• Menu
  • Skip to right header navigation
  • Skip to main content
  • Skip to secondary navigation
  • Skip to primary sidebar
  • Skip to footer

Before Header

Philadelphia Wealth & Asset Management Firm

wealth management

  • Why TBA?
    • Why Tower Bridge Advisors?
    • FAQs
  • Who We Serve
    • Individuals & Families
    • Financial Advisors
    • Institutions & Consultants
  • People
    • James M. Meyer, CFA® – CEO
    • Robert T. Whalen – Principal
    • Nicholas R. Filippo – VP, Sales & Marketing
    • Jeffrey Kachel – CFO, Principal & CTO
    • Chad M. Imgrund – Sr. Research Analyst
    • Christopher E. Gildea – Senior Portfolio Manager, Co-Chief Investment Officer
    • Daniel P. Rodan – Sr. Portfolio Mgr.
    • Christopher M. Crooks, CFA®, CFP® – Senior Portfolio Manager, Co-Chief Investment Officer
    • Michael J. Adams – Sr. Portfolio Manager
    • Shawn M. Gallagher, CFA® – Sr. Portfolio Mgr.
  • Wealth Management
    • How to Select the Best Wealth Management Firms
  • Process
    • Financial Planning
    • Process – Equities
    • Process – Fixed Income
  • Client Service
  • News
    • Market Commentary
  • Video
    • Economic Updates
  • Contact
    • Become A TBA Advisor
    • Ask a Financial Question
  • We are looking to add advisors to our team. Click here to learn more!
  • We are looking to add advisors to our team. Click here to learn more!
  • Click to Call: 610.260.2200
  • Send A Message
  • Why TBA?
    • Why Tower Bridge Advisors?
    • FAQs
  • Services
    • Individuals & Families
    • Financial Advisors
    • Institutions & Consultants
  • People
    • James M. Meyer, CFA – Principal & CIO
    • Raymond F. Reed, CFA – Principal
    • Robert T. Whalen – Principal
    • Nicholas R. Filippo – VP, Sales & Marketing
    • Jeffrey Kachel – CFO, Principal & CTO
    • Chad M. Imgrund – Sr. Research Analyst
    • Christopher E. Gildea – Sr. Portfolio Mgr.
    • Daniel P. Rodan – Sr. Portfolio Mgr.
  • Wealth Management
  • Our Process
    • Financial Planning
    • Process: Equities
    • Process – Fixed Income
  • Client Service
  • News
    • News & Resources
    • Market Commentary
  • Videos
    • Economic Updates
  • Contact
    • Become a TBA Advisor
    • Ask a Financial Question
wealth management

September 2, 2025 – Equilibrium means balance but doesn’t define the size of a market. A steady unemployment rate, stable housing prices and a steady 10-year bond yield all suggest equilibrium, but beneath the surface, there are warning signs that require investor attention.

//  by Tower Bridge Advisors

Equilibrium. The point where everything is in balance. Think of a scale. Put a one-ounce object on one side and a one-ounce object of the other. They balance. The same would be true whether you use a two-ounce object or even a two-pound object.

Look at the unemployment rate, perhaps the most important economic indicator watched by all in the United States, seared into our collective brains for almost 100 years courtesy of the Great Depression. It has stayed in a tight range of 4.0-4.2% for over a year. Likewise, weekly unemployment claims, those signing up for unemployment insurance each month, have also stayed in a tight range of 210,000-240,000. But look at continuing claims, the cumulative number of people still on the unemployment rolls. They have been inching up by over 100,000 or a bit over 5% since mid-April. Meanwhile, the number of job openings has declined by 39% since April 2022. No wonder college grads and white collar workers are having such a difficult time finding a job. The labor force participation rate has declined from 62.8% to 62.2% over the past two years. That seems like a small change on the surface but it represents hundreds of thousands of Americans who have dropped out of the labor force. The majority of that change coincides with the aging of our population. Using a wider lens, the participation rate has dropped a full five percentage points since the beginning of the 21st century.

That’s a lot of numbers. But if you try to piece them together, while it suggests equilibrium if one simply looks at the unemployment rate, what it really shows is that equilibrium is achieved by fewer Americans seeking and obtaining fewer jobs. Add immigration into the mix. In 2023 and 2024 total immigration totaled almost 5 million when the southern border was wide open. Now that it is closed, that number in 2025 will be well under a million. Combine that with a declining birthrate and aging population and you quickly come to a conclusion that our labor market isn’t growing very much or at all. Balance is achieved as fewer potential workers seek fewer available jobs.

One measure of GDP growth is population growth times the rate of productivity improvement. Population growth (annualized), for all the reasons just mentioned, fell from 0.98% in June 2024 to the most recent reading of 0.56%. Such a drop, which will likely continue in the months ahead, would require a significant and sustainable increase in productivity. Productivity changes bounced around quite a bit but over the last 75 years has averaged close to 2%. The most recent reported number for the second quarter of 2025 is 1.2%. AI may lead to better productivity down the road but it isn’t reflected in the data yet.

Bottom line is that the labor market is growing at a subdued pace although it remains in balance meaning there isn’t upward pressure on wages. Good for inflation but no so good for those trying to get ahead in life. Struggles finding work show up in the upward creep of continuing unemployment claims.

Let me switch from labor to housing. Housing starts have been anemic for decades. If equilibrium is exemplified by average home prices, there exists pretty good balance today after a sharp spike post the Covid pandemic. Very low mortgage rates from the past decade have kept the supply of homes for sale low amid resistance to give up 3% mortgages. High current mortgage rates plus the impact of home price inflation in the 2019-2024 period has squashed demand. Again, fewer homes for sale and fewer buyers create an equilibrium. But it’s not a sign of a healthy housing market. Housing starts today are about the same level as they were in 1960 while U.S. population has almost doubled. Americans are less mobile in part because they either can’t sell their existing homes for the price they want, or can’t afford a new home where they want to move. With housing starts stagnant, the only growth in the housing industry for over half a century comes from higher prices. A frozen housing market shows up in the form of reduced mobility. Americans are staying in their homes longer, either by choice or, more likely, because of economic factors.

Finally, I want to turn to a third area of balance, the yield on 10-year Treasury bonds. For almost two years it has stayed within a narrow range of 4.0-4.5% with little variation. 10-year yields reflect 10-year inflation expectations. They have been anchored. Despite all the political machinations, tariffs, threats against Fed independence, higher national debt, record corporate earnings and a weaker dollar, yields have stayed remarkably consistent. What is that telling us? For one, it suggests long-term inflation expectations have been well anchored. I have no clue who will be guiding the ship six weeks, six months, or two years from now, but markets have been saying that however the Fed and Treasury reach decisions, markets haven’t seen enough of a reason to raise or lower long-term inflation expectations sufficiently to cause a meaningful change in long-term bond returns. However, if future policy chooses to tolerate more inflation as a price for faster growth, that may all change. But, for now, that’s a hypothetical that markets are not ready to embrace.

Let me try and pull this all together.

• First and foremost, there are no signs at the moment that suggest recession. Slower growth, perhaps, but not enough to scream the R word.
• When a labor market or housing market is smaller or growing at a more subdued pace, changes can have an outsized impact. A lower birth rate, less immigration, and an aging population are all headwinds that will require greater productivity in the months and years to come. Less regulation and technology advances will offset the headwinds. At the moment there is balance, but balance can be skewed either way quickly.
• Housing is a big problem and getting bigger. Look at the coming election for mayor in New York. If the election were held today, avowed socialist Zohran Mamdani would win in a landslide. Why? Because (1) he has identified the problems most paramount to voters and (2) he has offered a solution. Whether that solution proves right or wrong, at least it’s an effort to solve the key dilemma, how can one afford to live in New York. Housing affordability has become the number one concern and soon it will be the number one concern for many more parts of our country. Solving the problem will require public/private partnerships working together. Rent freezes won’t increase supply, especially against a backdrop of rising real estate taxes. Increasing supply isn’t simply building more structures, it will have to be done by rehabbing or repurposing real estate in creative ways.
• A little over a year from now we will have mid-term elections. President Trump has set his agenda. He has restructured the tax code, imposed tariffs, taken steps to reshore manufacturing, reduced regulations, and closed our southern border while pursuing an expansionary fiscal policy and pressing the Fed to lower short-term rates faster than the present Board may like. How this all plays out will be reflected next fall. Americans vote with their wallets. If you look at the stock market for clues, given near record prices, investors are voting with optimism. But the investor class is only part of the electorate. Data suggests lower- and middle-class Americans are struggling more than the investor class. It’s harder to find a job, wages are barely keeping up with inflation, and too many are squeezed out of the housing market.
• Traditional inflation readings measure changes in the prices we pay for goods and services. Changes in asset values are not reflected in the computation. But asset prices also have to find their balance just as we have discussed for the labor, housing and bond markets. Rising stock markets not only reflect higher earnings, but also the weaker dollar, an increase in retail participation in the stock market, and broader optimism as measured by near record price-earnings ratios. Earnings growth alone can be a persistent tailwind, but increased speculative fever isn’t a one-way street.

For now, there are reasons for cautious optimism with the caveat that changes in the labor market, housing market, yields on long-dated Treasuries, and speculative enthusiasm can quickly change the optimism to pessimism.

Today, Salma Hayek turns 59. Former US Open champ Jimmy Connors is 73. Former baseball commissioner Peter Ueberroth turns 88.

James M. Meyer, CFA 610-260-2220

Tower Bridge Advisors manages over $1.3 Billion for individuals, families and select institutions with $1 Million or more of investable assets. We build portfolios of individual securities customized for each client's specific goals and objectives. Contact Nick Filippo (610-260-2222, nfilippo@towerbridgeadvisors.com) to learn more or to set up a complimentary portfolio review.

# – This security is owned by the author of this report or accounts under his management at Tower Bridge Advisors.

Additional information on companies in this report is available on request. This report is not a complete analysis of every material fact representing company, industry or security mentioned herein. This firm or its officers, stockholders, employees and clients, in the normal course of business, may have or acquire a position including options, if any, in the securities mentioned. This communication shall not be deemed to constitute an offer, or solicitation on our part with respect to the sale or purchase of any securities. The information above has been obtained from sources believed reliable, but is not necessarily complete and is not guaranteed. This report is prepared for general information only. It does not have regard to the specific investment objectives, financial situation or the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed in this report and should understand that statements regarding future prospects may not be realized. Opinions are subject to change without notice.

Filed Under: Market Commentary

Previous Post: « August 28, 2025 – The July jobs report signaled a cooling labor market, with slowing growth and a slight rise in unemployment, yet consumer spending remains resilient despite retail price hikes caused by new tariffs. This mixed economic data creates a conundrum for the Federal Reserve as it balances its dual mandate amid political pressure and inflationary headwinds. Given this uncertainty and the S&P 500 trading near all-time highs, investors should brace for potential market volatility post Labor Day, as the Fed’s next policy moves will depend heavily on upcoming inflation and jobs data.

Primary Sidebar

Market Commentary

Sign Me Up!

Latest News

  • September 2, 2025 – Equilibrium means balance but doesn’t define the size of a market. A steady unemployment rate, stable housing prices and a steady 10-year bond yield all suggest equilibrium, but beneath the surface, there are warning signs that require investor attention.
  • August 28, 2025 – The July jobs report signaled a cooling labor market, with slowing growth and a slight rise in unemployment, yet consumer spending remains resilient despite retail price hikes caused by new tariffs. This mixed economic data creates a conundrum for the Federal Reserve as it balances its dual mandate amid political pressure and inflationary headwinds. Given this uncertainty and the S&P 500 trading near all-time highs, investors should brace for potential market volatility post Labor Day, as the Fed’s next policy moves will depend heavily on upcoming inflation and jobs data.
  • August 25, 2025 – The Fed’s shift in policy, as stated by Jerome Powell last Friday, moves away from a focus on inflation and more toward insuring full employment. Such a shift suggests more short-term rate cuts and a willingness to tolerate some inflation as long as it stays below 3%. A willingness to tolerate a bit more inflation may sound innocuous but it could lead to unanchored long-term inflation expectations and keep 10-year Treasury yields elevated. If so, the euphoria expressed in Friday’s market rally may have been a bit too exuberant.
  • August 21, 2025 – This Friday we will receive commentary from the Federal Reserve after its annual gathering in Jackson Hole, Wyoming. The central-bank gathering has sometimes been a venue for marking shifts in Fed policy. Last year Fed Chairman Powell used it to signal that rate cuts were coming, and followed through the next month. The Snake River, which runs through Jackson Hole, provides an apt backdrop for the Fed’s meeting where the waters can be turbulent and winding. In the meantime, technology stocks have retreated this week and a number of consumer-focused companies have provided both encouraging and uncertain signals.
  • August 18, 2025 – The noise of front-page news doesn’t seem to coincide with record stock prices. War, ICE raids, violent storms and tariffs may be the topics of the Sunday talk shows, but the stock market cares more about earnings and interest rates. Earnings are rising and interest rates are stable. Will that continue? Earnings growth should slow a bit as the full impact of tariffs hits. While the Fed Funds rates should start to decline this fall, markets will focus on changes in the 10-year Treasury yield more than the Fed Funds rate.
  • August 14, 2025 – The market is increasingly divided, with a strong AI-driven rally on one side and a weakening consumer economy on the other. This contradiction creates a significant risk of a sudden economic downturn or stagflation, as soaring tech valuations may be unsustainable without broader economic support.
  • August 11, 2025 – There is an expression that rationality requires separating the wheat from the chaff. In Wall Street, to be a successful investor, it is necessary to separate hype from reality. That is particularly important as speculative fever rises. Some of the hype is real; some is nonsense. Don’t simply follow consensus. As investors you invest in companies, not hype, not single products, hot today but cold as ice tomorrow. Think rationally and you will be a successful investor.
  • August 7, 2025 – Football is considered a game of inches. Consider the “Brotherly Shove,” popularized by the Philadelphia Eagles, which is a play used to gain very short yardage and advance down the field. In order to counter this offense, defensive opponents have employed various tactics, but without much success. Two consumer-focused companies, McDonalds and Disney, recently reported quarterly earnings, and are slugging it out on the field as consumer preferences change and these companies try to adapt.
  • August 4, 2025 – Confusing economic reports on GDP and the labor market can be decoded to show that growth in the first half of 2025 was muted while inflation was well contained before the full impact of tariffs. If those data trends continue, look for one to three 25-basis point rate cuts before the end of 2025. That outlook may change with subsequent data but it is increasingly clear that an economy that has proven so resilient may need a bit more help to offset the impact of tariffs and significantly lower population growth.
  • July 31, 2025 – The U.S. economy demonstrated a strong rebound in Q2 2025 with 3.0% GDP growth. Tech giants Microsoft and Meta significantly exceeded earnings expectations, fueled by the ongoing AI boom and robust cloud and digital advertising performance. While the current AI-driven market rally shows parallels to the dot-com era’s speculative growth, today’s tech giants exhibit stronger financial fundamentals than many during the earlier boom. Investors should balance the allure of high growth with valuation discipline and diversification to mitigate risks in this dynamic market.

Footer

Wealth Management Services

  • Individuals & Families
  • Financial Advisors
  • Institutions & Consultants

Important Links

  • ADV Part 2 & CRS
  • Privacy Policy

Tower Bridge Advisors, a Philadelphia Wealth and Asset Management firm, is registered with the SEC as a Registered Investment Advisor.

Portfolio Review

Is your portfolio constructed to meet your current and future needs? Contact us today to set up a complimentary portfolio review, using our sophisticated portfolio analysis system.

Contact

Copyright © 2023 Tower Bridge Advisors

Philadelphia Wealth & Asset Management, Registered Investment Advisors

300 Barr Harbor Drive
Suite 705
West Conshohocken, PA 19428

Phone: 610.260.2200
Toll Free: 866.959.2200

  • Why Tower Bridge Advisors?
  • Investment Services
  • Our Team
  • Wealth Management
  • Investment Process
  • Client Service
  • News
  • Market Commentary
  • Economic Update Videos
  • Contact