
Will AI help rebuild the middle class? The industrial age provided a lot of jobs for ‘middle-skill’ work that required reading and basic math skill. Jobs on factory floors, offices, and answering phones that paid relatively well. The age of the personal computer ‘devalued mass expertise and created massively amplified demand for elite expertise’. Many manufacturing jobs and office jobs were automated away by computer software. Will the AI age enhance jobs for middle-skilled workers? While plenty of folks are worried it will automate away all jobs or eradicate our species, some research is showing that it will make people without college education much more capable of doing a range of valuable jobs. In this example lower-skilled customer service reps (in fields with a 60% turnover rate) saw huge gains in their performance after an AI chatbot was introduced to help them with their work while the more experienced, higher skilled reps saw little to no benefit. Another MIT study on writing showed that lower skilled writers massively improved their writing with the help of ChatGPT, while higher skilled workers saw less benefit. Both examples of improvement in inequality. ‘Basically, the middle-skilled workers of the future could be people who have foundational skills in healthcare, in the trades, in travel, and services,’ -Autor

Mortgages rates moved horizontally this week after some brief excitement over mild inflation reports. The price of Mortgaged Backed Securities remains in an upward trend that has held for two months which is a positive sign for mortgage rates. Rates are up 1.125% from this time last year.


Inflation – the Consumer Price Index showed that overall inflation increased by 0.37% in April. Year over year inflation declined by 0.1% to 4.9%. This is down significantly from its peak of 9.1% The core rate, which strips out food and energy, also declined by 0.1% on a year over year basis to 5.5%
The Producer Price Index increased by 0.2% in the Month of April bringing the year over year reading down to 2.3% – a massive drop from the peak of 11.7% in Jan 2021. We expect to see this reflected in the CPI in the following months. The core rate declined by 0.2% to 3.2% year over year.
As a reminder Mortgage Rates are tethered to inflation, and the decline of these two indices reflected positively for rates and Mortgaged Backed Securities this week.

Jobs – the number of folks filing for unemployment benefits for the first time increased 22,000 to 264,000 individuals – the highest number since October 2021 (19 months). The four week average is now a 245,000. The number of folks filing for continuing unemployment claims also increased and is at 1.8M. Hiring has slowed.
Mortgage Applications – to purchase homes increased 5% last week which marks 7 weeks of increase in the last 10 weeks. Purchases applications remain down 32% year over year. Refinances applications increased 10% and are now only down 32% year over year.