Last week a disappointing jobs report brought unexpected gloom to a summer Friday. Though the U.S. economy added 114,000 jobs in July, the number fell far short of expectations and represented a significant drop from June’s total of 206,000. Meanwhile, unemployment had ticked up to 4.3 percent—the highest in three years. Stocks dropped upon the news.
On Monday, the economic weather got decidedly stormier as the markets went into free fall. Both the S&P 500 and the Nasdaq slid around 3 percent, while Japan’s Nikkei index fell a dizzying 12 percent, its biggest one-day decline in nearly 30 years. There were a variety of potential culprits for the selloff, ranging from a correction on AI hype to currency speculation run amok. But the fear of a slowdown in the U.S. economy clearly has Wall Street spooked.
Rising unemployment and a wobbly stock market are never good news. However, this week’s downturn may have a silver lining for designers. First, a little backstory.
In 2022, the Federal Reserve began raising the key interest rate in an effort to fight inflation. By 2024, it was north of 5 percent, the highest level since 2007. The strategy appears to have worked—inflation has fallen from its recent peak of 9 percent all the way down to 3 percent.
However, the rate hikes were strong medicine. Making money more expensive to borrow has sent the price of mortgages skyrocketing, freezing the housing market in the process. And when people don’t move, they typically don’t buy furniture or hire designers. You could argue that everything from the slow-motion collapse of Interior Define to last month’s Conn’s bankruptcy have all been downstream of rising interest rates.
Even before last week’s dismal jobs numbers, there was already pressure building on the Fed to cut rates. Now a cut is all but certain to come in September. Mortgage issuers are already anticipating a drop: The interest rate on a 30-year fixed-rate loan is back under 6.5 percent. If the central bank cuts aggressively this fall, mortgages will keep getting cheaper, and the frozen housing market will—presumably—thaw.
In other words: Bad news for the broader economy may end up being good news for the home industry.
There are plenty of caveats. If the job numbers keep getting worse and stocks continue to dive, we may be headed for a full-blown recession. If that happens, it’s hard to predict which will be the stronger force: economic headwinds or a more fluid housing market. It’s also the case that the affluent—the audience designers are generally catering too—are more sensitive to stock movement than to mortgage rates.
But after two years of a painfully stuck housing market, if it takes a little economic uncertainty to shake things loose, many in the industry will choose turbulence over stagnation.
