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The jobs report came out this morning and it was a painful one. The US added only 22,000 new jobs in August, according to the latest BLS report, and unemployment ticked up to 4.3%. What does this mean? While we already knew with over 90% certainty that the Fed was going to lower interest rates at their meeting later this month, September 17 to 18, we now, even though we already knew that was going to happen, we now have a much stronger case for it. In fact, I think the question can be asked, are they going to lower interest rates only by 25 basis points, a quarter of a percentage point, or will they lower it by half a percentage point? I think there could be a case made for that. So we're going to discuss all of that in today's first Friday monthly economic update. Welcome to the Afford Anything Podcast, the show that knows you can afford anything. Not everything. This show covers five pillars financial psychology, increasing your income, investing, real estate, and entrepreneurship. It's double I fired Typically, every Tuesday we answer listener submitted questions and every Friday we interview a guest. But there's one exception, and that is the first Friday of every month in which on the first Friday, which is the same day that the jobs report comes out, we dedicate an episode to a macroeconomic look at what's happening in the economy. So welcome to this September 2025 First Friday episode. Okay, so no one was really expecting the jobs report to be this bad. I mean, we know that the May and June jobs report numbers were Revised downwards to 14,000 and 19,000 respectively. We also know, of course, that the former head of the BLS lost her job as a result of such dramatic downward revisions. In spite of those two elements, we did have positive news that came from the ADP report. As a reminder, ADP is a private payroll processing company. Every month in advance of the BLS numbers, ADP releases their own report that uses actual payroll data from approximately approximately 460,000 companies, which represent 26 million private sector employees. Now, the ADP report is not a comprehensive jobs report because it only has private sector information, but it does provide a bit of a barometer, a bit of a hint as to what we might expect. It's generally considered to be a very reliable early indicator of what the Bureau of Labor Statistics, which is the official government jobs report. What the BLS report might show the ADP report showed that private sector employment grew by 54,000 jobs in August. So the ADP report was a lot more glowing, a lot more optimistic than the official BLS report. That's why? The BLS report that came out this morning was such a shock and the effect that it had on markets is that investors flew into bonds. So basically this is how it works. We get a bad jobs report. That means that we know with even greater certainty, we can guess with even greater certainty that the Fed is going to drop interest rates. If we know that the Fed is going to drop interest rates, we buy bonds because we want to lock in today's rates before they get even lower. And so when a bunch of people buy bonds, that makes bond prices rise because the demand for bonds is high, which means that bond yields go down. And so the fact that treasury yields are dropping is a sign that there's a good chance that mortgage interest rates might decline, which is very good news for anybody who wants to buy a home and also for anybody who wants to sell a home because we need more buyers in the market. Right now. There's low transaction volume. Homes that are for sale are spending on average 28 days, average days on market, which is significantly increased from 24 days, which it was last year, and from, I mean, during the pandemic in certain locations it went as low as eight days. So homes that are for sale are sitting on the market longer. There are fewer buyers that are interested, sellers are getting fewer offers. And so we need mortgage interest rates to decline and in order to spur the housing market. And the fact that treasury yields are dropping is very good news in terms of taking a step in that direction. Technically, when the Fed lowers interest rates, they don't directly impact mortgage rates. When the Fed lowers interest rates, they are lowering the rate, the, the overnight interbank lending rate, the rate at which banks loan money to and from one another. But when the Fed lowers interest rates, oftentimes treasury yields also drop. And that's what we're seeing right now. Treasury yields are dropping and mortgage rates are primarily tied to the 10 year treasury yield because most mortgages are 30 year loans. But the average homeowner refinances or sells within seven to 10 years. And so lenders look at the 10 year treasury as a proxy for how long a borrower is going to actually hold that mortgage before it gets paid off. So the 10 year treasury becomes this risk free baseline rate. That's the amount the US government will pay in order to borrow money for 10 years. Right? So it's, if you think of the 10 year treasury as that risk free baseline rate, you take that rate, you add a spread on top of it and Boom, that's your 30 year mortgage rate. And as of this morning, the national average 30 year fixed mortgage rate is between 6.5 to 6.6%, according to Bankrate and Nerdwallet. And for a refinance at 6.7%, what implications does that have? Well, let's math this out. A $300,000 mortgage at a 6.7% interest rate, which is right as of this morning, the prevailing 30 year refi rate, a $300,000 mortgage at a 6.7% interest rate means that the principal and interest portion of your mortgage payment is $1,947 per month. Take that same $300,000 mortgage and refi it at a 6% interest rate. That means your P and I portion of your mortgage payment is $1,799 per month. So you get a 7.6% discount, a discount of $147 a month from a 0.7 percentage point reduction. I know I'm throwing a lot of numbers at you in audio form, but that's basically a mathed out way of saying that dropping interest rates by a little less than three quarters of a percentage point leads to a discount for you of 7.5% in this particular example. In other words, even small tweaks in the mortgage interest rate lead to very steep, deep discounts in what you pay out of pocket for the cost of a mortgage. And the reason that matters is because according to the national association of Realtors, if the average 30 year mortgage interest rate drops below 6%, then 5.5 million more households would qualify for mortgages. And the national association of Realtors predicts that this would lead to a 3% boost in in home sales in 2025 and a 14% boost in home sales in 2026, meaning it would revive the slump in home sales that we're seeing right now. Oh, and by the way, I have some more stats on that. So inventory I mentioned, housing inventory is sitting on the market for a lot longer. Inventory is up 16% as compared to a year ago. So housing inventory is currently at 1.55 million units. And because of this increased inventory and because of higher days on market, there are sellers who are starting to discount their homes. So we've seen price drops in 33 out of the 50 largest metro areas. That's as of July 2025. So what this means is that if you're a buyer, this is a fantastic time to go buy. It's a buyer's market. This is the amazing time to buy a home. You're not going to face a lot of competition. You might be the only person making an offer on a home after that home has languished on the market for weeks. So wonderful, wonderful, wonderful time to go out and buy a home. Terrible time to sell one. So that's an update on the latest jobs report on unemployment, on what the Fed is likely to do, on what treasury yields are doing, on how that affects mortgage interest rates and on why this all matters and particularly if you're buying or selling a home and how this affects you. We're going to take a break to hear from the sponsors who make the show possible. When we come back, I want to talk about Fed Chair Jerome Powell's remarks in Jackson Hole, Wyoming. He made his last major public remarks as Fed chair in Jackson Hole a couple weeks ago. And so we're going to talk about what he said and what it all means. We're going to discuss that after these words from our sponsors. You know when you're a kid and you're thinking about what do you want to be when you grow up? 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