes rise before falling back. As we go to print, if we look at the rate odds for the Oct 2026 meeting we see 80.3% chance of no change, 17.2% of 1 cut, and 1.3% odds of 1 hike. Looking back to 1 month ago, those October meeting odds of no action stood at 50.1% and the odds of 1 cut at 37.5%.

The above chart shows the geographic mix of volumes and details on price mix by region. The South is the main event in single family volumes whether new or existing at almost 47%.

For the bar chart, we break out the mix for each region by price tier. For example, the South shows almost 51% of its existing home sales volume in the $250K to $500K range and almost 19% of its sales in the $100K to $250K bucket.

We see a major concentration across the regions in the $250K to $500K although the $100K to $250K bracket for the Midwest stands at over 31%. The West shows a high share of 28.5% in the $500 to $750K bracket, which again underscores how expensive the West region price tags remain in national context.

The map explains what states are in each Census region. There is a very wide range of home price profiles in the West and Midwest states.

Inventory for total existing homes ticked slightly higher MoM (as revised) to 1.36 million units for +3.0% MoM and +2.3% higher YoY. Current inventory is well below longer term medians including 2.06 million for the post-1998 median. The median from Jan 2011 (homebuilding low) to current times is 1.67 million. In other words, existing home sales inventory remains extremely low even if the level is materially higher than the stunning low of 850K of Feb 2022 ahead of the end of ZIRP and start of the tightening cycle in March 2022.

The above two-sided chart updates the trend line in total existing home sales vs. new single family homes. We had been operating without new home sales data from the Census Bureau since the shutdown. We now have January 2025 numbers for new and March for existing. Feb 2026 new home sales data is expected to be released on April 23.

The above chart breaks out the timeline for existing single family alone of 3.63 million vs. total existing home sales of 3.98 million. The 3.98 million for total is well below the long-term median (from Jan 1999) of 5.22 million. The total of 3.63 million for single family is well below the long-term median of 4.63 million.

Existing single family was -3.5% sequentially and -0.3% YoY (SAAR). The lower line is ex-condo/ex-coops. We saw 350K in condo and coop sales in March 2026, down from 380K YoY and down from 370K MoM.

The above chart updates the median price for existing single-family homes at $412.4K after June 2025 hit a record $438.6K. The median price in March 2026 is dramatically above the $308K level back in Jan 2021 and $277K in Dec 2019 when mortgage rates were in a different zip code and closer to 3.7% for 30Y Freddie Mac.

The above chart shows another angle on the sales mix across the price tiers. We just lift the numbers off the monthly handout for single family homes released by the NAR each month. The NAR totals add up to over 100% but the message is clear enough. Higher price homes and wealthier buyers have had a better time.

The $250K to $750K range as two tiers add up to almost 2/3 of the market with the $100K to $250K showing a big share in some of the Midwest states as detailed in an earlier chart. We also looked at the growth trends for each tier earlier. Lower price tiers declined while the top 4 tiers rose. The lower price tiers are more on the cusp of where affordability and mortgage eligibility could be strained at 6% handle mortgage rates.

Market Commentary: Asset Returns 4-12-26

CPI March 2026: The CPI Cycle Could Prove Maddening 4-12-26

4Q25 GDP: More Adverse Revisions in the Golden Year 4-9-26

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26

Market Commentary: Asset Returns 3-30-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation March 2026

Glenn Reynolds, CFA — Sat, 04 Apr 2026 17:43:09 GMT

Fireside chats ain’t what they used to be.

With a confusing, repetitive, and internally inconsistent speech after demanding network time, the Trump Iran game plan remains in a state of confusion for those planning fixed investment and payroll decisions. WTI ended the week at a “post-Iran” high. That sets the tone for FOMC planning with decent jobs numbers as the Fed frames the inflation vs. payroll trade-off. The UST curve rallied during the week after a period of rising. The moving parts remain in flux.
The good news is that this past week brought solid March payroll numbers on Friday after earlier constructive ADP numbers. JOLTs have time lags, and those were less reassuring (see Payroll Focus: ADP Highlights March 2026 4-1-26, JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26).
The Establishment Survey posted a payroll increase of 178K, which is the highest since Dec 2024 and the first month in Trump 2.0 that exceeded the median monthly adds from Jan 2009 through March 2026. Services accounted for +143K of the increase with Goods at +43K and Government -8K. In contrast to the ADP report, BLS’ Manufacturing posted a positive number for March at +15K for a YoY tally down by -29K vs. March 2025. Fed 2026 payroll adds were revised lower to -133K while Jan 2026 was revised higher to +160K as confusion is the theme for FOMC handicapping.
The Household Data shows a decline in total employed in March 2026 from Feb 2026 of -64K and a decline of -661K YoY vs. Feb 2025. The ranks of the unemployed declined by -332K from Feb 2026 but total unemployed rose by 107K vs. March 2025. The net effect relative to the workforce is a tick down in the unemployment rate to 4.26%, which would be considered full employment in past cycles. The March 2026 U-6 ticked higher sequentially to +8.0% from 7.9% in Feb 2026 and 7.9% YoY vs. March 2025. It is hard for the FOMC to get too nervous over that 4.3% rate with oil at a cyclical high and the inflation side of the mandate still in the lead.

The monthly payroll adds/declines chart above starts in March 2022 with the end of ZIRP and the start of the tightening cycle. The bar chart tells an objective data story. The +178K for March 2026 drove the U-3 rate lower to 4.3% or back to the January 2026 level from 4.4% in Feb 2026.

The numbers in 2025 and 2026 include the only negative deltas on the chart with 6 months in the red during Trump 2.0. Furthermore, the 2025-2026 months were all below the post-Jan 2009 median of 176K until March 2026 edged above it.

That long-term median period includes a slice of the longest recession since the Great Depression, so it is not a high bar to clear. Those payroll numbers from Jan 2025 to March 2026 offer no bragging rights. Health Care and Social Assistance (89.9K) + Leisure and Hospitality (44.0K) comprised 133.9K of the job additions tally. We would tag those as low multiplier effect sectors.

The above chart plots the running job adds/declines since Jan 2009 against the unemployment rate, which ticked lower MoM to 4.3% from 4.4%. In the chart, we isolate the worst months of the COVID dislocations in the box for better visuals to capture the other periods.

The 4.3% U-3 is below the long-term median of 4.9%. The 4.3% is still a solid number across the cycles. Payroll has been struggling somewhat in relative terms, but history is kind to 4.3%. If the 2025-2026 frame of reference is 2024 (not a good jobs year) then the 2025-2026 numbers are not so bad. If we compare it to the 2022-2023 period, the current job adds run rates are grim.

The above chart updates the time series for the U-3 unemployment rate and U-6 structural underemployment rate across the years from 1994. As noted, the current U-3 rate ticked lower to 4.3% from 4.4%.

The U-6 is the structural underemployment metric that is always useful to watch. The U-6 jumped to 8.7% in Nov 2025 from 8.1% in Sept 2025. To start 2025, the U-6 rose sharply in Feb 2025 to 8.0% from 7.5% in Jan 2025.

The current 8.0% is a tick lower from 7.9 % in Feb but is well above the 6% handles seen in spring of 2023. The U-6 is still below the median from 1994 of +9.3%, which notably includes the post-crisis shock and the longest recession since the Great Depression.

The time series above updates the U-6 minus U-3 differential as a measure of relative employment quality and to flag risks of major dislocations in large swaths of the economy (think oil patch collapse in the late 1980s, tech bubble imploding into a weak 2001-2003, financial services and automotive meltdown in 2009).

The current 3.7% differential is below the long-term median of 4.0%. The job ranks are still vulnerable now with the Iran war effects flowing into hiring decisions, industry fundamentals, and FOMC policy planning.

Many questions will be getting answers with respect to how tariffs and the oil spike will flow into hiring, investment, working capital cycles, new capacity planning. The wide range of potential outcomes is clear enough in that “boots on the ground” cannot be ruled out until those boots and bodies return home.

Escalation and “take the oil”

A material escalation would be about a lot more than the US and would hit Europe and Asia especially hard. It would not take much creativity to figure out how China (Taiwan) and Russia (Ukraine, Baltics) could react to exploit such chaos. Then the global cycle nerves begin anew.

The “take the oil” mantra from Trump by the end of the week implies massive manpower demand, military resources, budget bleeding (and UST supply) and unpredictable escalation of the conflict. That means even more problems from oil prices and supplier chain dislocations. That would necessarily hit payroll and economic growth.

Tariffs are still near the top of the risk checklist…

Reshoring has been very slow as the manufacturing payroll trends imply. We are seeing major plans to relocate automotive OEM capacity back to the US, and that should attract more supplier chain capex. The auto supplier to OEM chain will be a focal point in the upcoming USMCA review process with Canada and Mexico. Autos is only one small piece of the manufacturing picture despite all the headlines.

In contrast to autos, the idea of a major new aluminum smelter in the US will not happen based on economics and the timeline to build one. Low-cost power is essential for such smelting activities, and data centers would be happy to pay a multiple of what an aluminum smelter would see as cost effective. There are a lot of stories along the manufacturing chains with some good and plenty bad. For now, manufacturing payrolls are “net bad.”

Some of the risk issues get swept up in immigration and deportation numbers, but the analysis always comes back to the number of workers with paychecks. Employers will be making decisions to mitigate the tariff damage with tariff cost mitigation strategies (e.g., layoffs) if they are not passing along the cost in prices or want to limit the scale of price increases to customers.

The AI wildcard in manpower needs sees a lot of speculation in the manufacturing sectors but even more so in Services payrolls. That has been evident in some recent stock volatility across SaaS-based business services leaders.

There is no hiding from the need for economic reactions along the supplier-to-customer ecosystem. Someone always pays – including those “paying” with layoffs in tariff cost mitigation decisions.

The above chart updates total payroll vs. the unemployment rate. The trend needle has not moved much in 2026. More bodies with more paychecks are always a good thing. The trick from here is how the consumer deploys that paycheck and whether the zero-sum realities of household budgets undercut spending. The need for defensive spending habits in light of impaired household discretionary cash flow could become a bigger headwind in the aftermath of the Iran fallout.

As noted in the bullets at the top, the total employed in March 2026 moved lower from Feb 2026 by -64K and show a decline of -661K YoY vs. Feb 2025. That flunks the “more bodies, more paychecks” rule.

The above chart updates the total payroll number vs. job openings. JOLTS data analysis had been slowly recovering from the shutdown, and is now back into the lineup with its usual 1-month lag (see JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26).

Management teams have a lot of moving parts to factor into planning whether quantitative or qualitative. The final IEEPA decision from SCOTUS came in against Trump, but he was prepared to start slapping on tariffs under Section 122, 232, and 301. Notably, Section 301 tariffs (“fair trade”) are underway and are topics for other days. They will create more trade partner strife.

The trade flows have been looked at in many past commentaries (see Meanwhile…Back in Economics and Tariffs 3-2-26, US Trade with the World: Import-Export Mix 2-25-26). The latest trade disruptions from the Gulf and the related supply chain problems (oil, LNG, helium, aluminum, etc.) have been getting a lot of headline time. The disruption could get much worse via the Red Sea if the Iran War escalates and the Houthis pile on. There are also the contingent threats of Iraqi Shiite militia. The FOMC and the market both have much to digest.

The fallout in consumer spending from health care premium increases now are joined by energy price stress and $4 regular gasoline. Home heating oil bills could get much worse later in the year if this lasts.

The retrenchments in SNAP spending and eligibility criteria challenges promise household stress and could signal trouble ahead in the lower part of the “K” household mix. Trump’s latest budget plan offers little relief to the lower part of the K recovery and in fact piles on with cuts to many programs.

Inflation reports had generally brought good news relative to expectations given the scale of the forward threat from tariffs and lagging effects to be seen across working capital cycles. That said, the inflation creep and affordability strain has clearly been in evidence and taking a toll on inflation across select product groups. PCE inflation and CPI will see a lot of pressure as Iran effects and material costs roll in on top of tariff-based pricing decisions that have been slow to unfold.

Tariffs will stay in the thick of the pricing pressure battle, and industries such as autos are likely to see more upward price pressure after a year of relative caution by OEMs to protect their customer base and dealer network. The OEMs had wanted to move cautiously with Trump (which by itself is a sad comment on how free markets have suffered under this administration). Now we will be adding much higher energy inflation from gasoline to go with the very high electricity CPI metrics and utility piped gas inflation.

The breakdown of relationships with the EU, the #1 trade partner with the US, have dramatically worsened with Iran and Trump’s increasingly ugly rhetoric and behavior with allies. It is getting weird with insults tossed at Macron’s wife. That is just strange.

The fertilizer sector is under stress right now on Gulf supply problems, and Canada is a critical part of that supply. With Qatar facing stress in the fertilizer shipment barriers right now, the Canadian position in potash might be worth keeping in mind. The synthetic crude oil supplies from Canada also offer high diesel yields for refiners that could be critical right now in tempering the rate of increase in freight costs since that flows into food and goods.

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26

Market Commentary: Asset Returns 3-30-26

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Producer Price Index Feb 2026: Getting Warmer 3-18-26

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

Payroll Focus: ADP Highlights March 2026

Glenn Reynolds, CFA — Wed, 01 Apr 2026 17:59:41 GMT

With a AAA national average regular gasoline price of $4.06 today (+36% in 1 month) and food feeling broad inflationary pressures, ADPs release showing real wage growth and more jobs will be a good signal if it can be sustained. The ADP wage growth numbers included +4.5% for “job stayers” and +6.6% for “job-changers.”
The ADP private sector jobs numbers were constructive at +62K on the back of a solid growth rate in the South (+101K) while the Northeast (-29K) and Midwest (-26K) were both in negative range with modest positive growth in the West (+26K).
The half empty view is Manufacturing jobs were down by -11K with Construction (+30K) and Natural Resources/Mining (+11K) carrying the ball for the Goods sector (+30K). The market is still waiting for those tariff-driven manufacturing jobs. JOLTS also raises question on manufacturing jobs (see JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up 3-31-26).
We see some good news in the small business job count with the small establishment tier of 1-19 employees at +112K. Overall, Services comprised 32K of the 62K total with Goods at +30K.

The UST rally this week combined the tailwinds of hope for “peace breaking out” in Iran with all the very unpredictable moving parts that come with that scenario. History will not be kind to those who think they can predict the behavior of Trump while Iran’s reactions come with the wildcard of religious fanaticism and rage at the saturation bombing. Iran’s unpredictability comes with the innate capacity to endure suffering and holding the line against the “Great Satan” and infidels.

We are not sure day-to-day misinformation helps ease the challenges of interpreting Trump or Iran, but the jobs mandate for the FOMC is still waffling as investors juggle their assessment of energy-driven cost pressures flowing into inflation and the payroll risks. The scale of the supplier chain disruptions and multiplier effects make the opening of Hormuz the overriding X factor for inflation and cyclical scenarios, but those play out at a lag.

In the meantime, we have new, pending (and immediate) threats of attacks on tech companies (18 companies) and their operations in the Gulf. Iran has one eye on the stock market also. A fresh round of back and forth could see Trump pull the plug and tell the rest of the world “all yours.”

Then there is Houthis risk and the vulnerability of oil and freight to Red Sea attacks. Even Shiite militias in Iraq get invoked by those making risk checklists. Those factors can work their way into roll-your-own scenarios for global and regional cyclical pressures, cost threats, and how that all plays into stagflation risk.

With WTI at just under $100 as we go to print, the good news is that the US has plenty of oil and gas, so this is not the late 1973 backdrop or 1979. Both saw stagflation follow. That lack of comparison to the Arab Oil Embargo period in the US is not the case for Asia, who face threats that take us back to our memory of odd-even license plate gasoline rationing of early 1974. We were ringside for that one. Europe, the #1 trade partner for the US, is also in a bind even if not as severe as Asia.

Consumers drive economies, and the challenges to household discretionary cash flow will roll into both domestic growth and trade. Whether the pressure will pick up on US employment and reshape FOMC monetary policy remains part of a wider range of outcomes. Iran is part of the cart-and-horse handicapping by the Fed in our view. It is not chicken and egg since Iran remains the main event.

We get the full March payroll numbers on Good Friday.

JOLTS Feb 2026: Openings Down, Hires Down, Layoffs Up

Glenn Reynolds, CFA — Tue, 31 Mar 2026 19:54:04 GMT

No joy in jobsville. Still waiting for those manufacturing jobs.

An almost 500K decline in sequential Hires is the main metric, but we see a decline in Job Openings in Feb 2026 of -358K with a rise in layoffs of a more manageable 61K.
The Feb activity largely predates Iran (bombing started Feb 28) and related shock waves across energy and supplier chains, so the March payroll data to be released on Friday will offer some more timely context.
The consumer spending swing factor from Iran could be more concentrated in Leisure and Hospitality payrolls in coming periods after a -213K decline in openings for that sector from Jan to Feb 2026. With health care premiums soaring, mortgage rates just under 6.5% after this week’s rally, retail gasoline materially higher, CPI lines very mixed, and consumer inflation expectations rising, it is fair to say economic growth faces a cloud after such a poor 4Q25 (see GDP 4Q25 Second Estimate: Sharp Move Lower 3-13-26).
Manufacturing is always a focal point in the context of the tariff story lines from the White House, but manufacturing hires MoM were down by -24K YoY even if only down by -4K sequentially from Jan 2026. Layoffs in manufacturing were down by -21K MoM in a signal of some stabilization before the Iran mess. Sequential job opening trends posted -71K in Manufacturing from Jan 2026 but with +39K YoY. The manufacturing openings are supposed to be higher under the tariff theory.

The above time series plots job openings across the timeline from 2007 to current. The sharp, downward trends from the end of ZIRP and start of the tightening cycle in March 2022 show little to celebrate. The high of 12.2 million off the lows of 4.6 million at the peak of the COVID panic are pretty dramatic, but recent periods are sot. Opening are at least running above the long-term median (5.92 million). The 5% decline YoY in job openings in Feb 2026 is bad news no matter how you slice it.

The above-median openings number comes in a market where secular growth and demographics need more job openings. That is especially the case to justify the tariff strategy. The strains on affordability in so many end markets since COVID (housing, health care, autos) combined with the threat of even more inflation tied to the Iran mess means even more jobs and higher salaries will be even more crucial.

The conversations will continue to focus on how many new job openings can be avoided through the deployment of AI tools and technology. The tariff cost mitigation strategies also do not help in budgeting for higher headcount.

Hires declined by -498K sequentially from Jan 2026 while layoffs/discharges rose by 61K. The hires YoY declined by -387K or by 7.4%. No joy there in an expanding economy even if annual GDP growth of 2.1% lagged 2024’s 2.8% (just don’t tell Hassett). The numbers clearly signal negative payroll trends.

The biggest MoM decline in Hires occurred in Leisure and Hospitality at -185K with Professional and Business Services at -154K. The biggest increase in layoffs was Retail at +72K.

The above chart updates the ratio of Hires to Layoffs/Discharges. The relationship stands at 2.82, below the long-term median of 2.91 from 2007. The post-2007 period includes the effects of longest recession since the Great Depression (Dec 2007 – June 2009) followed by the longest expansion in history from June 2009 to COVID (Feb 2020).

The above chart plots Hires vs. Total Separations on a SAAR basis. Separations include Quits, Layoffs/Discharges, and “Other Separations.” Total Separations moved lower by -173K in Feb 2026 and were down by -314K YoY.

We typically do not find “Total Separations” particularly interesting as a multi-line net number. Much of the decline in Separations can be attributed to a -153K MoM decline in “Quits.” One theory is that trend signals lower confidence in finding a job on the other side of quitting.

The Hires minus Total Separations differential is plotted above. We recently had some major revisions. As covered above, the sharp decline in Hires is the main event. Separations also had a decline on lower Quits.

The net number above has moved notably lower in recent months and is in the negative range now. The differential is starkly below the long-term median of +175K.

The time series for Total Quits as a % of Separations (SAAR basis) was 59.8%, slightly above the long-term median of 57.9%. The classic “Quits Rate” is measured by Total Quits as a % Total Employment, and that metric moved slightly lower on the month to +1.9%, down from 2.0%. The Quits rate is also down slightly YoY from 2.0% to 1.9%.

The bottom line on the JOLTS numbers is that it was one that UST bulls might grasp onto for hopes of easing improving and the same for the long-suffering bull flattener advocates. The oil price wildcard has plenty of history, but this scale has more in common with the Iranian crisis if 1979.

While the US is a powerhouse in energy (oil, natural gas, and LNG) and has Canada as a neighbor (as badly as Trump treats them) and largest oil importer into the US by far, that backdrop takes useful comparisons to 1974 off the table. The Arab Oil Embargo of late 1973 and “odd-even license plate” rationing in the recession is being experienced by many nations at this point. Just not the US. That impacts global growth. Asia is especially vulnerable.

NOTE ON COVID DISTORTIONS

The Hires vs. Separations time series make for interesting numbers but tough charts to plot visually given how much the spike in Separations/Hiring during COVID distorted the numbers from March 2020 to June 2020. The swings literally were off the charts. For presentation purposes, we adjust the charts above to exclude the raw data for those months to get a better vantage point on somewhat more normal times. Compared to COVID, the credit crisis seems “normal” in terms of the job count moves.

For disclosure purposes, Separations across March 2020 (16.3 million), April 2020 (11.6 million), May (4.7 million), and June (5.2 million) were running against Hires in March (5.2 million), April (4.0 million), May (8.1 mi/lion), and June (7.4 ml/lion). We remove those from the charts to get better scale visuals on the periods that precede and follow as the market saw 50-year lows in unemployment in 2022. Wild swings were had by all as industries saw shutdowns and layoffs in the COVID recession. The long-term medians from 2007 to 2022 for Hires and Separations were very close.

Almost 28 million Separations combined in March-April 2020 was a brutal reminder of that period.

Market Lookback: Confusion Reigns, Dislocation Pours 3-22-26

Producer Price Index Feb 2026: Getting Warmer 3-18-26

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

New Homes Sales Jan 2026: The Nays Carry

Glenn Reynolds, CFA — Thu, 19 Mar 2026 20:21:11 GMT

High and dry. Looking for some traffic.

Weak new homes sales in total and across all regions MoM add to the poor macro themes that come with Iran fallout, tariff noise, recent upward pressure on mortgage rates, a weak 4Q25 GDP report (negative residential investment) and the realities of a wide range of potential outcomes that can curb confidence and promote big ticket defensiveness on the part of potential homebuyers.
Supplier chain disruptions will raise costs for builders and are set against a backdrop that is more likely to pressure mortgage rates higher with the 10Y UST stubborn and the FOMC easing odds shifting toward no fed cuts. As of now (3-19-26), the odds are materially against any FOMC cuts for the remainder of the Fed meetings in 2026. That is quite a swing.
New home sales saw Average selling prices down sequentially to $400.5K, which is the lowest since July and down YoY from $429.6K. Inventories were flat MoM on a “not seasonally adjusted” basis and ticked slightly higher MoM on a SAAR basis. Inventory mix shows “homes under construction” substantially lower YoY and “completed home” inventory higher YoY.

The above chart updates the new single family home sales time series from 1963, and the current 587K (SAAR) is a grim number in the context of 2025 as well as long-term medians. That is especially the case in light of record demographic need. The shortfall in supply of affordable housing is a recurring theme even if favorable housing demand profiles are still a secular trend.

The policy responses from Democrats and now the GOP have been and remain completely inadequate. In fact, the latest proposals are bad for homebuilder costs (tariffs and labor migration/deportation), have kept mortgages higher (massive deficits), and temper consumer risk-taking (Iran effects). The proposed policy restrictions in legislation on build-to-rent misses the point on housing needs and ignores the immediacy of the supply limits for a house to live in (rent or own) and the consumer choice issues. Supply of housing stock is supposed to be the priority, but the political scramble is to do “anything.” That is a topic for another day.

As we look back to the peak of the housing bubble, we see 1389K in July 2005 or 2.4x the Jan 2026 volume. The COVID panic buying and relocation spree in Aug 2020 of 1016K was a wild period for new home sales and home starts in a ZIRP market with very low mortgage rates. For Jan 2026, the 587K is weaker than any 2025 numbers with the next lowest over the LTM period at 627K in May 2025.

The sequential move lower of -17.6% for total sales was ugly. We saw all 4 regions with negative MoM variances with the #1 South region at -8.1% MoM and -8.8% YoY while the West as the #2 market posted a sequential decrease of -21.6% MoM and -28.7% YoY. The Midwest posted a brutal -33.9% MoM but a solid +18.0% YoY. The tiny Northeast market was -44.7% MoM and flat at 0% YoY.

The above two-sided chart shows the sales pattern for the new home sales line since 2000 vs. the median prices, which weighed in at $400.5K for Jan 2026, above the $397.3K low in July 2025 but down from $419.2K in Dec 2025.

The fact that home prices had trended materially higher across the post-COVID cycle is old news, but the sensitivity of monthly payments is married more to mortgage rates as a critical variable in monthly payments. This current softening of prices does not fix the problem with rates rising and existing home sales supply weak overall given the mortgage refi barriers and how that flows into total supply options (see Existing Home Sales Feb 2026 3-10-26).

Mortgages have been stubbornly high but saw some very brief relief with the Freddie Mac 30Y moving into the 5% range before the recent sharp reversal. Mortgage rates remain the primary driver of weaker volumes in the lower price tiers in both new and existing home sales. A wildcard as we move into 2026 will be homebuyer confidence and cyclical consumer sentiment around “pulling the trigger” while seeing such material uncertainties (Iran war, tariffs, payroll anxiety) as we roll into the peak home selling season.

The above chart updates the running median price trends. Builder fears of higher material and supplier chain costs and now the Iran fallout will keep homebuilders defensive in their pricing strategies. Gross margins were softening in 2025 and will continue to soften into 2026. Many are posting margins still above pre-COVID levels even if down sharply from abnormal margin peaks in 2022. The trend line remains negative.

The above chart gives a different visual angle on the median new home sales prices from early 2022. That is a lot of $400K handles with some sub-$400K outliers. The current $400.5K can shift with regional mix as well as home price tiers and related supply issues. The affordability question is still intertwined with the monthly payment pressures from mortgages. It is about more than price.

The time series above updates the new single family home sales across the cycles since 1973 for the #1 and #2 regions of the South and the West. These two regions are around 84% of total single family home sales volumes for Jan 2026.

As noted earlier, the 362K for the South in Jan 2026 posted a sequential decline of -8.1% from Dec 2025 and is down by -8.8% YoY. The West at 127 is 22% of the total volumes vs. 62% for the South. For the month, the West was -21.6% sequentially and -28.7% YoY.

The smaller Midwest region and tiny Northeast region account for 12% and 4%, respectively, of new home sales in Jan 2026. The Midwest was down by -33.9% MoM but +18.0% YoY. The Northeast was -44.7% MoM and a flat 0% YoY.

Industrial Production Feb 2026: Capacity Utilization 3-16-26

Market Lookback: The Gulf of Cause and Effect 3-15-26

Market Commentary: Asset Returns 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

Producer Price Index Feb 2026: Getting Warmer

Glenn Reynolds, CFA — Wed, 18 Mar 2026 20:57:28 GMT

Throw some more line items on the fire…

We look at some key line items in a PPI release that never lacks for a massive wave of data to review from broad categories in Table 1 to adjusted and very granular line items in Table 2. Services remain a headache with Final Demand Services at 3.8% and 68% of the Final Demand-weighting while Final Demand Goods were more muted at +2.5% despite a sharp MoM rise from Jan to Feb.
Table 2 offers a wide range of commodity groupings including food to metals with some eyepoppers such as +48.0% in “fresh and dry vegetables” and +34.4% in ‘nonferrous metals.” Some of these trends were in evidence in CPI and PCE data (see PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26, CPI Feb 2026: It’s Making You Wait… 3-12-26).
Food and energy will be the ones to watch with Food facing multiple pressures from Iran fallout in their production chain and other major factors that will be hitting inputs (shipping, labor, tariffs, etc.). PPI lines in this release show “roasted coffee” at +25.8%, “beef and veal” at +13.0%, fish/shellfish at +12.2%, and confectionery end products of +8.2%. On a bright note, Eggs PPI is down by -80.4% after Trump cured the Avian Flu.
Final Demand Energy PPI posted -0.7% YoY and Final Demand Food stood at -0.3% YoY. Both of these supportive deflation lines clearly look vulnerable to disruptions and notably in oil and gas markets, fertilizer, and transport cost pressures as we look ahead to the rest of 2026.
With the FOMC unchanged on fed funds today, FedWatch odds looking more like late fall timing on cuts. Inflation appears set to rise on energy, food, and goods as tariff pricing decisions weigh in. Warsh will be greeted with unfriendly numbers barring very favorable developments in Iran and on the tariff decision front that are hard to confidently handicap. Payroll weakness may help the easing crowd, but more than a single cut would mean the inflation metrics are moving lower and the markets getting great news on productivity.

The above March 2022 chart updates the total Final Demand PPI from Nov 2010 to Feb 2026 with the latest Final Demand reading at +3.4% YoY. We see the sharp move higher in the post-COVID rebound running into widespread supply-demand imbalances into a March 2022 peak. For those who remember the obscene inflationary effects from commodities to used cars, there was a more complicated array of forces weighing in than political spin would suggest. We look at that policy-intensive period in detail in our PCE updates (see PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26).

The late February 2022 invasion of Ukraine was a key driver of an oil and gas spike that has some relevance to today. We often highlight how Trump never mentions Putin as a major factor in the inflation picture (only Biden and Powell). The Final Demand PPI for Energy in March 2022 spiked to +36.7% (data source: the original March 2022 PPI release). At that time, Gasoline hit 59.9% PPI YoY with diesel at 63.8%, home heating oil at 105.9%, LPG PPI over 91%, and “residential natural gas” at +22.8%.

Such moves in energy flow into goods and services across a range of time lags depending on price strategies, working capital cycles and regulatory actions. We look back at the 2022 experience as a reminder of what kind of chaos can unfold along the PPI chain as weeks go by in an oil and gas shock.

The above table breaks out some of the high-level lines we like to watch from Table 1 of the PPI release. We also do the usual “following the scrolling finger” approach in Table 1 and Table 2 under the “Unadjusted 12-month % change” column.

When you flag those YoY numbers, then next step is flagging the highest YoY numbers and looking for outlier months vs. steady high patterns. The trend line of PPI pressure requires a look at recent months to see if the bad news is evident in 2026. We will be getting some of that pressure in the March 2026 PPI numbers as the Iran War unfolds.

In recent months, we see Services posting 3 consecutive high months. Goods posted a high MoM in Feb of +1.1% and so did Final Demand Foods at +2.4% and Energy MoM at +2.3%.

Market Lookback: The Gulf of Cause and Effect 3-15-26

Market Commentary: Asset Returns 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Industrial Production Feb 2026: Capacity Utilization

Glenn Reynolds, CFA — Tue, 17 Mar 2026 00:51:38 GMT

Industrial production in Feb 2026 was up +1.4% YoY but slightly positive MoM at +0.2%. Capacity utilization for total manufacturing was flat MoM at 75.6%, which is well below the long-term median of +78.2%.
In the context of recent quarters, manufacturing capacity utilization was ahead of 4Q25 but slightly below 3Q25 and flat to 2Q25. Durables was running slightly ahead of 2025 run rates.
Strong MoM moves in “Motor Vehicles and Parts” as well as “Electrical Equipment, Appliances and Components” sent good signals in Durables while “Machinery” faded.

The above time series updates the long-term history of manufacturing capacity utilization since 1967. We see the material swings across expansion booms and busts. That includes the aftermath of some highly damaging oil spikes as capacity utilization later plunged. There was a lot more structural changes underway in those cycles than just oil and gas price pressures.

The May 1975 low of 71.6% was just as the economy was coming out of the late 1973 to early 1975 recession that unfolded after the Arab Oil Embargo. The 1980-1982 double dip recession came after the 1979 inflation spike took off with the Iranian oil crisis. Capacity utilization saw a 68.7 low in Dec 1982 as the economy was just coming off the recession trough. The first Gulf War came after the August 1990 invasion of Kuwait with capacity utilization hitting a low in March 1991 at 77.2, which is above where capacity utilization stands now in 2026.

The age of tech and credit excess in the late 1990s brought some new swoons with 71.8 in Nov 2001 after the TMT meltdown and HY default wave. Then came the post-credit crisis low of 63.4 at the recession trough in June 2009. COVID edged that one out with a record low of 62.6 in April 2020.

As we detail below in the recession histories, the idea of what is low or high capacity utilization in the context of corporate sector profitability is not as direct as one might think. Breakeven volumes, cost structures and pricing power are key drivers. The tariff excess as a core Trump policy only makes that unit cost analysis more complicated as we head into a new round of energy related cost pressures in 2026.

The above table breaks out the high-level groupings with total industry and total manufacturing flat. Mining ticked up and Utilities down for the month. We see Durables and Nondurables as the main events to track and especially the Durables sectors with all of its supplier chain to OEM multiplier effects.

Looking back from 2025 into early 2026, we see Manufacturing in a narrow range and the same for Durables. Tariffs have not moved the production needle much at all so far, but that does not tell the profitability story on the tariff cost impact. Most people (outside the White House) know that buyers/importers write the check for the tariff, so that implies a higher breakeven volume or some offsetting action on other costs or pricing. Those impacts will only play out over time across working capital cycles.

The above table breaks out the details for the top 5 Durables lines and the two largest Nondurables lines. We see a mixed picture across these major industries with only Motor Vehicles and Parts making a notable move higher and Machinery lower. We see 3 of 5 Durables lines tick lower and the two major Nondurables lines were a split decision. Chemicals rose and Food & Beverage declined.

The above table updates the capacity utilization history for expansions and recessions. As we routinely discuss, the ability of companies to generate solid profits at lower capacity utilization in today’s markets relative to past cycles is tied to both automation and the evolution of low-cost global supplier chains. Low-cost supplier chains are getting undermined by tariffs, so the demands to improve efficiency as tariff mitigation measures need to be monitored. The “AI story” and what it all means for productivity and headcount will be a big part of that theme.

The above chart details economic expansion and recession averages and lines them up by height as a frame of reference. We see the current level on the left at 75.6%.

In the context of the tariff priorities and reshoring ambitions, the slack capacity implied by the chart underscores the analysis is a lot more complicated than just “build more plants.” That is a story told on an industry-by-industry basis. The multiplier effects are important but the relocation of supplier chains and OEM relocation is very slow to unfold. Autos are the main relocation stories, but that is generally to existing infrastructure and not new greenfield plants.

Market Commentary: Asset Returns 3-15-26

PCE Inflation Jan 2026: Personal Income & Outlays 3-13-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down 3-12-26

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Housing Starts Jan 2026: Total Starts Up, Completions Up, Permits Down

Glenn Reynolds, CFA — Thu, 12 Mar 2026 19:39:40 GMT

The shortage of affordable homes remains a secular reality.

The Jan 2026 new residential construction numbers were set against a backdrop of decent consumer spending and more optimism around mortgage rates and the UST curve in January. The world has changed a lot since then.
For Jan 2026, starts rose by +7.2% MoM and YoY by +9.5%. However, single family starts were -2.8% MoM and -6.5% YoY. Total permits declined by -5.4% MoM and -5.8% YoY. Single family permits were -0.9% MoM and -11.6% Y0Y.
Privately owned completions were up by +4.8% MoM but down by -7.5% YoY. Single family completions were down by -1.0% MoM and down by -3.3% YoY.
Multifamily starts posted big numbers at +29.1% MoM and +56.9% YoY, and these headline numbers masked some of the relative weakness of single family in the total starts numbers.

The single family home starts time series shows a wild ride across the cycles. However, the current volumes are low when considering the intrinsically high demand for housing tied to demographics. The headwind has been affordability with the main swing factor there being the monthly payment burden (see Home Starts Dec 2025: Wrapping a Weak 2025 2-18-26).

Home prices have clearly soared since COVID, but mortgage rates drive the monthly payment burden more than price. As of last night close, the Mortgage News Daily Survey posted 6.24% 30Y, which marks a setback after the recent drop into the 5% handle range. The Iran backdrop and dramatic swings in oil ($96 handle as we go to print) has put some pressure on the 10Y UST that drives the 30Y mortgage.

The yield curve damage after the onset of the 2022 tightening cycle and inflation with ensuing volatility drove a 200 bps Hi-Lo range for 30Y mortgages since the fall of 2023 through early 2026. The struggle continues and the FOMC handicapping on rate cuts has turned in an unfavorable direction. As we go to print, the odds of a June cut has plunged per FedWatch. The odds of “unchanged” fed funds after the June Fed meeting is up to over 77% from under 38% a month ago. The odds also favor “no cut” for the July and Sept Fed meetings.

We need to keep in mind that 100 bps of easing in late 2024 saw a major mortgage rally initially before the market saw a bear steepener unfold into 2025 (see The Curve 12-15-25). So that bull UST flattener to bring down mortgage rates did not play out for long. That steepening sent mortgages higher again after Sept 2024 even if well below the 2023 mortgage peak.

The current run rates for new home volumes remain weak in multi-cycle context despite the recurring theme of inadequate supply for what should be exceptional demand. For now, affordability struggles trump demand. The Iran turmoil could now add a new round of lower cyclical confidence and concerns around payroll trends (job safety and buyer confidence).

As noted in the bullets, permits are in a fade, but single family starts were also weak in relative terms with the total starts numbers pumped up by a massive increase in multifamily (detailed further below).

The above chart plots total permits and total starts on a Not Seasonally Adjusted (NSA) basis. NSA is viewed as closer to what is going on in the trenches without the SAAR model assumptions. For January 2026, we see NSA total permits notably lower (-10.7%) YoY and single family permits down by -15.3% YoY. For MoM, total permits were down by -15.4% with single family permits down -2.7% MoM.

For total starts and single family starts on an NSA basis, we see total starts up by +3.8% MoM and single family NSA starts lower by -6.3% MoM.

The above plots the single family starts by region (NSA). On a MoM basis, the critical South region (totals 54% of total NSA starts) was higher by +10.1% MoM and by +15.6% YoY. The West as the #2 market was down MoM by -6.9%. The Midwest region MoM was down by 31% with the small Northeast market +40% MoM. The YoY NSA starts were mixed with the South higher and West lower among the big two regions. The Midwest was lower YoY and Northeast higher YoY.

The above chart updates running multifamily starts. At +524K (SAAR), Jan 2026 rose by +29.1% MoM and by 56.9% YoY. The 524K is well above the long-term median of 339K, above the median from Jan 2009 to current (347K), and above the median from 2000 to 2008 (296K). Jan 2026 even exceeded the median of the 1960s boom (487K).

The 1960s was a period of explosive growth for multifamily with the back end of the baby boom, the postwar rise of urbanization, and the high racial migration from the south to the north.

The above chart updates Multifamily permits (SAAR). The 453K in Jan 2026 multifamily permits declined by -13.4% MoM but rose by +8.9% YoY.

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26

4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26

Industrial Production Jan 2026: Capacity Utilization Trends 2-19-26

Home Starts Dec 2025: Wrapping a Weak 2025 2-18-26

Market Lookback 2-17-26

CPI Jan 2026: Reassuring Numbers, Missing Pieces 2-13-26

2025 Spread Walks and Multicycle Return Histories 1-5-26

Annual Return Differentials: HY vs. IG Across the Cycles 1-3-26

Total Return Quilt Across Asset Classes 2008-2025 1-2-26

Cyclical Histories: Will Facts Be in Vogue in 2026? 1-2-26

Existing Home Sales Feb 2026

Glenn Reynolds, CFA — Wed, 11 Mar 2026 02:25:58 GMT

Total existing home sales and Single family home sales both posted modest increases MoM but were down YoY. Coops/condos sales were lower MoM and YoY.
The market saw yet another YoY price increase (32 straight YoY increases) and a MoM increase in median prices for existing and single family. Coop/Condo prices were down both MoM and higher YoY.
Across the 6 price tiers we reviewed, the top 4 price range tiers increased and the bottom two price tiers declined. Rising inventory and rising prices have been an odd combination.

The above chart shows the sales volume delta by price tier for Feb 2026, and we see 4 of the 6 price tiers posting positive growth with only the two lowest price tiers posting declines.

The volatility and disruption of the Iran war is undermining the rally we had seen in the mortgage markets with a slight uptick again. After a brief move below the 6.0% line into 5% handle range, the setbacks on the UST curve sent mortgages to 6.09% for the Mortgage News Daily survey as of the latest close. The range has been a tight one.

Mortgage rates have been stubborn all year and they are hovering on average in the low 6% area. The Freddie Mac 30Y set on Thursdays (6.0% on 3-5-26) is still material relief from the 6.63% of one year ago for Freddie Mac. This week brings the CPI and PCE inflation reports for some new “pre-Iran” reads on where inflation was setting up before the impact of the oil and gas spike started flowing into the system. Even with today’s oil price around $83 (WTI) as we go to print, that is still up by $15 per barrel from the pre-bombing period.

The three Fed cuts in the fall of 2025 (-75 bps) followed 3 actions (50, 25, 25) in the fall of 2024, in turn translated into UST curve steepening along the way. Back in the fall of 2024, the UST rally along the curve saw mortgage rates right around today’s level after easing while the 10Y UST dropped down to around 3.6% (current 4.15%) and mortgages near 6.0%. That Sept 2024 rally soon gave way to a steepening and tough road for mortgages into 2025 and now 2026.

The Iran oil spike and all the knock-on effects for CPI and PCE inflation that will come with energy pressure could make for a lot of frustration in the White House. The chance of an easing in June per FedWatch has plunged over the past month with the odds of “no action” rising to +60.8% as we go to print from 24.8% 1 month ago.

The above chart shows the geographic mix of volumes and details on price mix by region. The South is the main event in single family volumes whether new or existing at over 46%.

For the bar chart, we break out the mix for each region by price tier. For example, the South shows over 50% (50.8%) of its existing home sales volume in the $250k to $500K range and 16% of its sales in the $500 to $750K bucket.

The high cost of homes in the West (notably California) is clear enough just by glancing at the bar chart with over 15% at prices over $1 million. The second highest in the $1 million club is the Northeast at almost 9%.

We see a big concentration in the $250K to $500K although the $100K to $250K bracket for the Midwest stands at over 33%. The map explains what states are in each Census region. There is a very wide range of home price profiles in the West and Midwest states.

Inventory for total existing homes ticked slightly higher MoM (as revised) to 1.29 million units for +2.4% MoM and +4.9% higher YoY. Current inventory is well below longer term medians including 2.065 million for the post-1998 median. The median from Jan 2011 (homebuilding low) to current times is 1.675 million. In other words, existing home sales inventory remains extremely low even if the level is materially higher than the stunning low of 850K of Feb 2022 ahead of the end of ZIRP in March 2022.

The above two-sided chart updates the trend line in total existing home sales vs. new single family homes. We had been operating without new home sales data from the Census Bureau since the shutdown, but we now have some updates (Note: the Jan 13, 2026 release from the Census covers through Oct 2025). The Census is very slow to catch up. From what we see on the Census site, the January 2026 new home sales should be updated March 19. As we have covered in our homebuilding commentaries, new home sales continue to struggle along with new residential construction (starts to be released this week).

The above chart breaks out the timeline for existing single family alone of 3.73 million vs. total existing home sales of 4.09 million, which is well below the long-term median (from Jan 1999) of 5.22 million for total existing homes. Existing single family was +2.5% sequentially and -1.1% YoY (SAAR). The lower line is ex-condo/ex-coops. We saw 360K in condo and coop sales in Feb 2026, down from 380K YoY and down from 380K MoM.

The above chart updates the median price for existing single-family homes at $401.8K after June 2025 hit a record $438.6K. The median price in Feb 2026 is dramatically above the $308K level back in Jan 2021 and $277K in Dec 2019 when mortgage rates were in a different zip code.

The above chart updates the monthly existing home sales across the timeline from Jan 2023 through Jan 2026. In the interest of visual quality, we had to delete the 2022 months when the market was posting 6 million and 5 million handle sales volumes in the first half of that year.

The current existing home sales volume is a long way from the mid-6 and high 5 million handles of 2021 and then into early 2022 when many homeowners had refinanced and new buyers locked in low mortgages. ZIRP ended in March 2022 and then the UST migration began and dragged mortgages to highs in 2023.

The Feb 2026 total of 4.09 million is near the May 2020 COVID trough of 4.07. We had a few sub-4 million handles along the way as noted in the chart, so the 2023-2026 period has been brutal for real estate brokers.

The above chart shows another angle on the sales mix across the price tiers. We just lift the numbers off the monthly handout for single family homes released by the NAR each month. It adds up over 100% but the message is clear enough. Higher price homes and buyers have had a better time.

The $250K to $750 range as two tiers add up to almost 2/3 of the market with the $100 to $250 showing a big share in some of the Midwest states as detailed in an earlier chart. We also looked at the growth trends for each tier in the first chart. Lower price tiers declined while the top 4 tiers rose. The lower price tiers are more on the cusp of where affordability and mortgage eligibility could be strained at 6% mortgage rates.

See also:

Employment Situation Feb 2026: Payrolls Get Ugly 3-8-26

PCE Income & Outlays Dec 2025: Inflation Reversal? 2-20-26

4Q25 GDP (Advance Est.): Less Distortion This Time 2-20-26