We are broadcasting live from NYSC Texas at Old Parkland in Dallas from the ground opening of the exchange's new home in the Lone Star State. Now, Texas is home to more NYSC listed companies than any other state, representing over 120 issuers and more than $4.8 trillion in market value. And what a fitting backdrop as we take a look at the complex economic landscape. While U.S. corporate profit margins just hit a record 19.4 percent in Q2, even as July consumers' spending flatlined and inflation does remain stuck above the Fed's target. Well, Fetcher Kevin Morsh will be speaking tomorrow at Jackson Hole's symposium, and this does come as business leaders navigate a critical moment in the market cycle. Well, joining us live to break down what this means for commercial businesses is Bill Adams, chief U.S. economist for Fifth Third Commercial Bank. Bill, great to have you here. Thank you so much for joining me.
Thank you for having me. It's great to be here.
Well, we know that earnings season is winding down here in the U.S. and we're just coming off the heels of Nvidia's earnings. Quite impressive numbers there. And not surprisingly, we are seeing a boost in Nvidia share prices. But given that consumer spending has also flatlined, if you had to give a letter grade to what we're seeing in terms of the corporations as we wind down earnings season, what would that letter grade be?
I think you have to give corporate profits an A for Q2. Earlier this week, we got the second estimate of U.S. GDP, and in the details of that, we got corporate profits for all U.S. corporations, not just publicly traded ones, and they're up over 20 percent year over year. Really, really strong earnings growth in the last year. The discussion around the stock market, fears about valuations perhaps being stretched. Really, valuations are being supported now by fundamentals. And I think that's quite encouraging to see. And I think that side of the economy, the corporate side, businesses, is really running on all cylinders right now.
Yeah, and speaking of which, you and I are counting down to Kevin Warsh's debut at Jackson Hole. And as an economist, you take a close look at the economic data and also what's happening below the surface. So when it comes to Warsh, of course, there is lots of anticipation. But what do you really expect him to say tomorrow?
I expect Chair Warsh to reinforce that he's not given us forward guidance. That's what the market is used to getting from the Fed chair at a Jackson Hole speech. So you can skip it if that's what you wanted. But I do think that Warsh will reinforce his strategic goals for the Fed. to reduce its footprint in the financial system and allow market forces to have more of an impact on interest rates and on financial conditions, and then to change the Fed's strategy in other ways. Chair Walsh does have this goal of reducing the size of the Fed's balance sheet, so he may give us some more details about the the focus on the plumbing of the Fed and how it works. But as far as financial markets, the focus there is on what will happen to interest rates. And I think tomorrow will probably be a non-event.
Yeah, and as we look past Warsh's symposium, his speech at the Jackson Hole Symposium, there are a lot of data points that are coming down the pike. We just saw growth numbers from that GDP here in the US, another read, another look at what's happening below the surface, but we also got PCE. And ahead of the Labor Day holiday, we do get that employment report. Last month, we did see in the month of July, we saw the unemployment rate become lower, but at the same time, we saw that surprise non-farm payrolls print. So what does all of this mean? And we're hearing about the K-shaped economy. So break all of this down for us.
So we at Fifth Third Commercial Bank see the labor market as gone from having really strong supply growth with high immigration and really strong demand growth with rapid economic growth in the early recovery from the pandemic to having modest growth of labor demand, which you see showing up in that 60-some thousand monthly increase in payrolls this year, and a decline in labor supply. Labor supply is down 1.3 million in the July jobs report from the same time last year. I think in the next jobs report coming out next week, we're likely to see another decline in labor supply as the suspension of temporary protected status for Haitians affects the number of people working with that background in the economy. That's going to affect employment in nursing homes and healthcare. And I think we'll see partially offsetting that, a bounce back in employment in local government employment. There was some weird seasonal adjustment stuff in the last jobs report affecting that. But net net, I think we'll probably see another monthly decline in payrolls because of the impact of changes in immigration policy. Although I think we'll still see the unemployment rate probably holding where it was last month and moving down from where it was six months ago.
Yeah, and Bill, finally, before I let you go, we have a little over 60 seconds here. You mentioned local government and employment. So I do want to get your take on business capital allocation in the state of Texas, in particular, what you're seeing in Dallas. So can you give us a little bit of insight?
So, Dallas Fort Worth has been one of the big winners in the recovery from the pandemic and the expansion of the last five years. It's drawn people in from the rest of the country from the rest of the world strong businesses in. flywheel effect of more businesses attracting more workers with more jobs, driving growth of consumer spending in our market, driving the housing market has been flying strong in the last few years. It slowed down a lot in 2025 with fewer job postings, meaning that people who might wanna relocate to DFW aren't able to find a job here as easily as they could have in 2022, 2023. And so that inflow has slowed, and that's slowed the housing market in the region. But I think we're starting to see job posting stabilize. I think they're likely to pick up over the next 12 months, and I think that means that the strong trend growth of this region is likely to continue.
Well, Bill, I appreciate your insights. Thank you so much for joining me, as well as your perspective on what we're seeing in the economy. But it's so great to have you here at the NYC, Texas, especially because you're a Dallas space. So thank you so much for joining us.
It's been a real pleasure. Thank you.
