Today, in the Real Estate Newsletter: Asking Rents Mostly Unchanged Year-over-year Brief excerpt: Another monthly update on rents. Apartment List: Asking Rent Growth -0.4% Year-over-year ... On the supply side of the rental market, our national vacancy index now sits at 6.9 percent, the highest reading in the history of that monthly data series, which goes back to the start of 2017. After a historic tightening in 2021, multifamily occupancy has been slowly but consistently easing for over three years amid an influx of new inventory. 2024 saw the most new apartment completions since the mid-1980s, and with 750 thousand units still in the construction pipeline, the supply boom has runway to continue this year. Realtor.com: 19th Consecutive Month with Year-over-year Decline in Rents The median asking rent across the 50 largest metropolitan areas in the United States fell again in February, to $1,691. This marks 19 months in a row in which rent has fallen year over year, this time by 0.9% from February 2024. This is much more in the article.

The fires that have been ignited are not yet visible. There's a eerie calm after an earthquake. Those trapped in collapsed buildings are aware of the consequences, but the majority experience a silence, as if the world stopped and has yet to restart. The full consequences are as yet unknown, and so we breathe a sigh of relief. Whew. Everything looks OK. But this initial assessment is off the mark, as much of the damage is not immediately visible. As reports start coming in of broken infrastructure and fires break out, we start realizing the immensity of the damage and the rising risks of conflagration. Uncertainty and rapidly accelerating chaos reign. President Trump used a medical analogy for what I'm calling The Tariff Earthquake: the patient underwent a procedure and has had a shock, but it's all for the good as the healing is already underway. We often use medical or therapeutic analogies, but in this case the earthquake analogy is more insightful in making sense of what happens to economic structures that have been systemically disrupted. The key parallel is the damage is often hidden, and only manifests later. The scene after the initial shock looks normal, but water mains have been broken beneath the surface, foundations have cracked, and though structures look undamaged and safe, they're closer to collapse than we imagine, as the structural damage is hidden. Another parallel is the potential for damage arising from forces other than the direct destruction from the temblor. The earthquake that destroyed much of San Francisco in 1906 damaged many structures, but the real devastation was the result of fires that started in the aftermath that could not be controlled due to the water mains being broken and streets clogged with debris, inhibiting the movement of the fire brigades, which were inadequate to the task even if movement had been unobstructed. The earthquake damaged the city, but the fire is what destroyed it. What was considered rock-solid and safe is revealed as vulnerable in ways that are poorly understood. Structures that met with official approval collapse despite the official declarations. What was deemed sound and safe cracked when the stresses exceeded the average range. The Tariff Earthquake exhibits many of these same features. Much of the damage has yet to reveal itself; much remains uncertain as the chaos spreads. Like an earthquake, the damage is systemic: both infrastructure and households are disrupted. The potential for second-order effects (fires in the earthquake analogy) to prove more devastating than expected is high. (First order effects: actions have consequences. Second order effects: consequences have consequences.) The uncertainty is itself a destructive force. Enterprises must allocate capital and labor based on forecasts of future supply and demand. If the future is inherently unpredictable, forecasting becomes impossible and so conducting business becomes impossible. Just as the 1906 fires sweeping through San Francisco were only contained by the US Army blowing up entire streets of houses to create a fire break, the containment efforts themselves may well be destructive. We had to destroy the village in order to save it is a tragic possibility. Here is a building damaged in the 1989 Loma Prieta earthquake that struck the San Francisco Bay region. The residents may have initially reckoned their home had survived intact, but the foundation and first floor were so severely damaged that the entire structure was at risk of collapse. On this USGS map of recent earthquakes around the world, note the clustering of quakes on the "Ring of Fire" that traces out the dynamic zones where the planet's tectonic plates meet. Earthquakes can trigger other events along these dynamic intersections of tectonic forces. In a similar fashion, The Tariff Earthquake is unleashing economic reactions across the globe, each of which influences all the other dynamic intersections, both directly and via second-order effects generated by the initial movement. Anyone claiming to have a forecast of all the first-order and second-order effects of the The Tariff Earthquake will be wrong, as it's impossible to foresee the consequences of so many forces interacting or make an informed assessment of all the damage that's been wrought that's not yet visible. The fires that have been ignited are not yet visible. They're smoldering but not yet alarming, and so the observers who are confident that everything's under control have yet to awaken to the potential for events to spiral out of control. New podcast: The Coming Global Recession will be Longer and Deeper than Most Analysts Anticipate (42 min) My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. 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From Fed Chair Jerome Powell: Economic Outlook. Excerpt: Turning to monetary policy, we face a highly uncertain outlook with elevated risks of both higher unemployment and higher inflation. The new Administration is in the process of implementing substantial policy changes in four distinct areas: trade, immigration, fiscal policy, and regulation. Our monetary policy stance is well positioned to deal with the risks and uncertainties we face as we gain a better understanding of the policy changes and their likely effects on the economy. It is not our role to comment on those policies. Rather, we make an assessment of their likely effects, observe the behavior of the economy, and set monetary policy in a way that best achieves our dual-mandate goals. We have stressed that it will be very difficult to assess the likely economic effects of higher tariffs until there is greater certainty about the details, such as what will be tariffed, at what level and for what duration, and the extent of retaliation from our trading partners. While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected. The same is likely to be true of the economic effects, which will include higher inflation and slower growth. The size and duration of these effects remain uncertain. While tariffs are highly likely to generate at least a temporary rise in inflation, it is also possible that the effects could be more persistent. Avoiding that outcome would depend on keeping longer-term inflation expectations well anchored, on the size of the effects, and on how long it takes for them to pass through fully to prices. Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem. emphasis added

Plus! Reindustrialization as a Financial Engineering Problem; How the Tariffs Happened; Meanwhile, in Europe; Lead Generation; The Platform

From the BLS: Employment Situation Total nonfarm payroll employment rose by 228,000 in March, and the unemployment rate changed little at 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in social assistance, and in transportation and warehousing. Employment also increased in retail trade, partially reflecting the return of workers from a strike. Federal government employment declined. employment in January and February combined is 48,000 lower than previously reported. emphasis added Click on graph for larger image. The first graph shows the jobs added per month since January 2021. Total payrolls increased by 228 thousand in March.  Private payrolls increased by 209 thousand, and public payrolls increased 19 thousand (Federal payrolls decreased 4 thousand). Payrolls for January and February were revised down by 48 thousand, combined. The second graph shows the year-over-year change in total non-farm employment since 1968. The third graph shows the employment population ratio and the participation rate. The Labor Force Participation Rate increased to 62.5% in March, from 62.4% in February. This is the percentage of the working age population in the labor force. The fourth graph shows the unemployment rate. I'll have more later ...