The intricate dance of economic indicators has unveiled a story of shifting tides in residential construction spending, mortgages, and job cuts. Let’s delve into the latest data and decipher the narrative.
As the residential construction spending spotlight dims, a critical player takes center stage: borrowing. A decline in borrowing echoes across the economic stage, leading to reduced investment, sluggish construction spending, and ultimately, fewer sales. It’s a chain reaction with profound implications.
The Federal Reserve’s quarterly Loans and Mortgages data for Q4 2023 paints a stark picture. Mortgage transactions witnessed a staggering -36% quarter-over-quarter (QOQ) decline and a jaw-dropping -52.4% year-over-year (YOY) plunge, reaching levels reminiscent of the dotcom bust era. The plummeting figures suggest more than just a mere adjustment; they signal a seismic shift.
The domino effect of reduced borrowing extends to the median sales price of new homes. As borrowing dwindles, so does investment in construction spending, triggering a cascading impact on job creation. The equation is simple: less investment equals fewer jobs, inevitably leading to a rise in unemployment.
It’s not merely a case of consumers becoming savvy and realizing inflated prices; it’s a scenario where the ability to make payments becomes an insurmountable challenge. The numbers speak a language of their own, emphasizing that, in the economic ballet, nothing else matters when the rhythm of borrowing falters.
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A mini 🧵 on this 🧵 and it's implications. First; residential construction spending. Less people borrowing leads to less investment. (construction spending) I.E. less sales 1/4@artimidore @JohnRavenda https://t.co/s1yG7F4jUg pic.twitter.com/7Y7hLTyHaj
— Mr.Awsumb (@MrAwsumb) March 10, 2024
It's not that people wised up and realized prices are 2x too high.
They're literally just can't stroke a payment.
Nothing else matters
— Darth Powell 🦈🇺🇲🇺🇦🇵🇱🇫🇮 (@GRomePow) March 11, 2024
15,563 job cuts this month, so far #MacroEdge pic.twitter.com/T1fBgcNdm7
— MacroEdge (@MacroEdgeRes) March 11, 2024