Redfin Economists’ Weekly Take: Fresh Government Data Could Bring Mortgage Rate Volatility

This Week In A Nutshell

The government shutdown looks likely to end this week, which means a flurry of fresh economic data over the next month or so could bring mortgage-rate volatility as investors reprice the odds of future rate cuts.

Upcoming Attractions

• Turning on the data spigot: With the government shutdown likely to end this week, the question for markets is what happens to the economic data calendar. Once BLS, BEA, and Census employees return to work, they will release an updated release schedule for the missing and upcoming reports. A key question will be whether the Fed receives any fresh recent reads on the job market and inflation before their December 10 meeting.
• Fed speak: There are 12 speaking engagements for Fed officials this week, including New York Fed President Williams, Fed Governor Waller, and Fed Governor Miran—all on Wednesday.

Last Week’s Highlights

• ADP’s employment data: ADP’s data showed a gain of 42k jobs in October after two months of losses, reaffirming the suspicion that the labor market weakened in late summer, but has stabilized since. Importantly, for those watching the labor market, ADP is now releasing preliminary weekly data ahead of its monthly releases, making the monthly data more predictable.
• Supreme Court tariffs case: In oral arguments, most justices on the Supreme Court appeared skeptical of the Administration’s use of IEEPA to justify many of the new tariffs introduced this year. However, if those tariffs are thrown out, the White House will likely pivot to other authorities they have used to reestablish similar tariffs, leaving the overall tariff rate mostly unchanged.

Diving a Little Deeper

Economic data release schedule

• For the housing market, the most important data points are the BLS’s jobs and CPI reports as well as BEA’s PCE inflation report.
• The unreleased September jobs report that was originally scheduled for release on October 3 will almost certainly be released immediately.
• But data for the October jobs and inflation reports have not been collected and officials might be late collecting data for the November reports. It’s possible officials will release data for both October and November close to the originally scheduled December release dates (December 5 for jobs and December 10 for CPI) but it’s possible the Fed will not have any fresh recent data before their December 10 meeting.
• Any data for October and November will need to be interpreted in light of the changes in data collection. It is possible the statistical agencies will simply choose to skip the October data. If they choose to collect it, we will need to examine the effect that recollection bias might have on the data.

What happens if the Supreme Court throws out IEEPA tariffs?

• Prediction markets see a 70% chance that the Supreme Court will block the tariffs that were established under IEEPA (International Emergency Economic Powers Act) authority. This represents about 70% of the total increase in tariffs this year. It is also possible the court only throws out the “reciprocal” tariffs (over 80% of the tariffs in question) while keeping the ones on Mexico, Canada, and China premised on fentanyl concerns.
• Tariff rates would drop immediately if the Court rules against the White House and importers could use legal action to pursue refunds for tariffs paid so far.
• The White House would most likely use some combination of the following statutes to replace most, if not all, of the tariffs: Sec. 122 and 301 of the Trade Act of 1974, Sec. 232 of the Trade Expansion Act of 1962, and Sec. 338 of the Trade Act of 1930. However, Sec. 122 only allows for temporary tariffs and while Sec. 301 and 232 allow for permanent tariffs, they require time consuming investigations or can only be used for specific products. That means some period of uncertainty or tariff-rate volatility.
• It is possible that the White House uses the opportunity as an off-ramp to settle at the lower overall tariff rate, but since the economic consequences of the trade war have been smaller than predicted by some economists so far, that seems unlikely.

Redfin Reports

• Flood-Prone America Is Seeing More People Move Out Than In for the First Time Since 2019
  • An analysis of domestic migration data shows high-flood-risk counties lost nearly 30,000 more residents than they gained last year, driven largely by outflows from Miami and Houston.
  • Some are leaving due to climate risk, while others are moving out in search of a lower cost of living or different politics. Redfin agents say many are “boomerang” migrants—people who moved to flood-prone America during the pandemic and then decided to return home.
  • While domestic migration to flood-prone areas has slowed, many of these areas are still experiencing population growth due to immigration. But that could change as the government cracks down on border crossings.

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