The regime change appears to be underway

Wow...

One of the big surprises in today's jobs report was the contraction in government payrolls. Consensus expected total job growth of 104k, of which 100k would be private jobs - implying growth of 4k for government payrolls. Instead, the government sector lost -10k jobs, thanks to a -14k decline in Federal workers (non-USPS). This shouldn't have been a big surprise... I'll explain quickly in the 🧵

Not a pretty jobs report today... I think this one chart sums up what's wrong with anyone pointing to unemployment as a sign the labor market is "solid." If not for collapsing labor force participation since April, unemployment would've climbed to 4.9% today instead of 4.25%. A lot to unpack in the 🧵

Challenger released its July job cuts report this morning and it showed a 139% y/y increase in layoff announcements. While I usually provide context to downplay such eye-popping figures, in this case the y/y figure isn't too far off from how elevated job cuts are relative to their pre-COVID norm: 98% above normal for July. Details in the 🧵

With this morning's PCE report in hand, we can circle back to see how my control group price index model performed... A quick thread on implications for control group retail sales 🧵

Powell successfully discouraged those hoping for a Sept rate cut yesterday. This morning's relatively hot PCE report just added fuel to that trend. Odds of a Sept rate cut have plunged to less than 40% from 66% at the start of the week. 👇

Picking up from this morning's GDP thread: The wild swings in net exports that flattered headline GDP weren’t just a statistical artifact - they reflect massive, tariff-driven volatility in the underlying goods trade. Let’s take a closer look in the🧵

2Q25 GDP came in hotter than expected (3% vs 2.6% consensus). But don’t be fooled by the headline... Final sales to private domestic purchasers - the cleanest read of underlying demand - rose just 1.07% in Q2. That’s the weakest since 4Q22 and a notable downshift from ~2.5% growth in 2024. Let's dig in🧵

Is housing just one tremor away from full-blown stress or is stabilization ahead? Learn more by checking out the data from HaMMR Digest authors @Econ_Parker and Leonidas Mourelatos.