Off by Nearly 1 MILLION Jobs? Why New Jobs Report Will Impact Rentals

0:00Big economic news dropped over the last week. From strong labor data to huge revisions about the data we got last year, a new inflation print, all this together brought us new insights that can help us see where the economy and the housing market is heading. So in today's episode of On the Market, we're diving into the latest economic news to help you make sense of the markets and help drive decision-making. We're talking about new jobs reports, inflation data, consumer sentiment, and how all of that comes together to impact our mortgage rate outlook. We're also going to discuss some particular sectors of the housing market that are poised to shine and which areas might be at greatest risk.

0:39This is On The Market. Let's get into it.

0:47Hey everyone, it's Dave. Welcome to On The Market. Last week was a big one for economic news and all the things we learned are going to directly impact mortgage rates. They're going to impact buyer demand and the direction of the housing market. So we're gonna dive into the latest data today and talk about what it means as we head into the hopefully busy spring buying season. First up, we're gonna talk about labor data. What's going on in the job market? This is a big question out there because over the last couple of months, we've had a lot of conflicting signals. But before I dive into what we learned, I just wanted to make clear why this even matters for real estate investors.

1:27because labor market might not seem obvious what this means for the housing market, but first, it helps us understand buyer activity. Like people who are losing their jobs or are fearful of their jobs, probably not going to buy a house. Second, it helps us understand rental demand and rent growth because same sort of thing about demand applies for renters. If they are worried about their job, wages aren't growing, that sort of thing, it's probably going to stagnate rent demand. Third, it helps us predict what happens with interest rates because the Federal Reserve, they are watching closely. Bond investors who dictate where mortgage rates go, they watch these things closely.

2:06So we need to keep an eye on what's going on in the labor market. It really does impact the housing market. So let's talk about what we learned. Overall, it was good news. We saw strong overall job growth with non-farm payrolls, which is basically how the BLS tracks labor data. We saw an addition of 130 ,000 jobs in January, which is great. That actually beat expectations of just 75 ,000. So that's a significant beat. We also saw the unemployment rate, which has its flaws, but is still a good metric to track alongside everything else we're looking at. Unemployment rate actually ticked down from 4.4 % in December to 4.3%.

2:48Now, I'll just spill the beans here. that's not necessarily from an increase in hiring, although we did see jobs added. The unemployment rate most likely is ticking down because we have a smaller labor force due to less immigration. When you dig into the labor data, you see that the economy is kind of splitting. Most of the jobs that were added in January were highly, highly concentrated in health care. That area of our economy is still growing. They are hiring. But if you look at other sectors in the economy, it's not doing that great. We see that manufacturing is down 100 ,000 jobs in the last year.

3:28Same with IT, basically tech. We also see professional and business services down big. These are white collar jobs down 200 ,000 over the last year. So the big headline is good. It is good that unemployment is shrinking. It is good that we added over 100 ,000 jobs in January. but it really depends on the market. If you work in tech or IT or manufacturing, you're probably not feeling great about the labor market because those sectors are actually losing. Whereas if you work in healthcare, you probably feel great about your job prospects. So that was the big headline news, but there was actually some other news that came out with this BLS report that I think maybe is even bigger news.

4:11In January, the BLS always releases their annual revisions. Basically, the way that the BLS tracks employment data is not very good. I don't know how else to say it. People have been critical of it for a long time. What I always say on the show when we talk about labor data is that there is no one perfect labor metric. You kind of have to look at the big picture. There's five, six, eight different things that you should be looking at. You can kind of, if you look at them all, get a holistic sense of where things are going. That said, the BLS, this is the big thing that investors look at. It's on the front page of the Wall Street Journal.

4:48You know, this is the big number. But it's also not very good. And you see massive revisions from time to time where the BLS actually says, you know what, what we released, that preliminary estimate wasn't very good. And actually, the data is changing. And they released their big annual revision for the year in January. So what it actually shows is that between 2024 and 2025, the total number of jobs that they had previously announced was revised down by nearly 1 million jobs. That is crazy. So basically, they were releasing data, thought that we had these million jobs added. They said more than that.

5:25But they've come out and said, actually, we overstated how many jobs were added by a million jobs. And I know that's a lot. It's crazy. It's actually the second largest negative revision on record. So yeah, that's a really big revision. But if you pay attention to this stuff, you probably already know that the BLS, the Bureau of Labor Statistics, their data isn't perfect. And I'll just say, I don't think that these revisions are a scam. I don't think they're necessarily playing games. I just think they have a very bad, imperfect way of collecting data. They extrapolate a lot. And this has been going on for a long time.

6:03This has been going on for 20 years, right? So it's not like something has really changed. And I think it's natural that during times where the economy is shifting a lot, like right now, or like 2009, when they released the other biggest revision ever, that it's not as accurate because they're extrapolating a lot. And when patterns shift, it is harder to extrapolate. But I will also say, I think these revisions are needed. I would rather them admit that they were wrong and then to release new numbers, even though it's frustrating and it makes it a lot harder to trust the new numbers because they are probably going to change it.

6:40And this is one of the several reasons that we need to look at the big picture. Again, many different data sets, none of them perfect. We got to take in the whole thing. So beyond just this BLS data, what else are we seeing? We're seeing that ADP, which is a private company, they track jobs numbers every single month, but they're a private company, not the government. they showed only 22 ,000 jobs added, which is a major divergence. It's still up. That's good. Still jobs being added, but off by over 100 ,000. So it kind of is a head scratcher. Makes you wonder which one is accurate. To me, I think the most important indicator that I'm looking at right now in February of 2026 is job openings.

7:26This is a really important indicator of just how many companies are feeling bullish and want to invest in labor and are out there hiring. It is down to 6.54, which in a historical context, it's a pretty normal number, but it is falling quickly. Like it is going down a lot in the last two months, down almost a full million in two months. That's like 15 % in two months. That's a big deal. And it's something that I think indicates that companies are going to pull back more on hiring and hiring. So that's concerning and something I personally think is going to continue. If you just look at trends in AI and investment cases, people aren't hiring that much.

8:09But on the other side of things, layoffs are really not as bad as the media makes it out to be. Like if you look at initial unemployment claims, this is a weekly set of data that comes out that just looks at how many people are filing for unemployment insurance for the first time. So that's a good indicator of who got laid off, right? People who get laid off, they file for unemployment insurance. And so you look at those claims, they're actually been really flat. Like they fluctuate week to week, but if you just look back over 2025 and into early 2026, it really hasn't changed that much. Jerome Powell, the chairman of the Fed, actually said we're in the no fire, no hire economy.

8:49I mean, I think that was like two press conferences ago, if you care about these things. And I think that's a pretty accurate assessment of what we're seeing. We're not seeing massive layoffs, but we are not seeing people hiring either. So the direction of the labor market, not super strong, but definitely not that weak either. I think we're still sort of in limbo trying to understand what direction this is going ahead. All right. So that's what we've learned about the labor market so far. More conflicting signals. Personally, I am not feeling like we're in a very strong labor market, but I am encouraged to see that we're not in an emergency status either.

9:26An unemployment rate of 4.3 is really low, but there are signs that things are starting to weaken. And so we need to keep an eye on that. The other major economic indicator we as real estate investors should be paying attention to is inflation. And we got a brand new report on inflation last Friday. And we're gonna get into that right after this quick break. Passive income sounds amazing until it involves 17 apps and active maintenance. That's where the Gemini credit card comes in. It earns you Bitcoin back on everyday purchases automatically. You use it like a normal credit card for lunch or gas or groceries.

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12:12Welcome back to On the Market. I'm Dave Meyer, giving you an economic update on all the key indicators we as real estate investors should be watching. First, we talk about the conflicting labor data that we have received over the last week or so, but we also got an inflation report, which is going to be really important for the future of mortgage rates. So let's talk about what was in that. Mostly, it was good news. We got a good inflation print last week, which personally I find encouraging. The CPI rose 2.4 % in January year over year, which is not bad. In December, it was up 2.7%, so it actually came down a bit, and it was below the 2.5 % that economists were expecting.

12:57Yes, it is still above the 2 % Fed target, but it is also way down from where it was a few years ago when it briefly topped 9%. So it's not where it needs to be. But, you know, for me, if we have a 2 % Fed target, we're at 2.4%, we're getting pretty darn close to where we want to be for inflation. I also want to call out that it has been almost a full year now since the quote-unquote Liberation Day tariffs were announced. And although data shows that U.S. consumers are footing roughly 90 % of the bill for those tariffs, it is not businesses or other countries paying it, 90 % of those costs are going to U.S.

13:35consumers, overall inflation has not gone up significantly. The products that are subject to tariffs have certainly gone up, but that has been offset by falling prices elsewhere. We see increases in things like ground beef. That's the highest one. It was up 70 % year over year. Home healthcare, hospital care, watches. Those are all up well above the target, but we're also seeing declines in gas prices. That's probably the major thing that's driving down the overall CPI is that gas prices are going down. We've also seen declines in used car prices, which everyone knows have been crazy over the last couple of years.

14:14and we saw a big drop in eggs. The egg drama continues. It's down 7 % in just one month. Truly, who would have thought three years ago that egg prices would be such a subject of interest on an economic show? But here we are, my friends, talking about eggs, and they are down 7%, which is good news. Now, when we combine these things together, when we look at the labor data and the inflation data that we just got last Friday, it starts to inform what we should be expecting for mortgage rates. Because as we know, the Federal Reserve, their job is to sort of walk this tightrope, keep the seesaw in balance between the labor market and inflation.

14:56They don't want to cut rates too much because they fear that can cause inflation, but if you keep rates too high to control inflation, that can hurt the labor market. So they're always trying to find this quote-unquote quote, neutral rate is this magical number that they're trying to achieve that gets us the optimal labor market and the optimal inflation rate. And the economic reports, the two that I just shared with you, should show you why they have a difficult job right now and why I don't think rates are gonna come down that soon. Look at these reports. Hiring was solid. Unemployment rate is low.

15:32That would suggest holding rates higher, not doing more cuts because the economy, it doesn't need stimulus right now. However, with lower inflation, many would argue that we now have wiggle room to lower the federal funds rate, lower short-term borrowing costs, and provide some juice for the economy. The fact is we just can't get a clear signal. Everything is too uncertain and often it's contradictory. Mortgage rates did happen to fall this week. I'm recording this a few days before the release, but we may even see rates in the high fives this week, which would be exciting. I think mentally, psychologically, that is helpful, but we've seen it before.

16:12We know that this could go right back up. And I just don't think we are going to see big moves in the mortgage market because we have constantly contradictory data and there is no clear signal on which way things are heading. Are we gonna see inflation spike? Is it gonna continue going down? Is the labor market gonna be decimated by the AI or is that all overblown hype? So that being said, I'm sticking with my forecast this year, as of now, for mortgage rates to remain in the five and a half to six and a half percent range because nothing in the data suggests that we're going to see anything else.

16:49And I've said it before, and I'll just say it one more time, that I think this is a relatively good thing. Mortgage rates being stable is what we want as investors, whether you're even if you're an agent or a loan officer out there, more stable conditions create predictable underwriting. It creates home buying conditions that people can wrap their head around. They're not sitting around waiting, wondering if they wait a month, is there going to be a quarter point better rates or a half point better rates? People will get used to it if we have these stable rates. And so when we look at the labor market and inflation data together, I think stability, you know, it's still going to fluctuate a quarter point here and there, but I think it's going to stay in this five and a half to six and a half percent range.

17:32And personally, that is something I can deal with. Now, of course, I would love to get to a place where we don't have to talk about mortgage rates all the time. But the fact is, it is going to impact the direction of the housing market. And there is one other data set I want to go over that is also going to impact the direction of the housing market, which is consumer sentiment, how people are feeling about the economy is going to impact demand for rentals. It's going to impact demand for homes. And we're going to dive into that data right after this break. What if your CRM actually did the hard work for you?

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21:20Welcome back to On the Market. I'm Dave Meyer going over the latest economic data. Before the break, we talked about the confusing signals from the labor market, the good inflation print that we got, but how those two sort of conflicting pieces of information are probably going to keep mortgage rates relatively stable. And that should help the housing market gain a little bit of traction. Stability is good. Mortgage rates, yeah, they're not gonna move that much, but they're down 100 basis points from where they were last year. But there is one other less talked about variable in the housing market that we should talk about, which is consumer sentiment.

21:58It, as of three months ago, was just dropping, dropping, dropping, was really at one of the lowest points we've seen in a long time. And the good news is that over the last three months, it has gone up. We've seen it start to inch back up, but I want to be honest that it's still not very good. It's still 40 % roughly below where it was a year ago. So people are not feeling great about the economy. Now, when you dig into the data, and this is going to really inform sort of what we should be thinking about as investors, when you dig into the data, there is a big gap in consumer sentiment. It reflects a lot of the K-shaped economy that we have in the United States right now.

22:39If you look at sentiment for consumers who have large stock portfolios, they're actually feeling really good about the housing market. We've seen, sure, stock market fluctuate over the last couple of months. It's not just going up and up and up, which is normal, I should mention. But those people, people who own assets, are feeling pretty good about the economy. They're out there buying. They're making up a huge percentage of consumer spending right now. But for consumers without stockholding, so folks typically on the lower end of the income spectrum, sentiment for those consumers has not gotten better.

23:14It's actually stagnated at really, really low levels. And this K-shaped divide matters for the housing market. It matters for housing demand because wealthier buyers are probably more confident. Meanwhile, first time entry level buyers or renters are feeling far less confident. It is one of the reasons you've probably seen in recent months, these headlines that show that the luxury housing market is on fire. And that is true. If you look at listings for like crazy listings, like over a million dollars. Yeah. But also like listings over$5 million listing over$10 million. That is one of the strongest areas of the housing market right now, while other areas are starting to stagnate.

23:59So this is something I want everyone listening to this to take note of, because it really matters whether you're buying in A class, B class, C class, D class neighborhoods. If you're buying workforce housing, if you're buying for people, for renters in the middle or lower end of the income spectrum, demand is probably going to be softer. I just, you have to expect this, right? Sure, affordability has gotten better, but when people are not feeling very good about the economy, they don't buy a lot. Economics sometimes is called the dismal science because honestly, some of it is science, yes, but a lot of it is just psychology.