Market Expert John Lonski on Slow Economic Growth, Inflation, and Interest Rates

Jobs Report Revisions and Economic Slowdown

• 📉 The Bureau of Labor Statistics will release a major revision to jobs numbers, which some believe will show an earlier jobs slowdown.
• ⚠️ John Lonski does not believe the numbers were politically manipulated, suggesting that if they were, there would be disgruntled employees revealing the manipulation.
• 📊 The establishment survey, used to determine the number of jobs, faces accuracy issues due to a declining response rate from surveyed employers, dropping from 60% to around 40%.

Inflation and Consumer Burden

• 📈 This week will feature significant inflation data with the Producer Price Index (PPI) and Consumer Price Index (CPI) reports.
• 🗣️ Lonski believes that inflation at the consumer level is above 3%, despite what reports might say, noting that everyday consumers, particularly middle-class Americans, are burdened by the elevated cost of living.

Federal Reserve Rate Cuts and Economic Outlook

• 🏦 While Lonski would prefer a 50 basis point rate cut, the consensus is leaning towards a 25 basis point cut by the Federal Reserve.
• 📉 He anticipates a period of slower economic growth, potentially leading to a Fed funds rate below 3% by early 2026, indicating many rate cuts are expected.

Housing Market and Mortgage Rates

• 🏠 For the housing market to recover, the 30-year mortgage yield needs to fall below 4.5%.
• 📉 This requires a substantially lower benchmark 10-year Treasury yield, suggesting that significant improvement for the housing sector is still a long way off.