Cooling Signs Everywhere

🧮 Inflation & Labor: A Smoother Week

This week’s national data delivered a refreshing shift toward stability. CPI moderated again, and PPI held flat with core PPI softening—one of the cleanest signs yet that upstream price pressure is easing. On the employment front, ADP’s NER Pulse showed another incremental dip in private payrolls. Unemployment claims held steady but stayed elevated compared to earlier fall readings, signaling a gradually softening job market.

In short: inflation is cooling, hiring is slowing, and the overall economic tone has become more balanced.

📈 Rising Unemployment Rekindles December Rate-Cut Hopes

The biggest storyline this week? A subtle rise in unemployment is exactly the kind of signal the Federal Reserve watches when determining whether restrictive policy needs to stick around. While unemployment isn’t spiking, it is clearly drifting upward—enough for analysts to revisit the possibility of a December rate cut.

Here’s why this matters:

• The Fed wants a “cooling but not collapsing” labor market. That’s precisely what we’re seeing: slower hiring, modest layoffs, and stable claims.

• Higher unemployment reduces wage pressure. Lower wage-driven inflation gives the Fed more room to ease.

• Rate cuts become a stabilizing tool when labor looks vulnerable. Not an emergency tool—just a fine-tuning adjustment.

The bond market is pricing in one, possibly two, cuts in 2026—but if unemployment continues to creep higher, the Fed may begin easing sooner. It isn’t guaranteed, but the path is open again… something we couldn’t say just a month ago. Even a small rate reduction could help affordability heading into the early spring market.

💳 Consumer Spending: Growing on Credit

Holiday spending continues to trend 2–3% higher year-over-year, but the momentum is built heavily on credit cards. Delinquencies—especially among lower-income consumers—continue to rise. Slowing wage growth, rising unemployment, and increased delinquencies together may pull forward the Fed’s desire for rate relief.

🏡 Housing: More Listings, Longer Waits

Housing supply increased 2–4% across major metros.

Median days on market (nationally) stretched to 40–43 days, the longest since early 2021. Builders remain aggressive with incentive packages—especially buydowns—as they work to wrap up Q4 closings.

Sources

• Bureau of Labor Statistics – CPI Report
  🔗 https://www.bls.gov/cpi/

• Bureau of Labor Statistics – PPI Report
  🔗 https://www.bls.gov/ppi/

• ADP NER Pulse (National Employment Report)
  🔗 https://adpemploymentreport.com/

• FRED – Initial Jobless Claims Data
  🔗 https://fred.stlouisfed.org/series/ICSA

• MBA Weekly Mortgage Applications
  🔗 https://www.mba.org/news-and-research/research-and-economics/surveys/mortgage-applications

• HousingWire Market Tracker
  🔗 https://www.housingwire.com/

• FRED – Mortgage Rate Trends (30-Year Fixed)
  🔗 https://fred.stlouisfed.org/series/MORTGAGE30US