Gen Z may spend less amid mediocre job market
The slow “no fire, no hire” labor market presents unattractive options for members of Generation Z, including many people in their late teens or early 20s who are looking for work or will be soon, according to a report Oxford Economics published Monday.
If the current trend persists, people in this age group are likely to reduce spending significantly, to such an extent that it could affect economic growth, said Grace Zwemmer, associate economist at Oxford Economics and the author of the report.
"Unemployment is rising and wage growth is declining for young adults, which could have a long-term scarring impact,” she said in the report.
The hiring rate, measured as a percentage of employment, has been trending down since 2022 and is now 3.2%, below the historical average, Zwemmer said. The unemployment rate has been rising faster for people aged 16 to 24 than for older workers.
The report said young people are more likely than before the pandemic to live with their parents and spend less on housing, transportation and food. Zwemmer said this reduced spending amounts to a $12 billion annual drag on consumption.
What Gen Zers face is somewhat akin to what millennials dealt with when the economy took a nosedive in the late 2000s, Zwemmer said. Millennials recovered well, in part because of high housing values. Gen Z can also benefit from holding less debt than prior generations, including less auto loan and credit card debt, although Zwemmer cautioned that this could change in the future.
Billionaire Bill Ackman says government shouldn’t sell Fannie Mae, Freddie Mac anytime soon
Billionaire Bill Ackman believes it’s not the right time for the Treasury to sell its stake in the government-backed mortgage giants Fannie Mae and Freddie Mac.
The Pershing Square Capital Management founder said in a presentation on X Tuesday that it would take significant time for the government to deliberately execute an initial public offering of its shares of the Federal National Mortgage Association and Federal Home Loan Mortgage Corp.
“We don’t believe that selling a portion of the Treasury’s government-sponsored enterprise shares in a public offering today is feasible or aligned with the Trump administration’s objectives,” Ackman said.
Ackman’s plan is simple: First, pay back the money Fannie Mae and Freddie Mac owe the government from the 2008 bailout. Next, let the Treasury use its special rights to turn those bailout options into stock, making it the biggest owner of both companies. Finally, relist Fannie and Freddie on the New York Stock Exchange so their shares can trade publicly again.
Remember, Fannie and Freddie purchase mortgages from lenders. They either hold these loans in their portfolios or package them into mortgage-backed securities and sell the bundles to investors. By selling mortgages to Fannie and Freddie, lenders get cash they can use to make new loans and keep the mortgage market moving.
Ackman’s proposal differs from the Trump administration’s view. The latter had been "opportunistically evaluating" a public offering for Fannie and Freddie, with a possible timeline as soon as the end of 2025.
Federal Housing Finance Agency Director Bill Pulte said any offering would be limited, possibly involving up to 5% of the company being public, rather than a full privatization, meaning that both entities would remain under government conservatorship.
Ackman said that over the past 10 days, he has spoken with Trump and Pulte, and that he discussed his proposal with Treasury Secretary Scott Bessent on Monday. The Trump administration is considering his proposal. The decision hinges ultimately on Trump.
Ackman, one of the largest stakeholders in Fannie and Freddie, has held 210 million shares for 13 years and said he has no intention of selling or increasing his position. He believes Fannie Mae and Freddie Mac should remain under conservatorship.
He also emphasized the importance of homeownership as a means to build wealth.
Factory orders rise as companies adjust to tariffs
Orders for new American-manufactured products rose 1.4%, or $8.4 billion, in August after two consecutive months of declines, the U.S. Census Bureau said in a report Tuesday. The data, initially scheduled for release Oct. 2, was delayed by the federal government shutdown. Orders were also up 3.3% from one year earlier.
The data is based on a survey of companies with at least $500 million in annual shipments. Total orders in August were $612 billion, the Census Bureau said. The figures are considered a good barometer of economic conditions in the manufacturing sector, which is adjusting to the U.S. government’s new tariffs on imported goods.
The same report said manufacturers shipped slightly fewer products in August than in the prior month after three straight months of increases. The inventory of products these companies had on hand was essentially unchanged after increasing for 10 of the previous 11 months.
Home Depot forecasts lower profit, sales
Home Depot cut its profit and sales expectations for the year as consumers postpone improvement projects and growth in home values remains sluggish.
The world's largest home improvement retailer's quarterly profit fell below analysts' estimates for the three months ending Nov. 2 as Home Depot's forecast shrank for both adjusted earnings per share and comparable sales for fiscal 2025.
The chain reduced the number of stores it plans to open to 12 in fiscal 2025, down from 13. It already had 2,356 stores by the end of the third quarter, the company said in its Tuesday earnings statement.
Home price growth is sluggish despite an improvement in mortgage rates compared to last year, as consumers delay purchases amid persistent inflation and sellers wait for more growth in home values.
It comes as the cost of a U.S. home rose 1.3% to a median $385,000 in the 12 months ended in October, according to Homes.com data.
Homeowners are also postponing major home improvement projects, Ted Decker, Home Depot's CEO, president and chair, said in the statement.
"We believe that consumer uncertainty and continued pressure in housing are disproportionately impacting home improvement demand," Decker said.
Decker also said fewer storms during this year's hurricane season led to lower sales of products needed for home repairs, while demand for backup power generators also fell.
Total revenue at Home Depot increased 2.8% to $41.4 billion. That figure includes a contribution of about $900 million from Home Depot's recent acquisition of building products distributor GMS.
Comparable sales in the quarter rose 0.2%, missing the consensus expectation of a 1.4% increase, according to Seeking Alpha.
Home Depot said net earnings in the third quarter fell 1.3% to $3.6 billion from the same time a year earlier.
Excluding one-time charges and benefits, Home Depot reported earnings of $3.74 per share, or 10 cents lower than the average estimate of analysts polled by FactSet, according to the Associated Press.