Despite many households locking in low mortgage rates, household interest expenses are skyrocketing. In 00Q4, the peak of the dotcom boom, interest expenses/GDP hit an all-time high of 2.2%. In 07Q2, shortly before the onset of the Housing Bust, interest expenses/GDP cyclically peaked at 2.04%. As recently as 22Q1 they were 1.1%, their lowest since 59Q4. However, in 23Q4, interest expenses/GDP were a shocking 2.02% and rising rapidly! Deeply concerning.

The cost to a mortgage lender to complete a residential loan in 23Q4 was $12,485, the second highest level in the history of the series, and up from $11,441 in 23Q3. Unfortunately, revenue per loan barely rose. As a result, each mortgage resulted in a loss of 73bps, up from 34bps in 23Q3. This large loss/loan suggests that despite layoffs and cuts, more cost cutting is ahead.

While the long-term impact of NAR’s agreement to end litigation brought on behalf of sellers, related to broker commissions, may take a while to become apparent, the immediate results were clear. On Friday, the day the agreement was announced, the stock price for RE/MAX declined 3.1%, for Redfin 4.9%, for Zillow 13%, for Compass 14.3%, and for Douglas Elliman 16.2%, suggesting that overall commissions and brokerage profits will be lessened.

The Friday File: A study of 584,734 dogs has found small, long-nosed, female dogs have the longest average lifespan at 13.3 years. The median canine lifespan is 12.5 years. Dogs with flat faces live an average of 11.2 years. Interestingly, they also find purebreds live 12.7 years while crossbreeds live 12. The longest-lived, the Lancashire heeler at 15.4 years, the shortest life expectancy, the Caucasian shepherd which averages 5.4.

As of 3/1/24, the IRS issued 36.2 million refunds versus 42 million refunds Y-o-Y. However, tax filing season began on 1/23/23 compared to 1/29/24. That said, so far, the IRS has processed 53.2 million returns vs. 54.3 million last year. The IRS has issued 36.2 million refunds vs. 42 million Y-o-Y with the average refund worth $3,128 vs. $3,028 Y-o-Y. All in all, no meaningful differences versus 2023.

The new White House pilot program designed to save homeowners money by waiving the requirement for title insurance on some refinancings by some lenders is, while well intended, ill advised. It’s because at the margin this increases housing demand, which will further raise prices, which are already high as we are short millions of units. Instead, boost the supply side by promoting more residential construction.

Since 1945, when equities retreat 5%-9.9%, on average it takes 1.5 months for markets to recover and recoup all losses. When markets experience a correction, a decline of 10%-19.9%, it takes on average 4 months to recover, and when they experience a bear market, a decline of 20%-40%, it takes about 13 months to recover. However, when markets fall more than 40% it takes a whopping 58 months to recover.

February net job creation was a strong 275,000. However, January’s growth was dramatically revised down to 229,000 from 353,000, heaping more doubt on the quality of the monthly net employment numbers. Therefore, focus on the unemployment rate, which at 3.9% is the highest it’s been since 1/22, and up significantly from a low of 3.4% as recently as 4/23. This rise should get the Fed to cut rates in June.

The Friday File: The wealthiest nation is Luxembourg with per capital GDP of $135,605, followed by Ireland at $112,248 and Switzerland at $102,865. No other nations exceeded $100,000. Norway was next at $99,266. Singapore was 5th at $87,884 then, Qatar at $81,968, and the USA at $80,412, which is downright amazing given its size. The top six nations are all small or tiny and enjoy idiosyncratic benefits.

In 1/23, when the labor market was sizzling, Y-o-Y wage growth for those employed during the previous year peaked at 6.4%. Among those who changed jobs it was 7.7%, and among those who didn’t change jobs it was 5.7%. By 1/24 overall Y-o-Y wage growth weakened to 5.5%, for switchers it was down a stunning 1.6 percentage points to 6.1%, but for stayers it fell one-third as much to 5.1%.