Nobel Prize for Economics – the Royal Swedish Academy of Sciences awarded the Nobel Memorial Prize in Economic Sciences to Acemoglu, Robinson, and MIT Economist Simon Johnson for their research on “how institutions are formed and affect prosperity.” They argue that institutions that protect individual freedom, property rights, enforce rule of law, educate their populations, and encourage innovation and entrepreneurism typically thrived economically during the industrial revolution. They use statistics to argue that the inclusive institutions of South Korea played a large role in its economic development comparative to North Korea. Twelve years ago, when they wrote Why Nations Fail, they used the US as a success story. In 2021 they were asked about the US after the insurrection on the US capital and the use of 20,000 National guard members to oversee the inauguration they were concerned about our institutions becoming less inclusive, lack of economic growth, and a very divided labor market. They advocate for a ‘good job’ agenda that envisions policy updates and public investments in good jobs and shared prosperity for working-class people that have been left out both economically and culturally.
Mortgage Rates increased again this week as the price of Mortgaged Backed securities declined for the second consecutive week. Rates are down 1% from this time last year.
Single Family Rents – Core logic released their SFR Rent Index and rents are up 2.4% year over year – a moderation from last year’s 2.8%. We are seeing rents up 4.85% in the CPI and PCE inflation reports so hopefully we will see more accurate figures in those reports soon which would help with mortgage rates.
Retail Sales – the Census Bureau released their Retail Sales report for October and it showed sales rose 0.4% in September. The Core Rate, which strips out auto and gas, rose 0.7% and is used in the GDP calculation. This is not great news for the bond market even if much of the spending is on credit cards. Of purchases from last year’s holiday season 28% put on credit remain unpaid.
Mortgage Applications –to purchase homes declined 7% last week but are up 7% year over year. Refinances dropped 26% last week but remain up 111% year over year.