by Calculated Risk on 1/09/2026 01:12:00 PM

The Federal Reserve released the Q3 2025 Flow of Funds report today: Financial Accounts of the United States.

The net worth of households and nonprofits rose to $181.6 trillion during the third quarter of 2025. The value of directly and indirectly held corporate equities increased $5.5 trillion and the value of real estate decreased $0.3 trillion.
...
Household debt increased 4.1 percent at an annual rate in the third quarter of 2025. Consumer credit grew at an annual rate of 2.3 percent, while mortgage debt (excluding charge-offs) grew at an annual rate of 3.2 percent.

Click on graph for larger image.

The first graph shows Households and Nonprofit net worth as a percent of GDP.  

Net worth increased $6.1 trillion in Q3.  As a percent of GDP, net worth increased in Q3 but is still below the peak in 2021.

This includes real estate and financial assets (stocks, bonds, pension reserves, deposits, etc.) net of liabilities (mostly mortgages). Note that this does NOT include public debt obligations.

The second graph shows homeowner percent equity since 1952.

Household percent equity (as measured by the Fed) collapsed when house prices fell sharply in 2007 and 2008.

In Q3 2025, household percent equity (of household real estate) was at 71.6% - down from 72.0% in Q2, 2025

Note: This includes households with no mortgage debt.

The third graph shows household real estate assets and mortgage debt as a percent of GDP.  

Mortgage debt increased by $108 billion in Q3.

Mortgage debt is up $2.99 trillion from the peak during the housing bubble, but, as a percent of GDP is at 43.9% - down from Q2 - and down from a peak of 73.1% of GDP during the housing bust.

The value of real estate, as a percent of GDP, decreased in Q3 and is below the recent peak in Q2 2022, but is well above the median of the last 30 years.

by Calculated Risk on 1/09/2026 10:34:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Housing Starts Decreased to 1.246 million Annual Rate in October

A brief excerpt:

Note: The Census Bureau is still catching up. They released Start data for September and October today, but we are still missing November data.
...
The third graph shows the month-to-month comparison for total starts between 2024 (blue) and 2025 (red).

Total starts were down 7.8% in October compared to October 2024.

Year-to-date (YTD) starts are down 0.7% compared to the same period in 2024. Single family starts are down 7.0% YTD and multi-family up 18.0% YTD.

There is much more in the article.

by Calculated Risk on 1/09/2026 09:59:00 AM

From the Census Bureau: Permits, Starts and Completions

Housing Starts:
Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,246,000. This is 4.6 percent below the revised September estimate of 1,306,000 and is 7.8 percent below the October 2024 rate of 1,352,000. Single-family housing starts in October were at a rate of 874,000; this is 5.4 percent above the revised September figure of 829,000. The October rate for units in buildings with five units or more was 347,000.

Building Permits:
Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,412,000. This is 0.2 percent below the revised September rate of 1,415,000 and is 1.1 percent below the October 2024 rate of 1,428,000. Single-family authorizations in October were at a rate of 876,000; this is 0.5 percent below the revised September figure of 880,000. Authorizations of units in buildings with five units or more were at a rate of 481,000 in October.
emphasis added

Click on graph for larger image.

The first graph shows single and multi-family housing starts since 2000.

Multi-family starts (blue, 2+ units) decreased month-over-month in October.   Multi-family starts were down 7.9% year-over-year.

Single-family starts (red) increased in October and were down 7.8% year-over-year.

The second graph shows single and multi-family housing starts since 1968.

Total housing starts in October were well below expectations.   We are still missing data for November due to the government shutdown.

I'll have more later …

by Calculated Risk on 1/09/2026 09:20:00 AM

The headline jobs number in the December employment report was slightly below expectations, however October and November were revised down by 76,000. The unemployment rate decreased to 4.4%.

Earlier: December Employment Report: 50 thousand Jobs, 4.4% Unemployment Rate

Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate was unchanged in December at 83.8%% from 83.8% in November.

The 25 to 54 employment population ratio increased to 80.7% from 80.6% the previous month.

Both are down slightly from the recent peaks, but still near the highest level this millennium.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.8% YoY in December, up from 3.6% YoY in November. 

Part Time for Economic Reasons

From the BLS report:

"The number of people employed part time for economic reasons, at 5.3 million, changed little in December but is up by 980,000 over the year. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons decreased in December to 5.34 million from 5.49 million in November.  This is well above the pre-pandemic levels and near the highest levels since mid-2021.

These workers are included in the alternate measure of labor underutilization (U-6) that decreased to 8.4% from 8.7% in November. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is well above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.95 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.91 million in November.

This is down from post-pandemic high of 4.171 million, and up from the recent low of 1.056 million.

This is above pre-pandemic levels.

Summary:

The headline jobs number in the December employment report was slightly below expectations, however October and November were revised down by 76,000.  The unemployment rate decreased to 4.4%.

This was another weak employment report.  

by Calculated Risk on 1/09/2026 08:30:00 AM

From the BLS: Employment Situation

Both total nonfarm payroll employment (+50,000) and the unemployment rate (4.4 percent) changed little in December, the U.S. Bureau of Labor Statistics reported today. Employment continued to trend up in food services and drinking places, health care, and social assistance. Retail trade lost jobs.
...
The change in total nonfarm payroll employment for October was revised down by 68,000, from -105,000 to -173,000, and the change for November was revised down by 8,000, from +64,000 to +56,000. With these revisions, employment in October and November combined is 76,000 lower than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 50 thousand in December.  Private payrolls increased by37 thousand, and public payrolls increased 13 thousand.

Payrolls for October and November were revised down by 76 thousand, combined.  The economy has only added 93 thousand jobs since April (8 months).

The second graph shows the year-over-year change in total non-farm employment since 1968.

In December, the year-over-year change was 0.594 million jobs.  

Year-over-year employment growth has slowed sharply.



The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate decreased to 62.4% in December, from 62.5% in November. This is the percentage of the working age population in the labor force.

The Employment-Population ratio increased to 59.7% from 59.6% in November (blue line).

I'll post the 25 to 54 age group employment-population ratio graph later.



The fourth graph shows the unemployment rate.

The unemployment rate was decreased to 4.4% in December from 4.5% in November.  

This was slightly below consensus expectations, however, October and November payrolls were revised down by 76,000 combined.

Overall another weak report.

I'll have more later ...

by Calculated Risk on 1/08/2026 08:03:00 PM

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

Friday:
• At 8:30 AM ET,: Employment Report for December.   The consensus is for 55,000 jobs added, and for the unemployment rate to decline to 4.5%.

• At 10:00 AM: Housing Starts for September and October.

• At 10:00 AM: University of Michigan's Consumer sentiment index (Preliminary for January)

• At 12:00 PM: Q3 Flow of Funds Accounts of the United States from the Federal Reserve.

by Calculated Risk on 1/08/2026 02:16:00 PM

On Friday at 8:30 AM ET, the BLS will release the employment report for December. The consensus is for 55,000 jobs added, and for the unemployment rate to decrease to 4.5%. There were 64,000 jobs added in November, and the unemployment rate was at 4.6%.

From Goldman Sachs:

We forecast that payrolls rose 70k (vs. 55k consensus) in December and the unemployment rate fell to 4.5% (vs. 4.5% consensus). ... We expect the unemployment rate to edge down to 4.5% because the increase to 4.6% in November largely reflected the impact of furloughed federal government workers during the shutdown.
emphasis added

From BofA:

Dec NFP are likely to tick up to a stable 70k (private: 75k) print, higher than consensus expectations. Initial claims remain low and continuing claims have trended lower since Oct. Education & health jobs should remain the driver of payroll growth. Given the strength in air travel and holiday spending, we project a rise in leisure & hospitality jobs. After the u-rate jumping to 4.6% in Nov, in part due to shutdown-related distortions, we expect a decline to 4.5%. It is likely that the worst is behind us in the labor market.

• ADP Report: The ADP employment report showed 41,000 private sector jobs were added in December.  This was slightly below consensus forecasts.  However, in general, ADP hasn't been very useful in forecasting the BLS report.

• ISM Surveys: Note that the ISM indexes are diffusion indexes based on the number of firms hiring (not the number of hires).  The ISM® manufacturing employment index increased to 44.9%, up from 44.0% the previous month. This suggests manufacturing jobs lost in December. The ADP report indicated 5,000 manufacturing jobs lost in December.

The ISM® services employment index increased to 52.0%, up from 48.9%.  This suggests job gains in December.  

• Unemployment Claims: The weekly claims report showed about the same number of initial unemployment claims during the reference week at 224,000 in December compared to 222,000 in November.  This suggests about the same number of layoffs in December as in November.

• Conclusion: Over the last 6 months, employment gains averaged 17 thousand per month.  The ADP report, the ISM Surveys, and unemployment claims suggest similar gains in December compared to November.   I'll take the over for December - but still weak hiring.

by Calculated Risk on 1/08/2026 10:52:00 AM

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

The Manheim Used Vehicle Value Index (MUVVI) rose to 205.5, reflecting a 0.4% increase for wholesale used-vehicle prices (adjusted for mix, mileage, and seasonality) compared to December 2024. The December index is up 0.1% month over month.
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 December (seasonally adjusted) and were up 0.4% YoY.

by Calculated Risk on 1/08/2026 08:48:00 AM

The Census Bureau and the Bureau of Economic Analysis reported:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis announced today that the goods and services deficit was $29.4 billion in October, down $18.8 billion from $48.1 billion in September, revised.

October exports were $302.0 billion, $7.8 billion more than September exports. October imports were $331.4 billion, $11.0 billion less than September imports.
emphasis added

Click on graph for larger image.

Exports increased and imports decreased in October. 

Exports were up 12% year-over-year; imports were down 4% year-over-year.

Imports increased sharply earlier this year as importers rushed to beat tariffs.  

The second graph shows the U.S. trade deficit, with and without petroleum.

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.

Note that net, exports of petroleum products are positive and have been increasing.

The trade deficit with China decreased to $14.9 billion from $28.1 billion a year ago.

by Calculated Risk on 1/08/2026 08:30:00 AM

The DOL reported:

In the week ending January 3, the advance figure for seasonally adjusted initial claims was 208,000, an increase of 8,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 199,000 to 200,000. The 4-week moving average was 211,750, a decrease of 7,250 from the previous week's revised average. This is the lowest level for this average since April 27, 2024 when it was 210,250. The previous week's average was revised up by 250 from 218,750 to 219,000.
emphasis added

The following graph shows the 4-week moving average of weekly claims since 1971.

Click on graph for larger image.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims decreased to 211,750.

This was slightly above the consensus estimate.