Where will the effective tariff rate settle at the end of the year?

The housing inventory situation in New York is laughably bad. Among the worst in the country.

California has about 4% less active inventory in 2025 compared to pre-pandemic. However, the inventory profile is very different across the state. This chart breaks down the metro-level inventory data across California. You can see which areas are better/worse than average.

We just released a new video update on residential construction & home prices. It covers the full housing cycle & highlights major regional disparities in inventory & price trends. If you're interested in reports like this, you can find more info here: epbresearch.com/services/

Initial jobless claims have been stabilizing over the last few weeks. Less so for the insured UR rate.

Something important you probably missed in the last jobs report: Construction and manufacturing employment just turned negative YoY, a classic recession signal. Credit to @epbresearch.bsky.social for this, the kind of signal Alethia is built to highlight. writings.alethia.news/cyclical-job...

Our next EPB update focuses on residential construction and home prices. This chart shows active housing inventory in 2025 compared to 2018/2019 levels. This is the one of the largest variations in inventory and home prices by geography or region in history.

Two comments about the labor data and political noise surrounding revisions: 1] Establishment survey nonfarm payroll revisions tend to move with economic momentum (so much that rolling revisions look like an economic indicator) 2] The unemployment rate is much less revised.

Government & quasi-government jobs (32% of total) are growing at 1.8%. "Private" sector jobs (68% of total) are growing at 0.3%. This split is textbook late-cycle labor dynamics.

Demographics at play, but yikes, the total employment-population ratio looks bad.

Consumption + investment (87% of GDP) decelerated to 1.2% growth in Q2. Q324: 3.4% Q424: 2.9% Q125: 1.9% Q225: 1.2%

The most effective way for an economy to grow is for the private sector to invest & grow the capital stock. From 1947-07, the private sector invested ~7% of GDP in new structures, equipment & IP. From 07-today, it's been ~4%. This is around $1T of missing investment per year!

The nature of residential construction spending has shifted. In the early 90s, 70% of residential construction spending was on new single-family buildings. Today, it's 47%. Remodeling and new multi-family buildings have increased their share from a combined 30% to over 50%.

Why does the average consumer feel worse off? Because 41% of consumer spending goes to: housing, utilities, healthcare, medications, and insurance. This was 16% in 1947, 30% in 1980, and 35% in 1990. Fewer consumer dollars are left for true discretionary spending.

Residential building is one of the most important categories of employment for the business cycle. Residential building includes single & multi-family building as well as remodelers. Remodeling has increased from 30% to nearly 50% of total residential building employment.

Is it sustainable for an economy to invest in intellectual property but not physical assets like structures and equipment? Can you invest in AI (IP) without more grid capacity (structures)? What are the implications of robust IP investment but depreciating physical assets?

How much money does the government spend per person, adjusted for inflation (2025 dollars)? 1965: $10,400 1975: $15,500 1985: $18,400 1995: $20,100 2005: $23,700 2015: $25,800 2025: $31,000 *this federal, state and local government spending per capita, adjusted for inflation.

Crowding Out The Private Sector Unchecked government spending growth is smothering the private sector, eroding productivity and blurring the economic picture for policymakers. Read the full blog post here: epbresearch.substack.com/p/crowding-o...

Aggregate hours worked in the private sector are growing at a 0.9% annualized rate. This compares to an average rate of 1.9% in the pre-pandemic expansion. The private sector labor market is weak for a non-recessionary period.

Private sector jobs (excluding education & healthcare) fell to 68% of total jobs in the economy. Normally, the private sector share of jobs falls in recessions, not expansions. The labor market gains continue to be dominated by government, and quasi-government jobs.

How do you solve a primary deficit problem with inflation, when the majority of the primary deficit is indexed to inflation?

Adding to the debt and claiming we’ll ‘grow our way out’ makes no sense—because it’s the debt itself that’s constraining growth. You can’t escape by digging deeper.

Fiscal austerity is like surgery - highly disruptive in the short term but an immediate path to recovery. More debt is the pain killer - avoids the root cause but compounds the problem, often in slow and insidious ways.

Nonfarm payrolls continue to be overstated. Over the last 12 months, nonfarm payrolls were revised lower by an average of 30,000 per month. Current data suggests we are adding ~1.6 million jobs per year. The pace is likely closer to 1.25 million, a 20% difference.

Where Does the US Economy Stand Today? A data-driven analysis cutting through the noise to reveal the current state of the Aggregate Economy. epbresearch.substack.com/p/where-does...

Federal government receipts have been relatively stable at 18% of GDP over the last 50 years.

Federal transfer payments + interest expense are larger than total federal receipts. (Transfer payments are mostly Social Security, Medicare, and state aid for Medicaid.)

Two key leading indicators of residential construction activity matched cycle lows this week.

US building permits drop to a new cycle low, below the historically significant 1.4 million level.

Structural Changes in the U.S. Labor Market. In the late 1990s, 73% of all employed people were aged 25-54. Today, 65% of all employed people are aged 25-54.

The increase in unemployment is coming mainly from the very young population.

There has never been a larger gap between the average price-to-income ratio for new and existing homes.

‘The full-time employment ratio is declining, which means a smaller share of the labor force is employed full-time. The signal is clear: employers are reducing labor intensity.’ epbresearch.substack.com/p/cracks-are... by @epbresearch.bsky.social

Cracks Are Spreading in the US Labor Market A closer look at the labor market reveals weakening demand, falling job quality, and signs of cyclical deterioration. epbresearch.substack.com/p/cracks-are...

CPI Dashboard. Residual inflation above 2% remains concentrated almost exclusively in shelter/rent.

Demographics obviously play into the employment population ratio, but we're now at a cycle low. We're putting an increasing burden on our working population to support our non-working population.

Across the total private sector: Job opening rate: 2017 levels Hiring rate: 2014 levels Quits rate: 2015 levels Layoff rate: secular lows Hiring remains very weak yet layoffs remain very low.

The 2025 Housing Market - Which States Are In Trouble www.youtube.com/watch?v=rrBa...

Initial jobless claims continue to steadily, but slowly, increase.

Homebuilders are still selling their completed inventory quickly. Once a new construction is completed, it sells in 3.0 months.

The housing market is moving into balance. The months supply of new & existing single-family homes is 5.0, above the average of 4.2 in 2018/2019. But there are extreme regional differences. Listings in Florida are up 28% vs. pre-pandemic Listings in Connecticut down 76%!

💰How the U.S. Federal Budget Has Transformed Since 1955... 70 years ago, the federal government was mostly a "consumer" - directly buying goods & services. Today, it's largely a transfer machine — funneling money to households and states. Here’s the breakdown 👇

Initial jobless claims continue to increase, but at a snail's pace. Jobless claims have increased roughly 15,000 in the last 2.5 years.

Amazingly, after the pandemic, stimulus, and recovery, the economy snapped right back to its pre-COVID trend of ~1.9% growth. Net, there's been about a 2% deadweight loss vs the prior trendline.

In our latest post, we show how the economy leads earnings and stock prices, not the other way around. epbresearch.substack.com/p/the-cyclic...

Jobless claims are running at a very mild elevation to the normal seasonal trend.

For my software friends, here is some aggregated income statement data for the Mag7. @coloradotravis.bsky.social @palmertree.bsky.social

Aggregated income statement data for the residential homebuilding sector shows revenue growth flat-lining with margin compression in gross and operating margins.

Inflation remains mostly a story of: Shelter & auto insurance Vs. Everything else.