In most areas, construction and housing were struggling in late 2025

We continue to get economic reports that were backlogged from the government shutdown that ended more than 2 months ago. This one shows what seems to be a strong report for new construction in America for October, until you look closer at the details.

U.S. construction spending increased more than expected in October, likely reflecting home renovations, with activity elsewhere weak.

The Commerce Department's Census Bureau ​said on Wednesday that construction spending rose 0.5% after falling 0.6% in ‌September. Economists polled by Reuters had forecast construction spending gaining 0.1% in October. Spending dropped 1.0% year-on-year in ‌October….

Investment in residential construction shot up 1.3% after slumping 1.4% in September. That was despite a 1.3% drop in spending on new single-family housing ⁠projects. Spending on multi-family housing ‌units, which account for a small share of the housing market, slipped 0.2%.

With both single- and multi-family housing projects falling, the increase in ‍residential outlays was likely because of renovations. Homebuilding has been hamstrung by higher mortgage rates, more expensive building materials because of tariffs on imports as well as labor shortages.

In fact, improvements and other residential construction nearly outpaced the amount of new construction of single-family homes in October. Single-family home construction is down nearly 8% since Feburary, and the value of multi-family homes was lower than it was at the start of this year.

Non-residential construction has also been skidding, with private non-residential construction seeing declines for 4 straight months, and down 6.8% since the end of 2023.

But yet the overall amount of new construction allegedly grew in October because of improvements and add-ons to current homes. Still doesn't seem like the sector was in good health at that time. The mortgage market has picked up recently, after the Trump Administration’s move from 2 weeks ago where they decided to buy $200 billion in mortgage debt. However, it’s not because more homes are being sold.

Last week, applications to refinance a home loan rose 20% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Applications were 183% higher than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased to 6.16% from 6.18%, with points falling to 0.54 from 0.56, including the origination fee, for loans with a 20% down payment. That is the lowest rate since September 2024.

Good news if you bought a house in the last 3 years, but still not a level that many of us would refinance at. And the recent boost in that refi activity seems likely to end soon.

Interest rates moved much higher to start this week, as bond markets sold off following the Trump’s threats of new tariffs and escalating tensions over Greenland. The average rate on the 30-year fixed jumped 14 basis points higher, according to a separate survey from Mortgage News Daily.

“This matches the level seen the day before the announcement of the administration’s $200 billion mortgage bond buying plans. The last time rates were higher was December 23rd,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “In light of that announcement, why aren’t mortgage rates doing better? Simply put, the market has already reacted to that news to the extent allowed by its transparency.”

So the Trump Admin has pumped in more money to the economy (an inflationary move), and caused some capital flight due to his demented ramblings on Greenland and other foreign countries, which raises interest rates and counteracts the goals of buying up the $200 billion in mortgage bonds. That’s the type of “businessman brilliance” those low-infos voted for in November 2024, isn’t it?

We got some data today that may show why the Trump Admin felt a need to pump up the housing market. Because 2024 ended with a significant drop of Americans signing contracts to buy houses.

Stagnant mortgage rates, falling housing supply and ongoing economic uncertainty weighed heavily on homebuyers in December.

Pending home sales, a measure of signed contracts on existing homes, dropped 9.3% last month from November, according to the National Association of Realtors. Analysts were expecting a slight gain.

Sales were 3% lower than December 2024….

Sales fell month to month in all regions of U.S. and were higher annually only in the South.

Homes also stayed on the market longer in December, at an average of 39 days compared with 35 days in December 2024.

So it appears the construction sector and the housing market were two more major parts of our economy that were being held up by odd, temporary moves at the end of 2024.

I don’t see how those bumps show an improving overall trajectory, and it may well make things worse as the blips of remodelings and Treasury injections to lower interests rates unwind in the coming months. And all of this happy talk that I see people trying to pull on the economy isn’t something that seems to be connected to the reality and the data that we see in the everyday economy that people with actual jobs and lives have to deal with.

Big revenue boost allows for property tax relief in Wis. Now how do you do it?

Governor Evers recently had interviews with state media to mark the start of his last year in office. And those discussions included some surprising budget news, and a plan to deal with it.

Gov. Tony Evers said state revenues for 2025-27 are on track to come in as much as $1 billion higher than previously projected — and he wants lawmakers to use the additional funds to drive down property taxes.

The Dem governor, in his last year of office, called on lawmakers to approve the $1.3 billion in property tax relief he included in the 2025-27 budget that Republicans rejected. Still, he told reporters he was open to any approach that would help homeowners…..

Evers’ budget called for a series of steps to lower property taxes, from putting more state money into public education to supplemental aid for local governments.

The new call, which wouldn’t impact homeowners until they receive their bills in December, was one of several pushes Evers made for lawmakers to spend money the state either has in reserves or is expected to take in. The 2025-27 budget he signed was projected to have a gross balance of $770 million at the end of the biennium.

His ideas range from putting more money into special education reimbursement to approving various sales tax breaks Evers proposed in the budget, such as exempting adult diapers and breast pumps.

Turns out that Evers' prediction was selling things short, as on Thursday the Legislative Fiscal Bureau released their updated revenue estimates for the rest of the 2025-27 biennium.

Based upon our analysis, we project the closing, net general fund balance at the end of this biennium (June 30, 2027) to be $2,373.5 million. This is $1,529.0 million above the net balance that was projected at the time of enactment of the 2025-27 biennial budget, as modified to: (1) incorporate the 2024-25 ending balance (2025-26 opening balance) as shown in the Annual Fiscal Report; (2) include the fiscal effect of all legislation enacted to date in the current legislative session (2025 Acts 1 to 82); and (3) include the estimated fiscal effects of the following general fund tax law changes that were automatically adopted by, or altered estimated tax collections for, the state after enactment of the federal P.L. 119-21, the One Big Beautiful Bill Act (OBBBA): (a) the credit percentage for the child and dependent care expense credit; (b) Section 179 expensing provisions; (c) the federal limit for itemized deductions of state and local taxes; (d) reporting requirements for de minimus payments by third-party settlement organizations; (e) health savings accounts; (f) the qualified small business stock exclusion; (g) eligible expenses made from college savings accounts; (h) eligible rollovers to ABLE accounts from college savings accounts; and (i) the repeal of the deduction for energy efficient buildings.

The $1,529.0 million is the net result of: (1) an increase of $1,367.1 million in estimated tax collections; (2) an increase of $104.0 million in departmental revenues (non-tax receipts deposited in the general fund); (3) an increase of $49.9 million in sum sufficient appropriations; and (4) an increase of $107.8 million in the amounts that are estimated to lapse (revert) to the general fund.

And that's with the LFB adding in the $115 million that by law has to be set aside. Add that in, and it's nearly $2.5 billion that's projected in the bank, which is more than 3 times vs what was a relatively small cushion that was built into the budget when it became law back in July.

So why did LFB say things were looking so good? Income taxes are one major reason.

Total collections for 2025-26 are estimated at $10,330 million, which is $455.7 million (4.6%) higher than the previous estimates. One factor that is expected to help revenues over the rest of 2025- 26 is the projected high level of capital gains realizations for tax year 2025. [Realizations for tax year 2026 are also expected to be significant, though not as high as tax years 2024 or 2025]. Additionally, the year-to-date withholding growth for 2025-26 (5.7%) is higher than had been anticipated.

Total individual income tax revenues for 2026-27 are projected to increase by 3.2% year-over- year, to a total of $10,665 million. Relative to the previous estimates, these figures are higher by $311.9 million (3.0%). Major contributing factors to this increase include an improved forecast for wages and salaries, which impacts withholding collections, and a higher forecast for capital gains.

In addition, the LFB says that corporate taxes are projected to be $583 million above what was budgeted, as corporate profits continue to hit new records and are projected to keep growing over the next 18 months.But one warning I'd give is that the $700 million in income tax cuts that were part of the budget are going to show us as larger state tax refunds in the next 3 months. That's a significant unknown which could change those total revenues when Fiscal Year 2026 closes on June 30, for better or worse.

But part of the reason Evers isn't willing to wait for tax season to verify the larger revenues before he asks the Legislature to use that money for property tax relief is that the GOP-led State Legislature will go on their 10 month paid vacation in the next 6-8 weeks or so, before tax season ends. Not surprisingly, the GOP-led State Legislature has different ideas on how to limit or cut property taxes, starting with Assembly Speaker Robbin’ Vos.

Republicans are pushing SB 389/AB 391, which would end that per pupil increase after the 2026-27 school year, and it cleared an Assembly committee last week. “So hopefully he would work with us to say, assuming we do property tax relief, we can’t just keep putting more water into a bucket full of holes. We need to fill the holes and then make sure that the bucket has the ability to deliver the relief,” Vos said.

What “bucket” is Robbin’ talking about? Is he saying he wants to leak out funding to schools by cutting property taxes? If so, I guess that hacky metaphor makes sense, but I’m not thinking the average Wisconsin voter is down with cutting even more resources to public schools in their community.

The Senate has already passed this bill during the current session, and the GOP Leader in that house threw in his own talking points on the situation.

“Now that everyday people are feeling the impact of his 400-year mistake, Governor Evers is desperately trying to pass the buck,” said Senate Majority Leader Devin LeMahieu, R-Oostburg. “If the governor really cared about lowering property taxes, he would sign our proposal to eliminate the automatic 400-year property tax increase he unilaterally created.”

Congrats, Devin LeMahieu! You are the new contestant on the game show “GOP, LYING or STUPID??”

For the God-knows-how-many-ith time, the only reason we have a property tax increase for schools is because the GOP refused to put state aid into the schools. The $325-per-student increase in revenue limit is for a combined total of state general aids and property taxes. And the GOP chose to pass a budget that ended up cutting state general aids for nearly 3/4 of the state’s districts for this school year. Hence…higher property taxes.

Not surprisingly, the failure of the WisGOP Legislature to have the state pay its share resulted in the largest increase in K-12 property taxes in Wisconsin in decades, as the Wisconsin Policy Forum reminded us in December.

The easiest solution to all of this isn’t something either Evers or Vos/LeMahieu have brought up. Why not just back $400 to each tax filer in Wisconsin as a property tax/rent rebate, which they will get by June of this year. Last month, I estimated a doubling of the Property Tax and Renter's Credit from $300 to $600 would cost around $255 million, so a $400 rebate would be maybe $340 million? That seems to play it cautiously enough so that if the $1.4 billion in extra revenue becomes more like $700 million, we wouldn't risk a situation where the new Governor would have to fix a potential deficit as he/she comes into office.

The Wisconsin DOR should have the names of all of those who filed state taxes and took the Property Tax/Renter’s Credit, so the check would go out to everyone who claims it for this year. And it would be something that can be felt by Wisconsinites long before property tax bills come out in December (and before the 2026 elections, if that matters….and it sure should if you’re a WisGOP that’s already in big danger of losing your ill-gotten majorities).

No matter how you do it, there is NO excuse for there not to be some kind of way to use the higher projections of revenues to give property tax relief in Wisconsin. And Evers and the Legislature are not able to get to a deal, then I'd sure encourage Dems running in all state-level elections to run on using a sizable surplus as a reason to cut property taxes AND adequately fund our community schools. Because today's strong revenue numbers show that it can and should be done.

Hidden headline - large parts of the US economy lost jobs in 2025

I also caught an article which discussed how this week’s ADP private sector jobs report showed parts of the jobs market are going in different, and how that’s hurting the prospects for younger Americans looking to break into certain professions.

ADP’s December report, released [Wednesday], showed the U.S. economy’s private sector added 41,000 roles in the run-up to Christmas. This bounce back could in part be linked to seasonality around the holidays. But optimists might suggest it hints at a potential turnaround from 2025’s low-hire, low-fire environment.

Among the sectors that added the most roles were leisure and hospitality, which added 24,000 roles, and trade and transportation, which added 11,000 roles. Conversely, sectors such as professional and business services lost 29,000 jobs while information services dropped 12,000 jobs.

The shift from white-collar office hiring—which went into overdrive during the COVID pandemic—to blue-collar roles in personal services, transportation, and hospitality is in-keeping with Dr Nela Richardson’s take on the labor market as a whole: Change is so rapid that even year to year, labor market entrants are facing a new set of hoops to jump through.

Richardson, ADP’s chief economist, said new graduates are struggling in the current jobs market. Responding to a question from Fortune during a media roundtable following the December data release, she said: “If you think of a recent college graduate compared to maybe their older brother or sister, it’s not the same jobs market. If you were looking for a job in 2023, and you were a young person, you could probably name your price: You could work from home, you could work remotely, there were a lot of different benefits.”

This also bears out in the BLS jobs report from Friday. Health care employment kept rising at the end of December (+21,100), and added nearly 405,000 jobs for all of 2025.

Relatedly, social assistance also featured strong job growth in December, with 17,400 jobs added and 308,000 since December 2024. However, contrast the combined growth in the Health Care/Social Assistance categories with the rest of the service economy.

That “Rest of the Service Sector” category accounts for 2/3 of the 136.1 million private sector jobs in America. And that part was up by barely more than 90,000 nationwide. Yikes.

Among those other parts of the service economy, professional and business services lost 9,000 jobs in December, and lost 97,000 jobs for all of 2025. And parts of those sectors had it especially bad in 2025.

Change in jobs, Dec 2024-Dec 2025
Temporary Help Services -99,200
Computer Systems Designs/Related Services -46,800
Business Support Services -29,900
Scientific Research/Development Services -19,600

Then combine it with a loss of 70,000 jobs in the goods sector for 2025, and throw in another loss of 149,000 in government, and most areas in the jobs market are in recessionary conditions. The growth in health care and social assistance has masked a decline in jobs for the vast majority of sectors in 2025, and that may explain why the Federal Reserve cut rates more than you’d think in a time when inflation is still running around 3%.

Oh, and 2026 is starting with large spikes in health care premiums, likely leading to a decline in the number of Americans having health insurance and/or getting medical services. So that’s a serious headwind for one of the few areas that were hiring in 2025.

No wonder why so many Americans are down on the economy these days, This is the worst non-COVID jobs market in 15 years, and the first declining non-COVID market in nearly 20. Oh, but the extra few dollars you get from your tax refund in 3 months will change all of this for 2026. Surrrrre it will.

Tepid December and big downward revisions in Q4 wrap up a bad 2025 for US job market

Jobs Friday is finally back on schedule after its delays due to the government shutdown in October and November. And the report indicated December continued to show a jobs market that slowed significantly in 2025.

The U.S. labor market ended 2025 on a soft note, with job creation in December less than expected, according to a report Friday from the Bureau of Labor Statistics.

Nonfarm payrolls rose a seasonally adjusted 50,000 for the month, lower than the downwardly revised 56,000 in November and short of the Dow Jones estimate for 73,000.

At the same time, the unemployment rate fell to 4.4%, compared with the forecast for 4.5%.

Not mentioned in that decline in the unemployment rate is that it followed a 0.4% increase in that rate between June and November, and that unemployment had gone from 4.0% in January to 4.5% in November. And that the percentage of working-age people listed as employed is at its lowest non-COVID levels in a decade.

And if you dig into the actual jobs report, you'll see that an increasing amount of those "employed" aren't working as much as they wish they were.

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 people not in the labor force who currently want a job was little changed at 6.2 million in December but is up by 684,000 over the year. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.

On the payrolls side, the real news wasn't as much that only 50,000 jobs were added in December, as much as how additonal data for previous months showed job growth was much worse than the already-subpar numbers had indicated.

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. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)

While that October loss of 173,000 jobs is mainly a reflection of federal employees having their severance run out on Sept 30 after being DOGE'd and Voughted throughout the year (federal jobs were -179,000 in October), the private sector also had its October job growth revised down from 52,000 to 1,000. Those negative private sector revisions for October included previously growing sectors like construction (revised down -12,000), retail trade (revised by -21,500) and health care (revised by -13,200).

You put together the 3 months of Q4 2025, and they only had a total 88,000 private sector jobs added. Along with a 3-month stretch from June-Aug 2025 of 39,000 total jobs, we'r seeing the worst non-COVID run of job growth in the private sector since early 2010 - when we were dragging ourselves out of the Great Recession.

Put it together, and 2025 shows a significant dropoff from what we were seeing in the 2 years before Donald Trump's 2nd term in office began.

And while wage growth may seem OK on the overall level, everyday line workers saw their wages barely budge at the end of 2025.

In December, average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.3 percent, to $37.02. Over the past 12 months, average hourly earnings have increased by 3.8 percent. In December, average hourly earnings of private-sector production and nonsupervisory employees, at $31.76, changed little (+3 cents).

For all of 2025, production and nonsupervisory employees only had their average hourly earnings go up by 3.55%, the lowest 12-month increase since early 2020 - a much less inflationary time.

Pretty bad picture for the US jobs market, not just for December, but for 2025 in general. And if firms continue to take all of the proceeds of worker productivity, and continue to avoid hiring and giving wage increases, how can consumer spending hold up for 2026?

Big productivity growth explains more output and profit without more jobs

One of the mysteries of the delayed economic data has been why we allegedly had large economic growth of 4.3% (beyond inflation), but job growth is near zero, and consumer sentiment is at multi-year lows.

Which is why today’s report on US worker productivity cleared up some of that confusion to me.

Nonfarm productivity, which measures hourly output per worker, accelerated ‌at a 4.9% annualized rate, the Labor Department's Bureau of Labor Statistics said on Thursday.

That was the quickest pace since the third quarter of 2023 and followed an upwardly revised ⁠4.1% growth rate in ‌the second quarter. Economists polled by Reuters had forecast productivity would grow at a 3.0% ‍rate after a previously reported 3.3% pace of expansion in the April-June quarter….

Productivity grew at a 1.9% rate from a year ago. ‌Businesses are spending on AI, which economists said could further boost productivity. The jump in productivity helps to explain the gap between strong gross domestic product growth and a lackluster labor market. The economy grew at a robust ⁠4.3% rate in the third quarter. In contrast, private job gains averaged 55,000 per month in the three months through October.

It’s worth looking back to see how we got here.

Productivity jumped as workers got laid off at the start of the COVID pandemic, and then it leveled off as Americans returned to work as the pandemic waned. But you can see that productivity was still 4% higher than it was pre-COVID at the end of 2022, leading to a sizable increase in output. Then you can see that while total hours worked has only had a slight increase from the start of 2023 to today, productivity has kept rising, taking output along with it.

This trend of higher productivity and output with flatlining hours worked is especially apparent in manufacturing, where hours worked peaked in early 2023. In the two years after that, productivity flattened out for the next 2 years and output dropped. But for 2025, productivity has picked up so much that output is also growing, while jobs and hours worked keep going down.

But a big difference from 2023’s jobs and productivity situation and 2025’s is that workers are not reaping as many benefits from their higher productivity and output. At the end of 2023, unit labor costs were up by 1.8% over the last 12 months, and at the end of 2024, labor costs were up 2.6% from the end of 2023. This is not the case in 2025.

Unit labor costs - the price of labor per ‍single unit of ⁠output - decreased at a 1.9% rate in the third quarter. That followed a 2.9% pace of decline ⁠in the April-June quarter. Labor costs increased at a 1.2% rate from ‌a year ago.

That’s a 1.2% increase in worker pay per unit before inflation, which is estimated at around 2.9% over the last 12 months in that report. And inflation-adjusted (real) hourly compensation for workers has declined in each of the last 2 quarters (-0.2% in Q3 and -0.5% for Q2).

The productivity report also shows the effects of 2025’s tariffs and other non-labor cost increases. Many of those tariffs started in April, and take a look at what happened to non-labor costs for businesses in the 2 quarters measured in between.

So businesses have been paying quite a bit more for materials and shipping and other costs following Trump’s “Liberation Day” tariffs, but the higher productivity and lack of wage increases for workers keeps total costs in check. Add in price increases for consumers, and the profits roll in to record levels.

Which means that everyday Americans are paying more but aren’t earning any more, and when you combine it with the Bubbly stock market, all of the economic growth proceeds roll to the top.

Which helps to explain this report that came out this week.

Americans grew more worried about the job market in December even as anxieties over personal finances faded, while near-term inflation expectations increased, a report from the New York Federal Reserve showed on Wednesday.

Respondents in the regional Fed bank's latest Survey of Consumer Expectations said the prospect of ‌finding a job if unemployed was the worst since the report began in 2013. The worries about getting a new job were led by ‌households that earned under $100,000 per year.

Job market anxieties were uneven in the final month of 2025, the New York Fed said, as expectations that the unemployment rate would rise ebbed in December relative to the prior month, while the probability assigned to losing a job rose relative to November. The survey also found a lower probability of leaving a job voluntarily in ⁠December versus the prior month.

So maybe that 4.3% GDP number from Q3 isn’t as BS as I originally thought it was, because the owners and paper-traders apparently were seeing things boom this Summer.

But the non-rich sure aren’t experiencing an economy that’s anything like one that would have 4.3% growth. And let’s see if that trend of low hiring and tiny wage increases continued at the end of 2025, with the release of the December US jobs report tomorrow. (Well, if we can trust the numbers, of course).

We don't need more oil in America. So why grab it from Venezuela?

The Venezuelan adventure that went on this weekend should make you ask "WHY?" Not just for the arrogance and general unconstitionality of it, but also because of this "reasoning".

Q: China, Russia, and Iran have interests in Venezuela. How does this operation affect your relationships with them? TRUMP: In terms of other countries that want oil, we're in the oil business. We're gonna sell it to them. We'll be selling oil.

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— Aaron Rupar (@atrupar.com) January 3, 2026 at 11:28 AM

Here's the funny part about that - we already have a ton of oil on the market these days, and we can't use what we have.

While gasoline usage for late November and December is up a bit from the higher-priced days of 2022 and 2023, you can see that it is still lower than it was in the non-COVID years of Donald Trump's 1st presidential term.

This reflects more people working remotely and not having to commute vs the 2010s, and the increasing proportion in electric and hybrid cars on the market, reflecting the incentives towards those vehicles that were put into law during the Biden Administration.

But that hasn't stopped oil companies in America from drilling. Outside of the travel and oil price crash at the start of the COVID pandemic, we've seen a general increase in the amount of oil being pumped out of the ground in this country over the last 8 years, with production hitting a new high of 13.87 million barrels a day for October.

Put the lack of demand and the higher oil output together, and gasoline has been more plentiful in the 2020s than it was in the pre-COVID era.

That situation has also likely put us at an economic limit of oil production, because oil prices have been consistently falling, and have been below $60 a barrel since that record production level was reached in October. That $60 a barrel number is important, because Texas oil producers told Federal Reserve officials last March they needed prices to be above there for it to be worth it to drill more.

So if you think that the capture of Maduro may lead to added oil onto the US market, I don't that's true. And if we didn't have a senile psychopath as President, he might not be talking up an oil imperialism angle that may well not happen, or could injure America's oil industry.

Even if this move is not going to do much to help the US oil industry or lower prices beyond where they already are (and if you set aside how ILLEGAL this all is under the general rules of diplomacy) maybe this grabbing of Maduro was in the works for a while, and there was a clear succession plan in place that's better for both the US and Venezuela.

President Trump said on Saturday that Delcy Rodríguez was sworn in as Venezuela’s interim president and would act as a partner in letting the U.S. run the country. Less than two hours later, Rodríguez made clear she viewed the U.S. as an illegal invader that must be rejected.

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— The New York Times (@nytimes.com) January 3, 2026 at 5:55 PM

So like a lot of other things with this Administration, here is where we are for both the economic and political ramifications of this weekend's activities in South America.

So you're saying there is no plan. Cool, cool.

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— jakemadtown.bsky.social (@jakemadtown.bsky.social) January 4, 2026 at 12:20 PM

This is what we get with a government run by Flor-idiots, oil men from Tex-ASS, tech oligarch shut-ins, and Faux News content creators.