by Calculated Risk on 8/07/2025 09:15:00 AM

From Manheim Consulting today: Wholesale Used-Vehicle Prices Decreased in July

Wholesale used-vehicle prices (on a mix, mileage, and seasonally adjusted basis) were lower in July compared to June. The Manheim Used Vehicle Value Index (MUVVI) declined to 207.4, which is still an increase of 2.9% from a year ago, while lower than June levels by 0.5%. The seasonal adjustment muted the results for the month, as non-seasonally adjusted values overall fell more than usual for the month. The non-adjusted price in July decreased 1.4% compared to June, which now makes the unadjusted average price higher by 3.0% year over year.
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 July (seasonally adjusted) and were up 2.9% YoY.

by Calculated Risk on 8/07/2025 08:30:00 AM

The DOL reported:

In the week ending August 2, the advance figure for seasonally adjusted initial claims was 226,000, an increase of 7,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 218,000 to 219,000. The 4-week moving average was 220,750, a decrease of 500 from the previous week's revised average. The previous week's average was revised up by 250 from 221,000 to 221,250.
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 220,750.

The previous week was revised up.

Weekly claims were higher than the consensus forecast.

by Calculated Risk on 8/06/2025 07:27:00 PM

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

Thursday:
• At 8:30 AM ET, The initial weekly unemployment claims report will be released. The consensus is for initial claims to increase to 220 thousand from 218 thousand last week.

by Calculated Risk on 8/06/2025 01:21:00 PM

Early in February, I expressed my "increasing concern" about the negative economic impact of "executive / fiscal policy errors", however, I concluded that post by noting that I was not currently on recession watch.

In early April, I went on recession watch, but I'm still not yet predicting a recession for several reasons: the U.S. economy is very resilient and was on solid footing at the beginning of the year, and perhaps the tariffs are not enough to topple the economy.

In the short term, it is mostly trade policy that will negatively impact the economy.  However, there other aspects of policy that bear watching - especially immigration.

Here is some of the data I'm watching.  

Housing:  Housing is the basis of one of my favorite models for business cycle forecasting.

This graph shows the YoY change in New Home Sales from the Census Bureau.  Currently new home sales (based on 3-month average of NSA data) are down 8% year-over-year.

Usually when the YoY change in New Home Sales falls about 20%, a recession will follow.  An exception for this data series was the mid '60s when the Vietnam buildup kept the economy out of recession.   Another exception was in late 2021 - we saw a significant YoY decline in new home sales related to the pandemic and the surge in new home sales in the second half of 2020.  I ignored that downturn as a pandemic distortion.  Also note that the sharp decline in 2010 was related to the housing tax credit policy in 2009 - and was just a continuation of the housing bust.

The YoY change in new home sales in late 2022 and early 2023 suggested a possible recession.  But as I noted earlier, I was able to look past the pandemic distortion and was able to predict a pickup in new home sales due to the low level of existing home inventory and because homebuilders could offer mortgage incentives that would somewhat offset the sharp increase in mortgage rates.

There are no special circumstances now, and if this measure falls to off 20% a recession seems likely.

Yield Curve: The yield curve is a commonly used leading indicator.  I dismissed it when the yield curve inverted in 2019 and again in 2022. Both times dismissing the yield curve was correct (the recession in 2020 was obviously due to the pandemic, so we will never know if the yield curve failed to predict a recession in 2019).

Here is a graph of 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity from FRED since 1976.

 

The yield curve reverted to normal a year ago and is currently positive at 0.5.  If this inverts, this might suggest a recession is coming.

Click here for interactive graph at FRED.

Heavy Truck (and Vehicle Sales): Another indicator I like to use is heavy truck sales.  This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the July 2025 seasonally adjusted annual sales rate (SAAR). Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Heavy truck sales were at 455 thousand SAAR in July, up from 443 thousand in June, and down 12.0% from 517 thousand SAAR in July 2024.

Usually, heavy truck sales decline sharply prior to a recession and sales have been a little soft recently.

Vehicle sales were over 17 million SAAR in March and April as consumers rushed to "beat the tariffs".  Then sales were depressed in May and June.

This graph shows light vehicle sales since the BEA started keeping data in 1967.   This is more of a concurrent indicator than heavy trucks. 

Light vehicle sales in July (16.41 million SAAR) were up 7.1% from the sales rate in June, and up 3.7% from July 2024

Unemployment: Two other concurrent indicators are the unemployment rate (using the "Sahm Rule") and weekly unemployment claims.

Here is a graph of the Sahm rule from FRED since 1959.

The Sahm Rule was at 0.13 percentage points in July. 

 If this increases to 0.5 it will suggest a possible recession.

Note that this increased to 0.56 in August 2024, but Dr. Sahm (and I) argued this was not indicating a recession.

And weekly unemployment claims always rise sharply at the beginning of a recession (other events - like hurricane Katrina - can cause a temporary spike in weekly claims).

As I noted earlier, I'm not sure how to estimate the economic damage caused by these tariffs and other policies.   The economy is clearly slowing due to policy.

There are also boycotts of U.S. goods and less international tourism based on both the tariffs and the inflammatory rhetoric of the current administration.  

None of these indicators are suggesting a recession.  For now, I'll focus on the leading indicators (especially housing) and I'll update this post monthly while I'm on recession watch.  

by Calculated Risk on 8/06/2025 10:20:00 AM

Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year

Brief excerpt:

Another monthly update on rents.

Tracking rents is important for understanding the dynamics of the housing market. Slower household formation and increased supply (more multi-family completions) has kept asking rents under pressure.

More recently, immigration policy has become a negative for rentals.

Apartment List: Asking Rent Growth -0.8% Year-over-year ...

The national multifamily vacancy rate ticked up to 7.1% this month, setting a new record for our index. We're past the peak of a multifamily construction surge, but the market is still absorbing all of the new units, and vacancies are still trending up.

Realtor.com: 23rd Consecutive Month with Year-over-year Decline in Rents

June 2025 marks the 23rd straight month of year-over-year rent decline for 0-2 bedroom properties observed since trend data began in 2020. Asking rents dipped by $36, or -2.1%, year over year.

This is much more in the article.

by Calculated Risk on 8/06/2025 07:00:00 AM

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 3.1 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 1, 2025.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 18 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 18 percent higher than the same week one year ago.

“Mortgage rates moved lower last week, following declining Treasury yields as economic data releases signaled a weakening U.S. economy. As a result, the 30-year fixed rate decreased for the third straight week to 6.77 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Borrowers sought to take advantage of these lower rates, as both purchase and refinance applications increased over the week. Purchase activity continued to lead 2024’s pace, as increasing for-sale inventory of homes has been supporting homebuying, but on the other hand recent weakness in the economic environment has deterred some prospective homebuyers.”

Added Kan, “Refinance applications increased to their strongest pace in four weeks after being on a downward trend the prior three weeks. The refinance share increased to almost 42 percent, its highest level since April.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.77 percent from 6.83 percent, with points decreasing to 0.59 from 0.60 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is up 18% year-over-year unadjusted. 

Red is a four-week average (blue is weekly).  

Purchase application activity is still depressed, but above the lows of October 2023 and slightly above the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

The refinance index increased and is picking up a little with lower mortgage rates.

by Calculated Risk on 8/05/2025 08:56:00 PM

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

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

by Calculated Risk on 8/05/2025 03:51:00 PM

From Cotality (formerly CoreLogic): US home price insights — August 2025

The end of the 2025 spring homebuyers season ended softly, with slower price growth dominating the narrative and potentially opening the door to more buyers.

• Year-over-year price growth dipped to 1.7% in June 2025 and is now well below the rate of inflation and signals that real prices may be becoming slightly more affordable.

• Seasonal increases in home prices continue to be weak, up 0.1% compared to the month before, which is the slowest June monthly increase since 2008.

• West Virginia saw prices rise 5.5% year-over-year, entering the top 5 states with the highest home price growth. The full list includes Connecticut, New Jersey, Rhode Island, and Illinois, all of which continue to record more than triple the national rate of price growth.

• Florida, Texas, Montana, and Washington, D.C. reported negative home price growth.
emphasis added

This graph from Cotality shows the Top 10 coolest markets.

The list is dominated by Florida and Texas.  According to Cotality, the highest risk markets are all in Florida.

House prices are under pressure with more inventory and sluggish sales.

by Calculated Risk on 8/05/2025 11:44:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Q2 NY Fed Report: Mortgage Originations by Credit Score, Foreclosures Decrease

A brief excerpt:

The NY Fed released the Q2 Quarterly Report on Household Debt and Credit this morning. Here are a few charts from the report.

Note: The Liberty Street Economics blog today focused on “borrower trends in the mortgage market across balances, delinquency rates, credit scores, and geography”.

The first graph shows mortgage originations by credit score (this includes both purchase and refinance). Look at the difference in credit scores in the recent period compared to the during the bubble years (2003 through 2006). Recently there have been almost no originations for borrowers with credit scores below 620, and few below 660. A significant majority of recent originations have been to borrowers with credit score above 760.

There is much more in the article.

by Calculated Risk on 8/05/2025 11:13:00 AM

From the NY Fed: Household Debt Growth Remains Steady; Auto Loan Originations Pick Up

The Federal Reserve Bank of New York’s Center for Microeconomic Data today issued its Quarterly Report on Household Debt and Credit. The report shows total household debt increased by $185 billion (1%) in Q2 2025, to $18.39 trillion. The report is based on data from the New York Fed’s nationally representative Consumer Credit Panel. It includes a one-page summary of key takeaways and their supporting data points.

The New York Fed also issued an accompanying Liberty Street Economics blog post analyzing borrower trends in the mortgage market across balances, delinquency rates, credit scores, and geography.

“This quarter’s flow of household debt into serious delinquency was mixed across debt types, with credit card and auto loans holding steady, student loans continuing to rise, and mortgages edging up slightly,” said Joelle Scally, Economic Policy Advisor at the New York Fed. “Despite the recent uptick in mortgage delinquency, overall mortgage performance remains strong by historical standards.”

Mortgage balances grew by $131 billion in the second quarter and totaled $12.94 trillion at the end of June 2025. Credit card balances rose by $27 billion from the previous quarter and stood at $1.21 trillion. Auto loan balances also increased by $13 billion and totaled $1.66 trillion. HELOC balances rose by $9 billion to $411 billion, representing the thirteenth consecutive quarterly increase. Student loan balances edged up by $7 billion and stood at $1.64 trillion. In total, non-housing balances rose by $45 billion, a 0.9% increase from Q1 2025.

The pace of mortgage originations increased slightly, with $458 billion newly originated mortgages in Q2 2025. There were $188 billion in new auto loans and leases appearing on credit reports during the second quarter, an increase from the $166 billion observed in the first quarter of 2025. Aggregate limits on credit card accounts continued to rise by $78 billion, representing a 1.5% increase from the previous quarter.

Aggregate delinquency rates remained elevated in the second quarter, with 4.4% of outstanding debt in some stage of delinquency. Transition into early delinquency held steady for nearly all debt types except for student loans. Student loans saw another uptick in the rate at which balances went from current to delinquent due to the resumption of reporting of delinquent student loans. Transitions into serious delinquency were mixed across debt types: auto loans and credit card debt were largely stable, mortgages and HELOCs edged up slightly, and student loans rose sharply.
emphasis added

Click on graph for larger image.

Here are two graphs from the report:

The first graph shows household debt increased in Q2.  Household debt previously peaked in 2008 and bottomed in Q3 2013. Unlike following the great recession, there wasn't a decline in debt during the pandemic.

From the NY Fed:

Aggregate nominal household debt balances increased by $185 billion in the second quarter of 2025, a 1% rise from 2025Q1. Balances now stand at $18.39 trillion and have increased by $4.24 trillion since the end of 2019, just before the pandemic recession.

The second graph shows the percent of debt in delinquency.

The overall delinquency rate increased in Q1.  From the NY Fed:

Aggregate delinquency rates remained elevated in the second quarter of 2025. As of the end of June, 4.4% of outstanding debt was in some stage of delinquency, which is 0.1 percentage point higher than the first quarter. Transition into early delinquency held steady for nearly all debt types; the exception was for student loans, which saw another uptick in the rate at which balances went from current to delinquent due to the resumption of reporting of delinquent student loans on credit reports after a nearly 5-year pause due to the pandemic. Transition rates into serious delinquency, defined as 90 or more days past due, were largely stable for auto loans and credit cards; edged up slightly for mortgages and HELOCs; and rose sharply for student loans.

There is much more in the report.

by Calculated Risk on 8/05/2025 10:00:00 AM

(Posted with permission). The ISM® Services index was at 50.1%, down from 50.8% last month. The employment index decreased to 46.4%, from 47.2%. Note: Above 50 indicates expansion, below 50 in contraction.

From the Institute for Supply Management: Services PMI® at 50.1% July 2025 Services ISM® Report On Business®

Economic activity in the services sector grew in July for the second consecutive month, say the nation's purchasing and supply executives in the latest Services ISM® Report On Business®. The Services PMI® indicated expansion at 50.1 percent, above the 50-percent breakeven point for the 12th time in the last 13 months.

The report was issued today by Steve Miller, CPSM, CSCP, Chair of the Institute for Supply Management® (ISM®) Services Business Survey Committee: “In July, the Services PMI® registered 50.1 percent, 0.7 percentage point lower than the June figure of 50.8 percent but in expansion territory for the second month in a row. The Business Activity Index remained in expansion in July, registering 52.6 percent, 1.6 percentage points lower than the reading of 54.2 percent recorded in June. This index has not been in contraction territory since May 2020. The New Orders Index also remained in expansion territory in July, recording a reading of 50.3 percent, a drop of 1 percentage point from the June figure of 51.3 percent. The Employment Index was in contraction territory for the second month in a row and the fourth time in the last five months; the reading of 46.4 percent is 0.8 percentage point lower than the 47.2 percent recorded in June.

“The Supplier Deliveries Index registered 51 percent, 0.7 percentage point higher than the 50.3 percent recorded in June. This is the eighth consecutive month that the index has been in expansion territory, indicating slower supplier delivery performance. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Prices Index registered 69.9 percent in July, a 2.4-percentage point increase from June’s reading of 67.5 percent. The index has exceeded 60 percent for eight straight months, with July’s reading the highest since October 2022 (70.7 percent).
emphasis added

This was well below consensus expectations, and employment was very weak, and prices paid high.

by Calculated Risk on 8/05/2025 08:30:00 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 $60.2 billion in June, down $11.5 billion from $71.7 billion in May, revised.

June exports were $277.3 billion, $1.3 billion less than May exports. June imports were $337.5 billion, $12.8 billion less than May imports.
emphasis added

Click on graph for larger image.

Exports and imports decreased in June.

Exports were up 3.3% year-over-year; imports were down 1.4% 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 $9.5 billion from $22.8 billion a year ago.

by Calculated Risk on 8/04/2025 08:12:00 PM

From Matthew Graham at Mortgage News Daily: Lowest Mortgage Rates Since Early October

Friday's reaction was so big that the average mortgage lender didn't fully adjust their rate offerings to match the market movement. This is typical of very large swings in bonds. It also meant that we merely needed today's bond market levels to hold steady in order for rates to continue lower and that's exactly what happened.

In fact, bonds ultimately improved just a hair, but even before that, mortgage lenders were out with their lowest rates since early October. [30 year fixed 6.57%]
emphasis added

Tuesday:
• At 8:30 AM ET, Trade Balance report for June from the Census Bureau. The consensus is the trade deficit to be $67.6 billion.  The U.S. trade deficit was at $71.5 Billion the previous month.

• At 10:00 AM, the ISM Services Index for July.   The consensus is for a reading of 51.5, up from 50.8.

• At 11:00 AM, NY Fed: Q2 Quarterly Report on Household Debt and Credit

by Calculated Risk on 8/04/2025 03:47:00 PM

This graph shows heavy truck sales since 1967 using data from the BEA. The dashed line is the July 2025 seasonally adjusted annual sales rate (SAAR) of 455 thousand.

Note: "Heavy trucks - trucks more than 14,000 pounds gross vehicle weight."

Click on graph for larger image.

Heavy truck sales were at 455 thousand SAAR in July, up from 443 thousand in June, and down 12.0% from 517 thousand SAAR in July 2024.

Year-to-date (NSA) sales are down 6.8% through July.

Usually, heavy truck sales decline sharply prior to a recession and sales have been a little soft recently.  

by Calculated Risk on 8/04/2025 02:00:00 PM

From the Federal Reserve: The July 2025 Senior Loan Officer Opinion Survey on Bank Lending Practices

The July 2025 Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) addressed changes in the standards and terms on, and demand for, bank loans to businesses and households over the past three months, which generally correspond to the second quarter of 2025.

Regarding loans to businesses over the second quarter, survey respondents reported, on balance, tighter lending standards and weaker demand for commercial and industrial (C&I) loans to firms of all sizes. Furthermore, banks generally reported tighter standards and weaker demand for commercial real estate (CRE) loans.

For loans to households, banks reported basically unchanged lending standards and weaker demand for residential mortgage loans, on balance. In addition, banks reported tighter lending standards and stronger demand for home equity lines of credit (HELOCs). For consumer loans, standards tightened for credit card loans and remained basically unchanged for auto and other consumer loans. Meanwhile, demand weakened for credit card and other consumer loans and strengthened for auto loans.

The July SLOOS included a set of special questions inquiring about the current level of lending standards relative to the midpoint of the range over which banks’ standards have varied since 2005. Banks reported that, on balance, levels of standards are currently on the tighter end of the range for all loan categories. Compared with the July 2024 survey, banks reported easier levels of standards for most loan categories except residential real estate (RRE) loans, for which levels of standards were comparable with July 2024.
emphasis added

Click on graph for larger image.

This graph on Residential Real Estate demand is from the Senior Loan Officer Survey Charts.

This graph is for demand and shows that demand has been weak since late 2021.

The left graph is from 1990 to 2014.  The right graph is from 2015 to Q1 2025.

Only demand for HELOCs was reported as stronger.

by Calculated Risk on 8/04/2025 11:31:00 AM

Today, in the Calculated Risk Real Estate Newsletter: How Much will the Fannie & Freddie Conforming Loan Limit Change for 2026?

A brief excerpt:

With house prices up low-single digits over the last year through mid-year, an interesting question is: How much will the Fannie & Freddie conforming loan limits (CLL) change for 2026? And how much will the FHA insured loan limits change?

First, there are different loan limits for various geographical areas. There are also different loan limits depending on the number of units (from 1 to 4 units). For example, currently the CLL is $806,500 for one-unit properties in most areas. For high-cost areas like Los Angeles County, the CLL is $1,209,750 for one-unit properties (50% higher than the baseline CLL).
...
Note that during periods when house prices decline, the CLL is not reduced. The CLL was at $417,000 from 2006 through 2016 and only increased slightly in 2017 as the house price index caught back up to the previous high reached during the housing bubble. This graph shows the CLL since 1979. The CLL was unchanged from 2006 though 2016.

We need the house price data through September 2025 to calculate the conforming loan limit for 2026. This quarterly data will be released in late November.

There is much more in the article.

by Calculated Risk on 8/04/2025 10:35:00 AM

The BEA reported this morning that light vehicle sales were at 16.41 million in July on a seasonally adjusted annual rate basis (SAAR).

This was up 7.1% from the sales rate in June, and up 3.7% from July 2024.

Click on graph for larger image.

This graph shows light vehicle sales since 2006 from the BEA (blue) through July (red).

Vehicle sales were over 17 million SAAR in March and April as consumers rushed to "beat the tariffs".

Then sales were depressed in May and June. 

The second graph shows light vehicle sales since the BEA started keeping data in 1967.

Sales in July were at the consensus forecast of 16.4 million SAAR.

by Calculated Risk on 8/04/2025 08:11:00 AM

Altos reports that active single-family inventory was up 0.6% week-over-week.

Inventory is now up 38.6% from the seasonal bottom in January.   Usually, inventory is up about 22% from the seasonal low by this week in the year.   So, 2025 is seeing a larger than normal increase in inventory.

The first graph shows the seasonal pattern for active single-family inventory since 2015.

Click on graph for larger image.

The red line is for 2025.  The black line is for 2019.  

Inventory was up 26.6% compared to the same week in 2024 (last week it was up 27.0%), and down 10.0% compared to the same week in 2019 (last week it was down 10.3%). 

It now appears inventory will be close to 2019 levels towards the end of 2025.

This second inventory graph is courtesy of Altos Research.

As of August 1st, inventory was at 866 thousand (7-day average), compared to 860 thousand the prior week. 

Mike Simonsen discusses this data and much more regularly on YouTube

by Calculated Risk on 8/03/2025 06:14:00 PM

Weekend:
• Schedule for Week of August 3, 2025

Monday:
• At 2:00 PM ET, Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) for July.

From CNBC: Pre-Market Data and Bloomberg futures S&P 500 are down 9 and DOW futures are down 43 (fair value).

Oil prices were up over the last week with WTI futures at $67.33 per barrel and Brent at $69.67 per barrel. A year ago, WTI was at $75, and Brent was at $78 - so WTI oil prices are down about 11% year-over-year.

Here is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are at $3.13 per gallon. A year ago, prices were at $3.46 per gallon, so gasoline prices are down $0.33 year-over-year.

by Calculated Risk on 8/03/2025 08:21:00 AM

IMPORTANT: It is critical that the Fed stay independent, data driven, and immune to political pressure. This is also true for the Federal statistical agencies, and the firing of the highly respected BLS commissioner on Friday (because of the bad employment report) is very concerning. The U.S. Senate must ensure that the next BLS commissioner is respected, data driven, and immune to political pressure.

On Friday, Fed Governor Adriana Kugler resigned. This created some concern that she was leaving early and creating a vacancy at a crucial time at the Fed.  The Fed needs to be independent, data driven, and not subject to political whims.  

In the case of Dr. Kugler, she was appointed to an unexpired term, and her term was scheduled to end in January 2026 (just six months from now). It is likely she left a little early to be available at the start of a school year (she is a professor). So, this is not a big deal. She will miss four FOMC meetings: Sept, Oct, Dec and Jan 2026.

FOMC Composition

The Federal Open Market Committee (FOMC) is composed of seven Fed Governors, the President of the NY Fed, and four rotating Federal Reserve Bank district Presidents (there are 12 Fed Districts).

Fed Governors

The Fed Governers are appointed to 14-year terms (every 2 years a term expires). If a Fed Governor leaves early, the President can appoint someone to fill the unexpired term.

This means each President appoints 2 governors and can also fill any unexpired terms.

The other Fed Governor whose term is scheduled to expire while Trump is President is Jerome Powell in January 2028. If he decides to leave early (likely), Trump can appoint someone to fill the unexpired term - and then appoint someone for 14 years in January 2028.  It is possible (but unlikely) that Powell will stay until 2028.

Here are the other five Fed Governors:

Christopher J. Waller, appointed by Trump, term expires January 2030

Michael S. Barr, appointed by Biden, term expires January 2032
Michelle W. Bowman, appointed by Trump, term expires January 2034
Philip N. Jefferson, appointed by Biden, term expires January 2036

Lisa D. Cook, appointed by Biden, term expires January 2038

Federal Reserve Bank Presidents on the FOMC

Fed District Presidents serve five-year terms and are appointed by the Directors of each Federal Reserve Bank. The current terms all end in January 2026, but frequently Fed Presidents are reappointed.

This year (2025) the five Fed Presidents on the FOMC are:

John C. Williams, New York, Vice Chair
Susan M. Collins, Boston
Austan D. Goolsbee, Chicago
Alberto G. Musalem, St. Louis
Jeffrey R. Schmid, Kansas City

Next year (2026), the Five Fed Presidents will be (it is likely most, if not all, will be reappointed in January):

John C. Williams, New York, Vice Chair
Beth M. Hammack, Cleveland
Neel Kashkari, Minneapolis
Lorie K. Logan, Dallas
Anna Paulson, Philadelphia

This is a qualified group. Even if Powell leaves, and four of the seven Fed Governors are Trump appointees, I think the majority of the FOMC will be very data dependent - and not swayed by politics.  And it is a COMMITEE vote!  There is the possibility we could see the first ever dissent by a Fed Chair.  

Note: The Fed Chair must be one of the Fed Governors. Trump could appoint someone to fill the last six months of Dr. Kugler's unexpired term and then appoint someone else in January that he intends to name Fed Chair.