Could The Weakening Jobs Market Actually Be GOOD For The Economy? | Michael Kantrowitz

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**Michael Kantrowitz** (1:00)
Right now, and I think for the foreseeable future, we are in this somewhat sweet spot where softer employments allowing interest rates to decline, allowing the Fed to cut slowly and steadily. And that is starting to show up in both forward-looking data sets that forecast housing employment, I'm sorry, housing PMIs or orders and profits. And I think is already starting to show up in some better housing data, which tends to be the most rate-sensitive part in the economy. So, you know, it's a no-gain, no-gain backdrop, if you will. And I think that's particular to this environment after the 22 inflation shock. And while it is uncommon in the last 30 years, if you go back 60 years, it's actually happened quite often. So it's not unprecedented.

**Adam Taggart** (1:57)
Welcome to Thoughtful Money. I'm Thoughtful Money Founder and your host, Adam Taggart. Folks, we are very lucky to be joined today by Michael Kantrowitz, Chief Investment Strategist and Managing Director at Piper Sandler. I think it's a very opportune time to have Michael on. Michael is best known for his HOPE framework, which is a highly effective way to measure the health of the economy and to tell whether it's getting stronger or weaker. As we approach the end of the year here, 2025, there's a lot of uncertainty heading into 2026 There's a lot of cross currents going on. I think being able to look through his lens, being able to look through his framework gives us a really good sense of where things actually stand right now, and on a net basis, where things are trending. Anyways, Michael, thanks so much for joining us today.

**Michael Kantrowitz** (2:47)
Yeah, always a pleasure, Adam. Good to see you.

**Adam Taggart** (2:49)
Good to see you too. Look, lots to talk about. If we can, I have you do this every time you come on, but if you can just give perhaps 30 to 60 seconds in terms of background on this, which is kind of the hero visual for your HOPE Framework, just explain what it is and why it's so effective for you as a lens to look at the economy through.

**Michael Kantrowitz** (3:13)
Sure. So the HOPE Framework, as you can see, the acronym is Housing Orders, Profits, Employment, and it was an analysis we did, I did many years ago, that I was looking at the impact of changes in interest rates, specifically Fed policy, and how different popular leading, coincident lagging economic indicators reacted to that through history, which goes back to about the 50s. And the results, not surprising, you know, started off with your early cyclical sectors like housing, which is has historically been always the first data set to begin to improve before a broadening recovery in the economy or just a broadening in general, followed by orders, which I look at a lot of PMI data, which stands for purchasing managers indicators. So there's services and manufacturing. And when you get those two data sets to improve or deteriorate, it more often than not correlates to a change in the profits picture, whether or not profits are growing or slowing, and whether they're broad or narrow. And then of course, whether we go into a economic contraction is generally a function of the employment backdrop. And so having this framework helps me understand, A, what's going on, keeps me honest, and helps me communicate a roadmap, particularly when the Fed is in a tightening or easing cycle, to point to different metrics in the macro data that I am looking for to either corroborate a view or to perhaps change my view. So yeah, we're at an interesting time now because with the weak employment, software employment data of the last several months, employment has once again, it seems like we were at this point a year ago as well, become the focus of many investors.