Archive for July 2023

On 3/31/23, 23.3% of home mortgages had a rate below 3%, 38% had a rate between 3%-4%, 19.9% had a rate between 4%-5%, and 18.8% enjoyed a rate over 5%. Equivalently, 61.3% of mortgages were below 4%, and 81.2% were below 5%. However, the percentage of mortgages below 4% peaked in 22Q1 at 65.3% as…

The Friday File: For a $3.25 cup of coffee, rent is $1.13, staff/wages are $0.81, tax is $0.49, profit is $0.32, paper products such as the cup and napkins cost $0.23, milk costs $0.13, and coffee also costs $0.13, or 4% of the total. So, if the cost of coffee beans falls by 50%, your…

With home prices generally reaccelerating and interest rates again testing recent highs, housing affordability is deteriorating. As of 6/22/23, with the 30-year mortgage rate at 6.67% it took $2,258, a record high and nearly 35.7% of median household income, to cover the monthly mortgage payment on a median priced house, assuming 20% down and a…

June inflation fell to 3% Y-o-Y from 4% in May, and from a peak of 9.1% in 6/22. While core inflation rose only 4.8% Y-o-Y, it’s more than double the Fed’s 2% target. Moreover, the Fed’s favorite inflation gauge, service inflation minus housing and energy, was almost unchanged from May. The big decline in headline…

While equities have so far enjoyed a banner 2023, firms that recently went public are struggling. Class of 2020 IPOs are down an average of 34% from their initial listing price, 2021 IPOs are down 46%, and 2022 IPOs are off 49%. Relatedly, traditional IPOs (excluding SPACs) have so far raised $9 billion this year,…

June payroll growth deflated to 209,000, the lowest level since 12/20, April and May employment was revised down 110,000, and it was the first time in over a year that growth fell short of market expectations. Yet unemployment fell and Y-o-Y wage growth grew 4.4%, unchanged since the start of 2023, and well above the…

The Friday File: In 1966, U.S. per capita caloric sweetener consumption was 115 lbs/year, and as late as 1982 it was under 120 lbs/year. Consumption then rose quickly, peaking in 1999 at 154 lbs/year. It’s since markedly declined and has averaged 126 lbs/year since 2018, the same level as in 1985. Refined sugar consumption is…

With race-based affirmative action now illegal, colleges who wish to maintain diversity have opportunities. They may wish to consider spending much more on outreach to underprivileged communities to boost already low application rates. They can also offer plans that give automatic acceptance to the top X% of all high school graduates. Colleges and universities could…

The Fed received a double-whammy last week. Not only was 23Q1 GDP upwardly revised from 1.3% to 2%, suggesting the economy was performing meaningfully better than believed, but inflation as measured by core-PCE rose 4.6% in May Y-o-Y, and has been flat for six months. Moreover, the Fed’s favorite measure of inflation, services minus energy…

The current US flag was designed by Bob Heft of Lancaster, Ohio in 1958 in anticipation of Alaska becoming the 49th state and Hawaii following soon after. He was amazingly a high school junior, and his teacher gave him a lousy B-. Two years, 21 letters and 18 phone calls later, President Eisenhower called inviting…