The latest BLS Jobs Report showed strong job growth and a drop in unemployment from 4.2% to 4.1%. However, consumer surveys tell a different story. The University of Michigan Survey of Consumer Expectations found that 50% of respondents now expect unemployment to rise in the next year, up from 32% in November. This is the highest level since April 2020. Meanwhile, only 16% think unemployment will decrease, down from 23% in December.
The gap between those expecting unemployment to rise versus fall is now 34%, similar to levels seen before major recessions in 2007 and 2001. This raises concerns that the recent BLS job numbers might face significant revisions, as has happened in the past.
Additionally, February will bring final data from the Q3 2024 Quarterly Census of Employment and Wages (QCEW), which is expected to show that roughly half of the reported job growth didn’t actually occur. If both scenarios play out, it could lead to lower mortgage rates via lower yields, stronger MBS performance, and potentially a shift in the Fed’s policy stance.
Source: www.MBSHighway.com
By: Jon Iacono