Transcript
A (0:00)
Well, this is an unusual first Friday because we don't have a jobs report. But we do know that in October, US Companies announced more job cuts in a single month than they have over any single month of the last 20 years. In other words, October was peak job cut month. By contrast, private payrolls, as reported by ADP, rose by 42,000 in October. So we have a little bit of conflicting data, some pessimistic, some optimistic. We're going to take a deeper look at that in today's episode. We also have a new Fed rate cut, some mixed signals in the housing market, and good news about prescription drug prices. We're going to cover all of that in today's first Friday 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 fire. I'm your host, Paula Pant. I have a master's in economic reporting from Columbia. And typically on our Tuesday episodes, we normally answer questions that come from you. And on our Friday episodes, we normally interview guests. But there's one exception, and that exception is the first Friday of every month. That's when we host a special First Friday Macroeconomic update taking a wide lens look at the economy around us. So welcome to the November 2025 Friday First Friday Economic Update. We'll start with a look at jobs because if you want to understand what's happening in the economy, don't look at the stock market, look at the bond market and look at jobs. And this month is unusual because typically the Bureau of Labor Statistics puts out its jobs report on the first Friday of every month, which is why we host these episodes on this day. But we don't have that this month. Instead, what we do have is a report from a private payroll processor called adp. They independently measure the jobs market through weekly payroll data from more than 26 million private sector employees in the U.S. what they found is that private employers added jobs in October for the first time since July. So they found that In October, the US grew by 42,000 new jobs. The bulk of those were in service providing jobs, including trade, transportation and utilities, financial activities, and education and health services. They found net job losses in professional and business services, leisure and hospitality, and information. Regionally, the Northeast and the Mid Atlantic lost jobs, while the west, particularly the Pacific areas were net job gainers. And when it came to the size of businesses, small businesses and mid sized businesses lost jobs minus 10,000 for small businesses businesses, meaning 49 or fewer employees. Medium businesses, which are between 50 to 499 employees, also lost jobs by an order of 21,000. But big businesses, defined as 500 or more employees, gained jobs by a total of 73,000. By the way, if you're wondering why 73,000 is a much bigger number than the 42,000 net new jobs reported in October, it's because were taking the 72,000 jobs that big businesses created or added and subtracting the losses from the mid sized and small companies. So according to the ADP report, which again only focuses on private sector data, big businesses added jobs last month, particularly in the western half of the us. The same report also found that pay growth was flat last month. ADP is not the only player in town and we have some more pessimistic data, this coming from an outplacement firm called Challenger, Gray and Christmas. They found that US Companies announced the most job cuts for any October in more than 20 years. Their data shows that companies announced 153,000 job cuts last month, which is triple the number of job cuts as compared to October of last year and which amounts to the most job cuts for any October since 2003. Their data shows that these job cuts are largely in the technology and warehousing sectors and driven largely by AI. They also found that year to date job cuts have exceeded 1 million, which is the most since the pandemic. And US based employers have announced the fewest hiring plans since 2011. Seasonal hiring plans are the lowest since the firm began tracking in 2012. Again, this is all data coming from Challenger, Gray and Christmas, which is a private outplacement firm. Okay, let's get data from a third firm, Revelio Labs. They released data yesterday Thursday showing that the US had an overall decrease in employment of 9,000 jobs in October. Revelio Labs data says that the US lost 9,000 jobs in October. ADP data says that the US gained 42,000 jobs in October. Now ADP, I should say of all of these various private sector companies that we're looking at, ADP is the the behemoth. They have a tremendous sample size and they are widely trusted. But it is still a good practice to look at data from a variety of sources. And according to Revelio Labs, which unlike ADP includes public sector jobs in its calculations, we had an overall decline of about 9,000 jobs in October, largely driven by the public sector. But there were a couple of industries, notably the education and health services industries, that increased employment. And I should note that Revelio's data on the education and health services industries mirrors what ADP also said. They're in agreement that the biggest job gains are coming from education and healthcare. There are a couple of other aggregate measures that are a little bit concerning when it comes to unemployment. One is youth unemployment. We're seeing large numbers of the 16 through 24 age cohort unemployed, much more so than usual. Another is the number of long term unemployed. According to BLS data, as of August, the number of long term unemployed, defined as people who have been jobless for 27 weeks or more, which is a little over six months. That number has increased by 385,000 over the past year. And long term unemployed account for one quarter of all unemployed people. That's data as of August. Now, that is the highest percentage since February of 2022, and it's a ratio that's increased by 4.2 percentage points over the last year. Even though according to the last official data that we have the unemployment rate, which is 4.3%, and the total number of unemployed people, which is 7.4 million, those numbers have been remarkably steady. But despite that steadiness, the number of long term unemployed inside of those figures has grown. That's at least the picture that we're left with based on the last official data that we have now. We also know that unemployment among people ages 16 to 24 is the highest that it's been since the pandemic. As of August, Youth unemployment was 10.5%, and that's the highest that it's been Since February of 2021, in the middle of the pandemic. At that time, it was 10.9%. Now, as to why that is, there's of course we can only speculate. But a few ideas that have been floated include the fact that in a soft job market, when there are fewer new jobs that are being created, the inexperienced are unlikely to get hired. The few jobs that are available are likely to go to more experienced workers. That could be one reason. That's another way of saying of the jobs that are being created, fewer of them are entry level. In addition to that, or perhaps corresponding with that, AI can take over a lot of entry level tasks, which leads to a displacement of college graduates from those types of jobs. One question that I received recently from a listener who reached out on Twitter, they asked, how is it possible for unemployment to be historically low while at the same time we're losing jobs? Fed Chair Jerome Powell phrased the answer very, very well when he said, you've got A low firing, low hiring environment, end quote. So low firing, low hiring, people who have jobs are staying in their jobs. That's the good news. But not a lot of new jobs are getting created, and that means it's harder than ever for particularly younger workers to break into the job market. By the way, in that same set of remarks, Jerome Powell warned against assigning too much blame to AI, and he talked about how AI may be part of the story, end quote. But he also said that he believes that some of the main drivers are a broadly slowing economy and restraint in hiring, given a sluggish economy. And JPMorgan Chase CEO Jamie Dimon echoed a similar sentiment when he talked about how if the market stay good and they'd run their company well, AI will not cause net job losses inside of JP Morgan. But in fact, it will cause some people to transfer or shift jobs, but could actually lead to hiring. So all of that is to say we know that there is sluggish job growth, particularly at the entry level. And while many people want to point the finger at AI for that, AI is one element of a mosaic of factors. Speaking of Jerome Powell, on October 29, the Fed issued a second consecutive rate cut, cutting rates again by a quarter of a percentage point, bringing the target range of the Fed funds rate to between 3.75 to 4%. There were, and this is interesting, there were two dissenting votes, but for opposite reasons. One of the dissenting votes came from a member of the fomc, the Federal Open Market Committee, who wanted a bigger cut, a half point cut rather than a quarter point. The other dissenting vote came from someone who wanted no cut at all. Now, the reason two dissenting votes are interesting, and I've spoken about this in previous episodes, for decades, the Fed has largely had a practice of not publicly indicating dissent. You know, if you go way back to the 1970s or 1980s, you go back to the Volcker years, there was dissent in the Fed then. But if you go to the 90s and the Greenspan years, the Fed wanted to present a public image of everybody being in alignment. That is no longer the case. In the past handful of Fed meetings, we've been starting to see dissent. And the fact that there were two dissenting votes this time around shows that dissent is now a thing again inside of the Fed, which indicates a cultural shift from the way that it used to be. Okay, so if you're sitting here thinking, all right, that's great that the culture inside the Fed's changing, but how is that going to impact Me, a lowered fence funds rate means a couple of things. Number one, for any borrowing that you do, it largely will make things better. Car loans, mortgages. We'll talk more about that in a moment. Car loans, mortgages, any personal loans that you take out, those rates are likely going to go down. On the other hand, for money that you're saving in your high yield savings account, those yields are likely also going to go down. So anytime rates lower, it's good for borrowers, bad for savers. Now, the Fed is going to meet one more time. They're going to be meeting in December of this one more time this year, I should say one more time this calendar year. They're going to be meeting in December. And Jerome Powell has not given any hint as to how they are leaning for that meeting, whether they're going to cut rates for a third consecutive time or not. That said, the markets are pricing in a decent probability that the Fed will. Goldman Sachs is forecasting that the Fed is going to cut rates in December. And According to CME FedWatch, investors across the board are forecasting a 65% probability of a cut. Meanwhile, mortgage interest rates as of today, the first Friday, November 7th, the current average interest rate for a 30 year fixed rate mortgage is 6.26%. That's according to Bankrate. That is significantly lower than it was in June, July, August, but it's still not down to the 6% number that the national association of Realtors states is going to be a inflection point line. Now, I should note that it isn't the Fed funds rate per se that impacts mortgage interest rates. It's the 10 year treasury yield, which right now is 4.15, which is up from around 4% last week. The fed funds rate influences the 10 year treasury, but other factors such as inflation and economic worries play into the 10 year treasury as well. In any event, big picture, mortgage interest rates are at 6.26 right now. It's a big improvement from over the summer, but it's not quite where we need it to be in order to see some bigger moves in the housing market for that to happen, to see more buyers enter the market, to see more inventory start moving, we want to get that interest rate below 6%. According to data from Redfin, using data gathered during the second quarter of 2025, about 1 out of every 5 mortgaged homeowners has an interest rate that is 6% or greater. And just shy of 1 out of every 10 homeowners has an interest rate that's between 5% to 5.9%. So the reason that we want mortgage interest rates to fall below 6% is because when we can get into that five handle zone, that one out of every 10 mortgage homeowner that has a current mortgage rate that's in the five handle, they get freed up from the lock. In effect, they feel the freedom to be able to sell out of their current home and buy into a new one because they're not going to be trading a substantially lower interest rate for a substantially higher one. And the more currently mortgage homeowners that you can free from that lock, in effect, the more you can create activity in the real estate market again, which right now there's not a lot of activity. It's a great time to be a buyer because you're not going to have a lot of competition. But as a seller it's a pretty yucky time because there's just not a lot of activity. There aren't a lot of buyers. So that's what's going on to the best of our ability to understand it, given the data limitations that we currently have. That is what is currently going on with the jobs market. Employment, unemployment, job creation, and that's what's going on with the fed funds rate and interest rates overall. We're going to take a break to hear from the sponsors who make the show possible. When we return, we're going to cover some of the other things that have been happening. Social Security is going to increase payments. There is some very good news about prescription costs. There's some bad news about car loans. Many more car loans are going into default than they have historically. We're going to talk about all of that and more next. I've been using Gusto since about 2016 or 2017 when I hired my first full time employee and I've stuck with them ever since. They handle everything. They take the stress out of payroll and benefits in hr. Gusto is online payroll and benefits software built for small businesses. It's all in one remote, friendly and incredibly easy to use. You can pay, hire, onboard and support your team from anywhere. We're talking automatic payroll tax filing, health benefits, simple direct deposits, workers comp 401k. Gusto makes it really simple and there are no hidden fees, no surprises. And they've got lots of automated tools built right in like offer letters and onboarding materials. And you can get direct access to certified HR experts. Try Gusto today@gusto.com Paula and get three months free when you run your first payroll. That's three months of free payroll@gusto.com Paula One more time Gusto.com Paula when you're little, you think about what you want to be when you grow up. Like oh, I want to be an astronaut. And then when you grow up, you do still think about those big dreams. But you think about it in the context of what impact, purpose, legacy do I want to leave? For many people, that question can lead to opening up your own business or your own nonprofit or some type of an organization. And for that you'll need a website, a payment system, a logo, a way to advertise to new customers and and all of that can be very overwhelming. But that's where today's sponsor Shopify comes in. Shopify is the commerce platform behind 10% of all e commerce in the US from household names like Mattel and Gymshark to brands that are just getting started. They'll get you ready with beautiful ready to go templates that match your brand style. Shopify's AI tools will help you write product descriptions and generate discount codes and they'll help you find your customers with email and social media campaigns. And they have award winning 24. 7 support turn those dreams into and give them the best shot at success with Shopify. Sign up for your 1 month $1 per month trial period and start selling today at shopify.com Paula go to shopify.com Paula shopify.com Paula.