Morning Report: The labor market continues to deteriorate

Posted on October 1, 2025 by Brent Nyitray

Vital Statistics:

Stocks are lower this morning after the government shut down at midnight. Bonds and MBS are up.

The government shut down at midnight as funding ran out. Worried about how the shutdown will impact the mortgage industry? The MBA has you covered. Main points:

The shutdown will impact HUD, which means FHA / VA / USDA loans may be slower. Of these three, USDA will be the most affected.

Fannie and Freddie are not government agencies, so the impact there would be limited.

New flood insurance policies will be on hold until the program is re-authorized. The IRS will still honor tax transcript requests.

The private sector shed 32,000 jobs in September, according to ADP. “Despite the strong economic growth we saw in the second quarter, this month’s release further validates what we’ve been seeing in the labor market, that U.S. employers have been cautious with hiring,” said Dr. Nela Richardson, chief economist, ADP.

Education and health services added 33,000 jobs, while leisure and hospitality lost 19,000. Professional/business services and finance also declined. The Midwest bore the brunt of the job losses. Pay growth for job stayers was steady at 4.5%, while the pay growth for job switchers fell from 7.1% to 6.6%.

FWIW, the Street is looking for an increase of 50,000 jobs in Friday’s jobs report, assuming it comes out. BLS has said it will not release the jobs report if the government is still shut down, so this report carries additional weight.

Job openings ticked up slightly in August, from 7.21 to 7.23 million. The quits rate fell from 2.0 to 1.9%, which is further evidence of the “job-hugging” phenomenon where workers hold employees hold onto their current jobs, even if they are unhappy, due to economic uncertainty and fear of the labor market, rather than seeking new opportunities.

The labor market is weakening, and the Fed stayed tight for too long.

Consumer confidence fell in September, according to the Conference Board. “Consumer confidence weakened in September, declining to the lowest level since April 2025,” said Stephanie Guichard, Senior Economist, Global Indicators at The Conference Board. “The present situation component registered its largest drop in a year. Consumers’ assessment of business conditions was much less positive than in recent months, while their appraisal of current job availability fell for the ninth straight month to reach a new multiyear low. This is consistent with the decline in job openings. Expectations also weakened in September, but to a lesser extent. Consumers were a bit more pessimistic about future job availability and future business conditions but optimism about future income increased, mitigating the overall decline in the Expectations Index.”

IMO it looks like the weakening labor market is beginning to affect the consumer confidence numbers.

Mortgage applications decreased 13% last week as purchases fell 1% and refis fell 13%. “Mortgage rates increased to their highest level in three weeks as Treasury yields pushed higher on recent, stronger than expected economic data. After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizeable drop in refinance applications, consistent with our view that refinance opportunities this year will be short-lived,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “With the 30-year fixed rate now at 6.46 percent, refinance activity declined for all loan types, including a 22 percent decrease in conventional refinances and 27 percent decrease in VA refinances. The average loan size for refinances dropped to $380,100 from $461,300 two weeks ago as these higher rates eliminated the refinance incentive for many borrowers with large loans.”

Filed under: Economy |

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46 Responses

  1. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on October 2, 2025 at 9:20 am said:

    Thanks for the new Thread, Brent!

    Also, I did not know this and I consider myself pretty well informed.

    https://x.com/alexthechick/status/1973717469035692046?s=46&t=vSGsUlnc4rLxcUf7zfUiHg

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  2. jnc4p's avatar
    jnc4p, on October 2, 2025 at 10:30 am said:

    Always nice to see a good debunking of a bad talking point:

    https://fiamengofile.substack.com/p/surprise-surprise-another-popular

    Like

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    • Brent Nyitray's avatar
      Brent Nyitray, on October 2, 2025 at 10:52 am said:

      They are confusing credit analysis with discrimination. Which is par for the course with the left.

      Like

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      • jnc4p's avatar
        jnc4p, on October 2, 2025 at 1:07 pm said:

        And always go to the maximalist version of the claim:

        No woman anywhere in the United States was “allowed” to get a credit card prior to 1974.

        Odd then that there were all these credit card ads targeting women in the 1960’s.

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        • Brent Nyitray's avatar
          Brent Nyitray, on October 2, 2025 at 1:15 pm said:

          The left is claiming women couldn’t get bank accounts before then either.

          It is all just stupid retconning of history.

          Like

  4. jnc4p's avatar
    jnc4p, on October 3, 2025 at 9:04 am said:

    https://weeklytearsheet.substack.com/p/morning-report-real-estate-price

    Your observations on price cuts match what I see in my neighborhood based on Zillow.

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  5. jnc4p's avatar
    jnc4p, on October 3, 2025 at 2:29 pm said:

    I always hate this framing:

    Why Young Men Are Losing Faith in Science

    Oct. 3, 2025

    By Adam Frank

    Dr. Frank is a professor of astrophysics at the University of Rochester.

    https://www.nytimes.com/2025/10/03/opinion/manosphere-science-young-men.html

    Science isn’t about “faith”. As the pithy quote notes, the great thing about science is it’s true whether you believe in it or not.

    What people are losing respect for are “experts” who make assertions that they claim are based on science but are in fact ideology.

    If a claim can’t be subjected to the scientific method, then it’s not science.

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  9. jnc4p's avatar
    jnc4p, on October 6, 2025 at 10:03 am said:

    This the same thing that happened with Great Britain & Soros, right?

    https://open.substack.com/pub/persuasion1/p/why-argentinas-economy-is-floundering

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    • Brent Nyitray's avatar
      Brent Nyitray, on October 7, 2025 at 1:32 pm said:

      I think so

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    • ScottC's avatar
      ScottC, on October 8, 2025 at 8:00 am said:

      jnc:

      This the same thing that happened with Great Britain & Soros, right?

      If the description in the article is correct, yes, it is pretty much exactly the same thing. The UK’s obligations to the Exchange Rate Mechanism, which is what Soros exploited in order to continually short-sell pounds at inflated prices until the UK finally gave up defending it, sounds like the same thing Milei has done to himself by committing to keep the peso within a specific band.

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  10. jnc4p's avatar
    jnc4p, on October 7, 2025 at 2:35 pm said:

    Interesting the argument that Colorado uses to defend “gender affirming” care:

    “Justice Amy Coney Barrett, who is often seen as a crucial swing vote in cases, pointedly asks the lawyer for Colorado about the harms of conversion therapy. The lawyer says that the harm “comes from telling someone there’s something innate about yourself you can change – and then you spend all kinds of time and effort trying to do that, and you fail.””

    https://www.nytimes.com/live/2025/10/07/us/supreme-court-conversion-therapy

    That pretty much sounds to me like the problem with “gender affirming” care in the first place.

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    • ScottC's avatar
      ScottC, on October 8, 2025 at 7:44 am said:

      jnc:

      That pretty much sounds to me like the problem with “gender affirming” care in the first place.

      Exactly. I listened to oral arguments yesterday, and much of the focus of the hypothetical examples raised in questioning by the justices revolved around conversion therapy of gay people. But what was never pointed out by anyone at any point is that “gender affirming care” for trans people is, at least in many instances, in fact a form of conversion therapy for people who are actually gay. Opposition to conversion therapy for gay people cannot coherently exist alongside opposition to conversion therapy for trans people.

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  11. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on October 8, 2025 at 9:42 am said:

    Interesting analysis of the left. I find the critiques of the Right tedious and stupid, but the look into the left is, I think, correct.

    https://townhall.com/tipsheet/mattvespa/2025/10/08/this-writers-take-on-the-left-and-right-is-interesting-but-hes-especially-brutal-with-the-dems-n2664618

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  18. jnc4p's avatar
    jnc4p, on October 13, 2025 at 12:34 pm said:

    I always appreciate the honest people, regardless of where they fall on the left/right spectrum:

    https://dennisonwrites.substack.com/p/fucckkkkkkhe-deserved-to-get-it

    Another interesting piece on the Trump Gaza deal.

    https://www.theatlantic.com/ideas/archive/2025/10/ceasefire-hostages-israel-gaza/684547/

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    • markinaustin's avatar
      markinaustin, on October 13, 2025 at 4:15 pm said:

      He did what Biden never could have done on his best day, I think because Bibi trusted Trump to have his back if it didn’t work out.

      No, I still think he is the worst President since the second Harrison, but he deserves credit for this, even if it doesn’t hold.

      It won’t hold because of no fault of Trump’s of course, so I won’t blame him when it falls apart. This was an accomplishment standing on its own, in the moment.

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      • Let the mutherfuker burn!'s avatar
        Let the mutherfuker burn!, on October 13, 2025 at 6:52 pm said:

        Hi Mark,

        I hope you’re well!

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      • jnc4p's avatar
        jnc4p, on October 13, 2025 at 10:02 pm said:

        “I think because Bibi trusted Trump to have his back if it didn’t work out.”

        That and I think he also understands the mentality of the other players in the region better than previous presidents. And he isn’t constrained from working with them due to human rights considerations.

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        • Let the mutherfuker burn!'s avatar
          Let the mutherfuker burn!, on October 14, 2025 at 10:52 am said:

          I think that one of the biggest mistakes, if not the biggest mistake, is assigning a moral ranking to a foreign leader/government. My Dad taught me years ago, during the time the Shah of Iran was under pressure to leave, that there are generally two types of world leaders, bad people and worse people. When we assign a foreign leader into a moral category it always weakens alliances and makes the US a less dependable ally, which weakens the whole point of American foreign policy, that is to advance US interests. I think the Trump approach to Iraq in the early 90’s would have been to attempt to align the US with Saddam Hussein to counter Iran. Rather that continual escalations and confrontations.

          If you’re the leader of a foreign country, the Russians are much better allies than the US.

          Like

  20. Let the mutherfuker burn!'s avatar
    Let the mutherfuker burn!, on October 14, 2025 at 9:44 pm said:

    The intentional and relentless needling of Stephanopoulos is what I find hilarious.

    https://x.com/ericldaugh/status/1978163188655870371?s=46&t=vSGsUlnc4rLxcUf7zfUiH

    The next Trump admin member that’s interviewed is going to call him “Slopodopoulos” or say that “your lies are why you had to pay Trump $16 million.” Or both.

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  22. jnc4p's avatar
    jnc4p, on October 20, 2025 at 1:09 pm said:

    So now it’s gone from “it’s not a real thing” to “it’s complicated”.

    https://www.washingtonpost.com/health/2025/10/20/undocumented-immigrant-health-care-shutdown/

    Next step is “it’s happening and it’s a good thing.”

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    • Brent Nyitray's avatar
      Brent Nyitray, on October 22, 2025 at 4:49 pm said:

      Obama started the culture war shit in the military (though I would argue the initial impetus was Tailhook during the GHWB admin)

      One of the left’s most annoying rhetorical tics is politicizing some institution and then claiming the other guy is politicizing it when the most extreme things are trimmed back

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