The Unassuming Economist

From a paper by Shuang Ma, Baoling Mo, and Xiaoyu Meng:

“We examine the impact of minimum wage increases on labor self-funded training by first constructing a theoretical model that explores the effects under both perfectly and imperfectly competitive market conditions. We then empirically analyze the impact using data on training enterprise registrations and household spending on training. Theoretically, we find an increase in the minimum wage is expected to suppress demand for low-skilled labor, leading affected workers to engage in self-funded training to compete for a limited number of job positions. Empirically, a minimum wage increase significantly boosts the number of newly registered training enterprises and household expenditures on skill training. Mechanism analysis reveals that a higher minimum wage increases labor costs for enterprises, leading them to raise skill requirements during recruitment, thereby encouraging job market participants to pursue self-funded skill training.”

On prices, rent, and mortgage:    

• Housing market shift: Foreclosures are creeping back up again. Foreclosures are up 40% year over year, but they’re still 13% below pre-pandemic 2019 levels. – Fast Company
• US Mortgage Rates Rise to Three-Month High, Slowing Home Demand – Bloomberg
• Americans are getting priced out of the American dream. As mortgage rates top 7% and home prices come in at $400,000, more and more Americans can’t afford to buy – Quartz
• In Q1 2025, 19% of Units Started Built-for-Rent were Single Family – Calculated Risk
• Home-Price Trends in Opportunity Zones Still Following National Patterns During First Quarter of 2025 – ATTOM
• Trump floats sale of government-controlled housing finance giants. Such a move would be a massive shift for the housing market. – Politico

On sales, permits, starts, and supply:    

• 3rd Look at Local Housing Markets in April – Calculated Risk
• Cost of Credit Eases for Builders and Developers – NAHB
• Gavin Newsom lays down the law on housing construction. The governor is wielding his power on an issue at the heart of California’s struggle to address soaring costs. – Politico
• Housing Affordability and Supply: Rising Inventory, But for Whom? – Realtor.com
• The Ultra Wealthy Are Riding Out the Market Chaos in Luxury Real Estate. Despite broader economic uncertainty, major markets like New York, Miami and Aspen have seen a surge in sales for homes priced at $10 million and up – Wall Street Journal
• Lawler: Early Read on Existing Home Sales in April – Calculated Risk
• Fresh Listings Tick Up—but Sales Lose Steam Over Stubbornly High Mortgage Rates – Realtor.com
• Single-Family Starts Down on Economic and Tariff Uncertainty – NAHB
• Single-Family Home Construction Drops as Tariff Turmoil Hits Homebuilders – Realtor.com
• Housing Starts Increased to 1.361 million Annual Rate in April – Calculated Risk  
• U.S. Housing Starts Ticked Up in April. The gauge of new residential construction rose 1.6% last month – Wall Street Journal
• US Housing Starts Increase on Pickup in Multifamily Construction – Bloomberg
• Tariffs Suppress New Construction in April, but Multifamily Projects Outperform – Realtor.com
• Flat Custom Home Building Trends – NAHB
• Flat Growth for Single-Family Built-for-Rent – NAHB
• California Home Sales “Retreat” in April; New Listings “Surge”. Active Inventory Highest Since October 2019 – Calculated Risk
• Slight Gains for Townhouse Construction – NAHB
• Spring Homebuying Season Sputters as Supply Jumps to 5-Year High, Existing-Home Sales Drop to 6-Month Low – Redfin

On other developments:    

• 5 Policies to Help Curb Housing Costs Immediately. These tools are effective ways to increase housing supply and homeownership opportunities – Pew
• US Housing Outlook – Apollo
• Housing market shift explained—and where it’s happening the fastest. The Pandemic Housing Boom was too much, too fast. Now, we’re in an affordability-constrained housing market—and it’s driving up the number of active listings for sale. – Fast Company
• How do you grade the Spring housing market? – Calculated Risk
• Single-Family Home Size Trending Higher – NAHB
• Zillow: Housing market to see first annual U.S. home price drop since 2011. Zillow projects that U.S. home prices will fall 0.9% between April 2025 and April 2026. Zillow economists had previously expected national home prices would rise this year. – Fast Company
• Georgia Is One of the Few Places Where Middle-Class Americans Can Afford an Average-Priced Home – Realtor.com  
• Home Depot shows that the housing market chill is hitting hard. $400,000 houses at 7% mortgage rates are weighing on the DIY trade. Just ask Home Depot – Quartz
• Income Growth Helps Mute Existing Affordability Constraints – NAHB

From a paper by Alberto Americo, Douglas K G Araujo, Johannes Damp, Sjur Nilsen, Daniel Rees, Rafael Schmidt and Christian Schmieder:

“We identify and document key stylised facts of inflation cycles for a large panel of advanced and
emerging market economies. To this end, we propose three complementary inflation cycle concepts: (1)
cycles in inflation levels, reflecting mostly the low- and medium-frequency components of inflation; (2)
cycles in higher-frequency deviation of inflation from its trend; and (3) a categorisation of inflation into
high and low inflation regimes. For each concept, we document key stylised facts within and across
countries and examine how these have evolved over time. We also show that the relationship between
inflation and business cycles matters: entry in a high-inflation regime is associated with a significantly
higher chance of a recession in the following quarters. A cross-country dataset with the inflation cycles is
made publicly available.”

From a paper by Ullrich Heilemann and Roland Schuhr:

“Okun’s misery index (MI), the sum of unemployment rate and inflation rate, is a popular measure of the state of the economy and thus of (macro) ” Economic Discomfort” as well as of government per-formance. We calculate the MI and some augmentations for Germany (until 1990: West Germany) for the period 1951–2021 and test them against a survey-based indicator of government performance (“ZDF-Politbarometer-Index”). The results support Okun’s choice of variables, but reject its augmenta-tion by the growth rate and the deficit ratio. Just as importantly, the effect of unemployment is almost twice as large as that of inflation, and both change considerably over time, as stability tests show. In assessing the performance of governments, MI rankings differ from those of their augmentations. Since the mid-1970s, however, the differences are limited. Barro’s Misery Index, a comparative ap-proach to assessing governments that is an alternative to MI, reaches opposite judgments than MI, but lacks empirical support. The implications for policymakers are both sobering and reassuring: as policy simulations and implied Phillips type trade-offs reveal, the sensitivity of MIs to macroeconomic policy is very low. This may not only hold for Germany given similar international evidence on MIs. The fact that the MI covers the two main macroeconomic objectives, is based on the latest official data, easy to calculate and internationally comparable makes Okun’s Misery Index a useful indicator of Economic Discomfort for Germany as well.”

From a paper by Nicolò Fraccaroli, Vincent Arel-Bundock, and Mark Blyth:

“The 2021 debate over the causes of inflation was dominated by contrasting narratives around the drivers of, and solutions to, rising prices. But how these ideas did or did not penetrate central banks, the politically independent institutions responsible for keeping prices stable, remains unclear. In this paper we investigate how the Bank of England, European Central Bank, and Federal Reserve discussed and deployed specific inflation narratives over time in their attempts to diagnose and treat the inflation of the period. We focus on four narratives that identify the main drivers of inflation in (1) excessive public spending, (2) higher wages in the labour market than warranted by productivity, (3) supply side disruptions to critical markets such as energy, and (4) corporate profit margin expansion. We use a large language model to tag central banks’ speeches with relevant narratives at sentence level, which allows us to quantify how much each central bank discussed each narrative. The results shed new light on how these three central banks interfaced with the recent debate around inflation.”