February 2025 Employment

Residential construction employment continued to follow trends of moderate growth in February.

Figure 1

Residential construction activity has historically been a leading cyclical indicator. Yet, some other indicators of economic growth are showing distress, and the stock market has retreated slightly.

The New York Fed’s GDP “Nowcast” still shows real growth of more than 2% for the first quarter. The Atlanta Fed’s “GDPNow” forecast has suddenly dropped from about 2% to less than -2%. This is likely because chaotic Trump policy announcements have led to short-term shocks in various categories of economic activities, which the GDPNow model can’t fully account for in real time. But, it suggests that real growth for the first quarter is coming in low. I am not sure what to expect from the reported numbers this quarter.

Normally, monetary policy trends and “animal spirits” drive cyclical trends. Occasionally, like in 2020, real shocks do. It’s hard to know how a business cycle driven by autocratic lawlessness will play out. It seems as though uncertainty should be contractionary, but maybe randomized uncertainty isn’t nearly as contractionary as the coordinated or emergent cyclical trends we are used to dealing with are.

Some further implications for housing are below the paywall.