
Housing expected to remain drag on economy; Job reductions rise; Restaurant performance edges lower
What you need to know to start your day
Housing expected to remain drag on economy
Housing is projected to be the biggest obstacle for overall U.S. economic growth in the second half of 2025, with residential investment expected to post an annual decline of 8%, according to analysts at Goldman Sachs.
The category that includes single-family and multifamily investment “is likely to remain the largest drag on growth,” Goldman Chief Economist Jan Hatzius said in an Aug. 3 research note to clients. Hatzius cited factors such as affordability challenges and shifts in U.S. immigration policy that are expected to slow formation of households, along with the recent pullback in U.S. job creation.
Overall residential construction could remain limited for the rest of the year, the Goldman economist said. Other analysts point to challenges ahead for both single-family and multifamily investment and development amid elevated interest rates and escalating costs expected to result from the latest U.S. tariffs on imported goods and building materials.
Housing data firm Cotality, formerly known as CoreLogic, noted that less than 10% of home construction goods are imported, but tariffs are starting to raise prices for several items including windows, floor coverings, appliances, steel and lumber. “Overall, this keeps consumers cautious when it comes to large purchases, like a 30-year mortgage, and homebuying demand will remain suppressed,” Cotality Chief Economist Selma Hepp said in a statement Monday.
Housing made up 16.3% of the overall U.S. economy in this year’s second quarter, including investment in acquisitions, construction, remodeling and related services, according to the latest Commerce Department figures. That share was essentially unchanged from the prior quarter and the year-earlier second quarter.
Job reductions rise
U.S.-based employers announced 62,075 job cuts during July, up 29% from the prior month and increasing 140% from a year earlier, according to the latest tracking by Challenger, Gray & Christmas. The outplacement firm said July reductions were well above the post-pandemic average of 23,584 for that month.
“We are seeing the federal budget cuts implemented by DOGE impact non-profits and healthcare in addition to the government,” Senior Vice President Andrew Challenger said in a statement, referring to the Department of Government Efficiency.
July data showed government leading for year-to-date job cuts at 292,294, far above the 37,614 in the first seven months of 2024. Technology firms announced 89,251 job reductions year-to-date, up from 65,863 a year earlier. The real estate industry had 4,359 announced cuts year-to-date, up from 1,461 a year earlier.
U.S. companies announced a total of 806,383 job cuts through July, the highest total for the first seven months since the 2020 total topping 1.8 million in the early days of the pandemic. Challenger said corporate shifts to artificial intelligence accounted for more than 10,000 job cuts during July, with tariff concerns affecting nearly 6,000 jobs so far in 2025.
Restaurant performance edges lower
Restaurant operators remain generally pessimistic about their financial prospects amid overall economic uncertainty, even as U.S. consumer spending at dining establishments has recently held up relatively well.
The latest survey by the National Restaurant Association found several metrics gauging industry health, including same-store sales growth, down slightly in June from the prior month. The trade group said 49% of operators reported annual gains in same-store sales, down from 52% reporting annual gains in the May survey.
The restaurant group said 41% of operators reported annual same-store sales declines in June, up from 38% in May; as 47% reported lower customer foot traffic in June, up from 42% in May. The group said 36% reported annual foot traffic gains in June, with the remainder reporting no change.
Still, 52% of operators said they made a capital expenditure for equipment, expansion or remodeling during the prior three months, the highest reading in a year. And despite operator pessimism and financial challenges facing that industry, the latest Commerce Department figures showed June spending at U.S. dining and drinking places totaled $98.7 billion, up 0.6% from the prior month and rising 6.6% from a year earlier.
Additional Info
Media Contact : https://www.costar.com/
Related Links : https://www.costar.com/
Source : https://www.costar.com/