by Calculated Risk on 12/07/2025 06:20:00 PM

Weekend:
• Schedule for Week of December 7, 2025

Monday:
• No major economic releases scheduled.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 and DOW futures are little changed (fair value).

Oil prices were up over the last week with WTI futures at $60.11 per barrel and Brent at $63.76 per barrel. A year ago, WTI was at $69, and Brent was at $74 - so WTI oil prices are down about 15% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $2.90 per gallon. A year ago, prices were at $2.97 per gallon, so gasoline prices are down $0.07 year-over-year.

by Calculated Risk on 12/07/2025 11:50:00 AM

Most analysts expect the FOMC to reduce the Fed Funds rate by 25bps at the meeting this week to a target range of 3-1/2 to 3-3/4 percent.    Market participants currently expect two additional rate cuts in 2026.

Analysis suggests rates are currently slightly restrictive (Cleveland Fed) or even already accommodative (even before this rate cut).  So, to cut rates in this environment, FOMC members are clearly expecting either inflation to decline quickly or an employment recession, or both.  This outlook should show up in the projections (lower inflation, higher unemployment rate).

From Goldman Sachs:

The FOMC is widely expected to deliver a third consecutive 25bp interest rate cut to 3.5-3.75% at what will likely be a contentious December meeting next week. ... The case for a cut is solid, in our view. Job growth remains too low to keep up with labor supply growth, the unemployment rate has risen for three months in a row to 4.4%, other measures of labor market tightness have weakened more on average, and some alternative data measures of layoffs have begun to rise recently, presenting a new and potentially more serious downside risk.

From BofA:

The Fed has signaled that it will cut rates by 25bp to 3.5-3.75% at its Dec meeting. We look for two or three substantive changes in the FOMC statement. The description of labor market conditions is likely to omit the language that the u-rate “remained low”, to reflect the 32bp uptick over the last three months.
...
The SEP is likely to show upgrades to growth in 2025 and 2026. ... However, as a mark-to-market based on the latest data, we think the u-rate for 4Q 2025 will be taken up by a tenth to 4.6%. ... These changes would provide some cover for cutting rates despite the expected upgrades to the growth outlook.
emphasis added

Projections will be released at this meeting. Here are the September projections.  

The BEA's estimate for first half 2025 GDP showed real growth at 1.6% annualized. Most estimates for Q3 GDP are around 3.5%.  That would put the real growth for the first three quarters at 2.2% annualized - well above the top end of the September projections.   So GDP for 2025 will likely be increased.

GDP projections of Federal Reserve Governors and Reserve Bank presidents, Change in Real GDP1
Projection Date	2025	2026	2027
Sept 2025	1.4 to 1.7	1.7 to 2.1	1.8 to 2.0
Jun 2025	1.2 to 1.5	1.5 to 1.8	1.7 to 2.0

¹ Projections of change in real GDP and inflation are from the fourth quarter of the previous year to the fourth quarter of the year indicated.

The unemployment rate was at 4.4% in September.  The unemployment rate will likely increase further this year. There was no data for October due to the government shutdown, and the November report will be released on December 16th - the week after the FOMC meeting - so the FOMC is flying blind this week on the unemployment rate.  However, they will probably increase the 2025 projection (and possibly 2026) as justification for the rate cut.  An unemployment rate of 4.6% over the next few months might be recessionary (according to the Sahm rule).

Unemployment projections of Federal Reserve Governors and Reserve Bank presidents, Unemployment Rate2
Projection Date	2025	2026	2027
Sept 2025	4.4 to 4.5	4.4 to 4.5	4.2 to 4.4
Jun 2025	4.4 to 4.5	4.3 to 4.6	4.2 to 4.6

² Projections for the unemployment rate are for the average civilian unemployment rate in the fourth quarter of the year indicated.

As of September 2025, PCE inflation increased 2.8 percent year-over-year (YoY), up from 2.7 percent YoY in August.  Projections for PCE inflation will probably remain unchanged or lowered slightly.

Inflation projections of Federal Reserve Governors and Reserve Bank presidents, PCE Inflation1
Projection Date	2025	2026	2027
Sept 2025	2.9 to 3.0	2.4-2.7	2.0 to 2.2
Jun 2025	2.8 to 3.2	2.3-2.6	2.0 to 2.2

PCE core inflation increased 2.8 percent YoY, down from 2.9 percent in August.   Projections for 2025 core PCE inflation will likely be decreased.

Core Inflation projections of Federal Reserve Governors and Reserve Bank presidents, Core Inflation1
Projection Date	2025	2026	2027
Sept 2025	3.0 to 3.2	2.5-2.7	2.0 to 2.2
Jun 2025	2.9 to 3.4	2.3-2.6	2.0 to 2.2

by Calculated Risk on 12/06/2025 02:48:00 PM

At the Calculated Risk Real Estate Newsletter this week:

Click on graph for larger image.

• Inflation Adjusted House Prices 3.0% Below 2022 Peak

• Q3 Update: Delinquencies, Foreclosures and REO

• Final Look at Housing Markets in October and a Look Ahead to November Sales

• Asking Rents Soft Year-over-year

This is usually published 4 to 6 times a week and provides more in-depth analysis of the housing market.

by Calculated Risk on 12/06/2025 08:11:00 AM

Special Note: There is still uncertainty on when some economic reports will be released. The employment report for November will NOT be released this week.

This will be a light week for economic data.  The FOMC meets this week and is expected to cut rates by 25bp.

----- Monday, December 8th -----
No major economic releases scheduled.

----- Tuesday, December 9th -----
6:00 AM: NFIB Small Business Optimism Index for November.

10:00 AM: Job Openings and Labor Turnover Survey for October from the BLS.

This graph shows job openings (black line), hires (purple), Layoff, Discharges and other (red column), and Quits (light blue column) from the JOLTS.

obs openings increased in August to 7.23 million from 7.21million in July.

The number of job openings (black) were down 6% year-over-year. Quits were down 3% year-over-year.

----- Wednesday, December 10th -----
7:00 AM ET: The Mortgage Bankers Association (MBA) will release the results for the mortgage purchase applications index.

2:00 PM: FOMC Meeting Announcement. The Fed is expected to cut rates 25bp at this meeting.

2:00 PM: FOMC Forecasts This will include the Federal Open Market Committee (FOMC) participants' projections of the appropriate target federal funds rate along with the quarterly economic projections.

2:30 PM: Fed Chair Jerome Powell holds a press briefing following the FOMC announcement.

----- Thursday, December 11th -----
8:30 AM: The initial weekly unemployment claims report will be released.  There were 191,000 initial claims last week.

8:30 AM: Trade Balance report for September from the Census Bureau.

This graph shows the U.S. trade deficit, with and without petroleum, through the most recent report. The blue line is the total deficit, and the black line is the petroleum deficit, and the red line is the trade deficit ex-petroleum products.

The consensus is the trade deficit to be $65.5 billion.  The U.S. trade deficit was at $59.6 billion in August.

10:00 AM: the Q3 2025 Housing Vacancies and Homeownership from the Census Bureau.

10:00 AM: State Employment and Unemployment (Monthly) for September 2025

----- Friday, December 12th -----
No major economic releases scheduled.

by Calculated Risk on 12/05/2025 04:20:00 PM

From the Association of American Railroads (AAR) AAR Data Center. Graph and excerpts reprinted with permission.

Continued Economic Uncertainty Reflected in Rail Volumes
...
In November 2025, total U.S. rail carloads were up 1.5% over November 2024, and 9 of the 20 major rail carload categories posted year-over-year gains. ...

U.S. rail intermodal shipments, which are driven primarily by consumer goods, fell 6.5% in November 2025 from November 2024. Year-to-date intermodal volume through November was 13.00 million containers and trailers, up 1.9% (nearly 247,000 units) over last year.
emphasis added

The AAR Freight Rail Index (FRI) combines seasonally adjusted month-to-month rail intermodal shipments with carloads excluding coal and grain. The index is a useful gauge of underlying freight demand associated with the industrial and consumer economy. The index fell 0.4% in November 2025 from October 2025, its seventh decline in the past eight months. The index is 4.4% below its year-earlier level, largely because of the intermodal slowdown in recent months.

by Calculated Risk on 12/05/2025 01:04:00 PM

The advance release of Q3 GDP has been cancelled. Q3 GDP will be released on Dec 23rd.

From BofA:

Since our last weekly publication, 3Q GDP tracking increased from 2.8% q/q sarr to 3.0% The upward revision was largely due to the strong September durable goods report that led us to revise higher our equipment estimate. [December 5th estimate]
emphasis added

From Goldman:

We lowered our Q3 GDP tracking estimate by 0.3pp to +3.5% (quarter-over-quarter annualized) and our Q3 domestic final sales estimate by 0.2pp to +2.6%. [December 5th estimate]

And from the Atlanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.5 percent on December 5, down from 3.8 percent on December 4. After this morning’s personal income and outlays release from the US Bureau of Economic Analysis, the nowcast for third-quarter real personal consumption expenditures growth declined from 3.1 percent to 2.7 percent. [December 5th estimate]

by Calculated Risk on 12/05/2025 10:47:00 AM

Here is a graph of the year-over-year change in shelter from the CPI report and housing from the PCE report this morning, both through September 2025.

CPI Shelter was up 3.6% year-over-year in September, down slightly from 3.6% in August, and down from the cycle peak of 8.2% in March 2023.

Housing (PCE) was up 3.7% YoY in September, down from 3.9% in August and down from the cycle peak of 8.3% in April 2023.

Since asking rents are mostly flat year-over-year, these measures will slowly continue to decline over the next year as rents for existing tenants continue to increase.

The second graph shows PCE prices, Core PCE prices and Core ex-housing over the last 3 months (annualized):

Key measures are above the Fed's target on a 3-month basis. 

3-month annualized change:

PCE Price Index: 2.8%
Core PCE Prices: 2.7%
Core minus Housing: 2.6%

by Calculated Risk on 12/05/2025 10:00:00 AM

From the BEA: Personal Income and Outlays, September 2025

Personal income increased $94.5 billion (0.4 percent at a monthly rate) in September, according to estimates released today by the U.S. Bureau of Economic Analysis. Disposable personal income (DPI)—personal income less personal current taxes—increased $75.9 billion (0.3 percent) and personal consumption expenditures (PCE) increased $65.1 billion (0.3 percent).

Personal outlays—the sum of PCE, personal interest payments, and personal current transfer payments—increased $70.7 billion in September. Personal saving was $1.09 trillion in September and the personal saving rate—personal saving as a percentage of disposable personal income—was 4.7 percent.
...
From the preceding month, the PCE price index for September increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.2 percent.

From the same month one year ago, the PCE price index for September increased 2.8 percent. Excluding food and energy, the PCE price index increased 2.8 percent from one year ago.
emphasis added

The September PCE price index increased 2.8 percent year-over-year (YoY), up from 2.7 percent YoY in August.

The PCE price index, excluding food and energy, increased 2.8 percent YoY, down from 2.9 percent in August.

The following graph shows real Personal Consumption Expenditures (PCE) through August 2025 (2017 dollars). Note that the y-axis doesn't start at zero to better show the change.

Click on graph for larger image.

The dashed red lines are the quarterly levels for real PCE.

Personal income was at expectations and spending was below expectations.

Inflation was slightly lower than expected.

by Calculated Risk on 12/05/2025 09:49:00 AM

From Manheim Consulting today: Manheim Used Vehicle Value Index: November 2025 Trends

The Manheim Used Vehicle Value Index (MUVVI) rose to 205.4, reflecting a 1.3% increase in November’s wholesale used-vehicle prices (adjusted for mix, mileage, and seasonality) compared to October. The index is mostly unchanged compared to November 2024. The long-term average monthly move for November is a decrease of 0.6%.
emphasis added

Click on graph for larger image.

This index from Manheim Consulting is based on all completed sales transactions at Manheim’s U.S. auctions.

The Manheim index suggests used car prices increased in November (seasonally adjusted) and were mostly unchanged YoY.

by Calculated Risk on 12/04/2025 08:11:00 PM

Note: Mortgage rates are from MortgageNewsDaily.com and are for top tier scenarios.

Thursday:
• At 10:00 AM ET, Personal Income and Outlays for September. The consensus is for a 0.4% increase in personal income, and for a 0.4% increase in personal spending. And for the Core PCE price index to increase 0.2% (up 2.9% YoY).

• Also at 10:00 AM, University of Michigan's Consumer sentiment index (Preliminary for December).